PMC Bank crisis: Even depositors, investors are to be blamed partially, says Bombay HC

PMC Bank crisis: Even depositors, investors are to be blamed partially, says Bombay HC

Narsi BenwalUpdated: Saturday, December 21, 2019, 01:54 AM IST
article-image
bombay-high-court |

Mumbai: Observing that the depositors and investors of the crisis-hit Punjab and Maharashtra Cooperative Bank (PMC) too can be 'partially' blamed for the mess, the Bombay High Court refused to interfere with the restrictions imposed by the Reserve Bank of India (RBI) on withdrawals.

A bench of Justices Satyaranjan Dharmadhikari and Riyaz Chagla also held that the central bank cannot be blamed for failing to foresee the financial health of PMC, despite coming across ‘certain’ irregularities while auditing.

The bench said, “We cannot, by reference to some rules, conclude that RBI has deliberately not stepped in earlier or has stepped in belatedly in order not to protect the interest of depositors, public and the banking company, but allowed some of the officials managing the affairs of the bank to get away.”

“We do not think that RBI can be faulted for issuing the directions as are impugned by these investors,” the judges held.

The bench further said that it cannot interfere with the limits placed by RBI on the withdrawal. “In fact, RBI has acted fairly, justly and reasonably in revising the limits on withdrawal from time to time. It is aware of the hardship and difficulty of depositors,” Justice Dharmadhikari observed.

In its detailed judgment, the bench led by Justice Dharmadhikari said that it does not think that the petitioners, styling themselves as aggrieved investors and depositors, can now complain.

“They have been candid enough to state that they entered into a contractual relationship with the PMC Bank because that was offering a higher interest on deposits. If later on, the affairs of the bank are not carried on smoothly and efficiently, but contrary to the interest of these depositors and investors, we do not think that they can blame the regulatory mechanism,” Justice Dharmadhikari said in the orders.

“They are to be blamed partially,” the bench ruled.

The bench further emphasised on the fact that the relationship between a bank and customers may be contractual, but it is based on faith.

“The customer is not expected to be so vigilant in all cases so as to note beforehand any wrongdoings in the bank with which he has contractual dealings. Therefore, the investors and depositors can still approach the competent courts and initiate proceedings so as to allege and prove the breach of this contract, trust and faith by the PMC Bank,” the bench suggested.

The court while dismissing the petitions, held that it cannot, on the basis of 'limited and sketchy material' proceed to fault the RBI and grant any relief to these depositors.

“More so, when the RBI says that it has acted so as to monetise the assets and properties of the bank and thereafter take further steps in the interest of the depositors and investors. We have, therefore, come to the conclusion that the petitions have no merit and they deserve to be dismissed,” the court ruled.

RECENT STORIES

Mumbai-Pune Expressway: Massive Traffic Congestion, Intense Heat Pose Challenges To Motorists...

Mumbai-Pune Expressway: Massive Traffic Congestion, Intense Heat Pose Challenges To Motorists...

Maharashtra Lok Sabha Elections 2024: 6 Seats Of NCP In Mahayuti Alliance Come With 'Terms &...

Maharashtra Lok Sabha Elections 2024: 6 Seats Of NCP In Mahayuti Alliance Come With 'Terms &...

Mumbai News: MSRDC Announces Toll Hike On Bandra-Worli Sea Link From April 1; Check New Rates Here

Mumbai News: MSRDC Announces Toll Hike On Bandra-Worli Sea Link From April 1; Check New Rates Here

Attention Mumbaikars! Fares Of Shared Cabs To Pune, Nashik & Shirdi Hiked; Check Details Here

Attention Mumbaikars! Fares Of Shared Cabs To Pune, Nashik & Shirdi Hiked; Check Details Here

Mumbai: Sena UBT Lok Sabha Candidate Amol Kirtikar Receives 2nd ED Summon In Khichdi Scam Case; Told...

Mumbai: Sena UBT Lok Sabha Candidate Amol Kirtikar Receives 2nd ED Summon In Khichdi Scam Case; Told...