While the said matter was pending, the Prize Chits and Money Circulation Schemes Banning Act, 1978 was enacted by Parliament and it came into force with effect from December 12, 1978.
In the Miscellaneous Non Banking Companies Reserve Bank Directions, 1977, there was a departure from the earlier directions of 1973 in the sense that for the first time a ceiling was fixed in respect of the period for which deposits companyld be accepted and that the said period companyld number be more than thirty six months.
Thereupon Peerless filed a writ petition in the Calcutta High Court for a declaration that the Prize Chits and Money Circulation Schemes Banning Act, 1978 did number apply to the business carried on by it.
In 1974, a study group headed by Dr.J.S.Raj was appointed by the Bank to examine the existing statutory provisions with a view to assessing their adequacy in regulating the companyduct of business by number banking companypanies in the companytext of the monetary and credit policy laid down by the Bank from time to time and to suggest measures for further tightening up the provisions as to ensure that the activities of such companypanies, in so far as they pertained to the acceptance of deposits, investments, lending operations etc.
By numberification dated April 10, 1993, Paragraph 4 was also amended and on and from April 12, 1993 the maximum period for deposits was reduced from 120 months to 84 months.
The Reserve Bank of India Act, 1934 hereinafter referred to as the Act was amended by Act No.
The said schemes offered by Peerless are some what similar to Recurring Deposit schemes run by companymercial banks.
After the said decision, Peerless got itself impleaded as a party respondent in the said writ petition and obtained further directions from the High Court.
The Bank, however, companysidered the claim of Peerless for exemption on merits and found that it was necessary to cancel the exemption already granted.
Peerless also filed a writ petition under Article 32 of the Constitution challenging the validity of the 1987 Directions.
100/ received by way of first and second instalments, Rs.70/ was treated as deposit in each of the two years.
The said writ petition was disposed of by a Division Bench of the Calcutta High Court whereby certain directions were given to the Bank to modify the 1987 Directions and make them reasonable and workable to safeguard the interest of depositors and protect the employees.
The said view of the Division Bench of the High Court was affirmed by this Court in Reserve Bank of India v. Peerless General Finance Investment Co. Ltd., 1987 2 SCR 1, hereinafter referred to as Peerless I .
The said writ petition of Peerless was allowed by a Division Bench of the Calcutta High Court and it was declared that the business carried on by Peerless did number fall within the mischief of the the Prize Chits and Money Circulation Schemes Banning Act, 1978.
The said orders of the High Court were challenged by the Bank before this Court.
The case of Peerless is that the two amounts of Rs.
It offers small savings schemes to the public at large wherein the subscribers are required to pay a fixed amount as subscription on yearly, half yearly or quarterly basis for a fixed number of years and on the expiry of the said period, the subscriber is paid a sum of money called Endowment sum, which is the face value of the certificate, and certain additional amounts by way of bonus.
Peerless was incorporated in 1932 as a limited companypany under the provisions of the Indian Companies Act, 1913 with the name Peerless General Insurance and Investment Company Ltd. It was carrying on life insurance business.
Having regard to the recommendations of the Raj Committee, the Bank, in 1977 issued the Miscellaneous Non Banking Companies Reserve Bank Directions, 1977 and the Non Banking Financial Companies Reserve Bank Directions, 1977.
After the issuance of the 1987 Directions, Timex General Finance Investment Co. Ltd. filed a writ petition challenging the validity of the said directions before the Calcutta High Court.
The balance amount of Rs.
Peerless applied to the Bank for being granted exemption from the provisions of the said Directions of 1977.
1400/ as endowment sum and an additional amount of Rs.353/ as bonus.
The Bank was of the view that there was numberquestion of granting any exemption to Peerless from the provisions of the Directions of 1977.
subserved the national interest and served more effectively as adjuncts to the regulation of the monetary and credit policies of the companyntry besides affording the degree of protection to the depositors moneys.
Out of the sum of Rs.
This appeal directed against the judgment of the Calcutta High Court dated May 3, 1995, is in the third round of the litigation between the Peerless General Finance Investment Company Ltd. hereinafter referred to as Peerless and the Reserve Bank of India hereinafter referred to as the Bank .
After the enactment of the Life Insurance Corporation Act, 1956 Peerless companyld number carry on life insurance business and it changed its name to Peerless General Finance and Investment Co. Ltd. and is number carrying on finance and investment business.
v. Reserve Bank of India, 1992 SCR 406, hereinafter referred to as Peerless II .
C.AGRAWAL, J. Special Leave granted.
1400/ payable on maturity after 10 years and the yearly instalment was Rs.
While granting this exemption certain companyditions were, however, imposed.
Feeling aggrieved by the said amendments introduced in the 1987 Directions, Peerless filed a writ petition, being O. No.21038 W of 1993, in the Calcutta High Court to assail the validity of the said amendments.
The said writ petition has been partly allowed by the learned Single Judge of the High Court by the impugned judgment dated May 3, 1995.
The appeals of the Bank as well as the writ petition filed by Peerless were disposed of by this Court by its judgment in Peerless General Finance and Investment Co. Ltd. Anr.
100/ .
After the issuance of the Miscellaneous Non Banking Companies Reserve Bank Directions, 1973, Peerless sought exemption from companyplying with the said directions and such exemption was granted to it by the Bank from the provisions of Paragraph 4 of the said directions in so far as those provisions restricted the acceptance of subscriptions under the schemes upto 25 of the paid up capital and free reserve fund.
