M P Jackson Vs Reserve Bank of India (Kerala High Court)
The Kerala High Court considered a writ petition challenging the Reserve Bank of India’s order issued under Section 36AAA read with Section 56 of the Banking Regulation Act, 1949, superseding the Board of Directors of an Urban Co-operative Bank and appointing an Administrator. The petitioner, the former President of the Bank, sought restoration of the elected Managing Committee, contending that the supersession order violated the principles of natural justice, lacked mandatory consultation with the State Government, and unlawfully displaced a democratically elected Board.
The RBI had conducted an inspection of the Bank, identified several irregularities, and issued All-Inclusive Directions (AID) imposing regulatory restrictions on its operations. Although the Bank sought permission to sell non-banking assets to improve its financial position, the RBI subsequently superseded the Board of Directors and appointed an Administrator for one year from 07.10.2025 to 06.10.2026.
The petitioner argued that the supersession order resulted in civil consequences and therefore could not be passed without affording an opportunity of hearing. It was further contended that Section 36AAA mandates consultation with the State Government, whereas the RBI had consulted only the Registrar of Co-operative Societies. The petitioner also argued that the elected Managing Committee, having a statutory five-year tenure under the Kerala Co-operative Societies Act, could not be replaced by an Administrator appointed under the Banking Regulation Act.
