In the matter of : ALLAHABAD BANK vs State

A Notice of Enquiry (NOE) was issued on 25.5.1995 to Allahabad Bank, Calcutta under Section 10(a)(i) of the Monopolies and Restrictive Trade Practices Act, 1969 (for brief the Act) on the basis of a Preliminary Investigation Report (PIR) submitted by the Director General (Investigation and Registration) (the DG).

THE NOE has alleged that the respondent was not maintaining a waiting list register for allotment of lockers in accordance with the directions of the Reserve Bank of India and lockers are allotted on condition of making fixed deposits by the customers. It was alleged that the above action of the respondent caused unjustified cost and placed restrictions on its customers attracting the provisions of Section 2(o)(ii) of the Act. The respondent filed a reply to the NOE in which it was pointed out that the subject matter of allotment of lockers by the respondent Bank was covered under the direction/ instruction of Reserve Bank of India under the Banking Regulation Act, 1949 and the NOE should be discharged on this ground.

After pleadings were complete, the issues were framed on 21.3.1996 which included the issue whether the Commission has jurisdiction to enquire into the charges as contained in NOE. After examination of witness on both sides the case was listed for final arguments. I gave a hearing to Mr. S.P. Pahwa, Advocate for the DG and Mr. Shiv Shankar, Advocate for the respondent. The Advocate for the respondent Mr. Shiv Shankar argued that the Commission had already held in other cases that it has no jurisdiction to enquire into charges as levelled against the respondent and cited the order of the Commission dated 1st September, 1998 in RTPE 244/97 in the matter of Director General (I&R) v. Daewoo Motors India Limited.

OUR attention has also been drawn to the order of the Commission dated 13.1.1999 in respect of RTPE 198/96, RTPE 46/94, RTPE 142/ 92, RTPE 59/94 and RTPE 335/96 against six nationalized Banks. In these cases the charges levelled against the respondents were similar to the ones in this case. The Division Bench of the Commission has held in its order dated 1st September, 1998 in RTPE 244/97 as follows : "Section 4(2) of the MRTP Act excludes applicability thereof inter alia to a banking Company with respect to matters in respect of which specific provisions exist inter alia in the BR Act. Section 6 of the BR Act enumerates forms of business in which banking Companies may engage themselves. They include lending or financing of money either upon or without security. Provision for giving loan by way of purchase of a vehicle popularly known as Auto Finance against hypothecation of the vehicle in question would certainly be included in the forms of business enumerated in Section 6 of the BR Act. Our attention has been invited by learned Advocate Mr. Suri for respondent No. 2 to Section 35 A thereof providing for power of the Reserve Bank to give, directions. Thereunder the Reserve Bank is empowered to issue directions to banking Companies generally or to any banking Company in particular from time to time if it is satisfied inter alia that in the public interest or in the interest of banking policy it is necessary to do so. It has further been provided therein that the banking Company to which such directions are issued shall be bound to comply with such directions. It thus becomes clear from the aforesaid provisions contained in the BR Act that the Reserve Bank enjoys supervisory power over conducting affairs of banking business by any and every banking Company. As aforesaid, it can issue directions if it is necessary to do so in public interest or in the interest of banking policy."

"As pointed out hereinabove, the Reserve Bank under the BR Act is constituted as a Custodian inter alia of public interest and conducting of banking affairs by the banking Company qua any banking policy. This Commission can also pass a cease and desist order against any party found guilty inter alia of adoption of or indulgence in restrictive and/or unfair trade practices in public interest and not de hors thereto. In that view of the matter, it is difficult to conceive that the Reserve Bank will not issue directions in public interest if it finds inter alia adoption of or indulgence in any restrictive and/or unfair trade practice by any banking Company. In this view of the matter, we think that this Commission is precluded from exercising its jurisdiction over a banking Company qua its banking business by virtue of Section 4(2) of the MRTP Act."

IN its order dated 13.1.1999 in RTPE 198/96, RTPE 48/94, RTPE 142/92, RTPE 59/94 and RTPE 335/96, the Commission has discharged the NOE issued to the respondents in those cases on the above ground as wel'' as on merits. IN the premises, we direct that the NOE issued against the respondent in this case may also be discharged. There is no order as to costs. NOE discharged.