Authority: High Court at Calcutta, Constitutional Writ Jurisdiction

Order Date: 07 August 2026

Case Overview

  • Petitioners: Nadia Printing & Packaging Private Limited (and another) vs Union of India and others.
  • The writ petition challenged RBI's order dated 21 November 2019 cancelling the petitioner’s certificate of registration as a Non‑Banking Financial Institution (NBFI), and the appellate order of 10 June 2021 upholding that cancellation.
  • Original registration was granted on 25 January 2001. RBI Notification dated 26 May 2014 required prior written approval for any merger or amalgamation under Companies Act sections.
  • On 13 August 2014 the petitioner submitted a scheme to amalgamate five other companies, seeking RBI approval to increase its capital.
  • RBI raised queries on 27 Nov 2014, 6 Aug 2015, 29 Oct 2015, 20 Nov 2015, 14 Jan 2015, 5 Dec 2016, 29 Nov 2018 and 12 Mar 2018; the petitioner supplied the requested documents each time.
  • RBI Notification of 27 March 2015 raised the minimum Net Owned Fund (NOF) for an NBFC to Rs 2 crore, allowing companies with NOF below Rs 200 lakh to continue only if they achieved Rs 100 lakh or Rs 200 lakh before specified cut‑off dates.
  • First show‑cause notice issued on 15 March 2018 alleged violations, non‑submission of FIU details, high‑risk status, and failure to file returns and auditor’s certificate for FY 2016‑17.
  • Petitioner replied with audited statements for 2016 and certificates for 2013‑17.
  • Second show‑cause notice dated 26 July 2019 demanded explanation for cancellation on ground of not maintaining Rs 2 crore NOF.
  • Petitioner replied on 9 August 2019, stating NOF > Rs 2 crore would be achieved upon sanction of the pending amalgamation scheme.
  • RBI cancelled the registration on 21 November 2019 solely on the Rs 2 crore NOF ground, also remarking the amalgamation application remained pending.
  • The petitioners appealed to the Appellate Authority (Central Government) under Section 45‑IA of the RBI Act; the appeal was heard on 6 April 2021 and the cancellation was upheld on 10 June 2021.
  • The High Court directed RBI on 21 March 2022 to decide the amalgamation application; RBI rejected it on 1 July 2022, a decision quashed by the Court on 20 December 2022, ordering fresh consideration.
  • RBI gave hearing on 6 February 2023; petitioner submitted further audited statements.
  • On 21 June 2023 RBI again declined approval, adding a new ground that the petitioner had not maintained NOF of Rs 25 lakh since 2012‑15, i.e., before the 2015 Rs 2 crore requirement.
  • Petitioners filed a supplementary affidavit on 27 February 2026 showing a CA certificate that NOF of Rs 2 crore was satisfied.
  • RBI issued a Notification on 29 April 2026 raising the NOF threshold to Rs 1000 crore.
  • RBI’s reply argued the petitioner never met the NOF criteria prior to 2015; petitioners contended this ground was not part of the original show‑cause notices.
  • The Court noted that at the time of the 2014 amalgamation filing the required NOF was Rs 25 lakh, later increased to Rs 2 crore in March 2015.
  • The Court observed that the petitioner never met the Rs 2 crore NOF at any relevant date, and the amalgamation was never approved.
  • The Court held RBI’s procedure was lawful, the cancellation was justified, and the later Rs 1000 crore requirement makes any restoration moot.
  • The petitioners’ argument that the cancellation creates a “stigma” was rejected.

Final Outcome

The writ petition (W.P.O. No.383 of 2021) is dismissed without costs. The cancellation of the certificate of registration stands; the petitioner may surrender the certificate if it is later restored.

Topics: NBFC Regulation, Net Owned Fund Requirement