Public examination of directors and auditors, etc., in respect of a banking company under schemes of arrangement
Section 45L of the Banking Regulation Act, 1949 deals with public examination of directors and auditors, etc., in respect of a banking company under schemes of arrangement. [45L. Public examination of directors and auditors, etc., in respect of a banking company under schemes of arrangement.--(1) Where an application for sanctioning a compromise or arrangement in respect of a banking company is made under [section 391 of the Companies Act, 1956 (1 of 1956)] or where su The Act came into force on 16 Mar 1949.
1[45L. Public examination of directors and auditors, etc., in respect of a banking company under schemes of arrangement.--(1) Where an application for sanctioning a compromise or arrangement in respect of a banking company is made under 2[section 391 of the Companies Act, 1956 (1 of 1956)] or where such sanction has been given and the High Court is of opinion, whether on a report of the Reserve Bank or otherwise, that any person who has taken part in the promotion or formation of the banking company or has been a director or auditor of the banking company should be publicly examined, it may direct such examination of such person and the provisions of section 45G shall, as far as may be, apply to the banking company as they apply to a banking company which is being wound up.
(2) Where a compromise or arrangement is sanctioned under 2[section 391 of the Companies Act, 1956 (1 of 1956)] in respect of a banking company, the provisions of 3[section 543 of the said Act] and of section 45H of this Act shall, as far as may be, apply to the banking company as they apply to a banking company which is being wound up as if the order sanctioning the compromise or arrangement were an order for the winding up of the banking company.
4[(3) Where 5[a scheme of reconstruction or amalgamation of a banking company] has been sanctioned by the Central Government under section 45 and the Central Government is of opinion that any person who has taken part in the promotion or formation of the banking company or has been a director or auditor of the banking company should be publicly examined, that Government may apply to the High Court for the examination of such person and if on such examination the High Court finds (whether a fraud has been committed or not) that person is not fit to be a director of a company or to act as an auditor of a company or to be a partner of a firm acting as such auditors, the Central Government shall make an order that that person shall not, without the leave of the Central Government, be a director of, or in any way, whether directly or indirectly, be concerned or take part in the management of any company or, as the case may be, act as an auditor of, or be a partner of a firm acting as auditors of, any company for such period not exceeding five years as may be specified in the order.
(4) Where 5[a scheme of reconstruction or amalgamation of a banking company] has been sanctioned by the Central Government under section 45, the provisions of section 543 of the Companies Act, 1956 (1 of 1956), and of section 45H of this Act shall, as far as may be, apply to the banking company as they apply to a banking company which is being wound up as if the order sanctioning the scheme of reconstruction or amalgamation as the case may be, were an order for the winding up of the banking company; and any reference in the said section 543 to the application of the official liquidator shall be construed as a reference to the application of the Central Government.]]
Section 45L, The Banking Regulation Act, 1949 (Act 10 of 1949).
Cross-references
Extracted from the operative text of the enactments themselves. Every destination below exists in our corpus.
This section refers to
Related judgements & precedents
These are some judgments that construed this section, and hold precedence value. They hold authority on how to read, interpret and use this section.
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Essar Bulk Terminal (salaya) Limited vs Reserve Bank of India
Court's Decision & Legal Precedent
When a statute confers a specific power upon an authority and prescribes the method of its exercise, the authority can only exercise that power in the manner prescribed by the statute. If the statute specifies that directions may be issued regarding 'a default' (singular) only after Central Government authorization for specific cases, the authority cannot issue general directives applicable to all defaults above a particular amount without individual case-by-case consideration. Accordingly, the RBI Circular of February 12, 2018, which applies a blanket mandatory restructuring timeline followed by mandatory insolvency filing to all accounts above Rs 2000 crore, exceeds the scope of authorization granted under Section 35AA of the Banking Regulation Act, 1949, and is therefore ultra vires.
On this section: Governs RBI's power to direct non-banking financial institutions; Court noted the circular applies to both banking and non-banking institutions jointly, creating inseparability issues
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Action Ispat and Power (p) LTD vs Reserve Bank of India
Court's Decision & Legal Precedent
The RBI circular dated 12.02.2018 mandating reference of all accounts with aggregate exposure of INR 20 billion and above that default for 180 days to insolvency proceedings is ultra vires Section 35AA of the Banking Regulation Act, 1949, as it issues general directions to a class of borrowers rather than specific directions regarding individual defaults as required by Section 35AA. Section 35AA requires prior Central Government authorization and applies only to specific defaults, not to debtors generally. The power to issue insolvency resolution directions under the Insolvency Code can only be exercised by the RBI under Section 35AA with such authorization - Sections 21 and 35A cannot serve as alternative sources without satisfying Section 35AA's conditions. When a statute prescribes a specific method and conditions for exercising power (requiring Central Government authorization and being specific to individual defaults), the statute by necessary implication prohibits exercise in any other manner (by issuing general circulars applicable to categories of defaults).
On this section: RBI's power regarding non-banking financial institutions; held that circular must have due regard to conditions and objectives of such institutions as per Section 45L(3)
The holding above is the ratio decidendi as extracted from the judgment by eCourts India, reproduced unaltered — it is a rendering of the court's reasoning, not a substitute for its words. Read the order itself before relying on it.
Questions about Section 45L
What have the courts held on Section 45L of the Banking Regulation Act?
Essar Bulk Terminal (salaya) Limited vs Reserve Bank of India (02 Apr 2019) is the leading judgment on this section among those set out below: Governs RBI's power to direct non-banking financial institutions; Court noted the circular applies to both banking and non-banking institutions jointly, creating inseparability issues. Another 1 judgment on this section is set out below, all of them from the Supreme Court.
How do I find court cases under Section 45L of the Banking Regulation Act?
In judgments and charge sheets this section is written several ways, and each form finds a different set of orders. These search the full text of every order eCourtsIndia holds, best matches first: Banking Regulation Act 1949 45L, section 45L Banking Regulation Act 1949, section 45L of the Banking Regulation Act. Each opens the full list of orders on eCourtsIndia, where it can be narrowed by court, year and outcome. 2 reported judgments on this section are set out on this page, beginning with Essar Bulk Terminal (salaya) Limited vs Reserve Bank of India (02 Apr 2019).
What should I read with Section 45L of the Banking Regulation Act, and has it changed?
Its own text turns on section 45 (Power of Reserve Bank to apply to Central Government for suspension of business by a banking company and to prepare scheme of reconstitution or amalgamation), section 45G (Public examination of directors and auditors), section 45H (Special provisions for assessing damages against delinquent directors, etc), so none of them can safely be read on its own.
When did Section 45L of the Banking Regulation Act come into force?
Section 45L of the Banking Regulation Act, cited as Banking Regulation Act 1949 45L, came into force on 16 Mar 1949, having been enacted on 10 Mar 1949. It is in force as at the date shown on this page.
Other sections of this Act
- 56. Act to apply to co-operative societies subject to modifications5544 words
- 45. Power of Reserve Bank to apply to Central Government for suspension of business by a banking company and to prepare scheme of reconstitution or amalgamation2310 words
- 10B. Banking company to be managed by whole time chairman1171 words
- 5. Interpretation1164 words
- 43A. Preferential payments to depositors1031 words
- 11. Requirement as to minimum paid-up capital and reserves988 words
Source and method. Compiled from the enactments of Parliament and of the State legislatures as published on India Code, and republished together with commentary and other original matter under section 52(1)(q)(ii) of the Copyright Act, 1957. Structured, cross-referenced and maintained by eCourtsIndia. Text as in force on 22 Oct 2026. This page is not a substitute for legal advice.