The Supreme Court has held that the Reserve Bank of India's power to supersede the Board of Directors of a multi-State co-operative bank under Section 36AAA of the Banking Regulation Act, 1949 is not constrained by the six-month supersession limit prescribed in Article 243ZL(1) of the Constitution. The Court ruled that the third proviso to Article 243ZL(1) incorporates the BR Act into the constitutional scheme for multi-State co-operative banks, allowing supersession for up to five years. The judgment clarifies that successive supersession orders may extend beyond the elected Board's original term, and that the consultation requirement under the proviso to Section 36AAA(1) applies only to uni-State co-operative banks.
Case Details
SANDEEP S. GHANDAT vs RESERVE BANK OF INDIA
2026 INSC 955
Court
Supreme Court of India
Date
2026-09-03
Case Number
C.A. No.-005351-005352 - 2025
Bench
HON'BLE MR. JUSTICE PAMIDIGHANTAM SRI NARASIMHA, HON'BLE MR. JUSTICE ALOK ARADHE
Counsel
Pet: Devadatt Kamat
Res: Jaideep Gupta, Ninad Laud
Frequently Asked Questions
No. The third proviso to Article 243ZL(1) incorporates the Banking Regulation Act, 1949 for co-operative societies carrying on banking business, including multi-State co-operative banks. This proviso operates as an independent substantive provision that enlarges the main article's scope, making Section 36AAA BR Act applicable with its five-year aggregate supersession limit.
Yes. Once a Board is superseded under Section 36AAA(1), it ceases to exist and all powers vest in the Administrator. The power of supersession may be extended from time to time up to five years in aggregate, regardless of the original Board's tenure. Section 36AAA(7) requires the Administrator to call elections only upon expiration of the supersession period specified by RBI.
No. The proviso to Section 36AAA(1) requiring consultation with the concerned State Government applies only to co-operative banks registered with the Registrar of Co-operative Societies of a State. Multi-State co-operative banks, registered under the Multi-State Co-operative Societies Act, 2002, fall outside this requirement.
