ABC Ltd, an Indian company, applied to the Central Bank (RBI), for license to start banking operations in India. But RBI rejected the application. Can ABC Ltd appeal against this decision at a judicial forum ? Answer the

The granting of licence by the Reserve Bank of India may be subject to such conditions as the RBI may think fit in each case. The granting of licence or refusal of licence by RBI, if based on relevant material and germane consideration, cannot be challenged in a court of law. In the matter of Shivabhai Zaverbhai Patel vs. RBI AIR 1986 Guj. 19; (1985) 1 GLR 257, Hon'ble High Court of Gujarat upheld the RBI's decision of rejection of application for a banking licence which was based on diligent study and material facts. This principle was clearly established in Shivabhai Zaverbhai Patel vs. Reserve Bank of India (AIR 1986 Gujarat 19; (1985) 1 GLR 257) . In this case, the Gujarat High Court upheld the RBI's refusal to grant a banking licence, observing that the RBI had conducted a diligent study of material facts and acted within its statutory powers. The Court held that such a decision, taken in the interest of the banking system and depositors, cannot be challenged merely on merits in a court of law. Therefore, while ABC Ltd may file a writ petition, judicial review is confined only to examining procedural fairness, mala fide intent, or arbitrariness. If the RBI's refusal is reasoned, evidence-based, and within statutory authority, no appeal would succeed against the RBI's decision.