Courts Must Accord Due Deference To Determinations Of Sectoral Regulators Such As RBI On Technical Matters: Delhi High Court
The Bench set aside an ad-interim order permitting NBFC to resume business despite cancellation of certificate of registration, holding that interim relief order bearing "trappings of finality" is appealable.
The Delhi High Court has held that courts must ordinarily defer to the determinations of specialised sectoral regulators such as the Reserve Bank of India, which possess technical expertise and continuous engagement with the sectors they supervise, and that judicial interference with such determinations at the interim stage, absent cogent reasons, risks substituting judicial discretion for specialised regulatory judgment.
Allowing an intra-court appeal by the RBI, the Division Bench set aside a Single Judge's ad-interim order that had stayed the cancellation of a Non-Banking Financial Company's Certificate of Registration, holding that although the impugned order was interlocutory, it granted relief tantamount to the final relief sought in the writ petition and therefore bore the "trappings of finality," rendering it appealable as a judgment under the Letters Patent.
A Division Bench comprising Chief Justice Devendra Kumar Upadhyaya and Justice Tejas Karia observed, “Generally, the Courts must accord due deference to the determinations of sectoral regulators such as RBI, which possess specialised expertise, discharge statutory mandates, and remain continuously engaged with the complexities of the sectors under their supervision. As India’s central bank, RBI is entrusted with maintaining monetary stability, supervising financial institutions and safeguarding systemic resilience. Its decisions are informed by technical expertise, economic data, and policy considerations that ordinarily fall outside the conventional judicial domain”.
“While judicial review is essential to safeguard constitutional rights and prevent arbitrariness, its exercise must be calibrated so as not to encroach upon regulatory autonomy. Interference in the absence of cogent reasons risks substituting judicial discretion for specialised regulatory judgment, with potential consequences for financial stability and investor confidence. The Supreme Court has consistently recognised regulators such as RBI as expert bodies whose determinations merit due deference unless shown to be manifestly arbitrary or ultra vires”, the Bench noted further.
Senior Advocates Rajeeve Mehra, Ramesh Babu M.R appeared for the appellant and Senior Advocates Sandeep Sethi, Malvika Trivedi appeared for the respondent.
Respondent No. 1, a Kerala-registered NBFC, held a Certificate of Registration granted by the RBI in 2001. Following an inspection in late 2023, the RBI identified material regulatory violations and issued a Show Cause Notice in July 2024 proposing cancellation of the CoR under Section 45-IA(6) of the RBI Act, 1934.
The company's replies acknowledged several violations, and after a personal hearing, the Executive Director cancelled the CoR by order dated September 11, 2025. The company's statutory appeal against the cancellation was dismissed by the Appellate Authority in June 2026.
The company thereafter challenged both the Cancellation Order and the Appellate Order before the Delhi High Court. After a Vacation Bench declined ad interim relief and an earlier Letters Patent Appeal against that refusal was disposed of with directions for expeditious hearing, the learned Single Judge, by the order under appeal, stayed the cancellation insofar as it restrained the company from carrying on NBFI business, pending further hearing. The RBI challenged this order, contending that it effectively restored the CoR rather than preserving the status quo, and that it was passed without examining the public-interest findings recorded in the Cancellation and Appellate Orders.
Examining the principles governing interim relief, the Court held that granting stay of a regulatory cancellation order, which had recorded that the company's management was prejudicial to public interest, required a higher threshold of balance of convenience to be satisfied. It found that the Single Judge's order rested only on the company's disputed claim of having rectified its defaults, a question requiring adjudication on merits after the RBI's counter affidavit, and had not weighed the public interest findings recorded in the Cancellation and Appellate Orders.
The Court held that the company would suffer no irreparable prejudice since it remained free to conduct day-to-day banking transactions and recover existing loans, the restraint being confined to disbursal of fresh loans. On maintainability, the Court held that the expression "judgment" under Clause 10 of the Letters Patent must be given a wide construction, and that an interim order granting relief equivalent to final relief is appealable.
Cause Title: Reserve Bank of India v. Reliant Credits India Ltd & Anr. (Neutral Citation: 2026:DHC:7948-DB)
Appearances:
Appellant: Rajeeve Mehra, Ramesh Babu M.R., Senior Advocates, Nisha Sharma and Shreya V. Mehra, Advocates.
Respondent: Sandeep Sethi, Malvika Trivedi, Senior Advocates, Digish Shah, Anushree Kapadia, Krisna Gambhir, Shreya Sethi, Pranay Bhardwaj, Pragya Jaishwal, Shailendra, Advocates.