Supreme Court of India· 03 September 2026

Whether an order of supersession passed under Section 36AAA(1) of the Banking Regulation Act, 1949 can be extended beyond the term of office for which the Board of Directors of a multi-State co-operative bank had originally been elected?

SANDEEP S. GHANDAT & ORS v. RESERVE BANK OF INDIA & ORS

2026 INSC 955
Coram: Justice Pamidighantam Sri Narasimha · Justice Alok Aradhe

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Answer

Yes. Section 36AAA(1) of the Banking Regulation Act, 1949 expressly contemplates that a period of supersession, once ordered, may be extended from time to time, subject to an outer limit of five years in the aggregate, and the tenure of the erstwhile Board of Directors of a multi-State co-operative bank is of no consequence to the exercise of RBI's power of supersession.

Headnote

Banking Regulation Act, 1949 — s.36AAA — Constitution of India — Article 243ZL — Article 243ZT — Multi-State co-operative bank — Supersession of Board — Proviso as substantive provision — Banking Regulation Act, 1949 — s.36AAA(1) — Constitution of India — Article 243ZL(1) — Third proviso incorporates BR Act into Part IXB — Held: The third proviso to Article 243ZL(1) incorporates the Banking Regulation Act, 1949 into Part IXB, for a co-operative society carrying on the business of banking, in an additive and non-restrictive sense. RBI's power to supersede such a bank's Board under Section 36AAA(1) is accordingly not limited to six months under Article 243ZL(1). (¶24, 34) Banking Regulation Act, 1949 — s.36AAA(1) — Supersession extendable beyond original Board tenure — Held further: Section 36AAA(1) contemplates that a period of supersession may be extended from time to time, subject to an outer limit of five years, and the tenure of the erstwhile Board has no bearing on RBI's power of supersession. An order of supersession can accordingly be extended beyond the term of office for which the Board was originally elected. (¶37, 38) Constitution of India — Article 243ZL(1) — Proviso as independent substantive provision — Held further: Ordinarily a proviso restricts rather than enlarges the provision to which it is appended, but whether it is itself a substantive provision must be determined on its substance, not its form; the third proviso here enlarges rather than restricts Article 243ZL(1) and is an independent provision. Finding no infirmity in the High Court's judgment, the appeals were dismissed with no order as to costs. (¶25, 26, 40)

In the Court's own words

Paragraph 37The Administrator is thus obliged to convene a general meeting for the election of new directors only upon expiration of the period of supersession specified by the RBI. Bearing in mind the object underlying the RBI’s power of supersession and the mandate of Section 36AAA(7), we are of the view that the tenure of the erstwhile BoD of a multi-State co-operative bank is of no consequence to the exercise of that power. At the same time, the provision safeguards the interests of the BoD of the multi-State co-operative bank by fixing an outer limit of five years, so that elections are not deferred indefinitely. In the instant case, the power of supersession was exercised while the statutory term of BoD subsisted, and the period of supersession has thereafter only been extended, within the permissible outer limit of five years.

Paragraph 38For the aforementioned reasons, the second issue is answered in the affirmative by stating that the order of supersession passed under Section 36AAA(1) of BR Act can be extended beyond the term of office for which the BoD of a multi-State co-operative bank had originally been elected.

Acts & Sections

Article 243ZL of the Constitution of Indias.36AAA Banking Regulation Act, 1949Article 243ZT of the Constitution of Indias.56 Banking Regulation Act, 1949Article 243ZH(c) of the Constitution of IndiaConstitution (Ninety-Seventh Amendment) Act, 2011

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Also decided in this judgment

Whether the power of the RBI to supersede the Board of Directors of a multi-State co-operative bank under Section 36AAA(1) of the Banking Regulation Act, 1949 is circumscribed by the six-month limit prescribed under Article 243ZL(1) of the Constitution?Can a proviso to a constitutional provision itself be a substantive provision, rather than merely an exception, where its substance so requires?

Plain-language answer prepared by the LexStreak Editorial Desk — verify against the judgment. Source: Supreme Court of India. Corrections