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?

No. The third proviso to Article 243ZL(1) provides that, in the case of a co-operative society carrying on the business of banking, the provisions of the Banking Regulation Act, 1949 shall also apply, and this incorporates the Act into Part IXB of the Constitution in an additive and non-restrictive sense. The power of the RBI to supersede the Board of a multi-State co-operative bank under Section 36AAA(1) of the Act is accordingly not circumscribed by the six-month limit prescribed under Article 243ZL(1).

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)

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