Delhi Cloth and General Mills v. Union of India

Facts

• The question arose whether a banking company could engage in a business activity not expressly listed in S.6(1)
• It was argued that S.6 was illustrative and that banks could engage in ancillary activities reasonably connected to banking
• The regulator contended S.6 was exhaustive, functioning as a statutory restriction on banking company activities

Issue

1. Whether S.6(1) of the Banking Regulation Act exhaustively lists permissible banking activities or is merely illustrative, allowing banks to engage in related but unlisted activities.

Held

• The Court held that S.6(1) provides an exhaustive enumeration of forms of business in which a banking company may engage. The list is a closed one. A banking company engaging in activities not listed in S.6(1)(a) to (o) acts ultra vires the Banking Regulation Act. This restriction exists to protect depositors by preventing banks from undertaking speculative or risky activities with deposited funds.

Ratio Decidendi

S.6(1) of the Banking Regulation Act is exhaustive, not illustrative. Banking companies are confined to activities expressly enumerated. Business outside S.6 is ultra vires and may attract regulatory action.