PEERLESS GEN.F.& I.CO.LTD. vs RESERVE BANK OF INDIA

The Supreme Court upheld the Reserve Bank of India's authority under Sections 45J and 45K of the Reserve Bank of India Act, 1934, to issue directions regulating Residuary Non-Banking Companies (RNBCs) to protect depositors and employees. The Court emphasized the need for such regulation to prevent exploitation of investors by financial companies offering high interest rates. However, it clarified that any directions deemed prohibitory or unreasonable would exceed the RBI's powers, thus balancing regulatory oversight with operational feasibility for RNBCs.