R. A. MEHTA, J. ( 1 ) THE two petitioners are the promoters of a proposed Urban Co-operative Bank. They have challenged the refusal of the banking licence by Reserve Bank of India. They had applied for such licence by their application of 12/09/1980 (Ann. D to the petition ). Therein the. have mentioned that Chaklashi town (in which the proposed Urban Co-operalive Bank was to be established) was having the population of about 30 and as per the census of 1971 the population was 20900. A case was sought to be made out for the necessity and feasibility of the proposed co-operative bank by citing various needs of different kinds of business industries etc. On that application the Reserve Bank by its letter dt. 27/09/1980 (Ann. E) asked the Assistant District Registrar of Co-operative Societies Nadiad to conduct a preliminary survey of the area of operation of the proposed Bank with the assistance of its promoters and their state/district central co-operative bank to identify the potentials for the growth of the proposed bank i. e. potential for deposit mobilisation as well as lending particularly lending to small scale and cottage industries. In pursuance thereof a Joint Report prepared by the Assistant District Registrar and the Manager of Kaira District Central Co-op. Bank Ltd. was sent by the letter dt. 21/10/1980 (Ann. F ). ( 2 ) HOWEVER by the letter dt. 3/03/1982 (Ann. G) the Reverse Bank refused the licence after considering the preliminary survey report and the Joint Survey Report and observed that the area of operation of the proposed bank was limited to Nagar Panchayat Chaklashi and the inclusion of nonurban area was not permissible in the area of operation of an Urban Co-operative Bank and it was further observed that Chaklashi was reported to have the population. of 9000 (urban population) and was served by two commercial banks and therefore there was existing adequate banking facility. It was also observed that the Chaklashi and the surrounding villages were predominantly agricultural in character and the preliminary and joint studies showed that there was little scope for industrial advances and therefore a need for organising a new primary (Urban) co-operative bank was not established and therefore the Reserve Bans refused the licence and refused the registering authority to proceed withe the registration of the co-operative bank. ( 3 ) A further representation was made by the promoters by letter dt. 22/03/1982 (Ann. H) and thereby an attempt was made to rebut In points made by the Reserve Bank for refusing the licence. It appears that on 10/04/1982 there was a meeting and some further discussion in pursuance thereof the promoters had written a letter dt. 13th May 198 (Ann. I) remaining about fresh decision. It appears that there was some further discussion on 8/06/1982 and in pursuance of that discussion the promoters by their letter dt. 21/06/1982 (Ann. J) forwarded more details and facts justifying the grant of the licence. ( 4 ) TAKING into consideration the various representations the Reserve Bank by its letter dt. 4/05/1983 (Ann. K) took a decision wherein it is observed that the area of operation of the proposed bank was predominantly agricultural in character and was adequately served by the existing banking structure and that the area did not have adequate nonagricultural business potential so as to sustain another new urban bank as a viable unit. ( 5 ) HOWEVER the petitioners were not satisfied and they made further representation by letters dt. 15/07/1983 (Ann. L) and 1/08/1983 and therein it is complained that even though the petitioners were refused licence existing on the ground that the area was predominantly agricultural and was served by banking facilities and did not have adequate nonagricultural business potential yet another Urban Co-operative Bank named Natpur Co-op. Bank Ltd. Nadiad was allowed to open a branch at Chaklashi by the Reserve Bank; and therefore the refusal to the petitioners seemed to be unjustified. This was replied by the Reserve Bank by its letter dt. 11/08/1983 (Ann. M.) and if was pointed out that opening of a new bank and a new branch of an existing bank were altogether different things and that an area which could not sustain a new Co-op. bank and can sustain a new branch of an existing co-op. bank and they stood entirely on different footing. It was also pointed out that the matter of the petitioners was considered on merits and studies were conducted and the results showed that there were no special and adequate factors in justification of a new urban Bank in Chaklashi functioning as a viable unit. ( 6 ) THE petitioners have therefore approached this court. It was also pointed out that the matter of the petitioners was considered on merits and studies were conducted and the results showed that there were no special and adequate factors in justification of a new urban Bank in Chaklashi functioning as a viable unit. ( 6 ) THE petitioners have therefore approached this court. At the time of admission an interim order was passed in respect of the licence granted to the third respondent Natpur Co-operative Bank Ltd. and it was directed that the operation if any carried on by the respondent no. 3 in the area shall not the taken into account by the Reserve Bank for reconsidering the petitioners case it ultimately the Reserve Bank was directed to reconsider the case. ( 7 ) THE learned counsel for the petitioners has submitted that the Reserve Bank has decided the matter on extraneous and non germane considerations and acted ultra vires sec. 22 (3) of the Banking Regulation Act 1949 as applicable to Co-operative Societies hereinafter referred to as the Act. Sec. 22 in so far as it is material for our purpose reads as under:"22 Licensing of co-operative banks : (1) Save as hereinafter provided no co-operative society shall carry on banking business in India unless : (a) It is a primary credit society or (b) it is a co-operative bank and holds a licence issued in that behalf by the Reserve Bans subject to such conditions if any as the Reserve Bank may deem fit to impose;xx xx xx (3) Before granting any licence under this section the Reserve Bank may require to be satisfied by an inspection of the books of the co-operative bank or otherwise that all or any of the following conditions are fulfilled namely ; (a) that the co-operative bank is or will be in a position to pay its present or future depositors in full as their claims accrue; (c) that the affairs of the co-operative bank are not being or are not likely to be conducted in a manner detrimental to the interests of its present or future depositors. THE learned counsel for the petitioners has submitted that the Reserve Bank is duty bound to issue licence once the conditions in sec. 92 (3) (a) and (b) are satisfied and the Reserve Bank has no discretion to refuse the licence. THE learned counsel for the petitioners has submitted that the Reserve Bank is duty bound to issue licence once the conditions in sec. 92 (3) (a) and (b) are satisfied and the Reserve Bank has no discretion to refuse the licence. ( 8 ) ON behalf of the respondent Reserve Bank affidavit in reply has been filed wherein it is pointed out that conditions (a) and (h) of sec. 923j are not fulfilled and as a result of studies and inquiries made it has been found that the Urban Co-operative Bank in Chaklashi would not be a financially viable unit. In the affidavit in reply it is stated that the Reserve Bank undertook a survey of the area and it was observed that the present banking structure functioning therein was taking care of both agricultural as well as business finance and that Chaklashi village of having (urban) population of 9 0 did not require any new bank so as to sustain a new urban bank as viable unit. It was also pointed out that a population of 17 446 was engaged in agricultural pursuits and they reside in the surrounding agricultural fields and not in Chaklashi village itself and the banking requirement of agricultural community was taken care agricultural co-operative credit structure comprising of district central co-operative banks primary agricultural credit societies farmers service societies etc. and since the urban co-operative Banks are part of the co-operative credit structure they are not allowed to enter rural area and thus come into competition with the rural co-operative credit structure. It is to be noted that the petitioners want to open a new Urban Co-operative Bank. There is no dispute about it. The reply affidavit further narrates the studies undertaken and ultimately the following conclusions were reached:"the findings of the above survey revealed as follows: (H) The Industrial activity in Chaklashi village was in a miniature form and comprised 2 to 3 automobile workshops 5 to 6 carpentry shops 4 to 5 welding workshops about 100 handloom weavers 5 saw mills. Also a few proposals for setting up some more industries such as ice factory rice mill industry for manufacturing of surgical cotton etc. were proposed to be set up. Also a few proposals for setting up some more industries such as ice factory rice mill industry for manufacturing of surgical cotton etc. were proposed to be set up. (III) Industrial development was not likely to pick up to an appreciable extent in the near future; (III) Only Chaklashi village and Fatehpur village came under the influence zones of C group and A group industrial growth centres respectively. The existing commercial banks in Kanjari Boravi and Nadiad could very well cater to the needs of the Industries which might come up in the aforesaid growth centres but 60me borrowers might prefer to deal with an urban co-operative bank; (IV) None of the five additional villages proposed to be included in the proposed banks area of operations other than Fatehpur were within the effective area of a growth center. In the context of the above it was concluded that the existing commercial banks branches in Chaklashi village were quite capable of meeting the nonagricultural credit needs of the local community and that the industrial activity in the village was at a low. ebb and was not likely to pick up to an appreciable extent in the near future. THUS the Reserve Bank has conducted a viability study to find out whether there were prospects of business potential so as to make the proposed Urban Co-operative Bank in the area a viable unit thereby enabling it to properly deploy its resources and earn sizable income so that the interests of all its depositors are well protected and the proposed Urban bank would be able to pay not only its present but also its future depositors in full as and when their claims would accrue. On these materials and findings the Reserve Bank came to the conclusion that the proposed Urban Co-operative Bank in Chaklashi would not be a viable unit and considering all these relevant factors decision has been taken not to grant the licence to the petitioners to open the proposed bank. ( 9 ) THE decision of the Reserve Bank is based on relevant material and germane considerations and the High Court cannot sit in appeal over the judgment of the Reserve Bank unless it is shown that the decision of the Reserve Bank is based on extraneous considerations or is perverse. ( 9 ) THE decision of the Reserve Bank is based on relevant material and germane considerations and the High Court cannot sit in appeal over the judgment of the Reserve Bank unless it is shown that the decision of the Reserve Bank is based on extraneous considerations or is perverse. In the present case the Reserve Bank has clearly shown that on relevant material and on germane considerations it had come to a conclusion that the proposed Urban Bank in Chaklashi would not be a viable unit and therefore the licence has been refused. It is the discretion of the licensing authority to grant or refuse the licence and when such decision is based on relevant material and germane considerations the High Court cannot sit in appeal over the decision of the Reserve Bank. Thus the contention of the petitioners fails. ( 10 ) IT was also submitted that the permission to open a new branch or another co-operative hank in the same village Chaklashi in favour of respondent no. 3 Netpul Co-operative Bank Ltd. shows that the decision of the licensing authority to refuse the licence to the petitioner for the same area. is ex-facie illegal and perverse. ( 11 ) IN the affidavit in reply as also in the correspondence the Reserve Bank: had pointed out that the viability norms in case of a branch of an existing urban co-operative bank are much lower than what have been laid down in the case of new urban co-operative bank and the cost of operation of a new branch of a bank is comparatively lower than the cost of setting up a new bank and moreover it was pointed out that a branch may not be a self-balancing centre as in the case of a new Urban bank office in the sense that the deposits collected by the branch may not invariably be in a proportion to its lending; whereas on the other hand a branch may be a mere deposit mobilisation centre and may have little scope for lending in the area; and the surplus funds raised at the branch may be gainfully deployed through its head office andor other branches where there is a larger potential for providing loans can draw on the pooled resources at the head office. All these opportunities will not be available in case of a new urban bank which has to rely on the mobilisation of its resources and proper and gainful deployment thereof in the area and quite a big contingent of staff is required for a new urban bank which being unitary office is required to control and operate a number of head office functions such as calling of board meetings issue of shares administration scrutiny and sanction of loan application etc. Thus the economics and norms of the working of a branch visa-vis that of a new urban bank are always much lower and always on a different footing. Therefore granting of licence or permission for opening a new branch cannot take the case of the petitioners any further. ( 12 ) IN view of the above discussion the decision of the Reserve Bank refusing licence to the petitioners cannot be said to be vitiated and cannot be interfered with by the High Court. ( 13 ) IN the result the petition fails and is dismissed. No order as to costs. Petition dismissed. .