Calcutta High Court
Pranab Kumar Ray And Another vs Reserve Bank Of India And Others on 26 August, 1992
Equivalent citations: AIR1993CAL50, (1993)1CALLT69(HC), 97CWN330, 1994(48)ECC152, AIR 1993 CALCUTTA 50, (1994) 48 ECC 152, (1993) 1 BANKLJ 457, (1992) 2 CAL LJ 288, (1993) 1 CALLT 69, (1993) CAL WN 330
ORDER
1. The writ petitioners have challenged the validity of the decision of the Reserve Bank of India as communicated by letter dated 13th January, 1990 rejecting the request of the petitioner No. 1 to release foreign exchange for his son, petitioner No. 2, for prosecuting LL.B. (Hons.) Course at the University of Leeds in the United Kingdom. Since the impugned letter dated 17th January, 1990 refers to policy guidelines contained in the Book of Instructions of the Reserve Bank of India relating to release of foreign exchange for LL.B. Course leading to Honours degree at Cambridge/Oxford Universities only, these guidelines have become an issue in this writ proceeding as the discloser of the same justifies the action of the Reserve Bank of India. The prayer is to quash the communication dated 28th September, 1989 by the RBI expressing regret to release any foreign exchange under the Existing Control Regulations and also the impugned communication dated 13th January, 1990 by the RBI to the effect that under the policy guidelines presently followed by the Bank foreign exchange cannot be released for LL.B. Course leading to Honours degree except only at Cambridge/Oxford Universities.
2. The petitioner No. 2 was able to secure a confirmed admission in the University of Leeds for higher studies in LL.B. (Hons.) of three-year degree course with the intention of joining the legal profession in India. The petitioner No. 1, the father of the petitioner No. 2, having adequate means was willing to render financial support to his son for prosecuting his studies abroad. Soon after the publication of Part-II Examination by the University of Calcutta in September, 1989 the petitioner No. 2 duly applied to the RBI for requisite permission for release of foreign exchange for higher studies in U. K. as the session was to commence from 4th October, 1989 at Leeds. The petitioner No. 2 was subjected to various queries by the RBI. It is alleged in the petition that the respondent No. 3 who is E.C.O. of the Exchange Control Department became obstructive from the very outset by his act and conduct and stood in the way of the petitioner No. 2 and ultimately succeeded. The uncle of the petitioner No. 2 extended the helping hand by sending sponsorship certificate and the visa was issued by the Deputy High Commissioner for the United Kingdom in Calcutta in October, 1989. The petitioner No. 2 left Calcutta and got himself admitted at the University of Leeds on 9th October, 1989.
3. Mr. Pal appearing for the petitioners made submissions relating to some undisputed facts. In 1972 the Bar Council of India adopted a resolution vide S. 24(1)(c)(iv) of the Advocates Act, 1961 that the LL.B. degree of Leeds University obtained after graduation from any Indian University is hereby recognized. The petitioner No. 2 graduated in Political Science from Calcutta University in 1989. It appears from the Affidavit-in-Opposition by the Bank that the Under-Secretary by D.O, dated 3rd January, 1989 advised the Regional offices not to release foreign exchange for Honours degree in Law to be prosecuted of any other University in U.K. The petitioner No. 2 on 5th September, 1989 applied to RBI for requisite permission for the release of foreign exchange and the Bank asked him to furnish some particulars relating to his admission in the foreign University etc. which were duly furnished. On 16th September 1989 the Joint Controller, RBI, Calcutta, telexed to the Controller, RBI, Bombay, seeking advice whether RBI would release admissible exchange after obtaining and undertaking from the student that the course would lead to Honours degree as appears from the Affidavit of the Bank. But the answer came in the negative and the petitioner No. 2 was advised that the Bank regrets its inability to release any exchange on the above subject under the Existing Exchange Control Regulations. When it was pointed out that there was precedent for release of foreign exchange to LL.B. (Hons.) at the University of Leeds during the last as well as the current year there was no response to the petitioner No. 2's letter of 21st October, 1989. The petitioners were told on 13th January, 1990 that under the policy guidelines foreign exchange is released for LL.B. (Hons.) degree only for Cambridge and Oxford Universities and the release of foreign exchange in respect of other universities to a few persons for LL.B. Course was due to mistake and such release was irregular. The question arises whether the guidelines as contained in the Book of Instructions have any statutory force or whether the guidelines have mandatory or directory force. It is well-known that guidelines is simply for guidance for the officers of the concerned establishments in dealing with various matters and it is an internal affair of the Bank and cannot be said to have any statutory force, or any mandatory or directory effect. The word "may" is not always been constituted as mandatory and by making guidelines the Bank cannot over power the Foreign Exchange Regulation Act, 1973. In this connection reference may be made to several decisions such as , (L.I.C. v. Escorts) and , (M.M. Penkiah v. M. Veeramallapa). It is crystal clear that departures were made previously from the provisions of the guidelines and this fact indicates that the provisions of the guidelines are not mandatory. It shows that there was no rigid form and the position is fluid from person to person at the whim of the officials of the Reserve Bank of India.
4. Instances have been provided by the learned Counsel for the writ petitioners where permission was granted to pursue Law Studies at the Universities of London and Leeds in spite of the fact that the guidelines were there the students were vetted and with the concurrence of the Central Government clearance was given to RBI's action. It is very much indicated that the guidelines are not inflexible or rigid and the RBI deviates from the same conveniently. Now definitely comes the question of discriminatory treatment and offending Art. 14 of the Constitution. From the aforesaid facts it is apparent that in the name of the so-called guidelines clear discrimination has been made in the instant case and arbitrary action has been taken against the petitioner No. 2 particularly in view of institutional preference i.e. the preference of the two Universities of Cambridge and Oxford as compared to other Universities of the U.K. When the Bar Council of India has recognized the LL.B. Degree of the University of Leeds, it has no business of the Reserve Bank of India to discriminate between the Leeds in the one hand and the Oxford and Cambridge on the other. Under the Advocates Act, 1961 and by the Resolution of the Bar Council of India the Law Graduate of Oxford. Cambridge and Leeds stand at par and any discrimination will be arbitrary and violative of Art. 14 of the Constitution. The RBI has not given any cogent justification for making institutional preference save and except that the Oxford and the Cambridge are of national importance. In this connection reference may be made to , (the Comptroller and Auditor General of India v. K.S. Jagannathan). It must be borne in mind that institutional preferences were held by the Supreme Court in a large number of decisions as arbitrary and were either disapproved or struck down. I do not want to recount those decisions as those are quite well-known. It must be borne in mind that Oxford or Cambridge is more expensive than other Universities in U. K. and mere reputation of an institution cannot be a relevant factor because a less brilliant student might get admission into an institution of high repute minus his merit whereas a meritorious student is denied such an opportunity. There might be an apprehension that the guidelines have been framed with an eye to affluent persons and high-ups who can have their students admitted in the Oxford and Cambridge Universities thereby demonstrating that RBI is following a policy of sheer discrimination, rather violation of the Constitution. The Court has a jurisdiction to strike down any policy which appears to it arbitrary and discriminatory, , Beenet Coleman v. Union of India. The plea of 'mistake' of the Bank appears to the Court an after-thought defence.
5. Mr. Roy Chowdhury, the learned, Counsel for the RBI, in eloquent defence submitted that the constitutional challenge is directed towards the policy directions of the Reserve Bank of India relating to release of foreign exchange to Indian students for studies in Foreign Universities as recorded in paragraph 56 of the Chapter XVI-30 of 1988 Edition of the Book of Instructions. The learned Counsel referred to three exceptions. The third exception which is the subject matter of the writ petition is that foreign exchange would be released if the Indian student has obtained admission for a course leading to Tripose/honours degree at Cambridge/Oxford Universities in U. K. The challenge is thrown that under the Advocates Act, the Bar Council of India is entitled to give recognition to foreign universities whose law degrees could be considered as qualification for enrolment as an advocate in India. It is submitted that the resolution of the Bar Council recognizes a degree in law of Oxford and Cambridge as also LL.B. degrees of the University of Leeds as qualification for enrolment as Advocates in India. It is submitted that because the Bar Council treats the Law Degree of Leeds University as equivalent to Oxford and Cambridge Universities it would be irrational and discriminatory for RBI to release foreign exchange only for Degree Course to those who have obtained admission to Cambridge or Oxford. It has been admitted by the RBI that the granting of foreign exchange to certain Indian students in law course in Leeds University was entirely due to mistake. It is submitted that the classification in the policy guidelines is neither discriminatory nor arbitrary. The RBI's guidelines cover all disciplines in view of the foreign exchange constraints of a developing country like India and the purpose of the Advocates Act is entirely different and cannot be equated with the policy decision of RBI. It is emphasized that it is now well-settled principles of constitutional law that Art. 14 forbids class legislation but certainly permits reasonable classification and such classification must be based on intelligible differentia. In view of the limited foreign exchange, the eligibility standard for release of foreign exchange for under-graduate studies is to be very selected. It is claimed that the question of discrimination arises only when there is discriminatory treatment among equals and it is said with much emphasis that the Oxford and the Cambridge Universities are a class by themselves as distinct from other universities of the United Kingdom. It is emphasized that this is an intelligible differentia between Cambridge and Oxford on the one hand and the other universities of the U.K. on the other. Mr. Roy Chowdhury drew the attention of the Court to a decision Re:
Oxford Poor Rate reported in 120 ER 68. In this case the Court took judicial notice as far back as in 1856 that the University of Oxford is a national institution. My attention has also been drawn to an article captioned "The Universities of the United Kingdom" written by Sir Albert Solman to emphasize the historical development regarding Universities of London. It is said by Sir Albert that the British Universities have their origins in the Twelfth and Thirteenth centuries with the foundation of the Universities of Oxford and Cambridge. It is further emphasized in the said article that both the universities enjoy reputation for science and scholarship which is unrivalled. It is submitted that there is a national nexus between the aforesaid differentia, and the object to be achieved under the Foreign Exchange Regulation Acts of 1947 and 1973. The decision reported in AIR 1981 SC 2138 : (1982 Tax LR 197) (R.K. Garg v. Union of India) was cited to establish that the Court must be very cautious in giving rulings in economic matters and an American decision in the case of Marey v. Doud, reported in (1957) 354 US 457, has also been quoted where Justice Frankfurter observed that the "Courts have only the power to destroy, not to construct". Well, it is difficult to swallow the remark of Justice Frankfurter. The admission of the petitioner No. 2 in Leeds University does not satisfy the RBI that the qualification for admission in that University is similarly situated as those in Cambridge and Oxford so as to entitle him to the release of foreign exchange. I cannot reconcile myself with the decision placed by the learned Counsel in the case of D.N. Chanchala v. State of Mysore, . By quoting the decision in , (Shree Sita Ram Sugar Co. Ltd. v. Union of India), the Court was made to convince that such matters do not ordinarily attract the power of judicial review. Some more decisions were cited which I need not elaborate. It is stated that the review of the policy direction was taken by the Central Office of the RBI that the Union Ministry of Finance starting from 3rd January, 1989 and culminated in the Circular dated 2nd April, 1990 communicating that the Regional Offices should strictly adhere to instructions contained in paragraph 56 of BOI in the matter of release of foreign exchange to students pursuing courses in Law leading to Tripose/ honours at Cambridge/ Oxford in U. K. It is submitted by Mr. Roy Chowdhury that the big ground of challenge is the guidelines which are and were always there. The guidelines have been totally overlooked by the dealing officers at the Regional Offices in Calcutta in the case of Mr. Bachawat and Mr. Gupta but so far as Mr. Ghosh is concerned the Office of RBI in Bombay interpreted the relevant provision in favour of the candidate which was however not accepted by the Central Government. Though the applications of the aforesaid three persons were vetted but it must be said that the RBI Officers committed mistake and the matter never reached the higher level or to the Joint Controller of Calcutta Regional Office. The RBI authorities have already explained the manner in which foreign exchange were released to the three students for studying in the United Kingdom. The significant point in the argument appears to be the recommendation dated 3rd January, 1989 of the Central Office of the RBI interpreting the relevant provision in a manner favourable to Honours students in the U.K. Universities but its non-acceptance by the Central Government is a matter which requires judicial scrutiny. It is hotly contested that the guidelines are not inflexible or rigid and that in some cases the guidelines are applied rigidly and in other cases without reasons in arbitrary manner. It is difficult to agree with the submissions of the learned Counsel for the Bank that the guidelines are not flexible and rigid. The guidelines arc always there and there are exceptions to the guidelines and the authorities at the help of the affiars can always interfere to deviate from the guidelines in particular cases for the ends of justice. The plea of 'mistake' cannot solve the problem of the petitioners and cannot be taken seriously by the Court. On behalf of the Bank the decision , (Coromondal Fertilizers Ltd. v. Union of India), has been referred wherein the Supreme Court observed: "A wrong decision in favour of any particular party does not entitle any other party to claim the benefit on the basis of the wrong decision". No one can disagree with the observation of the Supreme Court but the decision in the instant case was not in favour of any party but in respect of several parties and there was basical discrimination when the petitioner No. 2 was denied the same benefit in the garb of guidelines which once did not stand in respect of others. The defence has also objected to the fact that the petitioner No. 2 was extended the help by his uncle by sending requisite sponsorship certificate for the issue of visa by the local Deputy High Commissioner for U.K. On this count it is stated that such sponsored students are given U.S. $200 towards incidental expenses only and this certainly did not entitle to release of any foreign exchange. The learned Counsel for the defence has also scanned some of the decisions cited by the learned Counsel of the petitioners and submitted that those cases have no relevance to the facts of the present writ petition because in the instant case university-wise classification is a rational and reasonable one.
6. Mr. Mitra appearing for the Union of India adopted the argument of Mr. Roy Chowdhury for the RBI. He has further submitted that no one has any vested right to the grant or allotment of foreign exchange. He quoted from Prof. H.W.R. Wade's "Administrative Law" pages 373-74 (6th Ed.) that "A passage to the effect that the Home Secretary was entitled to pursue a policy of discrimination against foreign student of 'Scientology' by refusing to renew their residents permit". I do not know how this quotation fits in this case. He cited the decision in the case of State of U.P. v. Bijoy Bahadur Singh, , wherein it was held inter alia that the Government may change or revive its policy from time to time according to the demands of the time and situation and in public interest. To me the verdict is very appropriate but not applicable in this case because this is not the case of change of policy which is the exclusive jurisdiction of the Government but this is a case of sheer discrimination with a particular student. Again the learned Advocate for the Union of India has cited the decisions of M/s. Sita Ram Sugar Co. Ltd. v. Union of India, inviting the attention of the Court to the observation of the Supreme Court that "Judicial Review is not concerned with matters of economic policy". This case in no way effects the present writ petition; the Court is not going to decide or judicially review any economic policy of the Central Government.
7. After having considered the different aspects of the case I am of the view that the Reserve Bank of India is attempting to justify in giving preference to students admitted to Oxford and Cambridge Universities to the exclusion of all other Universities. It must be noted that there are more or less 48 Universities in the United Kingdom and undoubtedly among them the Universities of Oxford and Cambridge occupy pre-eminent position. There cannot be two opinions on this point. But, certainly, on this score other universities cannot be deprived of the same privileges which are extended by the Reserve Bank of India to the above two Premier Universities. The point which must also be noted that the Cambridge and Oxford Universities cannot be given the nomenclature of "National Universities" but they, of course, may be described as "National Institutions" for advancement of learning in England (120 ER 68). The judicial notice can be taken only this far and no further. Undoubtedly the Oxford and Cambridge Universities provide high standards of instructions in under-graduate disciplines in the U.K. and have a position of their own in the world but it cannot be said as a matter of rule that every student of these Universities is bound to be a better product than other Universities of the U.K. On this count Cambridge and Oxford Universities cannot have a justified extraordinary status of the release of foreign exchange from the Reserve Bank of India. It must also be noted that the controversy of "National Universities" and "National Institutions" have erupted from the Oxford Poor Rate case (supra) but this case itself is not based exclusively on the standard of teaching in the Universities of Oxford or Cambridge. But this particular case arose out of certain disputes relating to buildings in 1857 when there were not many universities in that country. The observation in the Oxford Poor Rate case (supra) about these two Universities may at best be taken as obiter. The argument by the defence on the Copyright Act by which books are sent to Oxford and Cambridge Universities Laboratories also does not appeal to me as there are many other universities and institutions where copies of books are sent under the said Act. The reliance on the British High Commission's assertion that the reputation of Cambridge and Oxford Universities in Science and Scholarship is unrivalled is not of such an importance which should be a matter of judicial satisfaction. The High Commissions issue leaflets and their respective countries' facts and information are reflected in the said leaflets. The British High Commission too has full right to issue such a leaflet but such a leaflet cannot be relied upon by a Court of law.
8. I may point out that apart from the Cambridge or Oxford University there are reputed institutions in the field of Medicine at Edinburgh and Liverpool; Physics, Imperial College, London; the London School of Oriental and African Studies which is an international reputation no less inferior than Oxford, or Cambridge; London School of Economics both of University of London as well other University of Leeds, Birminghum, etc. Simply to clarify and already clarified object will not solve the problem by denigrating other similar outstanding institution in the United Kingdom which have international recognition in their respective fields. Some misrepresentations have already been made while referring to the British High Commissioner's publication that the minimum qualification for admission is First Class Honours Degree of a recognized Indian University. The correct fact is that first class or second class examination leading to B.A. or B.Sc. of an approved university etc. are also admissible in the University of Cambridge and Oxford as appears from page 19 of the said publication.
9. I appreciate the remark of Mr. Pal when he says that "If the size of the cake is not big enough then distribute it equitably not favourably". In the case of Dr. Jagdish Saran V. Union of India, , the Hon'ble Judges of the Supreme Court very rightly observed: ".....the State's duty is to produce rule of equality, rather egalitarian justice in actual life". This approach must be the guiding factor in giving judicial pronouncement. In my opinion, the classification! made by the Reserve Bank of India in favour of the Oxford and Cambridge Universities vis-a-vis other universities of the same country is quite unreasonable and discriminatory and violative of Art. 14 of the Constitution and, accordingly, illegal and void. It must be examined whether there is any rational and proximate nexus between the object of FERA and the condition imposed by the RBI in this particular case. The object of FERA was to conserve and direct to the best uses, the limited supplies of the countries foreign exchange and to control transaction in foreign exchange, securities and gold. The whole idea was to see that the countries foreign exchange resources were not vested under any circumstances and where properly utilises to advance the national interest. In the instant writ application the above principle it must be held has no rational or proximate nexus. Here the foreign exchange has been asked to be utilised properly for the advancement of national interest by way of prosecution of studies in the University of Leeds and not for vesting the foreign exchange for any other purpose. The authorities are working against the best interest interest of the country. The Supreme Court has pointed out more than once that when an authority exercises a power conferred by a statute and the exercise of that power is challenged in a Court of law, the authority must show that what has been done as a rational connection with the object propose to be achieved by the statute. The Supreme Court further added that unreal connection must be struck down, , Director, Enforcement Directorate, Government of India v. Saroj Kumar Bhotika.
10. In the circumstances, I hold that the Reserve Bank of India and also the Union of India have acted in a most discriminatory and unreasonable manner by not allowing the foreign exchange to Mr. Pramit Kumar Ray, petitioner No. 2, for pursuing studies of LL.B. (Hons.) Course in the University of Leeds, United Kingdom, while extending the same facilities to those prosecuting Law Studies in the Universities of Oxford and Cambridge. I hereby quash the Memorandum dated 28th September, 1989 issued by the Joint Controller Reserve Bank of India, Exchange Control Department, Calcutta, and also the communication dated 13th January, 1990 issued by the Joint Controller, Reserve Bank of India, Exchange Control Department Calcutta. I further hold that the policy guidelines in the Book of Instructions followed by the Reserve Bank of India by which the foreign exchange are release for LL.B. Course leading to Honours degree only at Cambridge and Oxford Universities are ab initio bad and violative of Art. 14 of the Constitution. The Reserve Bank of India and the Union of India are directed to release foreign exchange to Mr. Pramit Kumar Ray, petitioner No. 2, son of Mr. Pranab Kumar Ray, petitioner No. 1, for pursuing his studies in LL.B. (Hons.) Degree Course at the University of Leeds within 30th September, 1992.
11. All parties to act on the signed xerox copies of the minutes of the Dictated Order on usual undertaking.
12. Petition allowed.