Calcutta High Court (Appellete Side)
Fabworth Promoters Private Ltd. & Ors vs Reserve Bank Of India & Ors on 24 February, 2020
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45.
24.02.2020
S.D., Ct.08
W.P. 2 (W) of 2020
Fabworth Promoters Private Ltd. & Ors.
vs.
Reserve Bank of India & Ors.
Mr. Jishnu Saha, Sr. Adv.,
Mr. Arindam Banerjee
Mr. Ishan Saha
Mr. Alokananda Das
Ms. Rituparna Chatterjee
....For the petitioners.
Mr. Debabrata Sen
Ms. Suchishmita Chatterjee
...For the Yes Bank.
Mr. V. Chatterjee
Mr. S. Bhattacharya
Ms. N. Chakraborty
...For the Respondent No. 4.
Learned Senior Counsel appearing on behalf of the petitioners submits that despite a comprehensive representation having been given to the Reserve Bank of India, the Reserve Bank, subsequent to the filing of the writ petition, gave a cryptic reply thereto, which tantamounts to 2 non‐consideration of the representation. Such reply is annexed at page 6 (annexure 9) to the Supplementary Affidavit filed today on behalf of the petitioners. It appears from the reply dated January 14, 2020, that the Reserve Bank of India primarily cited as reason for refusal to go into the merits of the representation, that a previous complaint was examined and para‐wise comment was submitted to this Court, a copy of which was made available to the advocate of the petitioners. It was further recorded in the reply that a second complaint dated February 22, 2018 was also examined and reply given to the petitioners vide letter dated March 8, 2018. On such ground, the Reserve Bank of India reiterated its responses submitted to this Court previously and their letter dated March 8, 2018.
Learned Senior Counsel submits that despite the petitioners having had to give a letter in the nature of an undertaking to the Yes Bank, relinquishing, inter alia, the petitioners' grievances and claims or issues against the Yes Bank, since the Yes Bank was in a dominant bargaining position, and since such document was executed by the petitioner under duress and compulsion, which is evident from the fact that the letter was issued on a draft as proposed by the Yes Bank itself, the same does not restrain the petitioners from making the second 3 representation before the Reserve Bank of India. As such, it is argued that the Reserve Bank shirked its statutory obligations in refusing to look into the representation on merits at all, despite there being serious complaints in the same as to the alleged irregularities committed by the Yes Bank.
Despite service, none appears on behalf of the Reserve Bank of India. Let the affidavit of service filed today be kept on record.
Learned counsel appearing on behalf of the Yes Bank submits that not only was an undertaking given by the petitioners that it was relinquishing the grievances, claims or issues against the Yes Bank, both the parties, being the Yes Bank and the petitioners, acted on such undertaking and all the funds of the petitioners lying with the Yes Bank were released in terms thereof. Moreover, the Yes Bank communicated to the petitioners that it was waiving penal charges as detailed in their previous letter dated December 27, 2017 as a "Goodwill Gesture" and agreed to pay the pre‐payment penalty amount to West Bengal Infrastructure Development Corporation.
It is thus submitted on behalf of the Yes Bank that although a Division Bench granted the petitioners liberty to agitate afresh the grounds of the previous writ petition against the report filed by Reserve 4 Bank of India, such right was waived by the petitioners by its letter of undertaking, as mentioned above, coupled with the conduct of both the parties pursuant to such letter, which endorsed such waiver.
Upon hearing the contesting parties present in Court today, it appears from a perusal of the purported undertaking given by the petitioners that, by the said document, the petitioners, inter alia, confirmed that the Yes Bank would be completely exonerated from any grievance or claims or issues (whether pending of future/direct or indirect) from the petitioners or its promoters or anyone on its/their behalf, vis‐à‐vis the Yes Bank, its Directors and Officers.
The primary question which arises in the present writ petition is whether the petitioners were entitled raise objection to the report filed by the Reserve Bank previously, pursuant to the liberty given by Division Bench of this Court, in the teeth of the subsequent document in the nature of an undertaking which was given by the petitioners.
Of course, the ground of patent arbitrariness cannot be imported to the present scenario of issuance of the purported undertaking, since the undertaking was issued by the petitioners itself and not the Yes Bank, although at the behest of the Yes Bank. 5
However, a thorough perusal of the purported undertaking shows that the same covers future grievances as well, which is unknown to law since future causes of action or legal action cannot be waived on an anticipation, but waiver constitutes the conscious relinquishment of a right in praesenti .
That apart, the liberty granted by the Division Bench vide judgment and order dated January 3, 2017 in AST No. 330 of 2016, was on a rather wider footing than the purported undertaking given by the petitioners. The Division Bench was pleased to hold inter alia that since the report had been furnished by Reserve Bank of India, the appellants therein (the present petitioners) would be free to challenge the same, if so advised, in appropriate proceedings. The appellants therein were given the further liberty to agitate such grounds, as were raised in the writ petition, with respect to the Reserve Bank's inaction. It was also observed that the observations made by the learned Single Judge in the order impugned before the Division Bench would not act as an impediment to such challenge.
However, the present reply dated January 14, 2020 given by the Reserve Bank of India primarily relies on the fact that pursuant to an earlier direction of the learned Single Judge, whose order was ultimately 6 challenged and set aside before the Division Bench, a previous complaint was examined and para‐wise comments submitted to the learned Single Judge.
However, such reasoning loses its force in view of the specific finding of the Division Bench as referred to above, which stipulates that the observations made by the learned Single Judge on the basis of such report would not act as an impediment to a future challenge to the report of the Reserve Bank of India by the petitioners.
As such, the purported undertaking given by the petitioners, being contrary to the liberty granted by the Division Bench of this Court, which had the force of law, partakes the character of waiver against a statutory right, which cannot be implemented, both applying principles of natural justice and in the light of the embargo in that regard stipulated the Specific Relief Act, which prevents an injunction a right to initiate a legal action.
Over and above the aforesaid considerations, it has to be appreciated that the representation lastly given by the petitioners to the Reserve Bank of India was not confined to grievances or claims or issues between the petitioners and the Yes Bank alone but also pertained to the general practices adopted by the Yes Bank, although read through the 7 focal point of the petitionersʹ grievances, which is otherwise the statutory obligation of the Reserve Bank of India to investigate on merits. Such obligation of the Reserve Bank of India being statutory in nature, partakes of the character of a legal obligation which could not be waived by the Reserve Bank of India itself, let alone the petitioners, who are the third parties, in the present case merely acting as the informants of such alleged illegalities before the Reserve Bank of India, setting the ball in motion for the Reserve Bank to invoke its own statutory obligations.
Another aspect which has to be considered is that the current representation, which has been answered in a cryptic fashion by the Reserve Bank, contains two components, the first pertaining to the report filed before the learned Single Judge, which was opened up for challenge by the Division Bench, as referred to above, the second related to the complaint that the undertaking itself, which is the very premise of the objection to the present representation being given by the petitioners, was itself obtained under coercion. Such aspect traverses the domain of the consideration of a private civil dispute between the petitioner and the Yes Bank and also coincides with the duties of the Reserve Bank of India to oversee the functioning of banks acting under the aegis of the Reserve Bank in accordance with law, the monitoring of which is the 8 responsibility of the Reserve Bank of India, being the guardian body of such other banks.
In such view of the matter, the Reserve Bank of India refused to exercise jurisdiction vested in it by law in refusing to consider on merits the representation of the petitioners dated June 1, 2019 being annexure 'N' at page 1305 of the present writ petition, by a cryptic reply dated January 14, 2020, being annexed at page 6 of the Supplementary Affidavit. It was the incumbent duty of the Reserve Bank of India to fulfil its statutory obligations by enquiring into the substantive allegations made against the Yes Bank in the representation given by the petitioners dated June 1, 2019, both as to the alleged coercion by the Yes Bank beyond banking norms and the other illegal activities allegedly done by the Yes Bank, for which liberty was already granted by a Division Bench of this Court.
Since the first question to be looked into by the Reserve Bank was whether the Yes Bank resorted to coercion contrary to banking norms and the said question, if answered in the positive, would render the undertaking itself bad in law and null, thereby opening the scope of the Reserve Bank of India to look into the other obligations and allegations pointed out in the representation, the Reserve Bank ought to 9 have looked into both the allegations of coercion and the other allegations made in the representation on their own merits as per the liberty granted by the Division Bench Judgment of this Court.
In such view of the matter, the Reserve Bank of India failed to exercise its statutory obligations in not considering the representation given by the petitioners dated June 1, 2019, on its merits.
Accordingly, W.P. 2 (W) of 2020 is allowed, thereby setting aside the reply dated January 14, 2020 given by the Reserve Bank of India being the respondent no. 1 to the representation of the petitioners bearing annexure 'N' at page 1305 of the writ petition and directing the respondent no. 1 to reconsider the said representation dated June 1, 2019 on its own merits in accordance with law, upon giving adequate opportunity of hearing to all the interested parties, including the representatives of the petitioners as well as the Yes Bank, and to furnish a comprehensive and reasoned reply on the same to the petitioners and the other interested parties. The entire process of examining the veracity of the allegations made in the said representation and furnishing of a reply to the petitioners shall be completed by the respondent no. 1 within two months from the date of communication of this order to the respondent no. 1.
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It is made clear that this Court has not gone into the merits of the allegations of coercion and the other allegations made against the Yes Bank by the petitioners and it is deemed that the Yes Bank controverts all such allegations.
There will be no order as to costs.
Urgent photostat certified copies of this order, if applied for, be given to the parties upon compliance of all requisite formalities.
(Sabyasachi Bhattacharyya, J.)