Calcutta High Court (Appellete Side)
Basabi Rai Chowdhury vs Union Of India & Ors on 19 June, 2013
Author: Ashim Kumar Banerjee
Bench: Ashim Kumar Banerjee
Form No. J.(2)
IN THE HIGH COURT AT CALCUTTA
Civil Appellate Jurisdiction
Appellate Side
Present :
The Hon'ble Mr. Justice Ashim Kumar Banerjee
And
The Hon'ble Dr. Mrinal Kanti Chaudhuri
W.P. No.12163 (w) of 2013
CAN No. 4735 of 2013
CAN No. 5092 of 2013
CAN No.5093 of 2013
BASABI RAI CHOWDHURY
-VS-
UNION OF INDIA & ORS.
WITH
W.P. No. 12974 (W) of 2013
NARENDRA PRASAD GUPTA
-VS-
THE STATE OF WEST BENGAL & ORS.
WITH
W.P. No. 12197 (W) of 2013
ANINDYA SUNDAR DAS & ORS.
-VS-
UNION OF INDIA & ORS.
(DEPT. OF FINANCE)
For the Appellants : Mr. Subrata Mukhopadhyay,
(in W.P 12163 (W) of 2013 Mr. Shamit Sanyal,
Mr. Tapas Maity
Mr. Sabyasachi Chatterjee,
Mr. Sudipta Dasgupta,
Mr. Bikram Banerjee
For the Appellants : Mr. Bikash Ranjan Bhattacharyya,
(in W.P 12197 (W) of 2013) Mr. Rabi Sankar Chattopadhyay,
Mr. Uday Sankar Chattopadhyay,
Mr. Suman Sankar Chattopadhyay
For the Appellants : Mr. Uday Sankar Bhattacharjee,
(in W.P 12974 (W) of 2013 ) Mr. Anupam Bhattacharjee,
Mr. Uttam Mazumdar,
Mr. Umesh Kumar Law,
Mr. Tapash Adhikari,
Mr. Ashish Rai,
Mr. Partha Sarathi Das
For the C.B.I. : Mr. Himangshu De,
Mr. Mrityunjoy Chatterjee
For the S.E.B.I. : Mr. Prasanta Kumar Dutt,
Mr. Susanta Kumar Dutt
For the U.O.I. : Mr. Bhaskar Prasad Vaishya,
Mr. Bhaskar Prasad Banerjee
For Ministry of Com. : Mr. Dipanjan Datta,
Affairs Ms. Gargi Mukherjee
For the State : Mr. Ashoke Kumar Banerjee, ld.G.P,
Mr. Sakya Sen,
Mr. Abhratosh Mazumder,
Mr. Suman Sengupta
For the R.B.I. : Smt. Suchismita Chatterjee (Ghosh)
Mr. M. K. Seal
For the Respondent : Mr. Naresh Balodia,
Nos.18 & 19 in : Mr. Deo Kant Sharma
(W.P.12163 (W) of 2013)
For the Respondent No.16 : Mr. R. N. Saha
For the Respondent No.17 : Mr. Sarajit Roy Chowdhury
For the Respondent No.16 : Mr. Kishore Dutta,
(In W.P.12163 (W) of 2013) Mr. Billwadal Bhattacharyya,
Mr. Rajdip Majumdar,
Mr. Arkaprava Sen
Amicus- curiae : Mr. Lakshmi Kr. Gupta
Heard on : June 5, 6, 7, 10,
11 & 12, 2013.
Judgment on : June 19 , 2013.
ASHIM KUMAR BANERJEE.J:
PREFACE:
Whoever comes in contact with the present case and the facts involved would definitely agree, the situation is disastrous. The magnitude of the problem is huge, unless steps taken, it would be an economic disaster. It has social impact too, hence the disaster may extend to the society as well, particularly in Eastern India where the problem has an impeccable effect.
Ordinarily, the Court of Law, particularly in civil litigations that would have a dominating effect in the writ jurisdiction as well, would always consider the pleadings and the pleadings only and seldom step out. In public interest litigation, the Court of Law made a departure in the past. The Apex Court did so being empowered by Article 142. We, the High Court, are aware of our plenary power under Article 226, even then we ordinarily restrain ourselves in encroaching upon the arena of legislature or the executive as it would create immense difficulty for smooth running of the democracy where all three wings being the legislature, executive and judiciary have different arena of travel. We are perplexed in the present situation as the averments do not fully impress us. At the same time we cannot be a mere on-looker considering the magnitude of the disaster.
When we decide litigation, we consider the pleadings and discuss the relevant gist in our judgment to find out the point where the parties would join issue in an adversarial litigation and in other litigations too. In the present case, we would make a departure. We would venture to scan the pleadings with little detail to avoid even a microscopic issue that might not have equal effect with the other issues would have.
BACK DROP :
In 70s' to secure the economy of the country and make it stable, the legislature though it fit to nationalize a large banking sector. One of the prime mottos of the legislature that prompted to do so, was to take the bank at the remotest level so that large Indian population would have the fruits of the banking system and to save them from the hands of local moneylenders who were known as blood suckers in our society. It was common in the rural field, a small amount became huge with interest that too, calculated at the compound rate and poor illiterate villagers would succumb to the pressure of the moneylenders being the feudal lords. The members of the poor family would have to serve the moneylenders as bonded labours. To ameliorate the immense hardship of the people at large, nationalized banks came not only as respite but also a tool to empower them and thereby strengthen the economy of the country, particularly the rural economy. The nationalized banks had various schemes to reach to the poor including small savings by piggy banking where monies were collected by agents. The legislature also thought it fit to boost up the small saving mechanism through the postal infrastructure. With the change in the society, particularly due to globalization, huge investments were made in banking sectors. Foreign banks started entering into the arena. The private banks became equally strengthened. To compete with the private and foreign banks, the nationalized banks also started changing their motto and gradually discouraging the rural banking sector as also the small savings. The vultures started entering into the field alluring illiterate, half-literate poor people at large. Thus, the entire small savings market, particularly in the rural area, was silently captured by the vultures. The Sanchayita was pioneer in 70s'. They, however, could not operate in the rural field. They acted in a comparatively small urban area alluring people a high rate of interest. Their modus operandi was different. They used to collect lump sum deposits from the depositors and pay them high rate of interest that they could not get from the market by reinvesting the said sums. Very soon, the system collapsed. The small companies, operating in the same field, came under the Reserve Bank scanner. The Reserve Bank started taking action against those companies who were operating in the field as a non-banking financial company without any valid license. Sanchayini Saving was one of them. With the Reserve Bank's prompt action, those companies were compelled to stop functioning. In millennium, particularly in the later part of the last decade mushroom finance companies entered into the arena silently and were able to capture the rural market. They took advantage of the changed attitude of the nationalized banks discouraging small savings and their reluctance in working in the rural banking system that, according to them, was not lucrative. The nationalized banks and their mentors at the appropriate level forgot the very purpose for which they were nationalized. They also became the victim of globalization and entered into the unholy competition of making profits. The poor illiterate or half-literate people, do not know how to open a bank account and operate the same. Whenever they would dare to visit a bank that would have a fair distance from his place of stay or place of work, he would often be discouraged by the person across the counter who has no time to treat him as a constituent of the bank and help him to open and operate a bank account. The banks would have thousands of excuses. The mentors at the appropriate level would remain satisfied with such excuses as their conscience did not prick contemporaneously. Thus, the mushroom finance companies flourished, Saradha was not the exception. The petitioners would say, the involvement was rupees thirty thousand crores, an amount much higher than the State annual budgetary allocation. In this backdrop, we start deciding the public interest litigations that were assigned to us by the Hon'ble Chief Justice. We must admit, the magnitude of the problem, has really troubled us we are anxious and at the same time worried and perplexed. We do not know how best we could do in the factual scenario. We start our humble endeavour with all seriousness and sincerity.
PLEADINGS : AN ATTEMPT TO SCAN There were three petitions filed before us, all three by advocates of this Court. The first being W.P.12163(W) of 2013 was filed by Ms. Basabi Roy Chowdhury whereas W.P. 12974(W) of 2013 was by Sri Narendra Prasad Gupta and the third one being W.P. 12197(W) of 2013 was filed Sri Anindya Sundar Das along with some depositors, all from rural part of the State. After the scanning, when we would enter into the judgment arena, we would be referring to page numbers of the Paper Book in case of Basabi Roy Chowdhury.
PETITION OF BASABI ROY CHOWDHURY :
In paragraphs 2, 3 and 5, Basabi claimed to a social activist without having any intention to have a political mileage or public interest. She was responsible for filing public interest litigations in the past in respect of Government circular with regard to purchase of newspapers for the public library, the hooch tragedy as also the Gurap rescue home tragedy.
In paragraph 4, she alleged failure of the State to protect the interest of the citizens. In paragraphs 6 to 9, she alleged, on April 16, 2013 she came to know of the misappropriation of fund by Saradha Group (wrongly stated as Sardha group). She made an enquiry and came to know, Saradha Group was one of the largest chit companies operating in Eastern India having diverse business in the field of construction, realty, tourism, hospitality, agriculture and media. The group was on the verge of collapse that would lead to a State level disaster. In paragraph 10, the petitioner contended, SEBI started taking action against illegalities. In paragraph 11, she alleged winding up of at least 10 Medias being electronic and print media that Saradha Group acquired and launched since 2010. About 1,000 journalists and other employees connected with the media were rendered jobless. In paragraph 12, she alleged, Kunal Ghosh, one Rajya Sabha M.P., was the Chief Executive Officer of the media run by Saradha Group. He was responsible to maintain liason between the group and the State, hence an independent authority would be required to investigate, as claimed in paragraph 15, where she also referred to a letter of one Sudipta Sen being the respondent no.16, the owner of the Saradha Group. In the said letter addressed to CBI, Sudipta alleged, he paid huge sums to various politicians as also the persons connected with the administration to have his business free from any trouble. In paragraphs 18 and 19, she stated, State started taking action after two hundred agents met one Roy (his full name was not disclosed). In paragraph 20, she claimed, the deposits of 2007-08 started maturing in 2013 leading to disaster. She mentioned about Sanchayita in paragraph 21. In paragraphs 22 to 24, she was describing the after effect of the tragedy resulting in suicides. According to her, the other chit fund companies were also responsible for collecting rupees fifteen thousand crores from the small investors in the State alone and thus funds were ultimately serving the interest of the political personnel, as claimed in paragraph 26. In paragraph 27, she claimed, a bill to curb the chit funds introduced in State Assembly in 2003, was sent for Presidential assent. The bill was ultimately sent back in 2009 for minor corrections. The State sent back the bill with corrections that was yet to be implemented. Sudipta Sen already siphoned off huge sums leaving only a meager amount of rupees seventy lakhs spread over in 37 accounts, as claimed in paragraph 31. He was already a wanted criminal as would be found in 2004 Criminal Intelligence Gazette. He was wanted in Maharashtra in connection with a real estate scam, as stated in paragraphs 32 and 33. He was the son of one Bhudu Sen, the owner of Sanchauni, as stated in paragraph 31 and 34. Three college teachers in Meghalaya also filed complaint against Saradha construction, as claimed in paragraph 36. In paragraphs 37 to 40, she would say, Sudipta Sen started his second innings as a land developer in Behala. He owned newspaper and television channels propagating the cause of the Trinamul Congress.
The chit fund companies' operation in West Bengal and the collapse of Saradha, triggered panic amongst the depositors leading to breach of peace as appearing in the news item. She talked about the chit fund companies operating in 1979 and 90's in paragraphs 41 and 42. She also referred to the other chit funds in paragraphs 43 to 47 that would disturb the State finance mechanism as the State was entitled to avail 75% loan from the small savings. As a result, small savings target failed as stated in paragraph 47. She would apprehend the ministers' intervention in the investment and thus, would demand CBI investigation. She would also contend, so long the print and electronic media belonging to Saradha Group would be functioning, it would be receiving grant from the State Government and would be propagating the cause of the ruling party, as stated in paragraphs 50 and 51. In paragraphs 52 to 55, she was apprehending intervention of the politicians including Members of Parliaments. In the rest of the paragraphs, she was trying to impress upon the Court the magnitude of the problem and the necessities of appointment of CBI. It was in the nature of submission in paragraph 56. She was complaining of functioning of the other groups like, Rose Valley, MPS, Prayag, URO and others having the same modus operandi.
AFFIDAVIT-IN-OPPOSITION :
State filed affidavit-in-opposition through one Chandan Chayan Guha, the Joint Secretary, Home Department, Government of West Bengal. The State in its affidavit admitted the magnitude of the problem and at the same time elaborately explained the stand of the State and the steps taken. In paragraph 3, State expressed their helplessness in taking appropriate measures in the field as banking and corporate function would be under the Union List and State Government was not vested with the regulatory power or authority to oversee their activities that would be regulated by Reserve Bank of India, Security and Exchange Board of India (SEBI), National Housing Bank (NHB) and Department of Company Affairs (DCA). The State of West Bengal introduced a bill in 2003 to protect the interest of the depositors in the State that bill was passed on December 5, 2003. In April 2006, the Government of India requested the State not to enforce the bill as they would be bringing legislation on the issue. A fresh legislation was introduced in 2008. In December, 2009, the bill was passed. In May, 2011, after the change of power in the State, the present Government wrote to the Government of India on July 14, 2011 to take an early action in this regard. The State Home Secretary informed the Finance Secretary at the Centre on the malpractice of the chit funds at the instance of the finance department. The investigation was done and it was felt, a proposed legislation would be made suggesting stringent action.
On an enquiry several irregularities were found out, even with regard to incorporation of the companies. Even in February, 2013 the Finance Department put up a suggestion for taking stringent action. Government of India was requested to return the bill for recasting. The file was cleared on February 4, 2013 by the Finance Department after talking to the Chief Minister. Accordingly, the bill was formally withdrawn. A new bill of 2013 was introduced and passed by the Assembly on April 30, 2013.
On Saradha Group, State informed the Court, on April 16, 2013, Bidhannagar Police lodged an FIR. One Monaj Negel, a director of the group was arrested on April 20, 2013 and after a nationwide look out, three other persons including Sri Sudipta Sen were nabbed from Jammu and Kashmir. To have a detailed investigation, State constituted a Commission of Enquiry under the leadership of Hon'ble Justice Shyamal Kumar Sen (former Chief Justice of Allahabad High Court). The Commission would provide hearing and receive public complaint. They would look into the complaint and forward the same to the relevant authorities including the Special Investigation Team (SIT) set up for the purpose, issue necessary directives to SIT, identification of key persons responsible, enquiry into the methodology and means adopted by the groups of companies, quantify an estimated amount involved, assess the assets and liabilities, recommend the means of providing compensation to the victims and remedial measures. The State directed the Commission to submit its report within six months that may be assisted by such experts having appropriate specialization in company law and corporate finance. The State also appointed Special Investigation Team under the leadership of Director General of Police. The primary concern of the State was to ameliorate the grievance of the small depositors. As soon as FIR was lodged, State lost no time to apprehend the alleged culprits and take appropriate action in this regard.
Sudipta also filed an affidavit, we do not wish to give any importance to the said affidavit. He, however, expressed satisfaction over the present investigation system, that was conducting investigation in respect of the scam where he was one of the accused. The parties would legitimately contend, it was peculiar, rather strange, the accused would express satisfaction on the conduct of the investigation against him by the investigating agency. We do not blame the counsel who would say so. At the same time, we would not brush aside the chance of diverting the attention of the Court. It may not be a ploy of the accused. There is one more significant fact. In the affidavit of Sudipta, he suggested, his properties and bank accounts be seized and the creditors may be paid off upon verifying their claims. It might be an attempt to dilute the situation lessening the magnitude of the heinous crime that he did. We, thus, do not give any credence to his affidavit. He wrote a letter to SEBI on April 1, 2013. He also wrote a letter to the CBI. We would be dealing those two letters separately. CBI also filed affidavit willing to take it up subject to extension of the State infrastructure.
NARENDRA PRASAD GUPTA :
Narendra was also an advocate. The petition was more or less based upon the newspaper report. He could not throw any separate light on the issue. He relied on the incident of April 16, 2013 in paragraph 5 and a newspaper report on April 20, 2013 including agitation before the house of Chief Minister on April 19, 2013. He also referred to the subsequent newspaper reporting including attempt to suicide and alleged non-action on the part of the State. He was asking for appointment of receiver over the assets of Saradha Group, apart from the investigation by Secretary, Company Affairs as also CBI. He also filed a supplementary affidavit mentioning about the petition of Basabi Roy Chowdhury. He also referred to the orders passed in the said matters as also the order passed by the interlocutory Court in a suit filed by the employees of media belong to Saradha Group. He also referred to the newspaper report involving two Members of Parliament belonged to the ruling political party. In his case, Reserve Bank filed affidavit explaining their stand and steps taken. The Reserve Bank contended chit funds did not come under their purview. Chit funds were within the statutory control of the State. Reserve Bank would have no role to play. The Reserve Bank also stated Saradha Group was not registered with the Reserve Bank.
ANINDYA SUNDAR DAS :
In the first few paragraphs up to paragraph 9, the petitioners expressed their intention to bring public interest litigation and briefly described the modus operandi of the chit funds in the State with the tacit approval of the politicians including ministers, Members of Parliament, Member of Legislative Assembly, etc. It was more or less a generalized attempt. Paragraph 10 to 12 would indicate, the involvement of the petitioners no.2 to 10 in the cause as depositors. Paragraph 13 would suggest tacit approval of the State in the business of Saradha Group. Paragraph 14 to 18 and 21 would briefly describe the business operation of the group. Paragraph 19 would refer to a news item of April 21, 2013. In paragraph 20, they referred to the distribution of Ambulance by the Chief Minister on August 13, 2011 at the instance of Saradha Group. In paragraph 23 would refer to the false complaint made by a media personnel working under the Saradha Group whereas in paragraph 24 to 26, the involvement of Srinjoy and Kunal was mentioned. In the rest of the paragraphs, the petitioners expressed dissatisfaction of the State functionary and prayed for proper investigation through CBI.
In this case also, Sudipta filed an affidavit almost in the same line as was done in the case of Basabi. The Reserve Bank also filed affidavit taking a consistent stand, so was the State through Chandan Chayan Guha.
A COMPOSITE READING :
From the pleadings, it would appear, Basabi was more descriptive than the other two, even then it was more of a generalized approach than giving particulars and materials other than the news items. In the past, the Court relied on news items, even on the basis of a news item suo motu sprang into action, issuing appropriate rule calling upon the State and or the wrong doers to undo the wrong. This, however, would be an exception. Such ventures might be apt considering the situation; it cannot be put into a strait jacket formula or used as a matter of course, particularly when the issue would involve not only a huge financial involvement but also have a social impact. At the risk of repetition, we would say, we are perplexed on the one hand when we find lack of materials to activate ourselves, on the other hand, we cannot be a mere onlooker considering the magnitude.
CONTENTIONS :
Sri Subrata Mukhopadhyay, learned counsel appearing for Basabi made elaborate submission. In fact, he led the petitioner front. To that extent, Mr. Bikash Ranjan Bhattacharjee, learned senior counsel appearing for Anindya, permitted him to do so.
MUKHOPADHYAY :
He would raise four issues i) the State agency would not be proper mode having a political clout, ii) the scam had a national impact having committed in other States too, iii) two States Assam and Tripura, already engaged CBI to conduct investigation whereas Jharkhand initiated suo motu proceeding against Saradha Group and
iv) the Commission appointed under the Commission of Enquiry Act was not equipped with the adequate infrastructure that would dispose of lakhs of applications made by the depositors and / or the agents.
Elaborating his argument, he would refer to in detail the letter of Sudipta appearing at page 196 to 213 of the paper book. He gave us briefly the idea of the backdrop, narrated past of Saradha and their involvement in the money market in the State, the mode of operation and at the same time lackadaisical approach of the State in curbing the menace. He informed us, the incident triggered of on the close of a media followed by a complaint of an employee for not getting salary for months together. He would refer to affidavit of Sudipta and comment, the nexus with the State agency, was established. He would refer to the affidavit of the State, particularly the enactment of the law after the incident surfaced in the media. According to him, the new law even if would be adequate to curb the menace, would not be in a position to deal with the Saradha case as the law could not have retrospective effect. He would refer to the Reserve Bank of India Act, 1934. Chapter IIIA of the said Act of 1934 would relate to collection and furnishing of credit information that would refer to the wide power granted to the Reserve Bank of India to take penal measure in case of any breach but by any banking company or a finance company. He would refer to various cases where our Courts as well as the Apex Court dealt with the issue of CBI investigation. He relied on the case of Centre for Public Interest Litigation and others Versus Union of India and others reported in (2011) 1 Supreme Court Cases 560, to support his contention, a petition of the like nature could not be dismissed in limine. He also cited the following decisions:
1.Kiswar Jahan and another Versus State of West Bengal and others reported in 2007(4) Calcutta High Court Notes page 526
2. Asok Kumar Todi Versus Kiswar Jahan and others reported in 2010 (2) Calcutta High Court Notes page 816
3. State of West Bengal Versus Committee for Protection of Democratic rights reported in 92010) 3 Supreme Court Cases 571.
UDAY SANKAR CHATTOPADHYAY :
He advanced his argument on behalf of Narendra. He would adopt the contention of Sri Mukhopadhyay. In addition, he would refer to pages 45, 54 and 64 of his paper book that would relate to his supplementary affidavit where the petitioner mentioned the involvement of Sudipta in 134 companies, and the newspaper item published relating to the nexus of the group with the police personnel. He would contend, Article 21 would ensure a decent living by the citizen that would get disturbed in a scam of like nature, that would divest the people not only of their money but also the peaceful living, hence the State was duty bound to conduct a fair and independent investigation and that would not be possible through the State agency and a special agency should be entrusted and CBI was the appropriate agency for the purpose. He would comment, State would not be interested in a speedy trial and conviction of the accused as the people in power were involved. The Commission appointed for the purpose would have limited scope. The members of the SIT had nexus with the Saradha Group. He referred to various pages of the paper book in case of Basabi to show the magnitude of the problem. He would also refer to the decision in the case of Nandigram reported in 2011 (4) Calcutta High Court Notes 736 and the Netai incident reported in 2011(2) Calcutta High Court Notes 442, to support his contention, the Court should pass interim relief to the petitioners. BIKASH RANJAN BHATTACHARYYA :
[[[ The learned senior counsel would describe the scam having national impact having spread over more than one State, hence a Central agency should be apt to conduct a free and fair investigation. He would, however, contend, the State agency should also be involved in the process as the central agency may be lacking infrastructure in conducting the investigation. Referring to the constitution of SIT appearing at page 131, he would contend, such a big team might have difficulty in conducting a speedy investigation. The team should be manned by persons having expertise. He would refer to the latest decision of the Apex Court in the case of Hema Versus State reported in All India Reporter 2013 Supreme Court 1000, particularly paragraph 8 and 12 wherein the Apex Court commented on the defective investigation and relied upon its earlier precedents wherein the Apex Court observed "There should not be any undue anxiety to only protect the interest of the accused. That would be unfair as noted above, to the needs of the society. On the contrary, State should be to ensure a fair trial wherein the accused and the prosecution both get a fair trial. Public interest in the proper administration of justice must be given as much importance, if not more, as the interest of the individual accused. In this, Courts have a vital role to play." KISHORE DUTTA :
Mr. Dutta appeared for Kunal. He filed affidavit appearing at page
161. He referred to paragraph 6, 14 and 15 of his affidavit to say, he was merely an employee working under the Saradha Group looking after the media business. He had no role to play in the collection of money that would be the centre of controversy in the present litigation. He would contend, he was not a necessary party in the public interest litigation that was filed by the petitioners named above.
In any event, on April 3, 2013 he resigned from the group as would appear from his pleadings.
NARESH BALODIA :
The learned counsel appeared for Sudipta and referred to in his affidavit. He expressed satisfaction, the way, SIT was working. He prayed for sale of all his assets and distribution all the proceeds to the depositors upon examination of the veracity of the claim. He would also pray for consolidation of all the criminal cases spread over the State.
DHIMAN SENGUPTA :
The learned counsel filed two applications for interventions claiming to be interested in the litigation as they were the depositors. BHASKAR PRASAD BHAISYA :
The learned counsel appeared for two Central Government agencies including Enforcement Directorate and submitted, the agency should be given a free access to the records at the office of the SIT so that they could carry on investigation at their respective level. BHASKAR PRASAD BANERJEE :
Mr. Banerjee assisted Mr. Bhaisya while appearing for the Central Government. He also appeared for the Ministry of Company Affairs and submitted, Serious Fraud Investigation Office (SFIO) already carried their preliminary investigation. He prayed for direction upon the State agency to give free access to the records to SFIO. HIMANSHU DE :
Mr. De appeared for CBI and referred to his affidavit wherein the CBI would contend, they were willing to take the responsibility provided the State would extend their logistic support as they lacked infrastructure.
SARAJIT ROY CHOWDHURY :
Mr. Roy Chowdhury appeared for Hirak Kr. Kar, an employee of the media belonging to the group and contended, the entry of Kunal in media, resulted in his exit without having his past dues settled. He would contend, he was unnecessarily made a party in one of the petitions.
PRASANTA DUTT :
Mr. Dutta appeared for SEBI. He would refer to the order passed by the SEBI at the instance of the State. According to him, State made a complaint in 2010 that prompted SEBI to investigate into the affairs of the group. SEBI passed an order directing winding up of the money collection business of the Saradha Group. He would refer to the affidavit of Samrat Dutta filed on behalf of the SEBI that would annex the order of SEBI appearing at page 112 to 123 of the paper book. SEBI directed Saradha Group not to access the capital market and restrained and prohibited company from selling and / or otherwise dealing in securities market till all its collective investment schemes were wound up and all monies mobilized through them were refunded to the investors. SEBI also threatened penal measures to be taken in case the order was not complied with within a period of three months from the date of passing of the order being April 23, 2013. He would also refer to a Regulation 65 and 73 of SEBI Regulation, 1999 that would suggest direction by the Board for initiation of criminal prosecution under Section 24 of the SEBI Act as also winding up all the collective investment scheme.
SUCHISMITA CHATTERJEE :
Appearing for RBI, Miss Chatterjee referred to Section 45 I of the Reserve Bank of India Act, 1934 and would contend Reserve Bank would have hardly any role to play. Section 45 I (bb) would define "deposit" that would include receipt of money by way of deposit or loan but does not include any money received by way of subscription in respect of a chit. She would also refer to the definition of "chit" under the Chit Fund Act, particularly Section 47 and 73. Section 47 would empower the Reserve Bank to inspect chit book and records in certain cases whereas Section 73 would suggest an adversary role of the Reserve Bank wherein Reserve Bank may tender to any State Government such advice on questions of policy with respect to the said Act on a request made by the State Government. She would contend, the company was not registered under the Chit Fund Act. According to her, in the fact situation Reserve Bank would not have no role to play.
THE GOVERNMENT PLEADER :
The learned Government Pleader would criticize all the three petitions particularly the first one to say, it was filed in an undue haste. The incident surfaced on April 16, 2013, as claimed by the petitioner and the petition was filed on April 22, 2013. The learned Government Pleader explained each and every detail of the investigation that the State conducted and was in the process of conducting and acting upon each of the complaint lodged at various police stations. He submitted as many as 4 sealed reports and one unsealed report. The sealed reports, we did not open at the time of hearing and kept it in the safe custody of the Registrar General. We would be opening the reports soon and discuss the same in the foregoing judgment. Commenting on the prayer asking for CBI investigation, the learned counsel would submit, law and order being in the State List, the Court of Law should slow in interfering with the power of the State to carry on investigation on receipt of criminal complaint. He would contend, the petition would have vague and generalized allegations that would not warrant intervention by the Court. On receipt of the complaint, immediately the police arrest Negel and started a nation-wide search for the other accused and the key accused was arrested within a few days from Jammu and Kashmir. Considering the magnitude of the claim, the State already appointed a special team being SIT having appropriate expertise from the police organization. The State already floated a global tender for hiring experts on the subject to assist SIT that would suggest a sincere and serious approach of the State. He would refer to various provisions of the SEBI Act and Regulation. SEBI already passed an order at the instance of the State and as soon as SEBI would recommend appropriate action on the failure of the group to comply with the direction, the State would definitely take steps in accordance with law. He would refer to the terms of reference to the Commission to suggest, the Commission was equipped with adequate power to deal with the situation, particularly repayment part of it. Commenting on the efficiency of CBI, he would contend already seven cases in the State having equal importance were pending and the CBI, however, failed to bring the issue in a logical conclusion. He would refer to Apex Court decision in the case of State of Uttarakhand Versus Balwan Singh Chaufal and others reported in (2010) 3 Supreme Court Cases 402 and the case of Committee for Protection (Supra). He would contend, the petition of Narendra was nothing but a replica of the first one. He would refer to Section 45T of the Reserve Bank of India Act that would provide power to appropriate criminal Court to issue a search warrant at the instance of the Reserve Bank or the State Government after being authorized in that behalf. According to him, the State Government would not have any role to play independently unless they were asked to do by any Central agency, be it SEBI or be it Reserve Bank. According to him, a common man could do anything unless prohibited by law whereas the State Government would act only authorized by law. On the petition of Anindya, he would contend, it would be pre- mature to ask for a committee of the like nature, as suggested by Mr. Bhattacharya, the learned senior counsel. The involvement of the other States would have no significance considering the magnitude that happened in our State. He would lastly contend, the law and order being a State subject, we should not interfere and entrust the job to a Central agency.
LAKSHMI KUMAR GUPTA :
The learned senior counsel assisted us at our request. He would contend, the issue was economic having a wide magnitude, the political significance should take a back sheet. According to him, the crime was heinous. The people were duped alluring them on high return. The incident not only divested people of the money they invested but also caused serious disturbance to their status in the society. The situation was such it would need immediate investigation as to the wrong done in the past as well as to curb the function of the wrong doers to prevent further wrong. It was a social problem. He was trying an analogy from Article 21 to say, the State was obliged to guarantee a peaceful and descent living that would be disturbed by the process in which the wrong doers were performing. He would also refer to Section 155 to 157 as to the power of the investigation entrusted to the police on a non-cognizable offence. He would refer to Delhi Special Police Establishment Act, 1946 under which the CBI was established to investigate certain offences in the Union Territories. The said agency could be put to action in any State, according to him, only with the consent of the State. The Court would have also power to ask the said agency to take up investigation where the Court would have doubt in functioning of the State agency. According to him, the fact situation, in the instant case, did not reach such a situation that would warrant interference by Court to such extent. The petition did not have sufficient materials to inspire the Court to interfere. The political interference, so pleaded, was generalized, except the reference to two MPs, one of them was an employee of the organization. With regard to the suggestion of Sri Bhattacharyya, learned senior counsel, for formation of special committee, Sri Gupta was critical as, according to him, it might cause further difficulty in the process of investigation as the agency conducting the investigation would have to take all the members of the special team in confidence that would delay the process.
According to him, we should keep the petitions pending, considering the magnitude of the problem and issue necessary direction with regard to the investigation so that the process could be expedited and then monitor the process of investigation by Court's periodic intervention. He would agree with the Court, it was not our duty. He would, however, suggest, to do substantial justice to the society, have to make a departure.
The disposal of the assets, collection of money through sale and recovery through other means and distribution amongst the depositors should be left to the Commission. We could suggest any other power that we feel prudent so to be vested to the Commission by the State.
CASES CITED The cases cited by Shri Mukhopadhyay as well as by Mr. Bhattacharya would mostly relate to the intervention of the Court in case of inaction on the part of the State entrusting the investigation to CBI. In addition to the same, after completion of the hearing the parties also filed few citations that would also relate to intervention of the Court and ultimately referring the investigation to CBI. We would deal with the same one after the other.
In the case of R.S. Sodhi -VS- Uttar Pradesh reported in All India Reporter 1994 Supreme Court Page-38, the Apex Court considered a case under Article 32 of the Constitution alleging a fake police encounter in the State of Uttar Pradesh. The Apex Court considered the fact. The learned counsel for the State emphasized, once the State Government showed its bona fide taking prompt action, it must be left to the State Government to complete the process without any interference from the outside agency. The Apex Court refrained from entering upon details that may prejudice any party, however observed, since the accusations were directed against the local police it would be desirable to entrust the investigation to an independent agency like the CBI.
In the case of Inder Singh -VS- State of Punjab & Ors. reported in 1994 Volume-VI Supreme Court Cases Page-275, the Apex Court ordered for CBI enquiry as the records revealed, senior police officers were involved in the crime.
In the case of Kunwar Pal Singh Rathi -VS- State of Uttar Pradesh reported in All India Reporter 2002 Allahabad Page-27, the State of Uttar Pradesh decided to build a Monument in the name of Ambedkar that attracted comments from Comptroller and Auditor General (CAG) pointing out various illegalities and irregularities. The Public Interest Litigation was brought by a social activist. The Division Bench considering the rival contentions and the report of CAG observed, the constitutional procedure as indicated could not be curtailed, particularly when the State Legislature was seized of the matter and was considering the report in accordance with the procedure prescribed through the Committee. At the end, the Division Bench of Allahabad High Court observed, it would be in the interest of the Government to make an enquiry in depth about the misuse of public funds and indisciplined financial behaviour of all the persons involved in decision making process, if the report of enquiry already submitted did not cover all the required aspects. The Division Bench ultimately formed a Committee to enquire into the allegation. The case of State of West Bengal -VS- The Committee for protection of Democratic Rights reported in 2010 Volume-III Supreme Court Cases Page-571, would relate to a huge number of casualty that took place in Garbeta in the district of Midnapur (Paschim) on January 4, 2001. A social activist filed the application under Article 226 in the High Court for CBI investigation that was allowed by the Division Bench. Aggrieved by the order of the Division Bench, the State filed appeal before the Apex Court. The State contended, the investigation was to be done by the Police as it would be within the domain of the State being Entry No.80 of List 1, 7th Schedule to the Constitution of India whereas CBI would come under Entry No.2 List II that would relate to the Union Territories. The Apex Court considered the rival contentions and ultimately held, Fundamental Rights cannot be extinguished by any constitutional or any statutory provision. Article 21 in its broad perspective, would seek to protect the persons of their lives and personal liberties, except according to the procedure established by law. The Special Police Act would empower CBI to take up the investigation subject to the consent of the State. The Court can also exercise its constitutional power of judicial review and direct the CBI to take up the investigation that would not amount to infringement of either the doctrine of separation of power or the federal structure. In paragraph 70, the Apex Court observed, the power would however be exercised with caution, order directing CBI to conduct an investigation should not be passed as a matter of routine. This extraordinary power must be exercised sparingly, cautiously and in exceptional situations, otherwise CBI would be flooded with a large number of cases and with limited resources they may find it difficult to properly investigate even serious cases and in the process lose its credibility and purpose with unsatisfactory investigation.
The case of Kishwar Jahan & Another -VS- State of West Bengal & Others reported in 2008 Volume-I West Bengal Law Reporter Calcutta Page-87 and the case of Ashok Kumar Todi -VS- Kishwar Jahan & Others reported in 2010 Volume-II Calcutta High Court Notes (Calcutta) Page-816, first one being the Single Bench decision merged in the Division Bench decision being the second one. The said decisions would relate to suicide of a young Mahamadan boy who allegedly contracted marriage with a Hindu girl and later on became the target of the rich family in which the girl belonged. The boy died in an unnatural incident. The CID made an enquiry that resulted in a case of suicide. The mother of the boy approached the learned Single Judge for CBI investigation. The learned Single Judge observed, investigation carried out by CID was not in accordance with the Criminal Procedure Code, hence, passed an interim order directing CBI to investigate. The Division Bench set aside the order impugned and then again directed CBI to start investigation on the basis of the own finding of the Division Bench. Rather, the Division Bench agreed with the ultimate conclusion but for a different reason. In the case of State of Uttaranchal -VS- Balwant Singh Chaufal & Others reported in 2010 Volume-III Supreme Court Cases Page- 402, the appointment of the post of Advocate General of Uttaranchal became the subject matter of challenge. The learned Government Pleader relied on paragraph 173 and 174 wherein the Apex Court observed, "a decree of precision and purity in presentation is a sine qua non for a petition filed by a member of the Bar under the label of Public Interest Litigation. It is expected from a member of the Bar to at least carry out the basic research whether the point raised by him is res integra or not. The lawyer who files such a petition cannot plead ignorance". The Government Pleader relied on the passage while commenting on the three petitions, all filed by the advocates of the Court, that would lack material particulars.
In the case of State of Punjab -VS- Central Bureau of Investigation and Others reported in All India Reporter 2011 Supreme Court Page-2962 the Apex Court was of the view that the investigating agency should be given appropriate opportunity to carry out further investigation if the Court was not satisfied with the preliminary investigation, however, at the end, considering the factual scenario, affirmed the decision of the High Court sending the case to CBI. While doing so, the Apex Court observed, "in other words that was one of those extraordinary cases where the direction of the High Court for investigation by the CBI was justified"
In the case of Centre for Public Interest Litigation and Others -VS- Union of India and Others reported in 2011 Volume-I Supreme Court Cases Page-560, in 2G Spectrum case the Division Bench of the Delhi High Court initially declined to entertain the petition that gave rise to the appeal filed before the Apex Court where Apex Court ultimately directed the CBI and the Enforcement Directorate to conduct the investigation. The Apex Court however framed the term of reference to CBI in paragraph 19 of the said decision. The case of Bar Association High Court Calcutta -VS- State of West Bengal reported in 2011 Volume-II Calcutta High Court Notes (Cal) Page-442 and the case of Bar Association High Court Calcutta reported in 2011 Volume-IV Calcutta High Court Notes (Cal) Page-736, would relate to incident at Netai Village in Midnapur (Paschim) involving the death of eight persons and causing injury to twenty. The Apex Court examined the case records and found the partisan attitude of the local investigating agency. The Division Bench passed order directing the CBI to take the task of investigation. The Division Bench also granted compensation to the victims. These two decisions however did not lay down any law.
Citing the case of Hema -VS- State through Inspector of Police, Madras reported in All India Reporter 1913 Supreme Court Page- 1000 Mr. Bhattacharya learned senior counsel relied on a passage where the Apex Court observed, efforts should be made to ensure a fair trial. He would contend, fair trial would also include fair investigation.
OUR UNDERSTANDING ON THE LAW ON A COMBINED READING OF THE PRECEDENTS AS ABOVE :
The local investigating agency being the State Police is ordinarily empowered in law to carry out investigation and ultimately bringing it to a logical conclusion before the appropriate forum. This is ensured by the Constitution as a State subject under Entry 80 List 1 whereas CBI is established under the Delhi Special Police Establishment Act 1946 to serve the Union Territories. The Police would come under Entry 2 List II 7th Schedule. The CBI could be engaged in a State investigation with the consent of the State. However, the Court was within their power to conduct a judicial review in a situation and in extraordinary case could direct CBI to carry out investigation by withdrawing the same from the local investigating agency. The Apex Court time and again cautioned, such power should be exercised sparingly and not as a matter of routine, otherwise CBI would be flooded with cases and that would render nugatory for lack of infrastructure. Hence, at the end of the day, we find our power that should be sparingly used that too, in an extraordinary situation. When an advocate filed a Public Interest Litigation he should take extra care and caution and the petition should be backed up by material particulars after a thorough research on the subject, generalized allegations would frustrate the process. LAW ON THE SUBJECT RELEVANT TO THE CONTEXT :
Article 21, being a Fundamental Right, guarantees every citizen of the country a decent living. The Article would say, no person shall be deprived of his life or personal liberty except, according to procedure established by law. The Courts expanded the scope of the Article to the extent; everyone would be entitled to a decent living. ROLE OF SEBI :
The Securities and Exchange Board of India Act, 1992 was enacted to provide for the establishment of a Board to look after the interest of investors in securities and promise the development of, and regulate, the security market and for matters connected therewith or incidental thereto. Under Section 30 of the said Act of 1992 the Board established under the said Act with the previous approval of the Central Government by notification would make regulation consistent with the Act. Accordingly, SEBI Regulations 1999 came into force that would provide appropriate mechanism to monitor the securities market and in cases issue direction to wind up collective investment scheme that did not have appropriate registration from the Board. CBI :
Delhi Police Establishment Act, 1946 was established to constitute a special police force in Delhi for the investigation of certain offences in the Union Territories. Under Section 5, the Central Government by order extend any area in a State, the power and jurisdiction of the said special police establishment for investigation of the offences or class of offences specified in notification under Section 3. Section 6 would provide nothing contained in Section 5 shall be deemed to enable any member of establishment to exercise power and jurisdiction in any area in a State without consent of the concerned State Government. Such special establishment is commonly known as Central Bureau of Investigation (CBI).
THE RESERVE BANK OF INDIA ACT, 1934 :
THE CHIT FUND ACT, 1982 Section 45-T was relied upon by the learned Government Pleader that would provide power to issue warrant at the instance of the Reserve Bank in appropriate cases. 45-I defined "deposit" that would not include "chit" as defined under the Chit Fund Act, 1982. However, the Reserve Bank has an advisory power that could be applied at the instance of the State. Such power could be exercised by the Reserve Bank under Section 73 of the Chit Fund Act, 1982. Section 47 of the said Act of 1982 empowered the Reserve Bank to inspect books and records of the chit fund.
CODE OF CRIMINAL PROCEDURE :
Section 155 to 157 of the Code of Criminal Procedure would oblige the State to act on information received in non-cognizable cases and cognisable cases. Section 157 would lay down the procedure for investigation. Section 158 would suggest a procedure for submission of report. Section 159 onwards would lay down the procedure till the issue is brought to logical conclusion.
Thus, on a combined reading of the law on the subject and applying it to the present context we would find, the depositors being citizens of the country were entitled to lodge complaint with regard to the non- refund of the deposits that they made with Saradha Group and police would be obliged to act upon such complaint and bring it to logical conclusion in accordance with the procedure laid down under the Code of Criminal Procedure. Similarly, the other Central Agency being SEBI was also empowered to look into the complaint as to whether there was any illegality committed by the company in contravention of the SEBI Act and the regulations framed thereunder and suggest remedial and penal measures to be adopted by various agencies including State Police if the company failed to act upon their direction as contained in the order passed under Regulation 73. In the instant case SEBI would contend, time was still there. Hence, it would be premature for them to take further steps in this regard. The company did not have any registration either under the Chit Fund Act or under the SEBI Act and thus would attract appropriate penal measures under the relevant provisions of law and Reserve Bank of India would be obliged to advise the State in case their assistance would be needed.
REPORTS :
As observed earlier, the learned Government Pleader filed five sealed and one unsealed report before us. In addition, the learned Government Pleader submitted a list of cases numbering about four hundred against Saradha Group at various Police Stations. The learned Government Pleader also filed a list of properties that the Police seized claiming to be belonged to Saradha Group. Those properties would also include luxury motor vehicles of high value. REPORT - 1:
Number of cases 503 as on May 31, 2013 would involve a sum of Rs.198 crores approximately.
REPORT - 2 The Superintendent of Police, 24-Parganas (South) District Enforcement Bureau, 24-Parganas (South) submitted a report in respect of Baruipur P. S. Case No.392 of 2013 at the instance of one Manik Chakraborty, Natunpara, Baruipur. Altogether seven accused persons were named in the FIR. The Police examined nine agents and twelve investors. They also examined eight investors who did not get back money after maturity. The Police caused the statement of seven persons recorded under Section 164 of the Criminal Procedure Code, seized various documents including thousand unused certificates and other papers in connection with the Saradha Group. The Police also seized various properties belonging to the Saradha Group from their office at Baruipur. Altogether six persons were arrested in the said case including three already arrested in earlier cases. Apart from the Baruipur case, thirty-one cases were initiated by the District Police, 24-Parganas (South) in various Police Stations, list of which was enclosed.
REPORT - 3 Status Report submitted by Additional Deputy Commissioner, Detective Department, Bidhannagore Police Commissioner gave details of seven cases lodged against the group under the Commissionerate till June 4, 2013. The concerned officer gave details of the investigation. Seventy-nine persons were interrogated and their statements recorded under Section 161 of the Criminal Procedure Code. The names were given in the said report. Investigation in two cases was complete and charge sheet was submitted against three arrested persons including Sudipta Sen. The other cases were in progress.
REPORT - 4 Report 4 would relate to Status Report submitted by Bidhannagore Commissionerate as on May 13, 2013 that would include two hundred and eight properties in the State either seized or documents recovered apart from fifteen properties situated in other States. By that date they got six cases in which forty-nine persons were interrogated. We have already considered the subsequent report as Report - 3 that would involve seven cases and examination of seventy-nine persons. REPORT - 5 The Commissioner, Bidhannagore P.S. submitted the Report 5 that would include notification with regard to formation of SIT. The district wise list of cases numbering about five hundred and thirty five giving a break up (company wise) and the list of all cases and the progress report in each case. We direct our officer to club all these reports in a bunch and reseal the reports along with the envelopes and keep it in the safe custody of the Registrar General of this Court. The unsealed cover would contain the formation of SIT as published in Calcutta Gazette on April 26, 2013 and appointment of Commissioner of Enquiry as published in the Gazette on April 24, 2013. [ SUDIPTA'S LETTER TO SEBI ON APRIL 1, 2013 AND CBI ON APRIL 6, 2013 :
SEBI's letter would appear from page 264 to 273. Sudipta offered explanation to SEBI pleading innocence. According to him, the fall of the group was a result of wrong business decision and recession in the market. He prayed for appointment of investigation agency. He would be also approaching the Court for appointment of retired High Court Judge or a Supreme Court Judge to conduct the investigation. The subsequent letter to CBI was rather a detailed exercise to narrate his version from setting up his empire up to the fall. He blamed several persons including some of them having political clout. In his letter, he referred to various persons from business and political circle, sports circle, some having access up to the President of India, to assure him no interference in his business by the State agencies. He requested CBI to carry out appropriate investigation. He described the said letter as "his last wish" before his death either by way of suicide or otherwise. He referred to a list of persons that we did not get from any of the parties or the State Administration. The CBI would say, they forwarded the letter to the State for action. The petitioners tried to get support from the letter establishing nexus of persons attached to corridors of power involved in this scam who in exchange of illegal gratification assured him trouble free business that would warrant an independent agency to take up the cause. SANCHAITA EPISODE :
In later part of 1970s Sanchaita Investment, a partnership firm mostly operated in the urban part of the State based in Calcutta. They collected lump sum amounts as and by way of deposit refundable with high returns payable on monthly basis. The firm initially established credence by paying interest to the depositors on the firm date and obviously failed to sustain in absence of appropriate returns of investment that they made either in realty sector or film sector or otherwise. The matter reached up to the Apex Court level. The Apex Court passed an extraordinary order appointing a committee that would have an immense power including that of a Civil Court as well having summary jurisdiction. The committee would be headed by a retired District Judge to be nominated by the Chief Justice having other members on the Board. The committee would be entitled to attach any property either belonging to the firm or its agents or benamdars or anyone having nexus with Sanchaita, after forming an opinion, the property was acquired with Sanchaita money. The Commissioner would invite objection, in case any objection was put against the attachment such objection would be considered and disposed of by a Division Bench of the High Court to be nominated by the Chief Justice and on a failure to sustain the objection by the objector the property would be sold and the proceeds would be distributed amongst the small objectors. The civil court was divested of the power to deal with the issue. The Apex Court passed such order presumably under Article 142. Such power, we do not have. The other similar companies were wound up. In cases where companies were established under the Companies Act, 1956, the Official Liquidator disposed of the assets to pay off the dues of the creditors. OUR VIEW IN THE PRESENT CONTEXT :
As observed at the outset, the gravity of the situation would certainly warrant attention at the appropriate level. On that score, none would differ. Even if we find, the petitions would contain insufficient particulars, we cannot brush aside the issue. If we strictly follow the procedural law on the subject, we would certainly dismiss the petitions, at the same time, suo motu take cognizance of the situation and would consider what best we could do in the fact situation, hence we wish to make a departure and ignore the follies on that score. The exercise would have two parts; one the investigation by taking steps as against the wrong doers initiating appropriate proceedings against them and pursue the same diligently until it would reach a logical conclusion. The second part is equally important and if not more to ameliorate the hardship that lakhs of depositors throughout the State as well as outside the State faced. Hence, let us deal with both the issues one after other.
As observed earlier, the Courts would definitely have power to direct CBI to conduct the investigation coupled with a direction upon the State authorities to cooperate with the CBI. However, we are cautioned by the Apex Court times and again. We should be slow in exercising such power that could only be used in an extra-ordinary / exceptional circumstance.
WHAT IS EXTRA-ORDINARY / EXCEPTIONAL CIRCUMSTANCE ? It would mean a situation that would lead to obvious conclusion, the process being frustrated; having either the State machinery deeply involved in the crime or their lackadaisical approach would result in an unsuccessful exercise. The cases which we discussed hereinbefore, the cases so highlighted by the learned counsel for the petitioners where Courts intervened and directed CBI to take charge, would mostly relate to either State sponsored crime where the police themselves were involved, be it a fake encounter or indiscriminate shoot out, or a deep and direct involvement of persons closely connected with corridors of power. In case of Nandigram, it was indiscriminate shoot out having involvement of State machinery and the ruling party that surfaced. In case of fake encounters, it was a State sponsored crime. Similarly the report of CAG in Ambedkar Manument was directly against the U.P. Government. INVOLVEMENT OF KUNAL GHOSH / SRINJOY BOSE :
Basabi alleged, Kunal being an employee of Saradha group acted as a liason between the group and the State Government. Narendra went one step forward to allege involvement of Srinjoy, both Members of Parliament, belonging to the ruling party. The allegations are serious. More serious the allegation is, the proof must be stricter. The people connected with politics would have to deal with various persons at various level. A politician may have his own means of livelihood and his involvement in the work place may not have necessary involvement in political circle. We are told, Kunal was already examined by the police. If any one of them would have involvement in the crime, they must be proceeded with irrespective of their colour and creed, for that the entire State machinery could not be blamed. His personal involvement in the crime may not have nexus with the State machinery unless it is proved; he acted as a conduit that would bring him under the scanner. If one of us would commit a crime, it would be his personal responsibility that must not have repercussion on the entire State judiciary unless such crime would relate to a mechanism involving the system. It would be too early to blame the State solely on the ground.
INVESTIGATION The involvement of the State in the present context, did not feature in the pleadings as Mr. Gupta rightly pointed out. The investigation is still on. It would be too early to comment as to Kunal's involvement in the present case, at least, we do not find any definite assertion backed up by sufficient particulars. Same was the case of Srinjoy Bose. Even if we find, these two persons were involved in the crime, the State must spring into action and proceed against them irrespective of their political colour and creed. We have to give sufficient opportunity to the State machinery to take a decision on that score. Merely someone was an employee in a particular branch of the business belonging to the group, one cannot blame the entire State machinery, particularly when we are prima facie satisfied with the progress that the State machinery made in the instant case, as we find from the reports referred to above. Since the magnitude is huge, the machinery should be extra cautious in proceeding as the people involved in it would try to scuttle the process or create as many hindrances as they could. We have to give adequate time to them. We would have to only watch whether they are serious and sincere in the process. We do not have any option either. The CBI clearly mentioned, they did not have any appropriate infrastructure. They may do it only with the State helping them. They were very candid on the issue. If we withdraw the process from the State machinery and ask the CBI to take it over and ask the State machinery to assist them, the result would not be as expected, at least, stage has not come, as we find from the fact situation.
We are always in favour of disposal of cases, rather than keeping it pending. Since we do not find any better course, we wish to give the State some more time. We would prefer to keep the issue pending before us and monitor the same periodically. It would be a difficult approach, particularly considering our constraints, heavy work load, both judicially as well as administratively. Considering the plight of the sufferers at large, we wish to make a departure on that score. We keep the request of Mr. Gupta and keep the matters pending for the time being giving some time to the State to bring the investigation at a close and start prosecuting the accused. We do not reject the prayer for appointment of CBI, we keep it pending.
Mr. Bhattacharya, learned senior counsel, suggested us, we should form a committee. Forming committee and asking them to supervise investigation would be without having any authority of law. We would rather prefer to grant liberty to the State machinery to take suggestion or advice of any other agency as they feel like. We direct the CBI, Enforcement Directorate, Ministry of Corporate Affairs, SFIO and all other organisations of the like nature, to render all necessary assistance to the State machinery as and when asked for, so that they could complete the process of investigation and start prosecuting the accused. The State machinery would however, be obliged to submit periodical report to the Court that would be considered by us at the appropriate stage. We would be giving such direction at the end. COMMISSION - ITS FUNCTION, RECOVERY AND DISTRIBUTION: Let us now deal with the second issue being the salvage that we could do out of the residuary assets and distribute the same amongst the depositors. The State already appointed Commission for the purpose. The Commission was empowered to provide hearing and receive complaint, examine the complaint and forward the same to SIT and / or any other appropriate authority, send directives if required to SIT, identify the key person responsible, enquire into the methodology adopted by the group of companies, quantify the estimated amount involved, assess the assets and liabilities, recommend means of providing compensation to the victims and to recommend remedial action. If we compartmentalise the scope of reference, we would find wide power given to the Commission. It would empower the Commission not only to examine the Saradha case but also consider all complaints relating to chit funds and / or other methodology adopted by various groups collecting money from the members of the public and denying them refund either by closing their business or otherwise. Hence, the lakhs of applications that the Commission received, would not only relate to Saradha group but also other group of the like nature as well. The complaints would not restrict to deposits alone. It might be of diverse nature. The complaints attracting cognizable and / or non-cognizable offence would be sent to SIT directly irrespective of the jurisdiction where the commission of offence occurred. The Commission was also authorized to issue directives to the SIT in this regard. SIT would be obliged to report back to the Commission. The Commission was also obliged to find out the key persons responsible for the present situation, enquire into the methodology they adopted and recommend remedial measures to the same.
The other part of the duty entrusted to the Commission was to recover assets and liabilities and suggest providing appropriate compensation to the victims. This power, in our view, is wide enough not only to cover the Saradha group but also other groups as well. The State must provide adequate infrastructure to the Commission so that the real purpose for which it was established is not frustrated. We are only concerned with Saradha group for the time being. We feel, State should take appropriate measure for disposal of the assets so long recovered and / or to be recovered and pass on the entire proceeds either to the Commission or to anybody set up for the purpose who would examine the claims, if any, lodged with the Commission. After being satisfied, Commission would prepare a list of depositors and pro rata distribute the proceeds collected for the purpose. If necessary, prosecuting agencies may approach the appropriate Courts for necessary permission to dispose of such assets. The consent of the accused would not be required as the key person already in his affidavit prayed for disposal of the assets.
There would be another possibility that we should not overlook. Taking advantage of the situation, the debtors of the group must not go scot free and the Commission should be clothed with power to recover those debts without approaching any Court of Law, through a summary procedure like the one granted in Sanchaita case, as referred to above and appropriate the sum in the process of distribution. The State must think over it and take immediate step in this regard.
CONSOLIDATION OF CASES There would be one more issue that we wish to highlight. From the list so far submitted, 500 and odd cases have already been pending in various police stations. It would be proper for one single agency to handle all the cases and the State in consultation with the Hon'ble the Chief Justice and the High Court administration, may set up a special Court for the purpose to deal with the cases relating to Saradha that would have power to try all cases relating to Saradha irrespective of the territorial jurisdiction. The State, in our view, should look into it and do the needful.
LOWER COURT RECORDS :
With the leave of the Court Basabi filed certified copies of the lower court records relating to GR Case No.227, 377, 378, 390, 391 and 400, all five cases of the Bidhannagore Commissionerate pending before the Court of learned ACJM, Bidhannagore and one of the Jharkhand to show, despite order of injunction being passed by this Court, learned Magistrate permitted bank account to be operated. APPLICATIONS FOR INTERVENTIONS :
CAN 5092 of 2013 and CAN 5093 of 2013 These two applications were filed by some of the depositors. They wanted to be added as party.
The depositors' interest was being looked after by this Public Interest Litigation. If we allow the applicants to be added as party it would open a flood gate and we would be flooded with lakhs of applications of the like nature. The interest of the applicants is being protected through these litigations. Hence, we do not feel it prudent to add them. Their applications are accordingly disposed of. CAN 4735 of 2013 :
The applicant Hirak Kar was an employee of the company. He is already a party respondent in one of the petitions wherein he would contend, he was unnecessarily dragged. Hence, his prayer for addition in the other matter would be superfluous. The application is accordingly disposed of.
DIRECTION :
Considering the backdrop and having regard to the observations made by us hereinbefore, we issue the following directions :-
i) The State Investigation Agency being SIT would submit monthly report of progress with the Registrar General of this Court on the last day of each English calendar month commencing from June 30, 2013 until the proceedings are brought to logical conclusion or until further orders whichever would be earlier.
ii) SIT would extend all support that would be asked for by any Central Agency for carrying out investigation at their level including inspection of records, providing copies if asked for and permissible in law. The Central Agencies would also be reasonable in this count having regard to the fact, SIT would be heard-pressed for time and would be busy with their present assignment. The Central Agency must approach them only with prior appointment.
iii) The State would issue appropriate direction at the appropriate level, if necessary, taking the assistance of the Court of law for consolidation of cases and establish and / or cause to establish a Special Court in consultation with the High Court administration so that all cases relating to Saradha could be heard by one Special Court having power to take cognizance, frame charges and conduct sessions.
It would be a Court for all purpose as far as practicable.
iv) Since the SIT is working with the active assistance of Bidhannagore Commissionerate we feel it prudent, State should extend sufficient logical infrastructure to the said Commissionerate and try to establish Special Court in terms of Clause (iii) above in and around the Salt Lake City to avoid delay in the process.
v) State should also examine the possibility of establishing one more Special Court of the like nature dealing with identical cases of other groups, if any lodged with the Police in any Police Station of the State.
vi) The Commission appointed for the purpose should be clothed with the power to dispose of all the assets belonging to the Saradha Group and/or their agents and/or their benamdars in case Commission would be satisfied the money invested by the said agent and/or benamdars for acquiring such property was the money collected from the depositors in the collective investment scheme floated by Saradha Group.
vii) The Commission should be clothed with the power to have appropriate mode of recovery of debts on behalf of the Saradha Group from its debtors and add the proceeds to the fund to be created for this purpose.
viii) All bank accounts belonging to Saradha Groups and/or their sister concerns, the personal bank accounts of the Directors would stand attached and the respective banks are restrained by an order of injunction from allowing anyone to operate such account unless authorised by the Commission save and except for the purpose of depositing money in the said account.
ix) The Commission would be at liberty to open a bank account in any Nationalised bank for the purpose to be operated by the persons to be authorised by the Chairman in that behalf.
x) The Commission would prepare a list of depositors upon verification of the respective claims.
xi) Upon a list being prepared in terms of Clause (X) above Commission would prorate distribute the amounts to the depositors in the manner as it would feel it prudent.
The directions with regard to investigations as directed above, would relate to the State Agency and State Agency only. The other part with regard to recovery and distribution was nothing but a recommendation to the State leaving it to the State to extend such power to the Commission if they feel like.
We abundantly make it clear, none of the above directions would relate to the Commission that would have a different field of travel. We would however hope and trust, State would rise to the occasion and seriously consider the recommendations made by us herein enhancing the power of the Commission.
We would humbly request the Commission with all humility, if they could provide us quarterly status report by the Secretary of the Commission to the Registrar General of this Court so that we could apprise ourselves what further steps are taken in this regard. We once again make it clear; this is our sincere appeal to the Commission and must not be construed otherwise.
All the three petitions be clubbed together and be kept out of the list for the time being and be placed as a "Specially Assigned Matter"
before the Division Bench presided over by one of us (Banerjee, J.) one week after the Puja Vacation to take stock of the situation and if necessary, to pass further direction and/or order in this regard. BEFORE WE PART WITH :
AN APPEAL TO MEDIA :
Role of media in a democracy is of great importance. A democratic set up cannot be run without a free press. In the past, this country noticed the role of the media, particularly at the time of emergency when journalists preferred to go behind the bar rather than to succumb to the autocracy. They did not have a fair trial for days together and were kept behind the bar. Yet they did not bend their head down, not for a personal cause but for the cause of democracy. Whenever any Government would deviate from its path the media would always caution them and highlight the issue, place it before the citizens that is how a healthy democracy would function. Most of the Public Interest Litigations saw the light of the day after media highlighted the issue. Without such exercise, the ordinary people would not have any means to come to know, what is rotting in the corridors of power. Of late, particularly after the introduction of the electronic media, less experienced people are in the fray. They would jump up to the cause in undue haste and would often commit mistake in the process. We do not wish nor do we have any inclination to undermine the role of the media. We do not wish to hurt anyone's sentiment. We only make an humble endeavour with all humility, to bring it to the notice of the prudent journalists and the persons connected with the media, the follies that we notice. The result is disastrous.
We make an humble endeavour and beseech you all connected with the media, please see to it, let there be no media trial before an actual trial takes place. We humbly appeal to your good selves, kindly consider, what would pass through the mind of the young Magistrate who in his/her second or third year of carrier would face the onslaught and there would be every chance of committing a mistake.
ACKNOWLEDGEMENT:
We acknowledge with our sincere gratitude, the immense assistance we got from Mr. Lakshmi Kumar Gupta, learned senior counsel who, on our request, addressed us on the issue.
We acknowledge with gratitude, the trouble taken by Shri Prasanta Kumar Dutta, learned advocate appearing for SEBI who, on our request, prepared Paper Books of three volumes for our perusal. We acknowledge with gratitude, the role of three advocates Ms.Basabi Roychowdhury, Mr. Aninda Sundar Das, Mr. Narendra Prasad Gupta, all advocates of this Court, who despite their professional pre- occupations, brought the issue before us without having any personal interest.
We sincerely acknowledge the immense assistance we got from the learned counsel appearing for the parties, particularly of the petitioners, Shri Subrata Mukhopadhya, Shri Bikash Ranjan Bhattacharya, the learned senior counsel and Shri Uday Snakar Bhattacharya as also the other counsel appearing for the respective respondents. We have no doubt, they would, in the near future, guide us in the right path assisting us to deliver substantial justice to the litigants, particularly the oppressed and downtrodden so that they would get justice in true sense at the end of the day. Urgent photostat certified copy of this judgment, if applied for, be given to the parties on their usual undertaking.
Mrinal Kanti Chadhuri, J:
I agree.
[ASHIM KUMAR BANERJEE,J.] [MRINAL KANTI CHAUDHURI,J.]