Calcutta High Court (Appellete Side)
Uco Bank vs Dr. Siten Saha Roy And Others on 6 February, 2020
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S/L. 11.
February 6, 2020.
MNS.
RVW 23 of 2020
With
CAN 1192 of 2020
With
CAN 1194 of 2020
With
CPAN 85 of 2020
in
W. P. No. 23412(W) of 2019
UCO Bank
Vs.
Dr. Siten Saha Roy and others
Mr. Aniruddha Chatterjee,
Mr. Rahul Karmakar
... for the review petitioner.
Mr. Bikash Ranjan Bhattacharya,
Mr. Aniruddha Roy,
Mr. Nirmalya Dasgupta,
Mr. Jitendra Patnaik,
Mr. Dibanath Dey
...for the writ petitioner.
Mr. Avinash Kankani
...for the Immigration Authorities.
The review application, bearing RVW 23 of 2020, along with the connected
application, including CAN 1194 of 2020 filed under Order XLI Rule 27 of the Code of Civil
Procedure, are taken up together for hearing, along with the contempt application, bearing
CPAN 85 of 2020.
Learned counsel appearing for the bank, who has taken out the review, submits on
the basis of an office memorandum dated December 5, 2017, which is annexed at pages-
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11 and 11-A of the application filed under Order XLI Rule 27 of the Code, that when the
matter was moved and the order under review was passed, already an amendment to
Clause- (j) of the original office memorandum pertaining to Look Out Circulars (LOCs)
was in place.
By relying on such amendment, it is argued that, for the economic interests of
India, among other grounds, LOCs can be issued even in such cases as would not be
covered by the guidelines thereinabove, that is, including Clauses- (g) and (h), which,
according to learned counsel for the review petitioner, were the basis of passing of the
order under review.
Since, the bank was not in the know of the said office memorandum dated
December 5, 2017, placement of the same now before this Court tantamounts to
discovery of new matter, entitling the review petitioner-bank to a review.
It is further submitted that, in view of the said office memorandum having the force
of law, there is also an error on the face of the record in the sense that the amendment in
the relevant guidelines was not taken into account while passing the order under review.
Learned counsel for the review petitioner- bank cites a judgment reported at 2014
SCC Online Del 6844 (Gautam Khaitan Vs. Enforcement Directorate), wherein the
learned Single Judge of Delhi High Court had held, inter alia, that economic offences
constitute a class apart and need to be visited with a different approach in the matter of
bail. The economic offences, having deep rooted conspiracies and involving huge loss of
public funds, need to be viewed seriously and considered as a grave offence affecting the
economy of the country as a whole and thereby posing serious threat to the financial
health of the country.
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Learned counsel for the review petitioner-bank argues on the strength of the cited
judgment that in the case at hand, the writ petitioner had joint liability for a debt of about
Rs.20 crores, which was not discharged by the writ petitioner.
As such, it is submitted that the writ petitioner was rightly prevented from leaving
the country, since the non-payment of the huge quantum of loan defaulted by the writ
petitioner would put a dent in the economy of the country, thereby adversely affecting the
economic interests of India as a whole.
As such, the amendment, which was overlooked by this Court while passing the
order under review, it is submitted, is relevant and was relevant at the juncture when the
order was passed, but not taken into account.
Learned senior counsel appearing for the writ petitioner, that is, the opposite party
no. 1 in the review application, submits that the expression "economic interests of India"
has to be read along with the preceding phrases "sovereignty, security or integrity of
India" and has to be on such a high footing that such offences, as alleged, would threaten
the sovereignty, security or integrity of India as a whole.
It is further submitted that the writ petitioner did not attempt to leave the country
surreptitiously, but had informed the authorities, which communication was also annexed
to the writ petition.
In the said communication, the petitioner had also indicated his several
engagements in UK, where the petitioner is a medical practitioner of repute and is in
charge of several health facilities.
It is further argued that, despite the introduction of the amendment, which is relied
on by the review petitioner-bank, the said amendment should be read as subject to
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Clauses- (g) and (h) of the original office memorandum, which make it mandatory for a
cognizable offence under IPC or any other penal law to be disclosed for the issuance of
an LOC.
Learned senior counsel cites a judgment reported at (1979) 4 Supreme Court
Cases 389 (Aaribam Tuleshwar Sharma Vs. Aribam Pishak Sharma and others) to
impress upon this Court that the scope of review was limited.
Learned counsel appearing for the Immigration authorities submits that on the very
next date after the order under review was passed, the writ petitioner sought to leave the
country at 8.00 a.m. and, as such, there were gaps in the communication channel
between learned counsel for the immigration authorities and the officers on the field, who
were to implement such order. As such, there was no willful or deliberate default in
complying with the order of this Court in such officers preventing the writ petitioner again
from boarding a flight.
Learned counsel for the immigration authorities, at this juncture, also places
reliance on an office memorandum dated May 10, 2019, which indicates, in Clause- 4
thereof, that the officers not below the rank of Chairman/Managing Director/Chief
Executive of all Public Sector Banks are competent to request for opening LOCs at any
point of time if departure of a particular person from India is perceived to be detrimental to
the 'economic interests of India' or if the departure of such person from India 'ought not to
be permitted in the larger public interest'.
Learned counsel appearing for the immigration authorities thus submits that, in the
present case, the requesting authority had the jurisdiction to seek for an LOC to be
issued.
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A bare perusal of the amendment, on the strength of which the review petition has
been filed, shows that the same was over and above the guidelines thereinabove in the
principal office memorandum containing the guidelines as to issuance of an LOC.
As such, the argument of the writ petitioner, being the applicant in the contempt
petition and the opposite party no. 1 in the review application, that the said amendment
had to be read in the context of Clauses- (g) and (h) of the original office memorandum,
cannot be accepted.
It is evident from the amendment itself that the same pertained to LOCs being
issued even in such cases as would not be covered by the guidelines in the original office
memorandum, thereby taking the amendment beyond the pale of Clauses- (g) and (h) of
the original office memorandum.
However, the primary question involved here is, whether the amendment, on the
basis of which the review petition has been taken out, if considered, might have made any
difference in the order under review and/or is relevant to the conclusion as reached in the
said order.
It is seen from the order under review dated February 3, 2020, that the basic
premise thereof was that a bare perusal of the office memorandum dated October 27,
2010, in particular Clauses - 8(g) and 8(h), made it evident that recourse to an LOC is to
be taken in case of commission of any cognizable offence under the IPC and other penal
laws only.
It is also provided, it was held, that the details in Column- IV enclosed with the
proforma annexed to the said office memorandum recording the reason for opening LOC
must invariably be provided, without which the subject of an LOC will not be
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arrested/detained. Thereafter, this Court proceeded to dwell on the fact that no
cognizable offence under the IPC or other penal laws had been disclosed in the present
case and, as such, the writ petitioner could not be prevented from leaving the country.
Even taking into consideration the expression "economic interests of India" in
isolation from the preceding phrases in the amended provision, which is a plausible
interpretation in view of the disjunctive clauses separating the said expression from the
neighbouring expressions, it has to be construed to be on a much higher footing than
violation of a mere commercial contract, whatsoever may be the quantum of the defaulted
sum.
An offence, to put a dent on the economic interests of India as a country, has to be
such that either the economy of the country would be jeopardized by such person leaving
the country and/or the offence would hit at the root of the economic system and/or the
market itself, including the share market.
In the present case, although the quantum of default was quite high, being around
Rs.20 crores, the magnitude of the quantum is merely a relative expression and cannot be
assessed as being "high" for all economic strata of society.
For an offence to be detrimental to the economic interests of India, there cannot be
any cut-off line or amount which demarcates some commercial defaults from others in
labelling those as being against the economic interests of the country as a whole. Even if
a loan of Rupee 1/- is not repaid to a bank in the public sector, we cannot draw a
distinction between that and a sum of Rs.20 crores being defaulted.
Moreover, there is a specific procedure under the law for recovery of such amount,
which has been availed of in the present case by the review petitioner-bank.
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Admittedly, the SARFAESI proceeding reached culmination and the award passed
therein is at the stage of execution. The securities for the loan-in-question are already
available for the bank to execute the award granted by the Tribunal.
In the event the provision of issuance of LOC are being permitted to be used
rampantly as a substitute of execution proceedings, the personal liberty of Indian citizens
could potentially be jeopardized and a flood-gate will be opened, giving the government
and other public authorities a handle to wreck vengeance on the citizens of India by using
the provisions of the office memorandum regarding issuance of LOC to hinder the
personal liberty of all citizens merely on the ground of commercial loans being defaulted.
Moreover, in the judgment cited on behalf of the review petitioner-bank, the matter
pertains to a specific statute, and there was a violation of certain clauses of the prevention
of Money Laundering Act, 2002. The question which fell for consideration in the
judgement rendered by the Delhi High Court was, whether bail ought to be granted to the
accused person or not.
The judgement is a precedent only for the proposition laid down therein, in the
factual context of the case, and cannot be a blanket precedent for all other cases as well.
Moreover, paragraph- 26 of the said judgement is on a proposition regarding
economic offences vis-à-vis grant of bail. Even therein, it was enumerated that economic
offences having deep-rooted conspiracies and involving huge loss of public funds need to
be viewed seriously.
In the said case before the Delhi High Court, a contract between the Ministry of
Defence of the Government of India with a third party was involved and there were
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serious allegations of kickbacks, which evidently impacted the economic interest of the
country directly.
However, if individual cases of defaults in connection with commercial transactions
are started being labelled as offences against the economic interests of India, the same
would undoubtedly open a flood-gate of abuse, as indicated above. A balance has to be
struck between the liberty of the individual citizen and the power of the Government to
curb the same under reasonable circumstances. Although there is no doubt that the bank-
in-question is a public sector bank and the interest of the public is involved, that, ipso
facto, does not give a handle to the immigration authorities or the Government to
implement or issue an LOC at the drop of a hat.
The amendment cited in the review application is preceded by the expression "in
exceptional cases", which could not be merely determined by the quantum of money
involved, since the cut-off amount for putting a default under the category of an offence
against the 'economic interests of India' would beg the question. The quantum of default
is a matter of perception depending on the economic condition of a person or an
institution. Even if the amount defaulted herein was around Rs.20 crores, the said
amount might not be much to a section, albeit small, belonging to the upper economic
crust of the society. As such, no line can be drawn in that regard.
The economic interests of India, if considered in proper perspective, has to be on
a much higher footing, directly and adversely impacting the share market or the economy
of the country as a whole, which destabilizes the entire economy of the country and
cannot be confined to individual loans on the basis of commercial transactions being
defaulted. Even the Circular dated May 10, 2019 handed over by learned counsel for the
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immigration authorities, shows that a request for opening LOC can be made by a
Chairman/Managing Director/Chief Executive of a public sector bank if the offence is
perceived to be detrimental to the economic interests of India and ought to be permitted in
the larger public interest.
Since the bank has a final award in its favour and has already taken recourse to an
execution proceeding, it ought to restrict its implementation of the award of such
execution proceeding, which is the due process provided by law, but cannot take recourse
to the higher remedy of issuance of an LOC.
Moreover, it is not disclosed either from the request for LOC or the complaint that
the economic interests of India or larger public interest was categorically indicated therein,
apart from the allegation that the defaulted amount was public money and the bank was a
public sector undertaking. Merely because the word "public" is involved, it does not
elevate the offence to such a high degree that it has to be an exceptional case as
contemplated in the amendment-in-question, to bypass the guidelines provided in the
original official memorandum governing LOCs and/or to affect the economic interests of
India as a whole, since in the present case, such interest has not been shown patently to
be hampered. If such logic is extended to its limits, every single loan would, if defaulted,
affect the economic interests of India, but that could not be a ground for bypassing the
governing statute in the present case. The Securitisation and Reconstruction of Financial
Assets and Enforcement of Security Interest Act and the modalities provided therein for
execution of the awards, by issuance of LOCs at the drop of a hat.
As such, although the order under review recorded that the request for LOC did not
disclose any cognizable offence under the IPC or other penal laws, thereby particularly
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relying on Clauses-8(g) and 8(h) of the office memorandum dated October 27, 2020, the
basic premise of the said order was that the request for LOC did not disclose any offence
which could justify the issuance of an LOC. It was also observed in the said order that it
was clear from the request for LOC made by the respondent no. 2 in the writ petition
dated July 31, 2019, annexed at page- 58 of the writ petition, that although the relevant column, that is Column- IV, was filled up, the respective entries under the subjects "F.I.R. No." and "Section of Law (where applicable)" were both "NOT AVAILABLE ON RECORD". On such premise, the action of the immigration authorities in preventing the writ petitioner from leaving the country was deprecated and set aside.
Even if the amendment annexed to the review petition is taken into consideration or was taken into consideration while passing the order under review, the same would not make a difference in the ratio of the order under review inasmuch as no exceptional case or any adverse effect on the economic interests of India as a whole have been made out either in the review petition or in the original request for issuance of LOC issued by the bank.
In such view of the matter, even if the present amendment was placed before the court while passing the order under review, it would not have any special relevance to the conclusion reached in such order and would not be a relevant factor in passing such order.
Since the scope of review is limited, there cannot be any reason why the said limited scope should be exercised in the present case.
An additional factor which ought to be considered is that, although the review petitioner-bank might not have access to the amendment, although the same must have 11 been available in the relevant website of the government at the relevant juncture, the authorities, who were co-respondents in the writ petition, could easily have produced the said amendment at the juncture when the order was passed, if they deemed it relevant. The amendment shows that LOCs can be issued in exceptional cases, in such circumstances as mentioned therein, whereby departure of a person from India may be declined at the request of any of the authorities mentioned in Clause- (b), if it appears to such authority, based on inputs received, that the departure of such person is detrimental to the sovereignty or security or integrity of India, or, among other things, to the economic interests of India. No such case being made out while hearing of the writ petition took place, the order under review was justified, even taking into account the amendment relied on by the review petitioner-bank.
As such, there is no merit in the review petition and accordingly RVW 23 of 2020, along with the connected applications, being CAN 1194 of 2020 and CAN 1192 of 2020, are disposed of without interfering with the order under review.
There will be no order as to costs.
As far as the contempt application is concerned, the issuance of a rule of contempt is resorted to any extreme cases only and, in the present case, learned counsel for the immigration authorities has given sufficient explanation as to why the order under review could not be complied with by the immigration authorities.
As such, this Court desists itself from taking resort to the extreme measure of issuance of rule of contempt and CPAN 85 of 2020 is accordingly disposed of.
However, it is made clear that any further attempt on the part of the immigration authorities to restrain the writ petitioner from leaving the country on the basis of the LOC- 12 in-question, would be viewed seriously and would amount to a contumacious action and would be dealt with suitably, if brought to the notice of this Court.
As such, the immigration authorities are hereby cautioned to be more prompt in using their channels of communication for intimating court orders immediately without putting forward any excuse for being slow in that regard.
There will be no order as to costs.
Urgent photostat certified copies of this order, if applied for, be made available to the parties upon compliance with the requisite formalities.
On the prayer of the review petitioner-bank, the above order is stayed till February 10, 2020 to enable the review petitioner to prefer an appeal against the same.
(Sabyasachi Bhattacharyya, J.)