W.P. No. 12163 (w) of 2013, CAN Nos. 4735, 5092 and 5093 of 2013 and W.P. No. 12974 (W) of 2013. Case: 1. Basabi Rai Chowdhury, 2. Narendra Prasad Gupta Vs 1. Union of India & Ors., [Alongwith W.P. No. 12197 (W) of 2013], 2. The State of West Bengal & Ors.. High Court of Calcutta (India)
| Case Number | W.P. No. 12163 (w) of 2013, CAN Nos. 4735, 5092 and 5093 of 2013 and W.P. No. 12974 (W) of 2013 |
| Counsel | For Appellant: Mr. Subrata Mukhopadhyay, Mr. Shamit Sanyal, Mr. Tapas Maity, Mr. Sabyasachi Chatterjee, Mr. Sudipta Dasgupta, Mr. Bikram Banerjee, Mr. Bikash Ranjan Bhattacharyya, Mr. Rabi Sankar Chattopadhyay, Mr. Uday Sankar Chattopadhyay, Mr. Suman Sankar Chattopadhyay and Mr. Uday Sankar Bhattacharjee, Mr. Anupam Bhattacharjee, Mr. Uttam ... |
| Judges | Ashim Kumar Banerjee and Mrinal Kanti Chaudhuri, JJ. |
| Issue | Chit Funds Act, 1982 - Section 47, 73; Code of Criminal Procedure, 1973 (CrPC) - Sections 155, 156, 157, 158, 159, 161, 164; Constitution of India - Articles 142, 21, 226, 32; Reserve Bank of India Act, 1934 (2 of 1934) - Sections 45T, 45I, 45I(bb); Securities and Exchange Board of India Act, 1992 - Sections 24, 30 |
| Judgement Date | June 19, 2013 |
| Court | High Court of Calcutta (India) |
Judgment:
Ashim Kumar Banerjee, J.
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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.
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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:
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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 out 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 thrity 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
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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:
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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.
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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.
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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 Sanchayini, as stated in paragraph 31 and 34. Three college teachers in Meghalaya also filed complaint against Saradha construction, as claimed in paragraph 36. In...
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