R R DELAVAI Vs. INDIAN OVERSEAS BANK

JUDGEMENT

(1.) The petitioner, who claims to be the Chairman, Madras Provincial Consumers' Association, Convener, Civil Liberties Panel and the elected Honorary President of the Triplicane Co-operative Bank Limited, Madras-5, has filed this writ petition for issue of Mandamus directing (1) the third respondent to seek the expert opinion of the Auditor-General of India and act on his advice concerning the overseas operations of the first respondent during the period 1981 to 1987 in its branches at Sayapur, Singapore, Hongkong and Indonesia and (2) the respondents to place before this court the full Inspection Report of Shri A. Namasivayam, the present Executive Director of the first respondent together with the original correspondence among them to enable this court to arrive at a fuller understanding of the issues raised in the affidavit of the petitioner and for formulating corrective guidelines that may be essential in preserving national wealth. The first respondent in the writ petition is the Indian Overseas Bank, represented by its Governor. The third respondent is the Union of India represented by the Additional Secretary, Ministry of Finance.

(2.) In the affidavit filed in support of the petition, the petitioner has stated that he is a tax-payer and a citizen of India. The following are the relevant allegations made in the affidavit in support of the prayers in the writ petition; Notwithstanding the instructions, statutory obligations and restraints imposed by and enjoined by the various Acts, Ordinances, Banking regulations governing the corporate system of banking in India, in particular by passing the Inspection Report of Sr. A. Namasivayam, former Deputy General Manager and at present Executive Director of the first respondent and contravening the advisory notes and communications of Sri P. S. Khera, Bar-at-law, New Delhi and Sri S. Kanniappan, Associate Lecturer, Government College of Arts and Crafts, Madras, Director on the Board of Directors of the first respondent, nefarious and corrupt practices, have crept into the overseas branches of the first respondent bank. There is a systematic depletion of hefty funds, nearly 200 crores of rupees from and out of the Hongkong and Singapore Branches of the first respondent in its operations covering Sayapur, Singapore, Hongkong and Indonesia. Staggering loss was sustained by the first respondent, due to mala fide and indiscriminate advances granted by the Senior Executives of the Overseas Branch Offices favouring uninvestigated business concerns, who offered worthless securities or no security fully aware of the irrecoverability of the advances. Loss was occasioned by the appointment of unscrupulous person in surreptitious manouvers in the top cadres oriented exclusively to the relatives of the top echelons of the first respondent. Adoption of sick industries was another mode by passing proper checks on the credibility of the concerns. Shri Bala Subramaniam, an employee-Director of the Board of Directors of the first respondent pulled out from the Inspection Report of Shri A. Namasivayam, on the activities of the Bank, as on 9-2-1985 that Shri P. B. Srinivasan, a former Chairman-Managing Director of the first respondent and Shri P.H. Ahuja, the then Regional Manager, Singapore Branch of the first respondent, misused their powers for personal gain. A list of fraudulent deals was revealed in the Inspection Report. A writing off of the losses as normal business losses is contemplated. The modus operandi adopted by the concerned officers is set out in detail. At one stage, the Ministry of Finance, Department of Economic Affairs (Banking Division), directed a review of the position. The Ministry proposed impounding of the passports of the individuals responsible for loss and their extradition to India. The Officers offered resignation at that stage, which were accepted without the concurrence of the Board of Directors, whose admonitions were by-passed by the Chairman-Managing Director. The Government nominee and the Reserve Bank nominee on the Board of Directors failed to evidence due care. The Inspection Report dated 9-2-1985 of Shri A. Namasivayam on the operations of the Singapore Branch read with the letters dated 6-3-1984 and 12-7-1985 of the two Directors of the Board of Directors, Shri P. S. Khera, Bar-at-law, New Delhi and Shri S. Kannakappan, Shri P. B. Srinivasan the former Chairman- Managing Director and his Co-brother Shri P. D. Ramamurthy, General Manager, and the then Regional Manager Shri P. R. Ahuja of having contrived an atmosphere to defraud the first respondent to the tune of Rs. 200 crores, which is now sought to be written off. During the years 1981 to 1987, the first respondent lost crores of rupees in its overseas ventures, particularly in Sayapur, Singapore and Hongkong and the present senior Executives are seeking to suppress and conceal the true facts in the public eye. Successive Managements have kept the depositors in the dark. The successors to the top echelon Shri P.D. Ramamurthy, General Manager and Shri S. Padmanabhan, manipulated and deliberately attempted to prevent the revelation of the mala fide acts of their predecessors, committing collusion. Shri P. D. Ramamurthy had misguided the Board of Directors in respect of the advances made by the Singapore Branch of the first respondent by recommending the acceptance of the resignation of an erring officer and reporting that the operation of the first respondent in Singapore were in good order. The illegal acts and omissions resulting in unprecedented irregularities in the history of banking in India, have damaged the reputation of the first respondent in its overseas branches in the Eastern Board of the world. As a result, the following ignominous situations have arisen;

(3.) On notice of motion, a counter affidavit was filed on behalf of the first respondent raising certain preliminary objections regarding the maintainability of the writ petition and the locus standi of the petitioner herein. According to the first respondent, the petitioner must satisfy this court that a specific right of his under the statute of the Constitution has been violated for him to move a petition under Article 226 of the Constitution of India. The stand taken by the first respondent in the counter affidavit is that the wrongs alleged by the petitioner, assuming for a moment were proved, are not remediable and consequently, the petition is bereft of remedies, thus nullifying the petitioner's prayers. It is stated that when Parliament has by specified statutes endowed power to Watch the affairs of a Bank to certain authorities, the petitioner cannot assume in law a superior status to that of an authority such as Reserve Bank of India and Ministry of Finance, Government of India. The Bank's accounts and affairs are audited every financial year by a statutory Auditor who is not an employee of the Bank. The first respondent is adhering to all the norms of acceptable banking practices and therefore, there is no specifically alleged dereliction of duty on the part of the Managing Director for the Bank to be exposed to the extra-ordinary jurisdiction of Article 226 of the Constitution. It cannot be assumed that the deficiencies in the society which have failed to correction by other means could be cured in Courts. When a parliamentary committee consisting of Members of Parliament scrutinises the functions of the Bank. The petitioner cannot introduce elements wholly alien and outside the authority of law, either to investigate the affairs of the Bank or to seek a writ from this Court to issue directions to a Constitutional functionary such as the Auditor General of India. It is not proper or correct in law for the petitioner to ferret information from the Bank through a proceeding under Article 226 of the Constitution of India and then endeavour to make out a case for invoking the extraordinary jurisdiction. The deponent of the counter affidavit will be violating his oath of secrecy if he were to divulge in any manner the details of any account. The financial position of a client with a Bank is a highly privileged one and if on an inchoate set of allegations, the deponent is to lay bare several accounts, their business would be immediately adversely affected, ruining them and also the vital interests of the Bank. This Court should consider another essential element of public interest that of protecting the inviolability of the precious rights of secrecy of the customers of the Bank. The Joint Secretary from the Ministry of Finance and a Senior representative from the Reserve Bank of India have a special status in the Board of Directors as they are representatives directly appointed by the Government of India, Ministry of Finance and Reserve Bank of India, respectively. The Ministry of Finance keeps itself informed of all aspects of the administration of the Bank. Hence, the writ petition should be dismissed.