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The Companies Act, 1956
Article 226 in The Constitution Of India 1949
Article 32 in The Constitution Of India 1949
The Reserve Bank of India Act, 1934
Article 12 in The Constitution Of India 1949

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Calcutta High Court
State Of West Bengal vs Union Of India And Others on 21 March, 1995
Equivalent citations: AIR 1996 Cal 181
Bench: S Banerjee

ORDER

1. The instant writ application, which has been moved as a public interest litigation, is unique in the history of public interest litigation in this Court or perhaps in the entire country. Unlike the other public interest litigations, where normally any public spirited person or organisation comes before the Court for obtaining relief in favour of persons economically or socially oppressed and unable to approach the Court for vindication of their fundamental or legal right complaining against State action or inaction, in the instant case, the State itself has come up before this Court by way of public interest litigation championing the cause of the numerous small depositors of the three 'different residuary non-banking companies (hereinafter referred to as R.N.B.C.) and for vindication of their legal and constitutional rights. Its uniqueness, however, does not end with the fact that here the petitioner is the State itself. It is also unique as in the instant application, State, being the petitioner complains against certains actions of the three R.N.B.Cs. and praying for reliefs against them which are admittedly not State or instrumentality of State or even authorities within the meaning of Art. 12 of the Constitution, but companies incorporated under the Companies Act. Such uniqueness of this petition provoked a legal debate as to the maintainability of the writ petition which continued for days, in which all the learned counsels whether for the writ petitioner or for the respondents participated with great ability rendering invaluable assistance to the Court and in which the finest quality of the learned counsels came out.

2. It is the case of the petitioner, State of West Bengal that it seeks to move the instant writ application on behalf of the countless small depositors of the respondent No. 2, M/s. Overland Investments Co. Ltd., respondent No. 6, Verona Commercial Credit and Investments Co. Ltd., and respondent No. 10, Sanchayani Savings (P) Investments Co. Ltd. all of which are residuary non-banking companies and incorporated under the Companies Act. It is contended by the petitioner that since the time of the case of Sanchaita Investments (State of West Bengal v. Swapan Kumar Guha, ) the Supreme Court from time to time in its different judgments have been commenting on the mushrooming of different non-banking financial institutions including R.N.B.Cs. and in their alarming function in receiving large deposits from the members of the public and specially from ignorant small depositors having little capital of their own and the probability of syphoning of funds rendering the small depositors penniless depriving them of their live's savings and has been expressing hopes that the State and the Reserve Bank of India should take appropriate steps in public interest to safeguard the interest of such countless small depositors. Ultimately, the Reserve Bank of India in exercise of power under S. 45(3) of the Reserve Bank of India Act, 1934, issued the Residuary Non-Banking Companies (Reserve Bank) Directions, 1987 (hereinafter referred to as 1987 Directions) in public interest and specially for safeguarding the interest of the small depositors. Under the said 1987 Directions the Reserve Bank of. India introduced a number of restrictions and requirements which the R.N.B.Cs. are required to follow, for the specific purpose of safeguarding interest of the small depositors and for their security. But now, from the Inspection Report of the Reserve Bank of India as also from the other Audit Report and also from Police Investigations Report, it appears that the aforesaid R.N.B.Cs. being the present respondents herein have been functioning in utter disregard and in violation of the various provisions of the aforesaid 1987 Directions and are also diverting crores of rupees to their subsidiary companies and to their directors jeopardising the interest of the small depositors and said R.N.B.Cs. have now reached such a situation that they are in the brink of a financial disaster and are unable to meet their total deposit liability and to pay back the small depositors their money taken by the said R.N.B.Cs. The details of such lapses on the part of the respondent No. 2, respondent No. 6 and respondent No. 10 have been set out in the writ petition, in the supplementary affidavit and in the additional supplementary affidavit and annexures thereto.

3. It is contended, on the basis of specific complaints, the police has started cases against the respondents Nos. 2 and 6 and their directors in which reports have been" submitted .

4. It is contended by the petitioner that it will appear from all such reports that the respondent No. 2 in clear violation of paragraph 6 of the aforesaid 1987 Directions, which requires investments of not less than 10% of the aggregate deposit liabilities in fixed deposits with Nationalised Banks and not less than 70% in uncumbered approved securities, and therefore, at least 44 crores out of total deposit liability of Rs. 58 crores was required to be invested in the aforesaid manner, only 3.87 crores have been so invested. The investment portfolio of the company during the last 3 years underwent a meta- morphic change, as a result of diversion of its investment from safe, secure and liquid assets to risk prone assets. The company had siphoned off sizeable sum of money to the tune of Rs. 667.25 lakhs in the guise of interest free loam and clean advances to its subsidiaries and group companies owned by Shri A. K. Bhowal and his family members. The company violated the provisions contained in paragraph 8 of the 1987 Directions relating to printed application form soliciting deposits; the company did not issue any advertisement soliciting deposits nor submit a statement in lieu of advertisement to the Bank as required under paragraph 16(2) of the 1987 Directions, the balance-sheet of the company did not reveal the actual liabilities as the company understated the liabilities in violation of the aforesaid 1987 Directions, by transferring a substantial portion of public deposits to Profit and Loss Account treating the same as income. The amount disclosed as deposit liabilities stood at Rs. 2,534.22 lakhs as on 31st March, 1993 as against the actual liabilities of Rs. 5, 799.59 lakhs. Thus, the amount of public deposit mobilised by the company up to March 31,1993 reduced to the extent of maturity paid had been understated by Rs. 3,265.37 lakhs in violation of the provisions of para 12 of the 1987 Direction. The company purchased innumerable number of plots of agricultural lands throughout the districts of West Bengal and in particular at Murshidabad and Burdwan districts. But the same could not produce the documents pertaining to land and buildings at Burdwan involving an amount to the tune of Rs. 151.36 lakhs. Nothing had been recorded in the Board meetings for involving such huge amount of money in landed properties. Funds were diverted to the various subsidiaries of the company by verbal order. Out of total amount of loans and advances amounting to Rs. 1010.05 lakhs, the subsidiaries and group companies of Overland Investment Ltd. enjoyed a sum of Rs. 667.26 lakhs i.e. 66.06% totally free of interest. The end-use of such funds tent to the subsidiaries and group companies was never ascertained. There are no papers or documents with the company for verifying details of such transactions.

5. In the case of Verona Commercial Credit and Investment Company Ltd., it was found inter alia from such reports that deposits liabilities have been understated by a sum of Rs.70 crores in violation of paragraph 12 of the 1987 Directions, the investment in uncumbered fixed deposit was nil as on 31-3-1993 as against requirement of Rs. 11.75 crores under para 6(1)(a)of the 1987 Directions; investment in approved securities was nil as against requirement of Rs. 82.31 crores under para 6(1)(b) of the 1987 Directions; that the sum of Rs. 1.73 crores was given to the Directors and their companies by way of loans and advances in support of which no document was forthcoming and no repayments were shown; that Rs. 14.66 crores were allegedly lent and advanced to the depositors, the details of which are not shown; no document could be produced in support of the claim that Rs. 9.21 crores was cash in hand in the audited balance-sheet for the year ended on 31-3-1994; in violation of para 7 of the 1987 Directions the company credited to the Profit and Loss Account Rs. 30.25 crores and Rs. 21.67 crores being the entire first year's subcription for the year ending with 31-2-1993 and 31-2-1992 respectively.

6. As regards the Sanchayani Savings Investment (P) Ltd., major findings in the said reports against the company are that as against the actual liability of Rs. 115 crores, liability disclosed in the aforesaid balance-sheet as on 31-3-1993 was shown as Rs. 95.23 crores; investment in approved securities was nil as on 31-3-1993; no receipts could be produced showing fixed deposits to the tune of Rs. 12.72 crores as per balance-sheet; no receipts produced for the alleged recurring deposits of Rs. 75 lakhs. Investment according to balance-sheet was only 11.04% as against the required rate of 80% in terms of paras 6(1)(a) and 6(1)(b) of 1987 Directions; in violation of para 5 of the said 1987 Directions the company did not allow interest in the case prematurity/surrender value of deposits; against the huge liability of Rs. 115 crores the paid up capital is a mere Rs. 1.52 lakhs; no materials were produced in support of investments in land and buildings; un- secured loans of Rs. 14 lakhs granted to the companies in which Directors are interested, total loss would amount to Rs. 20.27 crores if instead of 95% subscription liability, full amount of liability is taken into account.

7. It is being contended by the writ petitioner that it will appear because of such unsecured investment of the funds in violation of the various provisions of the 1987 Directions and diversion of funds to its subsidiaries and Directors, the interest of the small depositors of the said R.N.B.Cs. who mostly belong to the lower strata of the society have been seriously jeopardised. The said R.N.B.Cs. have now reached such a position that they are unable to pay back the loan taken from the small depositors and the said respondents are now in the brink of financial disaster; as a result the helpless small depositors are going to be deprived of their life's savings and money and consequentially the right to life of such depositors, which includes livelihood as guaranteed under Article 21 of the Constitution has been seriously affected. It is contended that the aforesaid 1987 Directions although contains various provisions for securing and safeguarding the money of the small depositors, the same does not contain any provision for recovery of the money in case of such misuse and diversion of funds by the R.N.B.Cs. or to compel them to pay back the money to the small depositors and the countless small depositors, who belong to weaker section of the community arc unable to approach the Court for seeking normal remedy available under the existing law for recovery of their money and they are not even aware about the impending financial crisis and disaster. It is contended that such helplessness of the countless small depositors and their inability to approach the Court are often taken advantage of by the R.N.B.Cs. who often create such a financial crisis to avoid repayment of the money to the small depositors. It is because of the aforesaid reasons, the State as the repository of the public interest has come forward to this Court by way of public interest litigation for appropriate relief in favour of such countless small depositors against the aforesaid R.N.B.Cs.

8. It has been contended by the petitioners that having regard to its constitutional obligation under Articles 38, 39, 39-A and 41 of the Constitution as also to the repeated observation of the Supreme Court in different cases that the State and the Reserve Bank should take appropriate steps for securing the interest of the depositors in such matters, the State of West Bengal has decided to move public interest litigation at this stage as it has come to a conclusion under the facts and circumstances of the case that if the situation is allowed to drift in its own course and allowed to be dealt with in the usual way, only the management of the aforesaid R.N.B.Cs. and better off investors will steal a march over the poor, ignorant and the helpless investors. In the prevailing situation if the aforesaid investors are left free to have their rights and obligations adjudicated upon and worked out in their separate and individual actions, there will inevitably be a situation, where the weaker sections of the people will be made to pay the more affluent sections. Under such consideration it has been decided by the State Government to beseech this Court to render justice, social and economic, by framing a positive and equitable scheme for refund out of amicable funds of deposits particularly to the countless small poor and ignorant investors who without such public assistance will be seriously affected in their enjoyment of lives by such unjust deprivation of their lives savings.

9. In the writ petition, the petitioners have freely quoted the observations of the Supreme Court in a number of cases being Sanchaita case (State of West Bengal v. Swapan Kr. Guha, ) and the case of Peerless v. Union of India, reported in AIR 1987 SC 1023, where the Supreme Court had the occasion to consider in-depth the functioning of such Non-Banking Finance and Investment Institutions and commented inter alia that the character of business carried on by such companies is adventurous and precarious; most of such businesses are bound to face economic crisis and it is necessary for the authorities to evolve foolproof scheme to see that fraud is not allowed to be played upon persons who are not conversant with the practice of such financial enterprises; the State and the Central Government and the Reserve Bank of India must be given a reasonable opportunity to see if it is possible under the law to institute an enquiry into the affairs of the firm and in the meanwhile to regulate its affairs and some measures are essential in the interest of countless small depositors who otherwise will be ruined by being deprived of their live's savings. Similar observations of the Supreme Court in the case of Reserve Bank v. Timex Finance, , where the Supreme Court was dealing with the legality and validity of the aforesaid 1987 Directions and examined the functioning of the R.N.B.Cs., where the Supreme Court referred to the abovementioned observations of Chinnappa Reddy and Khalid, JJ. of the Supreme Court, have also been quoted.

10. The petitioner has made an application for amendment of the prayers originally made in the writ petition. From the prayers made in the writ petition as also application for amendment, it appears that the petitioner has mainly prayed for appointment of a Commissioner or a Special Officer in respect of each of the respondent Nos. 2, 6 and 10 for taking charge and possession of all movable and immovable assets of the said three R.N.B.Cs.; their Bank Accounts; movable and immovable properties which realiy belonged to the said R.N.B.Cs. and diverted to the subsidiaries and sister concern and/or to their Directors or the dependants or the relatives or agent and employees; to carry out the necessary enquiry and investigation in that regard; attachment of all such properties; preparing a scheme for refund of the deposits along with dues accrued thereon to the depositors of the respondents Nos. 2, 6 and 10 and interim orders in respect thereof.

11. As in course of argument the writ petitioner, after having been served with an order passed by the High Court at Bombay, came to know that on the writ application of one Gaj Kumar Prabhakar Menokar and another, the Bombay High Court passed an injunction against the State of West Bengal restraining the State which was one of the respondents in the said writ petition, from taking any such action like attachment of the property and appointment of Receiver against respondent No. 10 herein Sanchayani Savings Investment (1) Ltd. the petitioner has now prayed for an order of injunction restraining the respondents Nos. 11, 12 and 13 and the agents, officers and employees of the respondent No. 10, from dealing with, disposing of, transferring or encumbering the movable and immovable properties of the respondent No. 10 and also from operating any Bank Account standing in the name of the respondent No. 10 or any of its office? or branches. In view of such fact the prayer for appointment of Special Officer over properties, movable and immovables, of the respondent No. 10 is not pressed. It has now been prayed in the additional supplementary affidavit that a Special Officer may be appointed to take immediate charge and possession of the properties in the name of respondents Nos. 11,12 and 13 and also the properties standing in the name of agents, dependants, employees of respondents Nos. 11, 12 and 13.

12. The writ application was moved upon notice to all the respondents and at the-very admission stage, all the respondents, excluding the Union of India and Reserve Bank of India, challenged the very maintainability of the writ petition and urged before the Court to decide such question of maintainability as a preliminary point without filing of affidavits. This Court having accepted the aforesaid submission of the respondents that the question of maimainability of the writ petition should be considered as a preliminary point, the learned Counsels appearing for the various contesting respondents addressed the Court at length days together in support of their contention that this writ application is not maintainable and consequentially the relief asked for by the petitioners cannot be granted. The Reserve Bank of India and Union of India supported the writ application and the submissions of the learned Counsel for the petitioners. Since the maintainability of the writ petition was thus being considered as a preliminary point at the instance of the respondents, no direction for affidavit was called for and the Court proceeded on the basis of the pleading of the petitioner in the writ petition, supplementary affidavits, additional supplementary affidavit and application for amendment.

13. It has been contended on behalf of the respondents firstly that the writ petition is wholly misconceived and not maintainable as the State cannot maintain a public interest litigation as the State has no cause of action. The second preliminary objection raised by the respondents is that the controvercies involved in the present application cannot form the subject-matter of the writ petition far less the subject-matter of a public interest litigation. Thirdly, it has been contended by the respondents by way of preliminary objection that the writ application is not maintainable, as a public interest litigation can only be maintained against actions or inactions of the State and/or State authorities and not against R.N.B.Cs. which are the companies incorporated under the Companies Act. It has also been contended by way of preliminary objection that because of existence of alternative remedy under the Companies Act the public interest litigation cannot be maintained.

14. The maintainability of the writ petition, thus have been challenged in all its aspects.

15. In support of the first objection, namely, the State has no locus standi to move a public interest litigation, it has been contended by the respondents, that in a normal litigation undoubtedly the State could not have any locus standi to move this writ application not being aggrieved by the impugned action admittedly State not being a depositor having any right or interest against the private respondents. It has been further contended that if the nature of the public interest litigation is examined, it will appear that even in the public interest litigation the State has no locus standi to move the same. It has been argued inter alia that public interest litigation is intended to vindicate and effectuate public interest by prevention of violation of the rights, constitutional or statutory, or sizeable segments of the society, which owing to poverty, ignorance, social and economic disadvantages cannot themselves assert, their rights and quite often not even aware of those rights. Per Venkatachaliah, J. in Sheela Barse v. Union of India, . It has been further submitted on behalf of the respondent No. 7 that public interest litigation lies at the instance of some public spirited person and/ or association against Government and Governmental Agencies and in support of such contention the respondent No. 7 has relied again on the observation of Venkatachaliah, J. in Sheela Barse v. Union of India, para 6, wherein it has been observed that "the grievance in a public interest action, generally speaking, is about the content and conduct of the governmental action in relation to the Constitutional or Statutory rights or segments of Society and in certain circumstances the conduct of governmental policies."

16. Mr. Samaraditya Pal, learned Counsel appearing for the respondent No. 7 also took great pains in taking the Court through almost each and every decision of the Supreme Court on public interest litigation including the case of Janata Dal v. H. S. Chowdhury, , where the decisions reported in various public interest litigations are summarised and relying on such decision and particularly in the Janata Dal's case, it has been submitted that when the persons directly interested do not complain and do not express any grievance, then a third party even if it is the State cannot seek to champion their cause as a public interest litigation.

17. It has been submitted by Mr. Pal on behalf of the respondent No. 7 that the proposition that the State can also initiate Public Interest Litigation is absurd inasmuch as in that event the State would have to initiate Public Interest Litigation against itself to remedy the denial or non-fulfilment of rights of citizens by the State. It has been further submitted that the contention of the writ petitioners, inter alia that in view of the provisions of the Directive Principles of State Policy the State feels obliged to initiate this Public Interest Litigation to champion the cause of small depositor is misconceived as such Directive Principles of State Policy are only applicable in making laws.

18. On the aforesaid point namely the State cannot have any locus standi to move public interest litigation the respondent No. 2 after adopting the submission made on behalf of the respondent No. 7, has further contended relying on the decision of the Supreme Court in the case of State of Orissa v. Madan Gopal, ; in the case of Veerappa v, Raman & Raman, ; in the case of K. S. Rashid v. Income-tax Investigation Commission, ; and in the case of Calcutta Gas Company Ltd. v. State of West Bengal, , that the petitioner has no locus standi and right to file the instant writ application or seek the reliefs sought for inasmuch as the petitioner in no way is aggrieved by the alleged impugned action. It was contended inter alia following the aforesaid decisions of the Supreme Court, the existence of right is foundation of exercise of jurisdiction of the High Court under Article 226 of the Constitution of India and, therefore, it is only at the instance of the aggrieved party appropriate writ can be issued.

19. It cannot be disputed, however, that the concept of Public Interest Litigation, which was initially unknown to our jurisprudence, is a product of recent judicial innovation through judicial activism with intention to bring justice within the reach of the persons, who constitutes the low visibility area of humanity and is economically and socially oppressed and, therefore, unable to approach the Court to vindicate their rights in public interest. The concept of public interest litigation because of the reasons aforesaid is a departure from the age-old concept of 'locus standi' and 'persons aggrieved' so long accepted by the Court. Under such newly innovated concept of public interest litigation which was introduced for the first time by the Apex Court of the land more or less in the decision reported in the case of S. P. Gupta v. Union of India, , any public spirited person or association is permitted to go before the Court in public interest to vindicate constitutional or legal right of a determinate class of the society, who are economically or socially oppressed and are unable to approach the Court themselves. The aforesaid concept of public interest litigation introduced by the Apex Court how now come to stay through a number of subsequent decisions of the Supreme Court as also of different High Courts of the country and in that view of the matter it is too late in the day to argue in a public interest litigation that the petitioner has no locus standi to move the application he not being aggrieved by the impugned action. The decisions of the Supreme Court, therefore, in the case of State of Orissa v. Madan Gopal, , in the case of Veerappa v. Raman & Raman, , in the case of K. S, Rashid v. Income-tax Investigation Commission, and in the case of Calcutta Gas Company Ltd. v. State of West Bengal, , all of which were arrived at by the Supreme Court prior to the innovation of the concept of public interest litigation and where the Supreme Court had no occasion, therefore, to deal with public interest litigation cannot be helpful in the instant case to determine preliminary objection raised by the respondents. Such decisions not being applicable at all in the instant case, the same may not engage our attention any further.

20. The first question, therefore, which has come up for determination by this Court relating to the aforesaid preliminary objection raised by the respondents is whether a public interest litigation can be initiated by the State when normally a public interest litigation is initiated by any public spirited person or association against omission or commission on the part of the State affecting the fundamental or legal right of a determinate class of persons who are unable to come before the Court.

21. Determination of this question is dependent on the understanding of the concept of the public interest litigation and the object, scope and extent thereof, which again can best be made by going through the different decisions of the Supreme Court on public interest litigation, where the Supreme . Court innovated, developed, nurtured and explained the concept of public interest litigation.

22. In the case of Mumbai Kamgar Sabha v. Abdulbhai Faizultabhai, , wherein the seed of the concept of Public Interest Litigation was first sown by Krishna Iyer, J., the Supreme Court held thus (at p. 1458 of AIR);-- "Our adjectival branch of jurisprudence, by and large, deals not with sophisticated litigants but the rural poor, the urban lay and the weaker societal segments for whom law will be an added terror if technical misdescrip-tions and deficiencies in drafting pleadings and setting out the cause-title create a secret weapon to non-suit a party. When foul play is absent, and fairness is faulted, latitude is a grace of processual justice. Test litigations, representative actions, pro bono publico and like broadened forms of legal proceedings are in keeping with the current accent of justice to the common man and a necessary disincentive to those who wish to by-pass the real issues on the merits by suspect reliance on peripheral, procedural shortcomings. Even Article 226, viewed in wider perspective, may be amenable to ventilation of collective or common grievances, as distinguished from assertion of individual rights, although the traditional view, backed by precedents has opted for the narrower alternative. Public interest is promoted by a spacious construction of locus standi in our socio-economic circumstances and conceptual latitudinarianism permits taking liberties with individualisation of the right to invoke the higher Courts where the remedy is shared by a considerable number, particularly when they are weaker. Less litigation, consistent with fair process, is the aim of adjectival law."

23. In the case of Fertilizer Corporation Kamgar Union v. Union of India, , where the terminology of the public interest litigation was used for the first time, the Supreme Court held thus (at pp. 353-54 of AIR) :-- "We have no doubt that in competition between Courts and streets and dispenser of justice, the rule of law must win the aggrieved person for the law Court and wean him from the law-less street. In simple terms, locus standi must be liberalised to meet the challenges of the times. Ubi jus ibi remedium must be enlarged to embrace all interests of public minded citizens or organisations with serious concern for conservation of public resources and the direction and correction of public power so as to promote justice in its triune facets. *** *** ***

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The argument is, who are you to ask about the wrong committed or illegal act of the Corporation if you have suffered no personal injury to property, body, mind or reputation? An officious busybody picking up a stray dispute or idle peddlar or blackmail-litigation through abuse of the process of the Court cannot be permitted to pollute the Court instrumentality, for private objectives. Public justice is always and only at the service of public good, never the servant or janitor of private interest or personal motive. Law, as I conceive it, is a social auditor and this audit function can be put into action only when someone with real public interest ignites the jurisdiction. We cannot be scared by the fear that all and sundry will be litigation happy and waste their time and money and the time of the Court through false and frivolous cases. In a society where freedoms suffer from atrophy and activism is essential for participating public justice, some risks have to be taken and more opportunities opened for the public minded citizen to rely on the legal process and not be repelled from it by narrow pedantry now surrounding locus standi. *** *** ***

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Public interest litigation is part of the process of participate justice and 'standing' in civil litigation of that pattern must have liberal reception at the judicial doorsteps.".

24. In the case of S. P. Gupta v. Union of India, , the Supreme Court crystallised the concept of public interest litigation and explained the object, purpose, scope and limitation of the same by holding thus:-- "It may therefore now be taken as well established that where a legal wrong or a legal injury is caused to a person or to determinate class of persons by reason of violation of any constitutional or legal right or any burden is imposed in contravention of any constitutional or legal provision or without authority of law or any such legal wrong or legal injury or legal burden is threatened and such person or determinate class of persons by reason of poverty, helplessness of disability or socially or economically disadvantaged position, unable to approach the Court for relief, any member of the public can maintain an application for an appropriate direction, order or writ in the High Court under Article 226 and in case of breach of any fundamental right of such person or determinate class of persons, in this Court under Article 32 seeking judicial redress for the legal wrong or injury caused to such person or determinate class of persons. Where the weaker sections of the community are concerned, such as under-trial prisoners languishing in jails without a trial inmates of the Protective Home in Agra or Harijan workers engaged in road construction in the Ajmer District, who are living in poverty and destitution who are barely eking out a miserable existence with their sweat and toil, who are helpless victims of an exploitative society and who do not have easy access to justice, this Court will not insist on a regular writ petition to be filed by the public spirited individual espousing their cause and seeking relief for them. This Court will readily respond even to a letter addressed by such individual acting pro bono publico. It is true that there are rules made by this Court prescribing the procedure for, moving this Court for relief under Article 32 and they require various formalities to be gone through by a person seeking to approach this Court. But it must not be forgotten that procedure is but a handmaiden of justice and the cause of justice can never be allowed to be thwarted by any procedural technicalities. The Court would therefore unhesitatingly and without the slightest qualms of conscience cast aside the technical rules of procedure in the exercise' of its dispensing power and treat the letter of public minded individual as a writ petition and act upon it. Today a vast revolution is taking place in the judicial process, the theatre of the law is fast changing and the problems of the poor are coming to the forefront. The Court has to innovate the new methods and devise new strategies for the purpose of providing access to justice to large masses of people who are denied their basic human rights and to whom freedom and liberty have no meaning. The only way in which this can be done is by entertaining writ petitions and even letters from public spirited individuals seeking judicial redress for the "benefit of persons who have suffered a legal wrong or a legal injury or whose constitutional or legal right has been violated but who by reason of their poverty or socially or economically disadvantaged position are unable to approach the Court for-relief. It is in this spirit that the Court has been entertaining letters for judicial redress and treating them as writ petitions and we hope and trust that the High Courts of the Country will also adopt this pro-active, goal-oriented, approach. But we must hasten to make it clear that the individual who moves the Court for judicial redress in cases of this kind mifst be acting bona fide with a view to vindicating the cause of justice and if he is acting for personal gain or private profit or out of political motivation or other oblique consideration, the Court should not allow itself to be activised at the instance of such person and must reject this application at the threshold, whether it be in the form of a letter addressed to the Court or even in the form of a regular writ petition filed in Court. We may also point out that as a matter of prudence and not as a rule of law the Court may confine this strategic exercise of jurisdiction to cases where legal wrong or legal injury is caused to a determinate class or group of persons or the constitutional or legal right of such determinate class or group of persons is violated and as far as possible, not entertained cases of individual wrong or injury at the instance of a third party, where there is an effective legal aid organisation which can take care of such cases."

25. In the case of Bandhua Mukti Morcha v. Union of India, , the Supreme Court held thus (Para 11) :--

"We are so much accustomed to the concepts of Anglo-Saxon jurisprudence which requires every legal proceeding including a proceeding for a high prerogative writ to be cast in a rigid or definitive mould and insist on observance of certain well settled rules of procedure, that we implicitly assume that the same sophisticated procedural rules must also govern a proceeding under Article 32 and the Supreme Court cannot permit itself to be freed from the shackles of these rules even if that be necessary for enforcement of a fundamental right. It was on the basis of this impression fostered by long association with the Anglo-Saxon system of administration of justice that for a number of years this Court had taken the view that it is only a person whose fundamental right is violated who can approach the Supreme Court for relief under Article 32 or in other words, he must have a cause of action for enforcement of his fundamental right. It was only in the year 1981 in the Judges Appointment and Transfer Case, , that this Court for the first time took the view that where a person or class of persons to whom legal injury is caused by reason of violation of a fundamental right is unable to approach the Court for judicial redress on account of poverty or disability or socially or economically disadvantaged position, any member of the public acting bona fide can move the Court for relief under Article 32 and a fortiori, also under Article 226, so that the fundamental right may become meaningful not only for the rich and the well-to-do who have the means to approach the Court but also for the large masses of people who are living a life of want and destitution and who by reason of lack of awareness assertiveness and resources unable to seek judicial redress. This view which we took in the Judges Appointment and Transfer Case is clearly within the terms of Article 32 if only we look at the language of this Article uninfluenced and uninhibited by any pre-conceptions and prejudices or any pre-conceived notions. While interpreting Article 32, it must be borne in mind that our approach must be guided not by any verbal or formalistic canons of construction but by the paramount object and purpose for which this Article has been enacted as a Fundamental Right in the Constitution and its interpretation must receive illumination from the trinity of provisions which permeate and energise the entire constitution namely, the Preamble, the Fundamental Right, and the Directive Principles of State Policy. Clause (1) of Article 3 confers the right to move the Supreme Court for enforcement of any of the fundamental rights, but it does not say as to who shall have this right to move the Supreme Court nor does it say by what proceedings the Supreme Court may be so moved. There is no limitation in the words of Clause (1) of Article 32 that the fundamental right which is sought to be enforced by moving the Supreme Court should be one belonging to the person who moves the Supreme Court not does it say that the Supreme Court should be moved only by a particular kind of proceeding. *** *** ***

*** *** ***

We may point out that what we have said above in regard to the exercise of jurisdiction by the Supreme Court under Article 32 must apply equally in relation to the exercise of jurisdiction by the High Courts under Article 226, for the latter jurisdiction is also a new constitutional jurisdiction and it is conferred in the same wide terms as the jurisdiction under Article 32 and the same powers can and must therefore be exercised by the High Courts while exercising jurisdiction under Article 226. In fact, the jurisdiction of the High Court under Article 226 is much wider, because the High Courts are required to exercise the jurisdiction not only for enforcement of a fundamental right but also for enforcement of any legal right and there are many rights conferred on the poor and the disadvantaged which are the creation of statute and they need to be enforced as urgently and vigorously as fundamental rights."

26. In the case of Bihar Legal Support Society, New Delhi v. Chief Justice of India, , the Supreme Court held thus (Para 2) :--

"Now, we may point out that so far as this Court is concerned, the special leave petitions of "small men" are as much entitled to consideration as special leave petitions of "big industrialists". In fact, this Court has always regarded the poor and the disadvantaged as entitled to preferential consideration than the rich and the affluent, the businessmen and the industrialists. The reason is that the weaker sections of Indian humanity have been deprived of justice for long, long years: they have had no access to justice on account of their poverty, ignorance and illiteracy. They are not aware of the rights and benefits conferred upon them by the Constitution and the law. On account of their socially and economically disadvantaged position they lack the capacity to assert their rights and they do not have the material resources with which to enforce their social and economic entitlements and combat exploitation and injustice. The majority of the people of our country are subjected to this denial of access to justice and overtaken by despair and helplessness, they continue to remain victims of an exploitative society where economic power is concentrated in the hands of a few and it is used for perpetuation of domination over large masses of human beings. This Court has always, therefore, regarded it as its duty to come to the rescue of these deprived and vulnerable sections of Indian humanity in order to help them realise their economic and social entitlements and to bring to an end their oppression and exploitation. The strategy of public interest litigation has been evolved by this Court with a view to bringing justice within the easy reach of the poor and the disadvantaged sections of the community. This Court has always shown the greatest concern and anxiety for the welfare of the large masses of people in the country who are living a life of want and destitution, misery and suffering and has become a symbol of the hopes and aspirations of millions of people in the country."

27. In the case of Sheela Barse v. Union of India, , the Supreme Court held thus (Para 6):--

"In a public interest litigation, unlike traditional dispute-resolution-mechanism, there is no determination or adjudication of individual rights. While in the ordinary conventional adjudications the party structure is merely bi-polar and the controversy pertains to the determination of the legal consequences of past events and the remedy is essentially linked to and limited by the logic of the array of the parties, in a public interest action the proceedings cut across and transcend these traditional forms and inhibitions. The compulsions for the judicial innovation of the technique of a public interest action is the constitutional promise of a social and economic transformation to usher-in an egalitarian social order and a welfare-State. Effective solutions to the problems peculiar to this transformation are not available in the traditional judicial system. The proceedings in a public interest litigation are, therefore, intended to vindicate and effectuate the public interest by prevention of violation of the rights, constitutional or statutory, or sizeable segments of the society, which owing to poverty, ignorance, social and economic disadvantages cannot themselves assert and quite often not even aware of those rights. The technique of public interests litigation serves to provide an effective remedy to enforce these group-rights and interests. In order that these public causes are brought before the Courts, the procedural techniques judicially innovated specially for the public interest action recognises the concomitant need to lower the locus standi thresholds so as to enable public minded citizens of social action groups to act as conduits between these classes of persons of inherence (sic) and the forum for the assertion and enforcement of their rights. The dispute is not comparable to one between private parties with the result there is no recognition of the status of a Bo minus-Litis for any individual or group of individuals to determine the course or destination of the proceedings, except to the extent recognised and permitted by the Court."

28. In the case of Janata Dal v. H. S. Chowdhury, , where the different decisions of the Supreme Court in public interest litigations were summarised, the Supreme Court tried to define the public interest litigation by holding thus:-- "Therefore, lexically the expression 'PIL' means a legal action initiated in a court of law for the enforcement of public interest or general interest in which the public or a class, of the community have pecuniary interest or some interest by which their legal rights or liabilities are affected."

29. In the said judgment the Supreme Court also quoted with approval the following definition of Public Interest as contained in Strouds Judicial Dictionary and Black's Law Dictionary.

30. In Strouds Judicial Dictionary,

Vol. IV (4th Edn.) 'public interest' is defined thus:

"Public Interest--1. A matter of public or general interest does not mean that which is interesting as gratifying curiosity or a love of information or amusement; but that in which a class of the community have a pecuniary interest, or some interest by which their legal rights or liabilities are affected." (Per Cam-bel,CJ., in R. v. Dedfordshire (18S5) 24 LJQB 81).)

31. In Black's Law Dictionary (6th Edn.), 'public interest' is defined as follows :--

"Public Interest -- Something in which the public, the community at large, has some pecuniary interest, or-some-interest-by which their legal rights or liabilities are affected. It does not mean anything so narrow as mere curiosity, or as the interests of the particular localities, which may be affected by the matters in question. Interest shared by citizens generally in affairs of local, State or national Government......"

32. Examination of the various decisions

of the Supreme Court on Public Interest Litigation right from the case of S. P. Gupta v. Union of India, will reveal that public interest litigation is an outcome of judicial activism and it is ajudicial innovation for ensuring rendering of social and economic justice to the under-privileged and the Supreme Court while nurturing such concept in the case of S. P. Gupta v. Union of India and later on developing and extending the same in subsequent decisions, time and again has recorded that the concept of public interest litigation is still in the process of evolution and while laying down the basic norms and the guidelines of such public interest litigation the Supreme Court has also accepted the fact that there may be public interest litigation of a nature different from one which is commonly faced.

33. In the case of Sheela Barse v. Union of India, , the Supreme Court was of the view that in public interest litigation both the party structure and the matters in controversy are sprawling and amorphous, to be defined and adjusted or readjusted as the case may be, ad hoc, according as the exigencies of the emerging situations; the relief to be granted looks to the future and is, generally, corrective rather than compensatory which, sometimes, it also is. The pattern of relief need not necessarily be derived logically from the rights asserted or found. More importantly, the court is not merely a passive, disinterested umpire or onlooker, but has a more dynamic and positive role with the responsibility for the organisation of the proceedings, moulding of the relief and this is important also supervising the implementation thereof.

34. Thus in the Janata Dal v. H. S. Chowdhury's case, , the Supreme Court held thus (Paras 59 and 66):--

"Though it is imperative to lay down clear guidelines and propositions; and outline the correct parameters for entertaining a Public Interest Litigation particularly on the issue of locus standi, yet no hard and fast rules have yet been formulated and no comprehensive guidelines have been evolved. There is also one view that such adumberation is not possible and it would not be expedient to lay down any general rule which would govern alt cases under all circumstances.

*** *** ***

*** *** ***

Though we have, in our country, recognised a departure from the strict role of locus standi as applicable to a person in private action and broadened and liberalised the rule of standing and thereby permitted a member of the public, having no personal gain or oblique motive to approach the Court for enforcement of the constitutional or legal rights of socially or economically dis-advantaged persons who on account of their poverty or total ignorance of their fundamental rights are unable to enter the portals of the courts for judicial redress, yet no precise and inflexible working definition has been evolved in respect of locus standi of an individual seeking judicial remedy and various activities in the field of PIL. Probably, some reservation and diversity of approach to the philosophy of PIL among some of the Judges of this Court as reflected from the various decisions of this Court, is one of the reasons for this Court finding it difficult to evolve a consistent jurisprudence in the field of PIL. True, in defining the rule of locus standi no 'rigid litmus test' can be applied since the broad contours of PIL are still developing space seemingly with divergent views on several aspects of the concept of this newly developed law and discovered jurisdiction leading to a rapid transformation of judicial activism with a far-reaching change both in the nature and form of the judicial process."

35. The reason is obvious. On the face of vast revolution that takes place in the judicial process, the theatre of the law is fast changing and the problems of the poor are coming to the forefront. (As observed by the Supreme Court at para 17 in the case of S. P. Gupta v. Union of India, ) and to face such a challenge the Court is required to innovate new methods and devise new strategies for the purpose of providing access to justice to large masses of people who are denied their basic human rights and to whom freedom and liberty have no meaning. The public interest litigation is one of such judicial innovations to meet such challenge. In public , interest litigation the concept of locus standi and "person aggrieved" is relaxed and petitions even at the instance of the third parties are accepted championing the cause for the determinate class of people socially or economically oppressed and who are unable to approach the Court for protection of their fundamental or other legal right. Under such circumstances, there cannot be a rigid form, invariable structure or unalterable field and fact situation of a public interest litigation.

36. Thus when even a public spirited person or association not having normally any locus standi to move a petition can be allowed to move a public interest litigation in public interest for vindication and protection of the constitutional or legal right of a determinate and oppressed class unable to approach the Court, in my view there cannot be any justification whatsoever to deny such right to the State itself in a fit and proper case to move public interest litigation for protection and vindication of the legal and constitutional right of the underprivileged and of a determinate class of persons who are unable to approach the Court who sometimes are not even unaware of their rights to save themselves from exploitations. It is now the consistent view of the Supreme Court that every action of the State is for public interest and must be for public good and therefore every action of the State is to be tested in the touchstone of the Article 14 of the Constitution. Thus if every action of the State is to be for public interest and for public good, the State can safely be said to be repository of public interest. Under such circumstances if by the impugned action of a body or person amenable to writ jurisdiction complained of, the right and interest of a determinate oppressed class unable to approach the Court, is affected, the State can also be allowed to maintain a public interest litigation in a fit and proper case, particularly in absence of suitable legislation and inability to legislate in the particular field, to protect and vindicate the rights of such determinate class before the Court of law and if the basic ingredients of the public interest litigation are found to be present, the application cannot be thrown out at the threshold merely on the ground the petition has been moved by the State.

37. In a public interest litigation, in my view, the emphasis has to be on the object and purpose of the same, namely rendering of social and economic justice to the weak and underprivileged and vindication and protection of their rights and interest they being unable to approach the Court, and not on the person who sets the Court on motion. Any person should be allowed to move the Court, except a busy body, interloper, person having his own interest, publicity seeker etc. The emphasis in the instant case being protection of the rights and interest of the countless small depositors who belong to the weaker section of the society and are unable to approach the Court themselves and to rescue them from their financial ruination, and deprivation of life's savings, there is no reason why State should not be permitted to take up their cause by way of public interest litigation, when the 1987 Direction and the Reserve Bank of India Act, do not contain any provision for rescuing the small depositors from financial ruination by return of their money with dues accrued thereon by the R.N.B.Cs. who have violated the provisions of the 1987 Directions and when it is beyond the competence of the State of West Bengal to bring about any legislation in respect thereof.

38. The submission of Mr. Pal that to permit the State to move a public interest litigation will be an absurd proposition inasmuch as the same would mean that the State is complaining against its own omission or commission, is not tenable. Such submission in my view, obviously emanates from the erroneous conception of the public interest litigation namely that a public interest litigation can be initiated only against State actions or inactions although no such proposition has been laid down in the different decisions of the Supreme Court and the other High Courts in public interest litigations. This point however will be dealt with in detail hereinafter as this is also one of the grounds on which the maintainability of the writ petition has been challenged.

39. This now takes us to the next point of the preliminary objection taken by the respondents namely in any event, the petitioner cannot obtained relief as it is seeking the same against respondents R.N.B.Cs. which are companies incorporated under the Companies Act and are not either State or instrumentality of the State or even an authority within the meaning of Art. 12 of the Constitution and therefore not even amenable to writ juris diction.

40. The submission of Mr. Mukherjee appearing for the petitioner, on the other hand is that even in an ordinary course of event writ lies'even against a person, or body of persons even though the same is not State or instrumentality of the State or an authority within the meaning of Art. 12 of the Constitution, if such a person performs statutory duty or is invested with certain statutory obligations or such a person is performing any public duty or invested with public obligations or duty. It has been submitted on behalf of the petitioner that the fact, 1987 Direction was promulgated for public interest and for protection of the interest of infinite number of small depositors is not beyond any dispute and has been declared to be so by the Supreme Court in the Timex Case, . The respondents, R.N.B.Cs. therefore, because of such 1987 Directions have public obligation and duty to carry on their business only after fulfilling such, public obligation and duties for the protection of the interest of the small depositors, but they not having fulfilled such public duties, obligations but actually having violated them, which has resulted in jeopardising the interest and the legal and constitutional right of the small depositors, even in an ordinary circumstances, a writ would have been maintainable against such R.N.B.Cs. and therefore there is no reason why in a public interest litigation writ cannot be maintained against such a company.

41. Mr. Pal, appearing for the respondent No. 7 in support of his submission that the

public interest litigation can lie only against the Government and governmental agencies has relied in the decision of the Supreme Court in the case of Sheela Barse v. Union of India as also in the case of Janata Dal v. H. S. Chowdhury . Mr. Palhas relied on the observations of Venkatachaliah, J. (as the Hon"ble Chief Justice was then) in the case of Sheela Barse to the effect (para 11 of the judgment) that the grievance of the public interest action generally speaking is about the content and conduct of the Government and governmental agencies in relation to the constitutional or statutory rights and segments of society and in certain circumstances the conduct of Government policies.

42. Although Mr. Pal wants this Court to accept the said observations of the Supreme Court as conclusive pronouncement of law that a public interest litigation lies only against the Government and governmental agencies, I am unable to do so. The reference to the aforesaid observations in the aforesaid case of Sheela Barse, clearly indicates that it was never observed by his Lordship that no public interest litigation can be maintained except against Government or governmental agencies. But it was observed by his Lordship that "generally speaking" grievance in a public interest action is about the content and conduct of the Government action in relation to constitutional or statutory rights of segments of society and in certain circumstances . the conduct of Government policies. The expression used by his Lordship while making such observations to the effect "generally speaking" can hardly be ignored and the same clearly indicates that generally a public interest action is brought against governmental action. But the very next sentences in the said paragraph makes it abandonedy clear that there is no hard and fast rule in public interest litigation that it can lie only against Government or governmental action, on the contrary, both the party structure and the matters in controversy are sprawling and amorphous to be defined and adjusted or readjusted as the case may be, ad hoc, according to exigencies of the emerging situation. The entire relevant portion of the aforesaid para 11 of the said judgment may be quoted hereunder:--

"In a public interest litigation, unlike

traditional dispute resolution mechanism,

there is no determination or adjumcation of

individual rights. While in the ordinary

conventional adjudications the party struc

ture is merely bi-polar and the controversy

pertains to the determination of the legal

consequences past events and the remedy is

essentially linked to and limited by the logic of

the array of the parties, in a public interest

action the proceedings cut across and trans

cend these traditional forms and inhibitions.

The compulsion for the judicial innovation

the technique of a public interest action is the

constitutional promise of a social and eco

nomic transformation to usher in an equali-

tarian social order and a welfare State. The

dispute is not comparable to one between

private parties with the result there is no

recognition of the status of a dominus litis for

any individual or group of individuals to

determine the course or destitution of the

proceedings, except to the extent recognised

and permitted by the Court. The "rights" of

those who bring the action on behalf of the

other must necessarily be subordinate to the

'interests' of those whose benefit the action is

brought. The grievance in a public interest

action, generally speaking, is about the

content and conduct of Government action in

relation to the constitutional or statutory

rights of segments of society and in certain

circumstances the conduct and Government

policies.-Necessarily, both the party structure

and the matters in controversy are sprawling

and amorphous, to be defined and adjusted or

readjusted as the case may be ad hoc".

according as the exigencies of the emerging

situations The proceedings do not partake of

predetermined private law litigation models

but are exigenously determined by variations

of the theme". '

43. It has also been submitted on behalf of the respondent No. 7 in support of the contention that the public interest litigation can lie only against the action of the Government or governmental agencies, that in the case of Janata Dal v. H. S. Chowdhury (supra) all the cases which the Supreme Court referred to in the said judgment while summarising the law of public interest litigation involved public interest litigation against State action.

44. In all the cases however State action was not complained of. In Asiad case the complaint was against the action of the contractors in depriving the labourers of their right.

45. That apart, in my view, however, the fact that in most of the different public interest litigations referred to by the Supreme Court in the said case involved public interest litigation against the Slate action or inaction, can hardly be treated as a pronouncement of law by the Supreme Court to the effect that no public interest litigation can lie except against the action of the Government or governmental agencies, particularly, when in none of the decisions it has ever been laid down by the Supreme Court, that public interest litigation cannot lie except against the Government action or inaction or against the Government agencies. On the contrary, the following observations of the Supreme Court in the aforesaid case of Janata Dal will indicate that in defining the rule of locus standi no rigid litmus test can be applied as the law is still developing: "Though we have, in our country, recognised a departure from the strict rule of locus standi as applicable to a person in private action and broadened and liberalised the rule of standing and thereby permitted a member of the public, having no personal gain or oblique motive to approach the Court for enforcement of the constitutional or legal rights of socially or economically disadvan-taged persons who on account of their poverty or total ignorance of their fundamental rights are unable to enter the portals of the courts for judicial redress, yet no precise and inflexible working definition has been evolved in respect of locus slandi of an individual seeking judicial remedy and various activities in the field of PIL. Probably, some reservation and diversity of approach to the philosophy of PIL among some of the Judges of this Court as reflected from the various decisions of this Court, is one of the reasons for this Court finding it difficult to evolve a consistent jurisprudence in the field of PIL. True, in defining the rule of locus standi no 'rigid litmus test' can be applied since the broad contours of PIL are still developing apace seemingly with divergent views on several aspects of the concept of this newly developed law and discovered jurisdiction leading to a rapid transformation of judicial activism with a far-reaching change both in the nature and form of the judicial process".

46. Since the very object of the public interest litigation is to ensure public interest and protection of legal or constitutional right of disadvantaged and oppressed groups or. individuals and to render social and economic justice to them, there cannot be any reason why in a fit and proper case the Court would hesitate to entertain a public interest action against any non-governmental institution or any person invested with statutory or public duties or public obligations when their omission or commission affects the rights of disadvantaged groups or individuals who are unable to approach the Court and legal injury or legal wrong is caused to them.

47. It cannot "be disputed even in an-ordinary circumstances a writ will lie even against a person or non-governmental body or organisation when they perform statutory duties or are invested with public duties and/or obligations.

48. In the case of Nagpur Corporation v. Nagpur Electric Light and Power Co. Ltd. , the Bombay High Court held that a writ or mandamus can be issued against the Nagpur Electric Light and Power Co. Ltd. Following the decisions of the Supreme Court in the case of Sohan Lal v. Union of India , Bombay High Court held that the writ in the nature of mandamus can be issued against a person directing him to do some particular thing specified in the order which appertains to his office and is in the nature of a public duty and the statutory duty devolving upon a public utility concern is a public duty. It was held that a public utility has the duty to supply a commodity or to furnish service to the public. A writ can issue at the instance of any consumer to a public utility concern for its failure to perform its duty or from restraining it from abusing its power under any of the provisions of the Act or under the licence.

49. In Halsbury's Laws of England, 3rd Edn., Vol. II, paras 159 and 170 it is observed thus:--

Para 159:-- "What mandamus is. The order of mandamus is an order of a most extensive remedial nature, and is, in form, a command issuing from the High Court of justice, directed to any person, Corporation or inferior Tribunal, requiring him or them to do some particular thing therein specified/ appertains to his or their office and is in the nature of a public duty. Its purpose is to supply defects of justice, and accordingly it will issue to the end that justice may be done in all cases, whether there is a specified legal right and not the specific legal remedy for enforcing that right; it may issue in cases where although there is an alternative legal remedy, yet that mode of redress is less convenient, beneficial and effectual." Para 170:-- "Enforcement of statutory duties. An order of mandamus will be granted ordering that to be done which a statute requires to be done, and for this Rule to apply it is not necessary that the party or Corporation on whom the statutory duty is imposed should be a public official or an official body. In order, however, for an order of mandamus to issue for the enforcement of a statutory right it must appear that the statute in question imposes a duty.............."" ............. a mandamus will issue to an official of a society to compel to carry out the terms of the statute by which the society is controlled."

50. In the case of Sudhir Chandra Neogi v. Calcutta Tramways Co. Ltd. , D. N. Sinha, J. held inter alia that there are instances in which such writs have been issued in the case of company or even a private individual.

51. In the case of Lt. Col. Khajoor Singh v. Union of India reported in AIR 1961 SC 352, Supreme Court held inter alia that under Art. 226 of the Constitution power is conferred on the High Court to issue to any person or authority or any given case to any. Government, writs or orders there specified for enforcement of any of the rights conferred ' by Part HI and for any other purpose.

52. In Praga Tools Corporation v. C. V. Imamual , it was held by the Supreme Court inter alia an order of mandamus is, a command directed to a person, Corporation or an inferior Tribunal requiring him or them to do a particular thing therein specified which pertains to his or their office and is in the nature of a public duty, it is however, not necessary that the person or the authority on whom statutory duty is imposed need be a public official or an official body. A mandamus can issue, for instance, to an official of a society to compel him to carry out the terms of the statute under or by which the society is constituted or governed and also to companies or corporations to carry out duties placed on them by the statute authorising their undertaking, Mandamus would also lie against a company constituted by a statute for the purpose, of fulfilling public responsibilities.

53. In the case of Ajayv. Dean, M.G.It of Medical Sciences , a Division Bench of the Bombay High Court held inter alia that the writ would lie against Kasturba Health Society registered 'as a public trust which was being run by Mahatma Gandhi Institute of Medical Sciences on the ground that the said society is performing a public duty or public function and is, therefore, amenable to writ jurisdiction even as a person.

54. In the case of Sri Anadi Mukti Sat Guru v. V. R. Rudani , one of the questions which came up for consideration for the Supreme Court as to whether writ will lie against the trust registered under Public Trust Act which was running a science college at Ahmedabad affiliated to the Gujarat University. In the said case teachers moved the writ petition claiming terminal benefits and arrear salary payable to them. In the said case the Supreme Court after holding that if the rights are purely of the private character no mandamus can issue, also held thus (paras 19 and 21):--

"The term "authority" used in Art. 226, in the context, must receive a liberal meaning unlike the term in Article 12. Article 12 is relevant only for the purpose of enforcement of fundamental rights under Article 32. Article 226 confers power on the High Courts to issue writs for enforcement of the fundamental rights as well as non-fundamental rights. The words any person or authority" used in Article 226 are therefore, not to be confined only to statutory authorities and instrumentalities of the State. They may cover any other person or body performing public duty. The form of the body concerned is not very much relevant. What is relevant is the nature of the duties imposed on the body. The duty must be judged in the tight of positive obligation owed by the person or authority to the affected party. No matter by what means the duty is imposed. If a positive obligation exists mandamus cannot be dented." *** *** ***

*** *** ***

"Here again we may point out that mandamus cannot be denied on the ground that the duty to be enforced is not imposed by the statute. Commending on the development of this law, Professor De Smith states: To be enforceable by mandamus a public duty does not necessarily have to be one imposed by statute. It may be sufficient for the duty to have been imposed by charter, common law, custom or even contract.' (Judicial Review of Administrative Act, 4th Edn., p. 540). We share this view. The judicial control over the fast expanding maze of bodies affecting the rights of the people should not be put into water-tight compartment. It should remain flexible to meet the requirements of variable circumstances. Mandamus is a very wide remedy which must be easily available 'to reach injustice wherever it is found'. Technicalities should not come in the way of granting that relief under Article 226. We, therefore, reject the contention urged for the appellants on the maintainability of the writ petition." In the said case Supreme Court followed its earlier decision in Praga Tools Corpn. v. C. V. Imamual (supra).

55. In the case of Sejat Rikeen Dalai v. Stock Exchange , the writ petitioner challenged the decision of the Bombay Stock Exchange refusing to admit her as a member of the Stock Exchange. Learned single Judge of the Bombay High Court relying on the decision of the Supreme Court in the case of Sri Anadi Mukti Sat Guru v. V. R. Rudani , held inter alia that as the Stock Exchange is a recognised Stock Exchange under the Securities Contracts (Regulation) Act, 1956 and was established under the said Act to assist, regulate and control dealings in securities and to ensure fair deal, the same are objects of public interests. Therefore, following wide into operation guaranteed under Article 226 of the Constitution, such stock exchange becomes amenable to a writ jurisdiction.

56. It will thus appear from the above-mentioned decisions of the Supreme Court and of different High Courts that even a person or a society or a company although may not be State or an instrumentality of State or an authority within the meaning of Article 12 of the Constitution, can be amenable to the writ jurisdiction if it performs a statutory duty or if it is invested with some public duty or public obligations or performing duties in public interest. Such duty is to bejudged in the light of positive obligation owed by the person to the affected party and if a positive obligation exists mandamus cannot be denied. Such public duty not necessarily have to be imposed by statute. The same may even be imposed by charter, common law, custom, even under contract.

57. If therefore even in an ordinary writ proceeding a person or a body of persons or a society, or company can be amenable to writ jurisdiction if it is invested with some public duty and obligation or if its functions are in public interest, it does not stand to reason why a public interest litigation cannot be maintained against person or association or persons or a society or a company, if it is invested with public duty and obligation or statutory duty and if its actions in not fulfilling such duty and obligation causes legal injury, to large number of persons, socially, economically or otherwise oppressed who are unable to approach the Court.

58. In my view, it has been rightly contended by Mr. Mukherjee appearing for the petitioner that the concerned R.N.B.Cs being the respondents Nos. 2, 6 and 10 are amenable to the writ jurisdiction as such R.N.B.Cs are invested not only with the statutory duty to carry on their business strictly in accordance with the provisions of the 1967 Directions issued by the Reserve Bank of India, their aforesaid duty to carry out such 1987 Direction is also public duty and public obligation and they owe a positive obligation to the numerous small depositors to strictly follow the 1987 Direction which was introduced by the Reserve Bank of India under S. 45K of the Reserve Bank of India Act in public interest and with the avowed object of safeguarding and protecting the interest of the small depositors.

59. Admittedly the said 1987 Directions were issued by the Reserve Bank of India under S. 45K(3) of the Reserve Bank of India Act, 1934, which empowers the Reserve Bank of India to give directions to non-banking institutions either generally or to any non-banking institution or group of non-banking institutions in particular, in respect of any matters relating to or in connection with the receipt of deposit, on public interest and the Reserve Bank had issued such directions in public interest. The fact that 1987 Direction has been issued for public interest, as a social control measure to safeguard and protect the interest of the numerous small depositors and to ensure repayment of their deposits, has now been judicially recognised. The Supreme Court in the case of Peerless General Finance & Investment Co. Ltd. v. Reserve Bank of India and Reserve Bank of India v. Timex Finance & Investment Co. Ltd. , while upholding the legality and the constitutionality of the aforesaid 1987 Direction came to a specific finding that such direction was passed to safeguard and to protect larger interest of the public and small depositors. While meeting the challenge as to the legality and consti- ., tutionality of the aforesaid directions by the said Timex Finance & Investment Co. Ltd. it was the contention of the Reserve Bank of India before the Supreme Court that such 1987 Directions were made for public interest and safeguarding the interest of millions of small depositors. After considering the submissions of all the parties the Supreme Court in para 40 of the said judgment inter alia held "if the. Reserve Bank has issued 1987 Directions to safeguard larger interest of the public and small depositors, it cannot be said that the Directions are so unreasonable as to be declared constitutionally invalid." In para 48 of the said judgment it was inter alia held by the Supreme Court "as seen, public performance of the direction is to ensure for the depositors' return of the amount payable on maturity together with interests, bonus, premium or other advantage, accrued or payable to the depositors." In para 55 of the said judgment the Supreme Court held thus :-- "The Reserve Bank of India issued the directions to regulate the operations of the R.N.B.Cs to safeguard the interest of the depositors. Payment of interest, bonus, premium or other advantage, in whatever name it may be called is reward for waiting or parting with liquidity. It is paid because of positive time preference (one rupee today is preferred to one rupee tomorrow) on the part of the depositor. 'Therefore, the directions avowed to preserve the right of the depositors to receive back the amount deposited with the - contracted rate of interest; it aims to prevent depletion of the deposits collected from the weaker segments of the society and also tends to effect free, flow of the business of the R.N.B.Cs who would desire to operate in their way." 60, In paras 58 and 59 of the said judgment of the Supreme Court held thus:--

"Investment agencies or commercial banks are intermediaries between savers and investors. They embark upon deposit mobilisation campaign to mop up the limited resources. Commercial banks or financial investments agencies, be it public sector or private sector, are varying with one another to scale new heights in deposit growth each year, devising different deposit scheme to suit the individual needs of the depositors or savers. Mushroom growth of non-banking agencies put afloat diverse schemes with alluring offers of staggering high rate of interests and other catchy advantages which would generate suspicion of the bona fides of the offer. But gullible depositors are lured to make deposits. It is not uncommon that after collecting fabulous deposits, some unscrupulous people surreptitiously close the company and decamp with the collections keeping the depositors at bay. Therefore, the need to regulate the deposits/ subscriptions in particular, in private sector became exploitation or mismanagement as social justice stratagem.

The directions are, therefore, a social control measure over the R.N.B.Cs in matters connected with the operations of the schemes or incidental thereto. The direction to investment in the channelised schemes at the given percentage in els. (a), (b) of proviso to para 6(1) was intended to deposit or keep deposited the collections in fixed deposit in the public sector banks or invest or keep invested in unencumbered approved securities so as to ensure safety, steady growth and due payment to the subscribers at maturity of the principal amount and the interest, bonus, premium or other advantage accrued thereon."

61. In para 64 of the said judgment the Supreme Court observed thus : --

"The regulation intends to preserve the corpus of deposits and the interest payable thereon as on date to be a tangible and unencumbered asset at all times, though not repayable. Indisputably the depositors/ subscribers stand as unsecured creditors. Undoubtedly every measure cannot be viewed or interpreted in the event of catastrophe overtaking the company. The catchy and alluring but beguiled terms of offer attract the vulnerable segments of the society to subscribe and keep subscribing the small savings for better tomorrow. But many a time, by the date of maturity, their hopes are belied and aspirations are frustrated or dashed to ground. They remain to be helpless spectators with all disabilities to recover the amounts. Pathetic financial position of some of the companies enumerated hereinbefore would amply demonstrate the agony to which the poor subscribers would be subjected to. The fixed deposits and unencumbered securities as per clauses (a) and (b) of the proviso to paragraph 6(1) would be 80% of the collections of the year of subscription and Shri Chatterjee contends to reduce it to 75% and to allow free play to use the residue in their own way. The difference is only 5% and others at vagery. The objects of the direction are to preserve the ability of the R.N.B.Cs to pay back to the subscribers/depositors at any given time; safety of the subscribers' money and his right to unencumbered repayment are thus of paramount public interest and the directions aimed to protect them."

62. In paras 68 and 69 of the said judgment Supreme Court observed thus:--

"The mechanism evolved in the directions is fool-proof as directed by this Court in First Peerless Case to secure the interest of the depositors as well capable to monitor the business management of every R.N.B.C. It also thereby protects interest of the employees /field staff/commission agent etc. as on-permanent basis overcoming initial convulsions. It was intended in the best possible manner to subserve the interest of all without putting any prohibition in the ability of a company to raise the deposit, even in the absence of any adequate paid up capital of reserve fund or such pre-commitment of the owner to secure such deposits. Thus the directions impose only partial control in the public interest of the depositors. The deposits invested or keep invested qua the company always remained its fund till date of payment at maturity or premature withdrawal in terms of the contract."

63. The abovementioned observations of the Supreme Court in the aforesaid judgment leave no manner of doubt that 1987 Directions were issued in public interest for securing and protecting the countless small/ depositors, who are prior to issue of such directions were at mercy of the company, and for the purpose of ensuring the return to the depositors of their money taken from them by the company. The duties of the R.N.B.Cs under the 1987 Directions are therefore not only statutory duties, but the same are also their public duties and obligations and they owe a positive obligation to the small depositors to follow such 1987 Directions. The money of the small depositors can only be taken and invested by the R.N.B.Cs and they can carry on their business only in accordance with the direction laid down in the 1987 Direction or not at all.

64. Under such circumstances, the R.N.B.Cs including the present respondents who are thus invested with such statutory and public duties and also obligations under the 1987 Directi6ns are certainly amenable to the writ jurisdiction of this Court if because of omission or commission on their part legal injuries are caused to the smalt depositors and their rights and interest, legal, constitutional or financial is affected.

65. In the instant case, the specific complaint of the State relying upon the aforesaid Reserve Bank Inspection Report, Audit Report and various Police Reports that the concerned R.N.B.Cs in the present writ petition have violated the aforesaid various provisions of the 1987 Direction with impunity and have invested on unsecured securities instead of investing in Nationalised Banks and Government Securities in utter violation of such 1987 Directions and in total disregard of the security and safety of the deposits of the countless small depositors have diverted fund to their subsidiaries companies or to the individual directors and have appropriated the same for their personal gain, and thereby leading the companies to the brink of financial disaster for which they are not in a position to pay back the deposits accepted from the depositors. Thus by the aforesaid acts of the said R.N.B.Cs the very purpose and object of the 1987 Directions which were introduced in public interest for protection of the rights and interest of the small depositors have been frustrated and the legal and constitutional right and interest of the small depositors have been jeopardised. By the aforesaid acts, therefore, the concerned R.N.B.Cs have failed to perform their statutory and public duty and fulfill their aforesaid obligation as enjoined upon them under the 1987 Direction.

66. Under such circumstances, not only the concerned R.N.B.Cs are amenable to writ jurisdiction, certainly appropriate directions and orders are warranted for rescuing the numerous small depositors from such financial disaster, from deprivation of their life's savings and to protect their right to livelihood by way of public interest action, they being unable to approach the Court themselves and not even being aware of their rights.

67. The preliminary objection of the respondents, therefore that the petition is not maintainable as no relief can be obtained against the concerned R.N.B.Cs which are companies incorporated under the Companies Act is rejected.

68. The next preliminary objection raised by the respondents as to the maintainability of the writ petition inter alia is that the writ petition does not disclose any cause of action for any proceeding for any forum and particularly in the writ jurisdiction of this Court. It has been submitted that cause of action means bundle of facts which the petitioner has to allege and prove in order to obtain the reliefs prayed for. But the instant writ petition is not based on allegation of facts but based on extracts of observations quoted from the earlier judgments of the Supreme Court, and even if the allegations made in the writ petition are assumed to be correct, the same do not disclose any cause of action. It has been submitted by Mr. Pal on behalf of the respondent No. 7 that in a proceeding under Art. 226 of the Constitution the causes of action which can form the basis are broadly confined to jurisdictional errors, illegal exercise of powers, arbitrariness, violation of principles of natural justice, perversity, mala fide , etc, none of which are involved in the instant writ petition. It has been submitted that even in a public interest litigation the same only pertains to the character of the proceeding under Art. 226 of the Constitution and therefore all the restrictive conditions and limitations in the matter of exercising writ jurisdiction remain intact. It has been sub-mitted that the grounds converge into a single theme helplessness of all Governmental authorities to take appropriate remedial steps in the absence of legal provision. In substance as well as in form the petition is an invitation by the executive to the Judiciary to act under the garb of its judicial function or judicial review and to legislate by usurping the power of the legislature and implement such legislation by usurping the function of the Executive. The controversy involved in the petition therefore cannot form the subject matter of a writ petition.

69. After careful examination of the writ petition as also the submission of the learned Counsel for the parties I am however unable to accept the contention of the respondents that the writ petition does not contain any cause of action at all. It is true that the writ petitioner has quoted freely from various observations made by the Supreme Court in various cases wherein the Supreme Court after taking note of the fact that the Non-Banking Financial Institution including the R.N.B.Cs. are doing business in such a manner that they are in the brink of financial disaster which would cause inculpable harm to large number of masses who are unable to approach the Court, observed that the Reserve Bank and the Slate authorities should take steps for protecf ion of their interests. It is also true that in the writ petition, after referring to such observations of the Supreme court, it has been pleaded by the petitioner in the writ petition that although under 1987 Directions, the Reserve Bank is empowered to regulate and restrict the business of the R.N.B.Cs. for protection of interests of the small depositors and can even issue the prohibitory order for carrying on their business any further but in absence of any provisions either in the 1987 Directions or any other legislation, Central or State, for recovery of the amount and refund of the same to the small depositors, the State is unable to take any action.

70. But it can hardly be said that because of such pleading that the writ petition does not

disclose any cause of action to move the instant writ petition by way of public interest litigation or the controversies involved in the petition cannot form the subject matter of a public interest litigation. As pointed out hereinbefore the very case made out in the writ petition is that although admittedly the aforesaid 1987 Directions were introduced by the Reserve Bank of India after the aforesaid observations made by the Supreme Court in the different case, for protecting and safeguarding the interest of small depositors and for public interest, such directions have been violated by the aforesaid R.N.B.Cs. with impunity and the deposits of the small depositors have been diverted to the sub- sidiary companies and to the directors and have been invested in unsecured securities jeopardising the interest of the small depositors and a situation has arisen where the R.N.B.Cs. are in the brink of financial disaster and are unable to pay back the money taken from the small depositors. The right and interest of the small depositors thus not only are seriously jeopardised for such violation of said statutory provision by the said R.N.B.Cs. which were enacted in public interest, the right to life which includes right to livelihood a'nd to live with human dignity guaranteed under Article 21 of the Constitution of the small depositors have also been violated as they are being deprived of their life's savings. Accordingly the State has come forward by way of public interest litigation for vindication and protection of such legal and constitutional right of the small depositors and for rescue of such small depositors from the impending financial disaster and to ensure return of their money. The interest of such large number of small depositors as also their legal and fundamental right being in jeopardy because of such action of the R.N.B.Cs. the same itself therefore is the cause of action for moving the instant public interest litigation by the State. The contention of the respondents therefore that there is no cause of action for moving the writ petition by way of public interest litigation is rejected.

71. Much criticism has been advanced on behalf of the respondents also by way of preliminary objection as to the intention of

the State in moving the writ petition and the subject matter of the same. It has been submitted that the different provisions of the Directive Principles of State Policy referred to in the writ petition cannot have any relevance in the present case as the same are relevant only in the matter of making laws and not otherwise.

72. In the writ petition the State Government after having referred to the different provisions of the Directive Principles of State Policy specially Articles 38(1), 38(2), 39(a), 39(b), 39(c), 39A, 41, 41(3), 41(4) and 41(5) have specially pleaded inter alia that the State of West Bengal considers it to be its duty in discharge of its constitutional obligation to initiate the present public interest litigation having regard to the aforesaid provisions in Part IV of the Constitution.

73. It is true the aforesaid provision of the Directive Principles of State Policy are not enforceable by any Court as provided under Article 37 of the Constitution, but are nevertheless fundamental in the Governance of the country and it shall be the duty of the State to apply these principles in making laws. Relying upon the aforesaid provision of Article 37 of the Constitution it has been submitted by the respondents that reference to the said Directive Principles are wholly irrelevant and the same can only be applied in making laws. The Supreme Court however now for more than a decade has also accepted the principles that the aforesaid Directive Principles of the State Policy which admittedly are fundamental in the goverance of the country should also be applied by the State in its different actions. The principles of equal pay for equal work, the absorption of ad-hoc employees, actions preventing monopoly and concentration of wealth to be common detriment are few examples of application of such principles even in the matter of Governmental action.

74. That apart, in view of the situation which has arisen because of the action of the respondent R.N.B.Cs. in violating the 1987 Direction and diversion of funds, if the State Government thinks that because of the aforesaid provision of the Directive Princi- ples of State Policy it is its duty to discharge its constitutional obligation to ensure that the ownership and control of the material resources of the community are so distributed as best to subserve the common good; that the operation of the economic system does not result in the concentration of Wealth and means of production to the common detriment and to meet the welfare of the people by securing and protecting as effectively as it may a social order in which justice, social, economic and political shall inform all the institutions of national life and to ensure that opportunities for securing justice are not denied to any citizen by reason of economic or other disabilities and consequentially to move the instant public interest litigation for securing and protecting the constitutional and legal right and the interest of a vast number of small depositors who are unable to approach the Court being economically oppressed and who perhaps are also blissfully ignorant- of the impending financial disaster that is awaiting them and for rendering social and economic justice to them, such action of the State Government cannot certainly be said to be lacking in bona fide.

75. Since the respondents have insisted that the objection as to the maintainability of the writ petition is to be heard by this Court as a preliminary point, the Court has to proceed on the footing that the averments in the pleadings are correct.

76. If the conduct of the respondents R.N.B.Cs. is examined, as pleaded in the writ petition as to the omission or commission of the respondents R.N.B.Cs. and as reflected in the Reserve Bank Audit Report, in the second report of the Auditor of the Company as well as the Police Reports, copies of which are annexed to the writ petition, supplementary affidavit and additional supplementary affidavits, the same will reveal a shocking and a dismal picture. It will appear from such reports that in utter disregard of the safety and security of money of the depositors the required amount of deposits were not invested with Nationalised Banks and Government Securities but in other unsafe securities; large amount of deposits which were initially invested with Nationalised Banks and Government Securities were diverted, withdrawn and invested with unsafe securities; crores of rupees were diverted to subsidiaries and group of companies as also directors of the company, the liability of the company in the balance sheet were understated, the said liability of the company have now far exceeded the paid up capital of the company and the whole attempt of the said respondents is to enrich themselves by adopting methods fair or foul at the cost of the depositors. The material portions of such reports in respect of three different respondents R.N.B.Cs. are staled hereunder:-- VARIOUS REPORTS RELATING TO

M/s. OVERLAND INVESTMENT

LIMITED, CALCUTTA

(A) Report of Inspection under Section 45N of Reserve Bank of India Act, 1934 by the Reserve Bank Inspection Team with reference to financial position of the company as on 31st March, 1993. (1) The amount of deposits collected has not been invested in the manner required under paragraph 6(1) of the 1987 Directions.

(2) The company did not appoint any public sector bank designated in that behalf.

(3) The company did not submit half-yearly auditor's certificate indicating the total deposit liabilities.

(4) The company violated the provisions of paragraphs 8, 13, 14 and 16 (2) of the 1987 Directions.

(5) Para 6 of the 1987 Directions required the company to invest not less than 10% of the aggregate deposit liabilities to be invested in fixed deposits with public sector banks : not less than 70% in unencumbered approved securities and not more than 20% of the aggregate deposit liabilities in other investi-ments. But the company's investment in fixed deposits in public sector banks stood at Rs. 17.21 lakhs out of Rs. 17.21 lakhs, deposit receipts to the extent of Rs, 6.05 lakhs had been pledged with United Bank of India for obtaining a secured loan of Rs. 6.00 lakhs and Rs.0.50 lakh pledged with P.N.L. Its investment in approved securities stood at meagre Rs. 3.65 crores as on March 31, 1993. The investment portfolio of the company during the last three years underwent a metamorphic change as a result of diversion of its investments from safe, secure and liquid assets to risk prone assets. The fixed deposits and Government securities have been mostly disinvested and the money has been utilised to purchase mainly enumerable numbers of plot of lands spread over different parts of West Bengal. The company syphoned off large quantity of money amounting to Rs. 667.25 lakhs in the guise of interest free loans and clean advanced to its subsidiaries and group companies owned by Shri A. K. Bhowal and his family members. The Balance-sheet represents as regards the amount of Secured Loan as well as the source of the same were totally wrong. The actual amount of secured loan is Rs. 52.39 lakhs and not Rs. 144.60 lakhs as shown in the Balance-sheet. The current liabilities at Standard Chartered Bank is Rs. 66.37 lakhs as regards against current assets (balance at bank) of Rs. 4.16 lakhs.

6. The corpus of deposits mobilised by the company under various schemes have been booked under 'unsecured loans' but the Balance-sheet of the company during all these years did not reveal the actual deposit liabilities of the company; since inception the company followed the practice of understating the liabilities by transferring a substantial portion of public deposits of Profit & Loss Account treating the same as income. After the judgment of the Supreme Court order dated January 30, 1992 the company had devised new schemes having the element of service charged and more or less transferring same proportion of money to Profit and Loss Account as income. Now it is taking 21.09% of the new collections as Profit & Loss Account. The amount of disclosed deposit liabilities stood at Rs. 2,534.22 lakhs as on 31st March, 1993 as against the actual liabilities of Rs. 5,799.59 lakhs and thus the amount of public deposit mobilised by the company up to March 31, 1993 reduced to the extent of maturity paid had been understated by Rs. 3,265.37 lakhs in violation of the provisions of para 12 of the Directions.

7. The depreciated book value of fixed

assets stood at Rs. 662.23 lakhs as on March

31, 1993. The fixed assets mainly consist of

land, building, office appliances, computer

equipments, tractor and trailer, cars and

other vehicles ets. out of which the share of

land and building including work-in-progress

amounting to Rs. 549.19 lakhs i.e. 82.93% of

the total fixed assets. The comapny had

purchased innumerable number of plots of

agricultural lands throughout West Bengal.

The company was contemplating to start

various projects like farm house, plantation,

hotels, fisheries for pisciculture etc. all such

projects were in the very preliminary stages

and none of the company's officials could

ascertain as to the time frame of such projects.

The entries made in the fixed assets Kutcha

register maintained in the Accounts Depart

ment of Head Office are mostly in pencil and

not signed by any official of the company.

Loans and Advances of the company as

shown is Rs. 1010.05 lakhs and Rs.25.18

lakhs as interest. But in most of the cases there

had been no sanction for such loans, and the

same were given under the verbal order of

Chairman-cum-Managing Director. Such

matters did not find a place in the Board

Meetings. Out of the total amount of loans

and advances of Rs. 1010.05 lakhs the subsi

diaries and group companies enjoyed a sum of

Rs. 667.26 lakhs i.e. 66.06% totally free of

interest. But the end use of such funds lent to

the subsidiaries and group companies was

never ascertained. Loans granted to the

certificate holders amounting to Rs. 88.74

lakhs. Advances to staff amounting to

Rs. 14.01 lakhs and advances to suppliers

Rs, 82.45 lakhs. Advances of purchase of land

Rs, 121.28 lakhs. The assistance of the mother

company to its subsidiaries showed increasing

trend in every year in respect of the subsidia

ries and group companies and there are no

papers/documents verifying details of the

transactions, and there was no system of

maintenance of books of accounts in that

regard.

8. There was no proper maintenance of

books of accounts. The company did not maintain any subsidiary ledgers for amount receivable, rent receivable payments made to various contractors/ brokers etc.

(9) The documents/papers pertaining to loans/advances granted to the subsidiaries and group companies were not made available.

(10) The documents/papers pertaining to land, buildings and other fixed assets were not maintained properly and were found to be scattered at different branches.

(11) The holding company's investment in shares and debentures to the tune of Rs. 208.00 lakhs were shown only on papers. No share scrip has yet been issued.

(12) There was no system of striking balances in the ledger accounts and the outstanding balances in the accounts had invariably been shown in pencil, the books are not written daily and are not signed by any official. (13) It was observed that off and on payments had been made to Shri A. K. Bhowal, Chairman-cum-Managing Director of the company for which detailed particulars e.g. purpose etc. had never been noted. Even the receipt was not available with the company. (14) Full particulars in respect of expenses incurred towards Advertisement and Publicity to the extent of Rs. 34.01 lakhs were not available at the Head Office.

(15) Payments made to various contractors/brokers were not supported by bills.

(B) Fresh Auditors Report for the year ending 31st March, 1993.

(1) Loans and Advances in the nature of Joans given by the company to employees and other parties; out of them most of the parties are hardly repaying the amounts.

(2) The company has not kept proper documents and records in the case where the company has granted loans and advances.

(3) Proper books of accounts as required

by law have not been kept by company.

(C) Annexure to the said Auditors' Report.

(1) Certificate holder wise schedule of subscription deposits along with claims paid thereon has not been prepared.

(2) The company had so far spent Rs. 50 lakhs as Building Under Construction in 1990-91 of the Registered Office of the company which has been transferred to building of Rs. 10,44,500/- in 1992-93. (3) The company so far purchased land for Rs.1,47,89,964/- up to 31st March, 1993, but no documentary evidence including register were produced before the Auditors.

(4) Investment against liabilities to the Certificate holders including interest and bonus as shown in the balance-sheet has not been made as per Clause 6 of the 1987 Directions.

(5) The deposit liabilities to the public as shown by the company has been understated. As the service charges and collection commissions have been apportioned from the deposit money and taken directly to the Profit and Loss Account as income. (6) In violation of the provisions of Clause 4A of Notification No. DPC 55/DG(O)-87 dated I5th May, 1987 issued by the Reserve Bank of India, the Company is charging service charges and commission not on the deposited amount but on the certificate value of such deposit which is yet to be received. The company's AcJual Deposit liabilities is amounting to Rs. 5709.59 lakhs which is not disclosed. (7) The ;company allotted 70510 shares amounting to Rs. 70.51 lakhs of which 41750, 26980 and 1780 shares were allotted to Shri A.K. Bhowal, Smt. K. Bhowal and Miss. J. Bhowal respectively. The proceeds of cheques of Rs.4 lakhs' received from Shri A. K. Bhowal was not credited during the year to the Company's A/c. The company could not show any documents in respect of payment made by Miss. J. Bhowal for Rs. 0.09 lakhs. As reqards sale of Unit '64, Rs. 16.24 lakhs and Rs. 16-18 lakhs was not transferred to the company's name. As regards sale of shares of subsidiaries for Rs. 21.68 lakhs, Rs. 10.80 lakhs, Rs. 1.69 lakhs the company could not produce any documents. Therefore the paid up share capital of the company should be Rs. 2,14,04,000/-. Out of secured loan of Rs. 114.60 lakhs, Rs. 62.21 lakhs represented credit balance awaiting bank adjustments, hence the total amount of secured loan should be Rs. 52.39 lakhs. (8) The company has not been able to produce any documents in respect of advances to companies and firms in which directors are interested aggregating Rupees 3,18,09,015.35 and advance to Overland Marketing Co. Pvt. Ltd. for Rupees 3,49,16,582.43. (9) The current liabilities for Rs. 28,132.26 has been increased to Rs. 1,01,37,576.35.

(10) The company has allowed the use of its landed properties to a group company namely Overland Farm House Ltd. without consideration. The company has not been able lo produce any board resolution in respect of the above arrangements. The company does not derive any income in respect of the above properties. The income derived from the properties are not passed on to this company by Overland Farm House Limited. Number of documents were not produced. before the Auditors for checking including Investment Register, Assets Register, Printing and Stationary Register, Land Recorded Register, Advance to Landlord, Advance to Staff, Loan to Certificates Holders, Advance to S. R. Advance for Land, Loan to Different Comapnies. (D) POLICE REPORTS

(A) Tamluk P. S. Case No. 55 dated 28-4-1994 under Sections 406/420/120B and 421 of the Indian Penal Code. This report inter alia indicates that the various bank accounts of the company as also some of the subsidiaries companies and bank accounts of the directors wherefrom it appears that even accounts are being maintained in the name of minor daughters of the director. (B) Tamluk P. S. Case No. 56 dated 28-4-1994 under Section 406/420/421/120B/34 of the Indian Penal Code.

The report inter alia gives a list of Real Estate of the company as disclosed by Shri A. K. Bhowa! before the Police wherefrom it will appear large number of plots of land under Burdwan, Marshidabad, 24 Pgs. (N) and North Bengal etc. and number of buildings in Calcutta and suburns have been purchased by the company. various reports relating to M/s. Verona Commercial Credit and Investments Company Limted.

A. Report of Inspection under Section 45N of Reserve Bank of India Act, 1934 by The Reserve Bank Inspection Team with reference to financial position of the company as on 31st March, 1993.

1. The deposit liabilities of the company have been understated by a sum of Rupees. 7003.27 lakhs in violation of para 12 of R.N.BC Directions No. 55 dated 15th May, 1987.

2. The company's entire investment in fixed deposits with the public sector banks at Rs. 79.88 lakhs as on 31st March, 1993 as pledged to United Bank of India, Durga-chowk, Haldia for obtaining a secured loan of Rs. 60.20 lakhs. Hence the company's investment in unencumbered fixed deposit was Nil as on 31st March, 1993 as against the requirement of Rs. 1175.98 lakhs as per paragraph 6(1)(a) of the Directions, ibid.

3. The company's investment in approved securities was Nil as against the requirement of Rs. 8281.88 lakhs as per para 6(1)(b) of the Directions.

4. Maintenance of books of Accounts of the Company was found to be far from satisfactory.

5. The inspection revealed that the management expense of the company includ-

ing commission paid to the agents was staggeringly high.

6. The company had failed to meet its statutory obligations in respect of Provident Fund of its employees.

7. Of the company's investment in Fixed Assets at Rs. 761.07 iakhs as on 31st March, 1993, land and buildings accounted for Rs. 588.42 lakhs.

8. The company's investment in shares of

its subscribers viz. Vanguard Lab(P) Ltd. and

Coal Chem (India) Ltd. aggregated to

Rs. 8.57 lakhs. Both the abovementioned

companies were however non functioning

since 1991.

9. The company had extended loans and advances to its Directors and to the companies where its directors are interested to the tune of Rs. 173.82 lakhs. No documents in respec! of the above loans and advances were produced. It has been observed that no re-payments in respect of the above loans and advances are forthcoming for quite a long time.

10. The company extended loans to the extent of Rs. 1466.6 lakhs to depositors as well as to the field staff, details of which, however could not be furnished by the company.

11. In the audited balance-sheet of the company for the year ended 31 st March,'1993 a huge sum amounting to Rs. 9.21 crores was shown as cash in hand. However, the company could not produce any documents evidencing holding of this cash balance.

12. During the inspection a forged letter purported to have been issued by the Reserve Bank of India certifying the financial soundness of the company was found in the records of the company. B. Reports of the Auditors for the year ending on 1992-93.

1. Loan Registers, P.F. Registers, Loan Security Registers, Investment Registers, Detailed Assets & Liabilities Registers and Mutual Benefit Certificates Registers were not produced before the Auditors forchecking. And for want of proper records, papers and documents as not produced before the Auditors, Land & Building purchased, building constructions, investments in Recurring and Fixed Deposits with Bank. Investment in Reliance Credit Ltd. and Loans and Advances (inclusive of those under H.P. scheme) to Directors, companies and others and recoveries of such loans and advances were not verified.

2. The Company has taken credit of its First Year's subscriptions of Rs. 30,25,29,718 to the Profit and Loss A/c. and in the last year such subscription credited in the said account was Rs. 21,67,13,948.79. This is an unfairs accounting policy of the company. On the contrary such subscription together with any interest, Premium, Bonus or other advantage accrued thereof would be the liability to the depositors with effect from 15th May, 1987 in terms of para 7 of the R.N.B.Cs. (Reserve Bank) Directions, 1987.

3. The Company has not submitted to the Regional Office of the Department of Financial Companies of the Reserve Bank of India, 15, N. S. Bose Road, Cal-1 a return as on 31st March, 1993 furnishing the information specified in the Schedule A attached to the R.N.B.Cs. (Reserve Bank) Directions, 1987 before 30th June, 1993 and the Company has not produced before the auditors evidence of compliance with the provision of para 16 of the said Directions of the Bank in respect of 'Advertisements and statement in lieu of Advertisement' for the year under report and that the company held as on 31st March, 1993 the aggregate amount of deposits of Rs. 47,56,56,376.18 taken from the public by issuing Mutual Benefit Certificates, but such deposit liability did not include Rupees 62,24,17,007.54 being the first year's subscription since 1st Oct., 1993 to 31st March, 1993 and credited, to the P. L. A/cs for the said period.

4. The company heTd a huge amount of cash in hand amounting to Rs. 9,21,02,053.09 as on 31st March, 1993 and it was in the last year Rs. 11,10,80,351.49 in the different offices of the company.

5. The company has granted loans unsecured to the companies and other parties lisfed in the Registers maintained under Sections 301 and 370 of the Companies Act, 1956.

6. No adequate documents and records were produced by the company for verification of loans and advances granted by the company on the basis of security by way of pledge of shares, debentures and other securities.

7. Subsidiaries companies in which the directors are interested namely, Vanguard Laboratories (P) Ltd., Coal-Chem (India) Pvt. Ltd. Gope Udyog Ltd. and Windage Pharmaceuticals Pvt. Ltd. to whom the loans were advanced by the company are regular in repayment of their principal amounts and interest. C. Police Reports.

Krishnanagar P. S. Case No. 152 dated 30-4-1994 under Sections 406/420/120B of the Indian Penal Code and 4/5/6 of Price Chit Money Circulation Scheme (Banning) Act, 1978.

This report alleges that the company did not follow the guidelines of the Reserve Bank of India and violated many things and adopted major unfair means in running the financial institution; there had been major irregularities in the stafement of Accounts of the company. The Managing Director siphone huged amount to various other places for his personal benefit and consumption without the caring and protecting the interest of the common depositors who were allured by the company to invest money for more financial gain. The rate of interest offered to the agents would clearly indicate that the idea of raising money from the members of the public was to use the deposits for personal consumption of the directors and to cheat the depositors. It is further alleged in the said report public deposits of the company amount to Rs. 11,759.03 as revealed through investigation although it was claimed by the directors, as stated by the accused, to be sum of Rs. 4756.56 lakhs; that the total liability of the company is Rs. 11,826.98; as against total assets of approximately Rs. 10 crores; loan have been advanced to subsidiaries amounting to Rs. 139.73 lakhs and to one Managing Director viz. Shri S. Gope sum of Rs. 68 lakhs and to other Director viz. Shri Soumen Das Rs. 30 lakhs; shares purchased in subsidiaries Rs. 8.97 lakhs and investment encumbered fixed deposit Rs. 54.82 lakhs. Various Reports Relating To M/s. San-

chayani Savings Investment (I) Limited.

A. Report of Inspection under S. 45N of the Reserve Bank of India Act, 1934 by the Reserve Bank Inspection Team with reference to financial position of the company as on 31st March, 1993.

1. The audited statements of the accounts of the company for the year ending on 31st March, 1993 were not correctly drawn.

2. Para 12 of the 1987 Direction was violated and the company failed to disclose as liabilities in its books of accounts, profit provided in the manner as aforesaid, para 12 of the direction requires the company to disclose its liability in its books of accounts and balance sheets the total amount of deposits received together with interest, bonus, premium or other advantages accrued or payable to the depositors; the company did not accrue interest on deposits,

3. The liability disclosed in the balance sheet as on 31-3-1993 was Rs. 9512.23 lakhs although the actual liability is Rs. 11,525.34 lakhs,

4. Investments in approved securities was found to be Nil as on 31-3-1993.

5. The fixed deposit as per balance sheet was Rs. 1272.52 lakhs, but receipt for the same were not produced for verification;

6. Receipts were also produced for alleged recurring deposits of Rs. 75.25 lakhs.

7. As against the required rate of 80% in terms of para 6(1)(a) and 6(1)(b) of the 1987 Directions, the company's investment according to its balance sheet was only 11.04%.

8. The company did not allow interest on deposits in the case of payment of prematurity/ surrender value of deposits in respect of certificates in violation of para 5 for the 1987 Direction.

9. Designated bank not appointed in violation of para 6(2) of the directions.

10. Half yearly auditors' report not submitted in violation of para 6(3) of the directions.

11. The applications for solicit ing of deposits and the deposits receipts issued to the depositors do not contain relevant particulars as prescribed in paras 8 and 9 of the directions.

12. Statutory returns and balance sheets beyond 1990 in violation of provision of paras 13 and 14 of the directions.

13. The company neither published any advertisement in newspaper for soliciting deposits nor submitted any statement in lieu of advertisement to the Reserve Bank in violation of para 16 of the Directions.

14. A sum of Rs. 438.15 lakhs shown as 'advance to field forces' under the head 'loans and advances' was found during inspection to be an expenditure item being unpaid commission to the field staff.

15. No documents should be produced in support of statement in the audited balance sheet of the company for the year ending on 31st March, 1993 that a huge amount of Rs. 402.36 lakhs is cash in hand.

16. The company could not produce any papers/documents evidencing its investments in lands and buildings fixed assets, other loans and advances, cash and bank balance etc.

17. The maintenance of books of accounts of the company was found to be far from satisfactory.

18. The inspection revealed that the management expenses of the company including commission paid to the agents was staggeringly high; as against the huge deposit liability of the company of Rs. 11,525.34 lakhs the paid up capital stood at a mere of Rs. 1.52 lakhs which was grossly inadequate.

B. Audit Reports and Police Report.

Taltala P.S. Case No. 225 dated 2-5-1994 under S. 120B/420 of the Indian Penal Code have been started against the company. During investigation it revealed that up to March, 1993 the company mobilised about Rs. 115 crores out of which Rs. 64 crores could not be accounted for by the Chairman and other office bearers of the said company and up to March, 1994 the total amount which could not be accounted for may well exceed Rs. 100 crores. It has also come to light that the companies have diverted substantial amount of money to other companies, like Central Investment Companies and Annuity Savings and Investment (I) Ltd.; have violated the provisions of paragraphs 6(1)(b), 6(1)(c), 8, 9, 12, 13, 14and 16 of the 1987 Directions. In course of investigation in respect of the affairs of respondent No. 10 it could be ascertained that the respondent No. 11 Shri Bhudeb Chandra Sen, used to work initially with Joy Engineering Company in the Sales Division, thereafter he joined the office of the Milk Commissioner as Cash Collecting Staff whete he worked from 1964 to 1970 when his service was terminated either by resignation or termination.

77. According to informations supplied by respondent No. 11 himself his company namely respondent No. 10 got involved in 1983 and 1984 in three criminal cases of which two were investigated by the Bureau of Investigation and other by the Detective Department. In the two cases investigated by Bureau of Investigation charge-sheets have been submitted and the matters are pending before the Alipore Court and the Bankshall Court. Between 1983 to 1987 two administrators were appointed in respect of the affairs of respondent No. 10 in two different proceedings. From 1987 the company started its activity afresh and as it stands now, the company has Divisional Offices at Calcutta, Kalyani, Guwahati, Jabalpur, Indore, Nag-pur, Bombay, Ratnagiri and Aurangabad. The respondent No. 11 failed to produce entries relating the particulars of the subscribers the total number of which would be about 2 lakhs. It has been disclosed by respondent No. 11 that the depositors deposit their instalments on monthly, quarterly, half-yearly and/or annually for the period varying between 5 years, 7 years and 10 years with the assurance of getting back the money with 10% compound interest. It has also been learnt that from the first year's collection the commission are given to different offices at the following rates :-- (a) Agents-- 15%

(b) Field officer -- 5%

(c) Sub organiser -- 5%

(d) Organiser -- 5%

(e) Inspector -- 5%

(f) Officers above inspector -- 5%.

78. It has also been disclosed that the company has landed properties at different places.

79. The company has granted unsecured loans of Rs. 14 lakhs to 28 lakhs to companies where B. C. Sen, one of the directors, respondem No. 11, is interested; instead of 95% subscription liability, if full amount of liability is taken into account, the total loss would amount to 20.27 crores.

80. It has also been argued on behalf of the respondents by way of preliminary objection that a writ petition cannot be maintained-by the State for the relief asked for when the small depositors themselves have not complained, against any action of the R.N.B.Cs or feel aggrieved by the same. In this connection reliance has been placed on the decision of the Supreme Court in the case of Simranjit Singh Mann v. Union of India as also in the Janata Dal Case .

81. The aforesaid contention of respondents are not tenable either factually or legally. From the annexures to the supplementary and additional supplementary affidavit to the writ petition it appears complaints were made by some of the depositors against the M/s. Overland Investments Co. Ltd. (respondent No. 2) and against Verona Commercial Credit and Investments Co. (respondent No. 6) the subject matter of which are Tamluk P.S. Case No. 56 dated 28-4-1994 and Krishnanagar P.S. Case No. 152 dated 30-4-1994. It further appears from such annexures of the said supplementary affidavit that 7 (seven) complaints were received by the Reserve Bank of India from a number of depositors of Sanchayani Savings and Investments Co. Ltd. (respondent No. 10) as to the non-refund of money as also from one Sanchayani investors association which were forwarded to the Commissioner of Police by the Reserve Bank of India for taking appropriate action.

82. That apart there can be a situation when the underprivileged and the socially and economically or otherwise oppressed class of the society may not even he aware of their rights and about violation thereof and their exploitation. But if cannot be said that under such circumstances a public interest litigation cannot be maintained for protection and vindication of rights of such oppressed class by a person who has no personal interest of his own. As held by the Supreme Court in the case of Bandhua Mukti Morcha (supra) the Supreme Court would not in exercise of its discretion intervene at the instance of a meddlesome interloper or busybody and would ordinarily insist that only a person whose fundamental right is violated should be allowed to activise the Court, but there is no fetter upon the power of the Court to entertain a proceeding initiated by any person other than the one whose fundamental right is violated though the Court would not ordinarily entertain such a proceeding, since the person whose fundamental right is violated can always approach the Court and if he does not wish to seek judicial redress by moving the Court, why should some one else be allowed to do so on his behalf. This reasoning "however breaks down when we have the case of a person or class of persons whose fundamental right is violated but who cannot have resort to the Court on account of their poverty or disability or socially or economically disadvantaged position and in such a case, therefore, the Court can and must allow any member of the public acting bona fide to espouse the cause of such person or class of persons and move the Court for judicial enforcement of the fundamental right

of such person or class of persons.

83. This is the very concept of public, interest litigation and therefore indeed it is futile to argue that in theinstant case the small depositors have not made any complaint. That apart even if the small depositors allegedly might not have complained against the action of the respondent R.N.B.Cs the same does not necessarily mean that they are not affected by the impugned action of the R.N.B.Cs or they are not aggrieved. It is one thing to be aggrieved by an action, it is another thing to complain about the same. The underprivileged and the oppressed class of people, very often, even if aggrieved are unable to complain being socially or economically oppressed. The case of Simranjit Singh Mann referred to by Mr. Pal in support of the said contention has no manner of application in the instant case. In the said case the petitioner who was the President of Akali Dal (M) challenged the propriety and the constitutionality of the trial as well as the sentences imposed on two convicts although the two convicts did not raise any such contention in the earlier proceedings, but the same was raised by third party, a total stranger to the trial commenced against the two convicts which was not allowed by the Supreme Court. In the said case the accused were not at all unable to approach the Court but faced a fullfledged trial. That apart the Supreme Court was of the view that its process was sought to be abused by a political leaders for political motivation. It is under those circumstances, the Supreme Court declined to treat the petition as a public interest litigation. The case of the Janata Dal also relied upon by Mr. Pal in support of his aforesaid contention does not help him at all. In the said case the Supreme Court after summarising its earlier decisions on public interest litigation found not even a single ray of the characteristics of public interest litigation. It was found by the Supreme Court that the Advocate who moved the petition was much concerned about his personal interest and private interest of the accused in the criminal cases and there was no ingredients of public interest at all. The said case was not a case for helping a socially and economically or otherwise handicapped person who is unable to approach the Court and to speak for himself.

84. It has further been contended on behalf of the respondents also by way of preliminary objection that this writ petition cannot be maintained for the existence of alternative remedy. It has been contended that the various provisions of the Companies Act provide an adequate remedy for the affected small depositors if they are affected or aggrieved by any omission or commission of the respondents R.N.B.Cs. Mr. S. B. Mukherjee, learned counsel appearing for the respondent No. 6 Verona Commercial Credit & Investments in support of such contention has taken this Court through various provisions of the Companies Act especially sub-secs. (3A), (4), (5,) (9) and (10) of S. 58A of the Companies Act which deals with the refund of deposits. By a different notification however issued under sub-sec. (7)(a)(ii) of S. 58A of the Companies Act the Central Government has exempted the R.N.B.Cs which are financial institutions within the meaning of S. 451 of the R.B.I. Act 1934, from any of the provisions of S. 58A of the Companies Act except the provisions relating to advertisement contained in clause (b) of sub-section (2) of the said section. That apart examination of such sections will indicate that although prosecution and punishment, in case of certain commissions and omissions have been provided for, there is no provision for securing refund of the small depositors. In fact, the various provisions referred to by the respondents in support of their contention that the same provide remedy to the small depositors, cannot be treated as alternative remedy at all the same not at all being efficacious and adequate. Under the Companies Act, the question of availability of remedy is dependent upon the status of the person making the complaint and the subject matter of the complaint. Section 235(1) empowered investigation in the affairs of a company by the Central Government only after a report has been made by a Registrar under sub-sec. (6) or (7) of S. 234 of the Companies Act. The Company Law Board has got power of investigation under S. 235(2) of the Companies Act, when an application is received from not less than 200 members or from members holding not less than I/ 10th of the total voting power and in the case of a company having no share capital when application is received from 1/5th of the persons on the companies register of members.

85. Section 237 empowers the Central Government to investigate into the company's affairs in cases other than S. 235 when it is so resolved by the company by a special resolution or is directed by a Court. The Company Law Board has the same power under the said section if it is of the opinion that the business is conducted with intent to defraud the creditors, the management is guilty of fraud, misfeasance and other misconduct. Section 243 empowers the Central Government after receiving investigation report under S. 234/235 may to cause to present winding up application before the Courts by a person authorised by the Central Government on the ground that it is just and equitable that it should be wound up or Central Government may direct an application to be filed under S. 397/398 of the Companies Act. Section 244 empowers the Central Government to initiate a proceeding on behalf of the company for recovery of damages or property. Sections 433, 434 and 439 are applicable for winding up the company, S. 439 authorises the company, creditors, conlributories, Registrar and the Central Government to apply for the winding . up company under S. 243 and in the event of winding up the distribution of funds to the creditors will have to be made in terms of provision of Ss. 529, 529A and 530 which also provides the creditors who would got preferential payments and the creditors other than such preferential creditors would get their payments only subsequent to such preferential creditors who again individually will have to prove his or her claim before the official liquidator.

86. The provision of the Companies Act therefore, can hardly be said to be efficacious,

alternative remedies for helpless small depositors belonging to the weaker section of the community to get their money with interest on the basis of which it can be said that such remedies are alternative remedies.

87. That apart to accept the aforesaid submissions of the respondents that reliefs should be refused on the ground of existence of purported alternative remedy, would negate and frustrate the very object and purpose of the public interest litigation where the ingredients of the same are present, which is to render social and economic justice to the underprivileged and the weak, who are unable to approach the Court on their own being socially and economically or otherwise oppressed and to make justice easily accessible to them. The fact that the bulk of the small depositors of the R.N.B.Cs belong to the rural poor and weaker section of the society is not a matter of dispute and in fact has already been judicially recognised by the Supreme Court in the aforesaid Timex Case as also the previous Peerless Case where it has been found that most of such depositors of R.N.B.Cs belong to the rural areas and who are persons belonging to lower middle class, small agriculturists small traders, pensioners etc. To ask such small depositors, when the respondents R.N.B.Cs are in the brink of financial disaster as aforesaid and are not in a situation to meet its total liability and is unable to return the money of the depositors, to move the Court themselves and to obtain their remedy in a company court or in a civil Court, where the process of litigation is lengthy and never ending and the costs involved is prohibitive sometimes even for a man of means, is to bolt the door of justice to such an oppressed class for all time to come.

88. It is for the purpose of rescuing such oppressed class and the underprivileged from the procedural maze in the courts and from social and economic exploitation" and to make justice easily accessible to them the concept and methodology of public interest litigation was innovated by the Apex Court of the land through judicial activism, which has now very much come to stay for the last two decades in our judicial system.

89. Mr. Biswarup Gupta, learned counsel appearing for the respondents Nos. 10 to 13 has referred to a Circular dated 13th June, 1994 of the Reserve Bank of India as also report dated 5-9-1992 of the A. C. Shah Committee and has contended inter alia that the same would indicate that a number of remedial measures have been recommended for functioning of the R.N.B.Cs and therefore, relief asked for in the writ petition cannot be granted. The circular in question merely lays down certain norms but does not make any provision by which the small depositors of the respondents R.N.B.Cs can be rescued from the impending financial disaster. The A. C. Shah Committee report also contains more recommendations on the basis of which the circular has been issued by the Reserve Bank of India recommending implementation of such recommendation. But from such recommendation also it will appear that the same will not resolve the crisis faced by a large number of depositors of the respondents R.N.B.Cs.

90. It has been argued that the subject matter of the writ petition cannot really form the subject matter of a public interest litigation as the State admittedly pleading absence of any legal provisions to secure interest of the small depositors, in the name of public interest litigation is really asking the Court to legislate which is the duty of the legislature. Reliance has been placed on the decision of the Supreme Court in the case of State of Himachal Pradesh v. Students' Parent, Medical College, Simla (anti-ragging case) where the Supreme Court held inter alia that it is not for the Court to give direction to the State Govt. to initiate legislation and the Court is not entitled to do so and it is entirely a matter for the executive branch of the Government to decide whether or not to introduce any particular legislation.

91. It does not however, appear to this court that the State Govt. by moving the instant public interest litigation is asking the Court to legislate or seeking a direction upon the Reserve Bank of India or Union of India to initiate suitable legislation to obviate the grave situation which has arisen for violation of the various provisions of the 1987 Directions by the R.N.B.Cs and for diversion of funds. It appears by moving public interest litigation the State is really seeking directions for rescuing a large number of small depositors of the R.N.B.Cs from financial ruination- by ensuring return of their money with interest for the obvious purpose of rendering social and economic justice to such underprivileged in absence of suitable provision in the 1987 Directions or in any other legislation in this regard and in absence of its power to make necessary legislation in that regard, being the repository of public interest. As held by the Supreme Court in the case of Peoples Union for Democratic Rights v. Union of India (popularly known as ASlAD's case) the task of restructuring the social and economic order so that the social and economic rights become a meaningful reality for the poor and lowly sections of the community is one which legitimately belongs to the legislature and the executive, but mere initiation of social and economic rescue programmes by the executive and the legislature would not be enough and it is only through multidimensional strategies including public interest litigation that these social and economic rescue programmes can be made effective. Public interest litigation is essentially a co-operative or collaborative effort on the part of the petitioner the State of Public Authority and the Court to secure observance of the constitutional or legal rights, benefits and privileges conferred upon the vulnerable sections of the community and to reach social justice to them. Public interest litigation which is a strategic arm of the legal aid movement and which is intended to bring justice within the reach of the poor masses, who constitute the low visibility area of humanity, is a totally different kind of litigation from the ordinary traditional litigation which is essentially of an adversary character where there is a dispute between two litigating parties, one making claim or seeking relief against the other and that other opposing such claim or resisting such relief. Public interest litigation is brought before the court not for the purpose of enforcing the right of one individual against another as happens in the case of ordinary litigation, but it is intended to promote and vindicate public interest which demands that violations of constitutional or legal rights of large number of people who are poor, ignorant or in a socially or economically disadvantaged position should not go unnoticed arid un-redressed. That would be destructive of the Rule of Law which forms one of the essential elements of public interest in any democratic form of government. The Rule of Law does not mean that the protection of the law must be available only to a fortunate few or that the law should be allowed to be abused and misused by the vested interests for protecting and upholding the status quo under the guise of enforcement of their civil and political rights.

92. It has also been argued by the respondents that the petitioner is not entitled to relief asked for in the writ petition. It has been contended that such reliefs asked for cannot be granted in the writ proceeding. It has been contended that Art. 226 of the Constitution is not an abrogation of the entire judicial system and the machinery set up for the administration of justice under the law, and yet the reliefs which are asked for, if granted would precisely amount to abrogation of the entire judicial system and machinery set up for the administration of justice. It is contended that reliefs which are asked for, can only be granted in a civil suit or in a proceeding under the Companies Act on fulfilment of certain conditions and not in a writ proceeding. It has been further contended if the reliefs asked for are granted the same will really amount to not only attachment before judgment but practically liquidation of the business of the companies and winding up of the same. It has been contended that carrying on the business by the residuary non-banking companies being valid and legal under the Companies Act and the same also having been held to be so by the Supreme Court in the first Peerless Case (AIR 1987 SC 1023) and the role of the R.N.B.Cs in utilising the vast untapped economic resources in the rural area having been recognised and appreciated in the experts reports, the petition cannot be maintained and the reliefs sought for cannot be granted. It has been further sought to be argued that the deposits have been made by the depositors with the company voluntarily and there is no element of compulsion statutory or otherwise in making the deposits and the relation between the companies and its depositors are purely contractual and no state power is involved in such contract.

93. The contention of the respondents that allowing the reliefs asked for would amount to abrogation of the judicial system and the machinery set up for the administration of justice is based on the lack of proper understanding of the concept of public interest litigation and its scope, already discussed in details hereinabove. Public interest litigation as it has been observed already is a newjurisdiction innovated by the Apex Court of the country through judicial activism for protecting and vindicating the rights and interest of the underprivileged and the weaker segments of the society who arc oppressed, socially, economically or otherwise and are unable to approach the Court themselves and for the purpose of ensuring social and economic justice for such a class. The same therefore, cannot be decided on the touchstone on the old orthodox traditional concept of writ jurisdiction and the jurisdiction of the civil Court and the company Court. As observed by Justice Bhagwati in his Article "Social Action Litigation : The Indian Experience" quoted with approach in para 56 of the Janata Dal's case . "The judiciary has to play a vital and important role not only in preventing and remedying abuse and misuse of power but also in eliminating exploitation and injustice. For this_purpose it is necessary to make procedural innovations in_order to meet the challenges posed by this new role of an active and committed judiciary. The summit judiciary in India, keenly alive to its social responsibility and accountability to the people of the country, has liberated itself from the shackels of western thought, made innovative use of the power of judicial review, forged new tools, devised new methods and fashioned new strategies for the purpose of bringing justice for socially and economically disadvantaged groups."

94. In a fit and proper case if the Court finds the various ingredients of public interest litigation are present and the underprivileged and socially and economically oppressed segments of the society, themselves unable to approach the Court, are suffering legal wrong and injury and socially and economically being exploited and need to be rescued by the Court through a public interest litigation, the Court will not be constrained to fold its hands in despair and plead its inability to help such underprivileged and oppressed class, but would have power to issue any direction, order or writ including a writ in the nature of any high prerogative even if the condition for the same are not fulfilled.

95. In fact, the nature of relief often granted in public interest litigation, which may be often unusual in a writ proceedings, to meet the exigencies of circumstances, is not unknown in the history of'public interest litigation. In the ASI AD's case where the controversy involved was violation of Labour Laws by the contractors the Supreme Court apart from directing the authorities to take appropriate legal action for violation of laws, also directed how the Government would enter into contracts with the contractors incorporating several terms for the protection of the workers of the contractors and three Ombudsmen were appointed for periodical inspeclion of work sites for ascertaining whether the beneficial provisions were in fact being complied with. In the case of Bandhua Mukti Morcha (supra) wherein the violations of Mines Act, 1952 Mines Rules 1955 and other rules and regulations were complained of, the Supreme Court appointed an official of the Central Government as a Commissioner to hold inspections, make enquiries, sample checks and ascertain whether the directions of the Supreme Court were being complied with. In the case of Upendra Bakshi v. State of U.P. , the Supreme Court passed different orders from time to time directing the Stale Government to take certain specified steps, when it was complained of about the wreched conditions

in which the girls were living in Government

protective home and directed the District

Judge, Agra to nominate two learned Advo

cates for inspection and enquiry and the

District Judge or any Additional District

Judge nominated by him was also required to

pay visit once a month. In the case of State of

W.B. v. Swapan Kr. Guha (Sanchaita case) which was

subsequent to the pronouncement of the

judgment in S. P. Gupta's case the Supreme Court after finding that the

firm concerned was in the brink of financial

disaster and would be unable to pay back the

deposit raised, from its depositors, assuming

the jurisdiction under Art. 32 of the Consti

tution, passed different orders to meet the

exigencies of the situation even nullifying the

decrees obtained by third parties and .even

superseding the suit which was then pending

in the original side of this Court at the

instance of the parties who are not parties

before the Supreme Court. In the said case the

Supreme Court also appointed a Commis

sioner investing him with immense power to

attach properties which are prima facie in the

opinion of the said Commissioner belonged

to said firm Sanchaita and/or of its partner,

agent, or benamidar, etc. and even to sell such

properties.

96. The exercise of such power in the Sanchaita case however has been sought to be distinguished by the respondents by submitting that the Supreme Court has passed such order in the Sanchaita case and other different cases of public interest litigation in exercise of power under Article 142 of the Constitution, a power which only the Supreme Court possesses and not the High Court.

97. Such contention of the respondents are not tenable. It will appear that from such cases, the Supreme Court exercised its power not under Art. 142 of the Constitution, but under Art. 32 of the Constitution and the Supreme Court in the case of Bandhua Mukti Morcha admitted that the power of the High Court in such public interest litigation is wider as under Art. 226 of the Constitution the High Court is empowered not only to issue a writ in the nature of various high prerogatives, but also any order and/or directions. In Sanchaita's case it will appear that the different orders were passed by the Supreme Court at the instance of the same depositors on their application under Art. 32 of the Constitution and not under Art. 142 of the Constitution.

98. In fact, similar arguments was advanced before the Supreme Court in the case Bandhua Mukti Morcha v. Union of India (supra) opposing the appointment of Commissioner and reliance upon the report of such Commissioner. In support of such contention it was submitted before the Supreme Court inter alia relying on Order XLVI of the Supreme Court Rules 1966 (which deals with the commissions) that since the commissions issued by the Court in the present case did not fall within the terms of any of the provisions of the Order XLVI, they were outside the scope of the power of the Court and the Court was not entitled to place any reliance on their reports for the purpose of adjudicating the issues arising in the writ petition. Rejecting such contention the Supreme Court inter alia held thus:-- "It is not at all obligatory that an adversarial procedure, where each party produces his own evidence tested by cross-examination by the other side and the Judge sits like an umpire and decides the case only on the basis of such material as may be produced before him by both 'parties, must be followed in a proceeding under Article 32 for enforcement of a fundamental right. In fact, there is no such constitutional compulsion enacted in clause (2) of Article 32 or in any other part of the Constitution. It is only because we have been following the adversarial procedure for over a century owing to the introduction of the Anglo-Saxon system of jurisprudence under the British Ruie that it has become a part of our conscious as well as subconscious thinking that every judicial proceeding must be cast in the mould of adversarial procedure and that justice cannot be done unless the adversarial procedure is adopted. But it may be noted that there is nothing sacrosanct about the adversarial procedure and in fact it is not followed in many other countries where the civil system of law prevails. The adversarial procedure with evidence led by the either party and tested by cross-examination by the other party and the judge playing a passive role has become a part of our legal system because it is embodied in the Code of Civil Procedure and the Indian Evidence Act. But these statutes obviously have no application where a new jurisdiction in created in the Supreme Court for enforcement of a fundamental right. We do not think we would be justified in imposing any restriction in the power of the Supreme Court to adopt such procedure as it thinks fit in exercise of its new jurisdiction, by engrafting adversarial procedure on it, when the Constitution makers have deliberately chosen not to insist on any such requirement and instead, left it open to the Supreme Court to follow such procedure as it thinks appropriate for the purpose of securing the end for which the power is conferred, namely enforcement of a fundamental right. XXX XXX XXX XXX

XXX XXX XXX XXX

We may point out that what we have said above in regard to the exercise of jurisdiction by the Supreme Court under Art. 32 must apply equally in relation to the exercise of jurisdiction by the High Courts under Article 226, for the latter jurisdiction is also a new constitutional jurisdiction and it is conferred in the same wide terms as the jurisdiction under Article 32 and the same powers can and must therefore be exercised by the High Courts while exercising jurisdiction under Article 226. In fact, the jurisdiction of the High Courts under Article 226 is much wider, because the High Courts arc required to exercise this jurisdiction not only for enforcement of a fundamental right but also for enforcement of any legal right and there are many righis conferred on the poor and the disadvantaged which are the creation of statute and they need to be enforced as urgently and vigorously as fundamental jights."

99. The objection of the respondents therefore as to the maintainability of the relief claimed although might have been tenable in an ordinary writ proceeding, the same cannot be tenable in a public interest litigation. If such adversary system of procedure is to be insisted upon in a public interest litigation, the very object and purpose of the public interest litigation namely to secure social and economic justice to the underprivileged and the oppressed and to make such justice easily available to them, will be frustrated.

100. The objection of the respondents in granting the reliefs asked for on the ground that the same will operate harshly against them as practically the same would amount to liquidation of their business on winding up the company is not tenable. It has already been pointed out hereinbefore the 1987. Directions were issued by the Reserve Bank of India in public interest as a social piece of legislation for the avowed purpose of securing and safeguarding the interest of the countless small depositors who belonged to weaker section of the community and for ensuring return of their deposits and therefore, R.N.B.Cs. including the present respondent R.N.B.Cs. have been invested with the public duty and owed a positive obligation to the small depositors to strictly follow the aforesaid 1987 Directions for safeguarding and securing the interest of the small depositors. But the concerned respondents R.N.B.Cs. having violated such directions and having made insecured investments in violations of the aforesaid 19S7 Directions and even diverting and syphoning funds to its susbsi-diaries and directors, now cannot complain that the reliefs asked for if granted would operate against them harshly and amount to practically liquidation of business. As it has been clarified by the Supreme Court in the aforesaid case of Timex Investments Co. Ltd. v. Union of India (supra) that the aforesaid 1987 Directions are mandatory and it was obligatory on the part of the respondents to follow them strictly. The concerned respondents R.N.B.Cs. now being in the brink of financial disaster and having reached such a situation where they are unable to meet their total deposit liability to its depositors and to return money and the said respondents themselves being responsible for such a situation by violating the provisions of 1987 Directions and because of syphoning of funds, it does not lie in the mouth of the said respondents, R.N.B.Cs. now that the reliefs asked for, should not be granted as the same would amount to liquidation of their business.

101. It has however been contended on behalf of the respondents R.N.B.Cs. and their directors that no wrong was committed by them by not following the 1987 Directions as challenging the various provisions of 1987 Directions specially the constitutionality and the legality thereof, they moved this Court under Article 226 of the Constitution and obtained an interim order which was subsisting.

102. But granting of interim order in such writ proceeding although might have restrained the Reserve Bank of India from enforcing such direction against the aforesaid R.N.B.Cs. the same certainly did not permit the present respondents R.N.B.Cs. to act in a manner jeopardising the safety and security of the deposits of the small depositors and the return of such deposits to the depositors or to divert and syphon of funds to subsidiary companies and the directors of the companies there by leading the company to the brink of a financial disaster.

103. That apart after the delivery of the judgment of the Supreme Court in the aforesaid Timex Case, which set aside the judgment of our_High Court and upheld the legality and constitutionality of the 1987 Directions and laid down in no uncertain terms that directions are for public interest are social piece of legislation and have been introduced for the purpose of safety and security of the small depositors and to ensure the return of the deposits of the depositors, the respondents could not have continued to violate the aforesaid 1987 Directions.

104. It is also to be recorded that since then during the pendency of this petition, the interim order granted in the writ petition of

the respondents R.N.B.Cs. as also other R.N.B.Cs. have been vacated and the show cause notices calling upon them why prohibitory order should not be passed has become operative.

105. After the vacation of such interim order the Court is also not powerless to make good, wrong and the damage caused to the innocent third parties during the subsistence of the interim order.

106. Taking full advantage of the situation after they obtained an interim order in the writ jurisdiction of this Court against the Reserve Bank of India in respect of paras 4 & 6 and other provisions of the 1987 Directions, the respondents R.N.B.Cs. for several years acted in a manner to the serious prejudice of the depositors diverting and syphoning of funds and bringing the Company to the brink of financial disaster and creating a situation by which they are unable to meet their total deposit liability and the depositors cannot be paid back their money. On the face of such a situation, should this Court hesitate to grant the necessary relief for rescuing such small depositors and ensuring refund of their amount simply because respondents R.N. B.Cs. did notfollow 1987 directions under the umbrella of an interim order granted by this High Court. The answer to this question was aptly given by the Supreme Court in the case of Newabganj Sugar Mills Co. Ltd. v. The Union of India where several Sugar Mill owners taking advantage of interim orders passed by the High Court charged higher price for sugar by ultimately lost the litigation. Both the High Court and the Supreme Court directed the mill owners to deposit the excess money collected and laid down in a scheme for their refund to the extent possible with the aid and assistance of the officers of the High Court. While doing so the Supreme Court observed thus:-- "A public injury by calling in aid Court process must quicken judicial conscience to improvise an ad hoc procedure to restore through the Court's authority what has been nibbled from numerous buyers. Innovative realism is obligatory on the Court with broad basis actus curiae neminem gravabit. Why did the buyers pay higher price for levy sugar? Because they respected High Court's orders.

In this justice situation conventional procedure of such small claimant being left to litigate for his little sum from the miller or wholeseller is to write off the remedy and allow ill-gotten wealth to be in the coffers of the wrong doer. (who got the charter to charge high from a Court order). Nor is the seemingly sweet suggestion that a representative action under Order I, Rule 8 Code of the Civil Procedure be instituted on behalf of the class of consumers, is feasible. Who is to start ? Against whom ? How is he to meet the huge litigative costs and how long? (O Lord, how long) Is he to wait with long drawn out trial procedures, appeal, second appeal, special appeal and Supreme Court appeal? For, on the other side is the miller with millions to be caughed up". "The handling of small claim is probably the most deplorable feature of the administration of Civil Justice and yet small claims are in many respects more significant than large ones, involving large numbers and inter-class disputes. If the confidence of the community in the justice system, especially consumer protection, is to be created, radical reform of the procedural law is needed now and here." 107 In view of the discussions made above all the preliminary objections raised by the respondents including the objections as to the maintainability of the writ petition fail and the same are hereby rejected. But all said and done another question which inevitably crops up for consideration as to whether the instant case is really a fit and proper one where this Court should invoke .its extraordinary jurisdiction by way of public Interest Litigation. It has been contended if the application is allowed to be maintained and treated as public interest litigation as prayed for, by the petitioner and the reliefs, asked for, are granted, the same will create a dangerous precedence as in the pretext of violation of any public duty or obligation anybody and everybody will rush to this Court by way of public interest litigation and a flood gate will be opened for such kind of litigations which will take away the time of the Court to deal with other serious matters. Objection of such nature to oppose public interest action, however, is not at all new but as old as the public interest litigation itself. Since the innovation of the concept of public interest litigation through judicial activism the Surpeme Court often had to deal with such objection that the public interest litigation would open flood gate of cases and that would create enormous burden on time of the Courts to deal with other matters. Such objection has always been overruled by the Supreme Court. What would be the consequences if a litigation is treated as a public interest litigation where all the ingredients thereof are present, has never been treated as a bar to entertain a public interest litigation although it is required to be seen that the ingredients of the public interest litigation are present and care has to be taken that in the name of public interest litigation some one does not come to Court to achieve his own interest or for political gain or for a blaze of publicity and he is not a busybody or interloper. The R.N.B.Cs. advertise their schemes widely in beguilting terms. Through such advertisements they take the small savings of the poor ignorant villagers through a special structure of agents, special agents, different kind of organizers and so on. But as such vast number of small depositors did not have any protection at all and were at the mercy of all these R.N.B.Cs. the Reserve Bank of India to carry out its obligation as per the observations made by the Supreme Court (in the first Peerless case, AIR 1987 SC 1023) that some action on the part of the Slate and the Reserve Bank of India is imperative to protect such a weaker section of the community from exploitation, in public interest for safeguarding the money of the depositors and for securing return of their money with all interests accrued thereon issued the 1987 Direction, which inter-alia require R.N. B.Cs. to make the major part of their investment namely 80% in Nationalised Banks and approved securities. It appears after such repeated observations of the Supreme Court in the first Peerless Case and in Sanchaita's case etc. that same action is imperative on the part of the State and the Reserve Bank of India, to protect and safeguard the interest of the small depositors, Union of India made necessary amendments in the Reserve Bank of India Act, under which the Reserve Bank of India has issued the 1987 Directions only for protecting and safeguarding the interest of the depositors by providing inter alia the manner in which the investment has to be made and also making violation of such provisions punishable. The power of prohibiting the R.N.B.Cs. to take new deposits is also there under Section 45K(4) of the Reserve Bank of India Act. But for reasons best known to the Reserve Bank of India and Union of India no provision either in the Act or in the aforesaid 1987 Directions was made to deal with a situation where because of violation of the provisions of the 1987 Direction by making unsafe or unsecured investment and by diversion of funds to the directors and subsidiaries companies, the R.N.B.Cs. are unable to meet their deposit liability and the small depositors would be deprived of their life's savings. Thus the 1987 Direction does not appear to be fool proof as it seems to be. It may be such a situation could not be foreseen for which no provision was made for return of the money to the small depositors in the case of a financial crisis created by the R.N.B.Cs. by violating the provisions of 1987 Directions. It is however not for the Court to direct the Union of India or the Reserve Bank of India to bring suitable legislation for the aforesaid purpose as indeed it is not within the power of High Court to direct such legislation and it is for the executive and the legislature in their wisdom to assess the situation and to decide whether suitable legislation is called for. But if such a situation is brought to the notice of the Court by the State by way of public interest litigation not for its own benefit or for political gain or for blase of publicity, but for protection and vindication of the rights of such large number of small depositors who are unable to approach the Court themselves being socially and economically oppressed and for rescuing them from the impending financial disaster and deprivation of their life's savings, the Court cannot fold its hands in despair and decline to interfere on the grounds that the same may open flood gate for similar cases, or the same will operate harshly against the concerned R.N.B.Cs. leading to. practical liquidation of their business although they are legally entitled to carry on their business. To refuse reliefs on such ground would amount to giving indulgence to the illegalities and the wrong doings of the concerned R.N.B.Cs. The R.N.B.Cs. cannot be permitted to incur expenses for running the company out of the money of the depositors and take away crores of rupees of the depositors money. They cannot be allowed to spend a moiety of deposits for meeting their own expenses. The business carried on by such companies is really of the nature of a middleman or of commission agent and it is for the companies to restructure or reorganise by curtailing the expenses. The R.N.B.Cs. during such business could not be subjected to the scheme of control either applicable to other financial or non financial companies as they have no capital and their schemes for a period much longer than three years. It is because, of the aforesaid reasons after the judgment of the Supreme Court in the first Peerless Case the aforesaid 1987 directions were issued for protecting and safeguarding the interest of the small depositors which have been violated with impunity. Refusal of relief on such ground would also therefore amount to giving premium to such illegalities and wrong doings of the respondent R.N.B.Cs. The Court cannot ignore the possibility of persons having no stake of their own starting such business and after collecting huge deposits from the investors belonging to the poor and weaker section of the society residing in a rural area and to stop such business after a few years and thus devouring the hard earned money of the small investors. It was also noted by the Surpeme Court in the Timex Case and has also been pleaded in the writ petition by the State of W.B. that the R.N.B.Cs. often invite such a situation stopping to run the business for their own benefit as the small depositors are unable to approach the Court. From the various reports as referred to hereinabove, it already appears that there has been diversion of huge amount of money worth crores of rupees to the directors and to subsidiary and group companies. Under such a situation, therefore, immediate action, for protecting and safeguarding the interest oflarge number of small depositors of the concerned respondents* R.N.B.Cs and for rescuing them from the impending financial disaster and from depri-viation of their life's savings is imparative. It is also important to remember the interest of the underprivileged and weaker section of the community is as much important as the interest of ihe affluent and the privileged class, if not more important and needs serious attention of the Court and therefore if they are sought to be rescued through public interest litigation, which is a judicial innovation, for giving them easy access to justice and for rendering social and economic justice to them, the same cannot be opposed on the ground of encroachment on Court's time.

108. The question, therefore, with which the Court at present is now left is what reliefs at this stage can be granted without further hearing the parties.

109. But before consideration of such

question 1 allow the application for amend

ment made by the petitioner for amending the

prayer portion of the writ petition as after

consideration of the same 1 am of the view

that for ends of justice and for complete ad

judications of the issues involved such

amendments are necessary and the same will

not change the nature and character of the

cases and the amendment is really of a formal

nature.

110. The final relief, which is required to be granted obviously is the preparation of a scheme for refund to the depositors of their money by the respondents Nos. 2, 6 and 10 with interest accrued thereon. But before consideration of such relief and preparation of scheme, interim reliefs are certainly called for to prevent further diversion and syphon-ning of funds and of the property. Unless the respondents R. N. B. Cs and their directors are restrained from transferring, encumbering, allienating, disposing of, and dealing with the funds and all other assets of the com

panies, there is every probability of further

diversion and syphoning of the funds, trans

ferring and encumbering of the property.

Under such circumstances, unless suitable

interim reliefs are granted, the very object and

purpose of the instant public interest litigation

to protect and safeguards the right and

interest of the small depositors of the respon

dents Nos. 2, 6 and 10 and to rescue them

from the impending financial disaster and

deprivation of their lives' savings and to

return their money with all dues accrued

thereon will be defeated.

111. I, therefore, direct that the respondents Nos. 2 and 6 and their directors being respondents Nos. 3, 4, 5, 7, 8, 9, 9A are restrained by an order of injunction from transferring disposing of alienating, encumbering and/or from dealing with in any manner whatsoever, all the assets and properties, movable and immovable of the respondents 2 & 6 and/or from giving effect or further effect to any agreement relating thereto and/or from operating the Bank Accounts standing in the names of respondents Nos. 2 & 6 and/or their sub-offices, branches and/or held by their agents and employees for and on behalf of the respondents Nos. 2 & 6'. The respondents Nos. 3, 4, 5, 7, 8, 9, 9A being the directors and employees of the respondents Nos. 2 & 6 as also the directors of the subsidiary and group companies and sister concerns of the respondents Nos. 2 and 6 are restrained by an order of injunction from transferring, disposing of, alienaling, encumbering and/ or dealing with all properties and assets, movable and immovable standing in the name of such directors and their family members or in the name of subsidiary or group companies and from operating their Bank Accounts until further orders of this Court, without the leave of the Court. The respondents Nos. 11, 12 and 13 and other agents, officers and employees of the respondent No. 10 are restrained by an order of injunction from dealing with, disposing of, transferring, encumbering, alienating in any manner whatsoever the assets and properties, movable or immovable of the respondent No. 10 until further order of this Court and also the assets and properties movable and immovable standing in the name of such directors, their family members, employees, subsidiaries, group companies and sister concerns in which such directors or any of them are interested, without the leave of the Court.

112. As to the other prayers for appointment of Commissioner or Special Officer for taking charge of all the assets and properties of the respondents Nos. 2, 6 and 10, their subsidiary and group companies, sister concerns and their bank accounts and to take immediate charge of properties which although standing in the name of some others, but actually belonged to respondents Nos. 2, 6 and 10 and carrying out the necessary investigation, although I am of the view that under the facts and circumstances of this case appointment of such Commissioner or Special Officer is necessary, I am not inclined to pass such an order at this stage without hearing the parties as to who should be the person or persons to be appointed as such Special Officer or Commissioner.

113. An application has been made by one Overland Karmachari Sanchaya Prati-nidhi Yukta Sangram Committee and other claiming itself to be a Joint Committee formed by the employees and representatives of Overland Investment Limited, praying for an appropriate direction or directions on the ground, the reliefs asked for, in the instant case, if granted, a large number of employees will become jobless and will face starvation. But in any event, even assuming interest of such employees and workers are also required to be taken into consideration the same cannot stand in the way in granting the reliefs as in the absence of the same the very purpose of this public interest action will be defeated. This application has not been heard and will be heard.

114. Let the said application, therefore, along with main writ application appear in the list on 6th April, 1995 for consideration of further orders.

115. All parties and the concerned Banks are to act on a signed copy of the operative

portion of this judgment on the usual undertakings.

116. Order accordingly.