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W.P. NO. OF 2006
IN THE HIGH COURT AT CALCUTTA
CONSTITUTIONAL WRIT JURISDICTION
ORIGINAL SIDE
IN THE MATTER OF:
An application under Article 226 of the Constitution of India;
AND
IN THE MATTER OF:
A Writ of or writs or in the nature mandamus, A writ of or in the nature of certiorari Writ of or in the nature of prohibition, such other Writ or Writs order or orders, direction or directions;
AND
IN THE MATTER OF:
Order dated September 6, 2005 passed by the Respondent No.1 in Case No. 91/2000-01;
AND
IN THE MATTER OF:
The Banking Ombudsman Scheme, 1995;
AND
IN THE MATTER OF:
SEBI guide liens (SEBI custodian of securities Regulations 1996);
AND
IN THE MATTER OF:
Shree Narayan Singh, Uddiyana, Dalip Mahal East, District Munger, Bihar- 811 201.
PETITIONER
VERSUS
1. Banking Ombudsman, Office of the Banking Ombudsman, Reserve Bank of India Building (9th Floor), 15, Netaji Subhas Road, Kolkata- 700 001.
2. Citi Bank N.A., through its Manager, Chowringhee Branch, 41, Chowringhee Road, Kolkata- 700071.
3. Reserve Bank of India, 15, Netaji Subhas Road, Kolkata- 700001.
RESPONDENTS
To
The Hon’ble Vikas Shridhar Sirpurkar, Chief Justice and His Companion Justices of the said Hon’ble Court.
The humble Petition of the Petitioner abovenamed most respectfully-
S H E W E T H :
1. Your petitioner is a law abiding citizen of India.
2. That this is a Writ Petition under Article 226 of the Constitution of India against the judgement and Order dated 6th September, 2005 passed by the Respondent no.1 i.e. the Banking Ombudsman, Kolkata in Case No.91 of 2000-01 whereby the Respondent No.1 has been rejected the complainant of your petitioner towards nondelivery of shares of Escorts Ltd. and ABB Ltd. deposited with the respondent No.2 observing that it is not possible to arrive at a conclusive view of an objective adjudication of the complaint though he has observed that the bank’s records to the effect of securities movement are not available.
3. The facts leading to the filing of the present petition are as follows:-
(a) That the petitioner jointly opened an equity advance account being No.123899008 with his wife Smt. Harbeet Singh and mother Smt. Premlata Devi with respondent No.2 in 1990.
(b) That the address of the joint account holders was that as mentioned in the cause title of the petition. Shares of various companies alongwith blank signed transfer deeds as security had been deposited by the petitioner with the respondent No.2.
(c) That during the course of conducting business, the statement of account dated 15.1.1993 furnished by the respondent No.2 shows 4000 shares of ABB Ltd. and 2200 shares of Escorts Ltd. were deposited in the petitioner’s account along with other deposited shares. Xerox copy of the statement of account as on 15.1.1993 is annexed hereto and marked as “P-1”.
(d) That in March 1999 the petitioner received statement from the respondent No.2 showing that only 2100 shares of Escorts Ltd. and 3200 shares of ABB Ltd. stood in the name of the joint account.
(e) That on 23.11.1992 your petitioner tendred 100 shares of Escorts Ltd. 800 shares of ABB Ltd. 50 shares of ITC and 10 shares of ICICI Ltd. with proper distinctive numbers. But the respondent No.2 did not process those shares and as such include these shares in the portfolio. The Xerox copy of the list of shares alongwith their distinctive numbers which were tendered with the respondent No.2 on 23.11.1992 is annexed hereto and marked as “P-2”.
(f) That on April 28, 1999 the respondent No.2 forwarded a letter with some photo copies of some documents attached therewith showing that one withdrawl request was placed on 29.9.1993 for withdrawl of 100 shares of Escorts Ltd. and 800 shares of ABB Ltd. But the document does not shows the details of the shares pledged and withdrawn from the account and does not indicate the deposit of the aforesaid shares being annexure ‘P-2’ which was tendered with the bank on 23.11.1992.
It is pertinent to mention herein that the aforesaid request of withdrawal of securities bears a special Note that – “These shares have been deposited with Citibank, dated 23.11.1992 but have not been processed and included in the portfolio of securities in deposit. Please arrange their return.”
Xerox copy of the letter dated April 28, 1999 with the relevant documents is annexed herewith and marked as “P-3” (collectively).
(g) On June 9, 1999 the respondent No.2 forwarded one letter indicating the specific distinctive numbers of only 100 shares of Escorts Ltd. alleged to have been withdrawn by the petitioner. Your petitioner states that these are the same shares which had been tendered by your petitioner on 23.11.1992. But the respondent No.2 did not indicate the distinctive numbers of the shares of ABB Ltd. Xerox copy of the letter dated June 9, 1999 is annexed hereto and marked as “P-4”.
(h) Again on July 22, 1999 the respondent No.2 forwarded another letter and contradicting their earlier stand and specifically stated that shares bearing No.12441248-347 had been withdrawn alongwith other 2000 shares of escorts Ltd.. Xerox copy of the letter dated 22.7.1999 is annexed hereto and marked as “P-5”.
4. That as your petitioner was not getting a satisfactory reply from the respondent No.2, the petitioner was compelled to lodge a complaint before the Lokpal, Banking, Bihar. The said complaint was redirected to the office of the respondent No.1 for the redressal of the disputes seeking restoration of the 100 shares of Escorts Ltd. and 800 shares of ABB Ltd. together with the dividends paid, bonus and other shares issued against these holdings, from the date of erroneous entries by the bank.
5. That on May 22, 2000 the petitioner lodged the complaint before the office of the respondent No.1 praying for redressal of his grievance in the matter. Xerox copy of the complaint dated May 22, 2000 is annexed hereto and marked as “P-6”.
6. That on June 20, 2000 the office of the respondent No.1 sent a letter to the petitioner informing him that his complaint has been registered as case No.91 of 2000-01.
7. That as per the quary of the respondent No.1 the respondent No.2 vide their letter dated October 16, 2000 wrote to the respondent No.1 that 100 shares of Escorts Ltd. with the distinctive Nos.12441248 to 12441347 had been withdrawn by the petitioner in 1993. Xerox copy of the letter dated October 16, 2000 is annexed hereto and marked as “P-7”.
8. As the disputes could not be resolved, a conciliation meeting was held on July 16, 2001 in the office of the respondent No.1 which was attended by the petitioner and Shri Sudhir Madhavan, Head Equity Advance Department of the respondent No.2. In the said meeting the representative of the Bank stated that he would check up the records of the Bank and the final position would be made available to your petitioner and the office of the respondent No.1 within fifteen days. Xerox copy of the minutes of the meeting dated July 16, 2001 is annexed hereto and marked as “P-8”.
9. That on October 6, 2001 the respondent No.1 passed an order rejecting the complaint of your petitioner holding that he approached the District Consumer Forum in 1992-93 and a compromise formula had been reached and in terms of clause 16(3)(d) of the Banking Ombudsman Scheme, 1995 the complaint was not maintainable. Xerox copy of the order dated October 6, 2001 is annexed hereto and marked as “P-9”.
10. Being aggrieved and dissatisfied with the order dated October 6, 2001 passed by the respondent No.1 your petitioner filed a writ application being W.P. No.563 (W) of 2003 before the Hon’ble High Court, Calcutta.
By an order dated July 15, 2003 the Hon’ble Justice Pinaki Chandra Ghose has been pleased to set aside the order passed by the Banking Ombudsman and gave a further direction to hear out the matter afresh after granting an opportunity to the petitioner of being heard. Xerox of the dictated order dated July 15, 2003 is annexed hereto and marked as “P-10”.
11. That as per the assurance given on behalf of the respondent No.2 on the last conciliation meeting dated 16.7.2001 the respondent No.1 advised by their letter dated 22.6.2004 to the respondent No.2 to furnish the required details of the records. The bank responded on 28.9.2004 without furnishing any details of the allege shares. From the said letter written by the authorized representative of the respondent No.2 reveals that the 800 shares of ABB Ltd. has been dematted on different combinations. The respondent No.2 further stated in the said letter that they received the said information from the Company’s Register but was unable to give the physical proof of the same. Xerox copy of the letter dated September 24, 2004 is annexed hereto and marked as “P-11”.
12. Subsequently a hearing was scheduled on 21.12.2004 in the office of the respondent No.1. The said meeting was attended by Smt. Parag Goswami, Assistant Vice President and Smt. Saloni Kapoor, Service relationship manager on behalf of the respondent No.2. At the time of hearing the respondent No.2 filed a letter dated 21.12.2004. A copy of the same was handed over to the petitioner for his counter reply. Xerox copy of the letter dated 21.12.2004 is annexed hereto and marked as “P-12”.
13. That on 2.2.2005 your petitioner has field the conter reply alongwith some annexures. In the said counter reply your petitioner annexed a document showing 100 shares of Escorts Ltd., 800 shares of ABB Ltd., alongwith 50 shares of ITC Ltd. and 10 shares of ICICI Ltd. had been tendered on 23.11.1990 with the respondent No.2. But as those shares had not been included in the portfolio of securities in deposit your petitioner made a withdrawal request on 29.9.1993 for their return. A specific request to that effect was duly typed on the said withdrawal request dated 29.9.1993.
But though the respondent No.2 returned those unprocessed shares, the bank deducted those shares from the total number of processed shares included in the portfolio of securities in deposit.
The reasons stated hereinabove the portfolio statement dated 28.9.1993 shares the balance shares are 2100 of Escorts Ltd. and 3200 shares of ABB Ltd. instead of showing 2200 shares of Escorts Ltd. and 4000 shares of ABB Ltd.
Xerox copy of the safe keeping record/portfolio statement dated 28.9.1993 is annexed hereto and marked as “P-13”.
14. In the said counter reply filed by your petitioner on 2.2.2005 before the respondent No.1. Your petitioner specifically demanded all the share transaction alongwith their distinctive numbers has to be placed before the respondent No.1 because it is obligatory on the part of the respondent No.2 being a custodian of the securities on behalf of the constituent as required in terms of SEBI (Custodian of Securities) Regulations, 1996.
The Xerox copy of the counter reply dated 2.2.2005 alongwith annexures annexed herein is annexed hereto and marked as “P-14”.
15. The respondent No.2 subsequently deposited another letter dated March 30, 2005 before the respondent No.1 and the copy of the same has also been handed over to your petitioner. In the said letter without providing the trail of the securities by producing all the distinctive numbers of the transacted shares, the respondent No.2 stated that the 100 shares of Escorts Ltd. bearing No.12441248-12441347 had been handed over to the authorized representative of your petitioner on 6.10.1993.
Regarding the 800 shares of ABB Ltd. bearing distinctive Nos.4121061-4121860 were dematted on 2.7.2001 in the account of your petitioner.
A request as made on behalf of the respondent No.2 to the effect that the respondent No.1 may enquire of the transaction of the shares from the Dayco Securities Private Limited though the Dayco Securities Private Limited is not at all a party of the lis.
Xerox copy of the letter dated March 30, 2005 is anclosed and marked as “P-15”.
16. Your petitioner states that on the next date of hearing, July 8, 2005, your petitioner again submitted before the respondent No.1 that as a normal practice the respondent No.2 received minimum one blank signed transfer deed, signed as transferer, per share certificate so deposited in physical forms. Besides that your petitioner further claimed before the respondent No.1 that the bank should provide the deposit slip and the distinctive numbers of the whole lot of shares and also the acknowledged withdrawal slips and clearly state which number of shares they have returned your petitioner put the bank to strict proof thereof by producing any evidence to show that the respondent No.2 had returned the 100 Escorts Ltd. bearing No.12441248-12441347.
The respondent No.2 on their submissions stated that 100 shares of escorts Ltd. were returned on 29.9.2003 and the 800 shares of ABB Ltd. bearing distinctive Nos.4120011-4120810 were returned on 28.9.2003 alongwith the said 100 shares of Escorts Ltd.
17. On the next date of hearing the respondent No.2 issued one letter dated July 9, 2005 addressed to the respondent No.1 wherein they have specifically sated in Para 1 that 100 shares of Escorts Ltd. bearing distinctive Nos.12441248 to 12441347 were returned to your petitioner on 28.9.1993. These shares were handed over to the authorized representative of your petitioner. In paragraph No.2 point ‘c’ the respondent No.2 further stated that 800 shares of ABB Ltd. bearing distinctive Nos.4120011 to 4120810 were also returned to your petitioner on 28.9.1993 and both the statements are confirmed by the bank through annexure-I annexed with the said letter dated July 9, 2005. Xerox copy of the letter dated July 9, 2005 is annexed hereto and marked as “P-16”.
18. Your petitioner states that the aforesaid 100 shares of escorts Ltd. and 800 shares of ABB Ltd. are the processed shares and from the said annexure-I of the letter dated July 9, 2005 it is revealed that the withdraw/request was made on 29.9.1993 for those particular shares which were deposited on 23.11.1992 and were not been processed and included in the portfolio of securities deposit.
Therefore in no stretch of imagination it can be presumed that the respondent No.2 have delivered the processed shares and also showing a deduction of that effect in the portfolio statement dated 28.9.1993.
Your petitioner put the respondent No.2 to strict proof thereof by producing any withdrawal request dated 28.9.1993 towards withdrawal of processed shares.
Your petitioner on several occasion put special emphasis that the respondent No.1 should exercise his powers as conferred in Section 17(1) of the Banking Ombudsman Scheme 1995, for natural justice and fair play. On the date of hearing i.e. on July 20, 2005, your petitioner again placed his demand to the respondent No.1 so that the bank be directed to produce deposit and withdrawal documents of each security duly signed by your petitioner. Xerox copy of the letter dated 20.7.2005 is annexed hereto and marked as “P-17”.
19. On the next hearing date i.e. on 20.7.2005 the petitioner prayed before the respondent No.1 to the effect that the bank should furnish bank’s records as were required to be maintained by the bank under SEBI Regulation 1996. Accordingly the respondent No.1 advised the bank to furnish the certified copies showing holding of shares and the securities trail as required in terms of relevant RBI circular (DBOD.Dir. BC.120/96/SD/PSB-90) dated 14.4.1990 and SEBI guidelines (SEBI Custodian of Securities Regulations 1996).
20. Your petitioner states that from the copy of the order passed by the respondent No.1 dated September 6, 2005 it is revealed that the respondent bank without producing the documents which is still within their custody as a custodian of securities took a completely new stand by issuing one letter dated 22.8.2005 addressed to the respondent No.1 that – “in accordance with Rule 2 of the Banking Companies (Preservation of Records) Rules 1985, the bank did not preserve vault registers of period exceeding five years and stock and share registers beyond eight years, and as the subject information required by the complainants dated back several years, the bank was not in a position to provide these documentations”.
21. Your petitioner sates that the respondent No.2 can not take advantage of the Rule 2 of the Banking Companies (Preservation of Records) Rules 1985 and thereby deny to produce the relevant records before the respondent No.1 for proper adjudication of the lis. That apart this point was never been raised by the respondent No.2 at the time of hearing of the matter. After the hearing was concluded on 20.7.2005 the respondent No.2 raised this point through their letter dated 22.8.2005 and as such it was beyond the scope of the hearing.
However the Rule 2 of the Banking Companies (Preservation of Records) Rule 1985 has no application whatsoever in this particular case. Your petitioner sates that the respondent No.2 is an intermediary in the securities market doing the business as custodian of securities and as such the respondent No.2 is regulated by SEBI (Custodian of Securities) Regulations 1996. As the respondent No.2 is rendering custodian services it is obligatory on the part of the respondent No.2 to be continuously accountable for the movement of securities in and out of custody account and exercise due deligence in safe keeping and administration of the assets of his clients in his custody for which he is acting as custodian of securities.
22. That on September 6, 2005 the office of the respondent No.1 issued a letter to the petitioner and forwarded a copy of the order passed by the respondent No.1 wherein the respondent No.1 has been pleased to reject the complaint of the petitioner under clause 21 of the Banking Ombudsman Scheme 1995, though the respondent No.1 observed in his finding that the bank’s records to the effect of securities movement are not available and the complainant were perhaps defrauded by 800 shares of ABB Ltd.
23. Being aggrieved and dissatisfied with the order passed by the Banking Ombudsman on September 6, 2005 the petitioner is filling this instant petition under Article 226 of the Constitution of India on the following amongst other :
G R O U N D S
I. For that the respondent No.1 has failed to appreciate that though the respondent No.2 was advised to produce the certified copies showing holding of shares and securities trail, as required in terms of relevant RBI Circular DBOD Dir. BC.120/96/SD/PSB 90 dated 14.4.90 and SEBI guidelines (SEBI custodian of Securities Regulation 1996), but they deliberately and willfully did not produce the relevant documents before the respondent No.1 for adjudication.
II. For that the respondent No.1 was failed to appreciate that on repeated demands by the petitioner the respondent bank never produce the portfolio statements of the security trial of all the shares, deposited and withdrawn with the distinctive numbers.
III. For that the respondent No.1 has failed to appreciate that the petitioner submitted the request for withdrawn on 29.9.1993 towards the refund of the 100 shares of Escorts Ltd., and 800 shares ABB Ltd and a result of which the respondent No. 2 shows a deduction of the said shares in there portfolio statement dated 28.9.1993.
IV. For that the respondent No.1 has failed to appreciate that in no circumstances the respondent No.1 issued the portfolio statement on 28.9.1993 by deducting those shares when a request for withdrawal was placed before the respondent No.2 on 29.9.1993 by the petitioner.
V. For that the respondent No.1 has failed to appreciate that the withdrawal request dated 29.9.1993 bears a special note towards the return of those shares which were deposited on 23.11.1992 but have not been processed and included in the portfolio of securities in deposit. Therefore the deduction from the processed shares as shown in portfolio statement dated 28.9.1993 is motivated and capricious to its core.
VI. For that the respondent No.1 has failed to appreciate that the petitioner has deposited 100 shares of Escorts and 800 shares of ABB Ltd. with the Respondent No.2 on 23.11.1992 with the distinctive numbers of the said shares written therein.
VII. For that the respondent No.1 has failed to appreciate that the respondent No.2 vide their letter dated 4.6.1999 admitted that the petitioner had withdrawn the 100 shares of Escorts Ltd. having the same distinctive nos. which the petitioner deposited with the bank on 23.11.1992.
VIII. For that the respondent No.1 has failed to appreciate that the letter dated 9.6.1999 stating the withdrawal of 100 shares of Escorts Ltd. bearing the same distinctive numbers of the deposits slip dated 23.11.1992, which clearly proves that those 100 shares of Escorts Ltd. and 800 shares of ABB Ltd. are Very much in the Custody of the respondent No.2 but were never been duly processed and included in the portfolio statement of your petitioner.
IX. For that the respondent No. 1 ought to have appreciate that the respondent No.2 while acting as a custodian of securities upon obtaining the proper certificate from the securities and Exchange Board of India, the respondent No.2 has not prove themselves to be continuously accountable for the movement of securities in and out of the custody account and more so did not exercise due diligence in safe keeping and administration of the assets of his client by non production of the records towards the security trail of the petitioner.
X. For that the respondent No.1 ought to have appreciate that the statements, letters and the submissions forwarded on behalf of the respondent No.2 are inconsistent and contradictory on different occasions towards the refund and/or withdrawal of the said 100 shares of Escorts Ltd. and 800 shares of ABB Ltd. inquestion.
XI. For that the respondent No.1 has failed to appreciate that the respondent No.2 have not been able to account for 100 shares of Escorts Ltd. and 800 shares of ABB Ltd. which were deposited by the petitioner on 23.11.1992. It is submitted that the withdrawal alleged to have made by the petitioner does not tally with the distinctive numbers given by the respondent No.2. This aspect of the matter has not been considered by the respondent No.1 while passing the impugned order.
XII. For that the respondent No.1 has failed to appreciate that the respondent No.2 was negligent in providing service to the petitioner, and, thus it was liable to compensate for the loss suffered by the petitioner in respect of 100 shares of Escorts Ltd and 800 shares of ABB Ltd.
XIII. For that the impugned order passed by the respondent No.1 is contrary to the records of the case.
XIV. For that the arbitrary action towards denial of production of the relevant records showing holding of shares and the security trail is hit by the principles of Article 14 of the constitution of India.
24. Your petitioner states that the respondent authorities should act in consonance with Law and Justice and should for bear from acting malafide.
25. Your petitioner further states that the records of the case are lying within the ordinary original Civil Jurisdiction of This Hon’ble Court in the office of the Respondents.
26. Your petitioner further states that there is no other adequate alternative specific legal remedy and the remedy sought for herein would afford complete relief to your petitioner.
27. Your petitioner states that they have not moved any other application before any other court on the self same cause of action.
28. The respondents are public authorities whose powers and duties are circumscribed by statue and they are bound to act in accordance with Law. The said respondent should act fairly but have failed to do so.
29. Your petitioner further status that there is no laches, negligence or lacuna on the part of your petitioner.
30. Your petitioner further states that there is no scope for further demand of justice. In the facts and circumstances of the case any further demand for justice would be an idle and futile formality.
31. This application is made bonafide and for the ends of justice and unless an order as prayed for herein are made your petitioner shall suffer irreparable loss and injury.
Under the facts and circumstances stated hereinabove your petitioner abovenamed most humbly and respectfully prays that your Lordships may be graciously pleased to ;
a) Issue an appropriate Writ, direction or order in the nature of certiorari quashing the judgement and order dated 5.9.2005 passed by the respondent No.1 in case No.91 of 2000-01.
b) Issue an appropriate Writ, direction or order in the nature of certiorari directing the respondent No.2 to transmit all the relevant records along with the distinctive numbers towards showing holding of all the shares deposited as well as withdrawals of the same as required in terms of relevant RBI circular DBOD Dir. BC. 120/96/SD/PSB-90 dated 14.4.90 and SEBI guidelines (SEBI custodian of Securities Regulation 1996).
c) Issue an appropriate Writ, Direction or order in the nature of mandamus Commanding the respondent No.2 to refund the value of 100 shares of Escorts Ltd. and 800 shares of ABB Ltd. together with dividend paid and bonus with interest @ 22% p.a. from the date of deposit till date of re-payment with interest.
d) Cost of and incidental to be paid by the respondents.
e) Pass such other order or further orders, direction and/or further directions as this Hon’ble Court may deem fit and proper.
And for this act of kindness the petitioner as in duty bound shall ever pray.
ADVOCATE-ON-RECORD
For the Petitioner.
I, Shree Narayan Singhresiding at Uddiyana, Dalip Mahal East, District Munger, Bihar- 811 201, do hereby solemnly affirm and say as follows :-
1. That I am the petitioner abovenamed. I am also know the facts and circumstances of the above case.
2. That the statements contained in paragraphs ………………of the foregoing petition are true to my knowledge and those contained in paragraphs ……………………….. are my information derived from records which I verily believe to be true and correct and those contained in paragraphs ………………….. are my respectful submissions before this Hon’ble Court.
Solemnly affirmed by the said Shree Narayan Singh at the Court House in Calcutta on this day of February, 2006.
Before me,
COMMISSIONER
W.P. NO. OF 2006
IN THE HIGH COURT AT CALCUTTA
CONSTITUTIONAL WRIT JURISDICTION
ORIGINAL SIDE
IN THE MATTER OF:
An application under Article 226 of the Constitution of India;
AND
IN THE MATTER OF:
Shree Narayan Singh
PETITIONER
VERSUS
Banking Ombudsman & Others
RESPONDENTS
P E T I T I O N
GOUTAM BHAKAT
Advocate
C/o. Dr. D.P. Majumdar,
Advocate
6, Old Post Office Street
Kolkata - 700 001.
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