Kattabomman Transport Corporation Limited Vs. State Bank of Travancore, Trivendrum and ors. - Court Judgment

Excerpt:
service - passing information - section 52 of state bank of india (subsidiary banks) act, 1959, section 44 of state bank of india act, 1955 and section 6 of banker's books evidence act, 1891 - order of single judge challenged - by impugned order judge held that respondent-bank under duty to maintain confidentiality while furnishing information regarding petitioner-nri (account holder) and such information cannot be obtained by invoking inherent powers of court - prima facie appellant-public sector does require information for purpose of fulfilling its obligations in judgment in madras high court - madras high court powerful enough to issue appropriate directions to respondent-bank to furnish information relating to nri account holder - held, order of single judge quashed. - - according to the appellant, the third respondent was receiving a good salary and had also made remittances to the state bank of travancore, kollankode branch, kanyakumari district in tamil nadu. in my opinion it is necessary in a case like the present to direct the jury what are the limits and what are the qualifications of the contractual duty of secrecy implied in the relation of banker and customer. the matter clearly comes within the four corners of duty owed by the bank to the public, and therefore, its private duty to the third respondent cannot prevail. consequently, it may not be correct to say that this court cannot, even in exceptional circumstances, exercise its power to call for information, from the bank. it is not as if the court would issue directions for the mere asking of it, the court must be satisfied that there is a prima facie case made out before any such directions are issued as stated in central bank of india v.jagannadha rao, c.j.1. this writ appeal is preferred against the judgment of the learned single judge in op 13268 of 1991-d dated 19-12-1991. the writ petitioner, kattabomman transport corporation limited, is the appellant and is a public sector undertaking of the state of tamil nadu. the writ petition was filed for directing the respondents herein, namely, the state bank of travancore, zonal office, trivandrum and the branch manager, state bank of travancore, kollankode branch, kanyakumari district to furnish the details mentioned in ext. p3 letter of the appellant dated 6-8-1991. the validity of the letter of the first respondent, ext. p4 dated 10-9-1991 is also under challenge.2. the third respondent herein, one yohannan rajaian has been impleaded as the third respondent suo motu by us by our detailed order dated 23-3-1992.3. the following are the facts of the case. yohannam rajaian third respondent was an employee of the appellant-transport corporation. he was dismissed from service in 1975. action was taken under the provisions of the tamil nadu civil service (classification, control and appeal) rules which were applicable to the employees of the appellant-transport corporation which, as already stated, is a public sector undertaking of the state of tamil nadu. questioning the order of dismissal, the third respondent filed a writ petition, op 7486 of 1990 in the madras high court. a learned single judge of that court set aside the order of dismissal and directed reinstatement and also directed that the third respondent shall be entitled to monetary benefits only from the date of reinstatement and not for the anterior period. third respondent was to be entitled to serviceseniority. against the said judgment, the third respondent preferred wa 1269 of 1990 in the madras high court. the said writ appeal was disposed of by a division bench of that court on 23-1-1991. the question before the division bench was whether the third respondent was entitled to back-wages from 4-4-1975, the date of dismissal or from the date of reinstatement. when the matter came up before the division bench, it was not clear whether the third respondent was gainfully employed subsequent to 4-4-1975. the division bench, therefore, passed an order as follows:'after giving our thoughtful consideration to this matter, we allow this appeal and set aside the direction of the learned single judge restricting the monetary benefit to the appellant only from the date of reinstatement and direct that he shall also be entitled to monetary benefits for the entire period from the date of dismissal till the date of reinstatement. this order, however, is subject to the condition that the appellant shall file an undertaking supported by an affidavit before the third respondent to the effect that in the event it is established that the appellant had, after the date of dismissal till the date of reinstatement, been gainfully employed throughout or for any part of the period, then he shall refund the monetary benefit received by him to respondent no. 3 to the extent of the benefit received by him on account of such employment. the undertaking and the affidavit, shall be filed before the third respondent within two weeks from today, shall remain valid for a period of one year from today during which period, respondent no. 3 may put up the claim, if any, for reimbursement. the backwages due to the appellant shall be paid to him within six weeks from today. with the aforesaid direction, the writ appeal succeeds; but without any order as to costs.'4. it will, therefore, be seen that the division bench directed that the third respondent would be entitled to back-wages from the date of dismissal till the date of reinstatement subject to the condition that the third respondent filed an undertaking sup-ported by an affidavit before the appellant-transport corporation to the effect that in the event it is 'established' that the third respondent had, after the date of dismissal till the date of reinstatement, been gainfully employed throughout or for any part of the period, then he should refund the monetary benefit received by him to the appellant to the extent of the benefit received by him on account of such employment. the undertaking and the affidavit were to be filed before the appellant and should remain valid for a period of one year during which period the appellant could put up the claim for reimbursement. the backwages due to the third respondent were directed to be paid within six weeks. we are now informed that the said time limit has since been extended by the madras high court. thereafter, the third respondent filed an affidavit before the managing director of the appellant-transport corporation on 28-1-1991 as per ext. p2. the third respondent received monetary benefits amounting to rs. 1,53,567.16 and has been reinstated.5. the appellant-transport corporation made enquiries as to whether the third respondent was gainfully employed during the period he was out of service. from the enquiry, it appears that it was revealed that the third respondent was employed as a personal driver in almalki and company under the director of emigration, international airport at doha, qatar from 1978 to 1984. he had gone abroad using his passport no. k442096 issued by the regional passport officer, madras. according to the appellant, the third respondent was receiving a good salary and had also made remittances to the state bank of travancore, kollankode branch, kanyakumari district in tamil nadu. the account was being operated in the name of the third- respondent and his wife, vilasini.6. the appellant then approached the branch manager of the state. bank of travancore at kollankode (tamil nadu) to give the details of the third respondent's account. the branch manager informed the appellant that if the regional office at trivandrum granted permission, he couldfurnish the details. thereafter, the appellantapproached the regional office of the statebank of travancore at trivandrum by letterdated 6-8-1991 (ext. p3). the first respondent-regional office gave a reply to theappellant on 10-9-1991 as per ext. p4 statingthat in view of the statutory obligation tomaintain secrecy with respect to informationrelating the affairs of customers, the bank wasunable to give particulars regarding the nriaccount of the third respondent. 7. questioning the said reply, the present writ petition was filed in this court.8. the learned single judge referred to the provisions of section 52 of the state bank of india (subsidiary banks) act, 1959 and held that the bank was under a duty to maintain confidentiality. the learned judge also held that the power of this court cannot be invoked for the purpose of collection of information alone unless the court feels that there is some other claim between the parties in whish the information was necessary. with this observation, the writ petition was dismissed on 19-12-1991. it is against this judgment that the writ appeal is preferred.9. in this appeal, as already stated, we had impleaded the said yohannam rajaian as the third respondent suo motu by our order dated 23-3-1992 as a proper party. a counter-affidavit has been filed by him admitting that he was in doha during 1978-84, but he denied that he was employed as a personal driver in almalki and company under the director of emigration, international airport at doha. he said that his passport number is not correct. however, he does not furnish the correct passport number. he also stated that he was not gainfully employed in doha. he also denied that he sent any amount to the second respondent-branch at kollankode. he stated that 'though i went to my brother in doha in search of a job, i could not get a job to my satisfaction which i could accept. in fact, during my period of being kept out by the appellant, i was being helped by my relatives so as to enable me to conduct the case and to make both ends meet'. he also denied that the account with the second respondent was being operated in his name and his wife's name.10. it is necessary to refer to the statutory provisions. section 52 of the state bank of india (subsidiary banks) act, (959 (corresponding to sec. 44 of the state bank of india act, 1955) reads as follows,:'52. obligation as to fidelity and secrecy ; (1) a subsidiary bank shall observe, except as otherwise required by law, the practices and usages customary among bankers, and in particular, it shall not divulge any information relating to, or to the affairs of, its constituents except in circumstances in which it is, in accordance with the law or practice and usage customary among bankers, necessary or appropriate for that bank to divulge such information. (2) every director, auditor, adviser, officer or other employee of a subsidiary bank shall, before entering upon his duties, make a declaration of fidelity and secrecy as in the form set out in the second schedule; provided that........,..........,' the aforesaid provision creates an obligation of fidelity and secrecy on the bank, but subject to the following exceptions :(1)as otherwise required by law, and/or (2) as required by the practices and usages customary among bankers. 11. coming to the first exception 'required by law', the position is that the information could be called for under orders of government or under sections 131 and 133 of the income-tax act, 1961, section 135 or 137 of the companies act, 1956, bankers books evidence act, 1891, section 45(b) of the reserve bank of india act, 1934, section 26 of the banking regulation act, 1949, section 36of the gift-tax act, 1958, section 91(3) of the criminal procedure code, 1973 and section 43 of the foreign exchange regulation act, 1983.12. section 5 of the bankers' books evidence act, 1891 mentions the cases in which an officer of the bank should not be compellable to produce books. section 6, however, mentions the cases in which inspection of books could be ordered by a courtof a judge. that section reads as follows:'6. inspection of books by order of court of judge;-- (1) on the application of any party to a legal proceeding the court or a judge may order that such party be at liberty to inspect and take copies of any entries in a banker's book for any of the purposes of such proceeding, or may order the bank to prepare and produce, within a time to be specified in the order, certified copies of all such entries, accompanied by a further certificate that no other entries are to be found in the books of the bank relevant to the matters in issue in such proceeding, and such further certificate shall be dated and subscribed in manner hereinbefore directed is reference to certified copies. (2) an order under this or the preceding section may be made either with or without summoning the bank, and shall be served on the bank three clear days (exclusive of bank holidays) before the same is to be obeyed, unless the court or judge shall otherwise direct. (3) the bank may at any time before the time limited for obedience to any such order as aforesaid either offer to produce their books at the trial or give notice of their intention to show cause against such order, and thereupon the same shall not be enforced without further order,' it is, therefore, clear that on the application of any party to a legal proceeding the court or a judge could order such inspection as provided by section 6 of the bankers' books evidence act, 1891. but the court has to take certain, precautions as laid down by a full bench of the bombay high court in central bank of india v. shamdasani, air 1938 bom 33. in that case, beaumont, c.j. observed that the bank has a statutory right under sec. 6 of the bankers' books evidence act, 1891 to object to any order directing inspection of their books though the order is made under section 94 of the criminal p.c., 1898 (corresponding to section 91 of the criminal procedure code, 1973). it is necessary to hear the bankbefore any order is made under the provisions of the criminal p.c. it is also observed that a prima facie case must be made out for such inspection of the bank accounts and that the. court should not order inspection as a matter of course in every case. otherwise there is a danger of the provision being abused by business rivals. the effect of the judgment of the bombay high court is of two-fold --(1) notice must be given to the bank before any inspection is ordered and (2) before such notice is given, the court must come to a prima facie conclusion that the facts of the case justify an inspection.13. coming to the second aspect of 'practices and usages customary' among bankers, the position appears to be as follows : in paget's 'law of banking', tenth edition, 1989 (chapter 15, pages 254 to 257), it is stated that there is a general duty of secrecy on the part of the bank subject to certain exceptions. the leading case is the one decided by the court of appeal in tournier v. national provincial and union bank of england, (1924) 1 kb 461. in that judgment, it was stated by bankes, l.j. that there is a duty of secrecy arising out of a contract between the banker and the customer and the breach of it may give rise to a claim for substantial damages if injury has resulted from the breach. it is, however, not an absolute duty but qualified and is subject to certain reasonable exceptions. bankes, l.j. held that:'in my opinion it is necessary in a case like the present to direct the jury what are the limits and what are the qualifications of the contractual duty of secrecy implied in the relation of banker and customer. there appears to be no authority on the point. on principle, 1 think that the qualifications can be classified under four heads: (a)where disclosure is under compulsion by law; (b) where there, is a duty to the public to disclose; (c) where the interests of the bank require disclosure; (d) where the disclosure is made by the express or implied consent of the customer.'as instances, the lord justice gave the following:'(a) the duty to obey an order under the bankers' books evidence act; (b) (quoting lord finlay in weld-blundell v. stephens, (1920) ac 956 at 965, cases where a higher duty than the private duty is involved, as where danger to the state' or public duty may supersede the duty of the agent to his principal; (c) of a bank issuing a writ claiming payment of an overdraft, stating on the face of it the amount of the overdraft; and (d) the familiar case where the customer authorises a reference to his banker.' the lord justice pointed out that in the common situation of a bank organising its business through a corporate structure involving a holding company and subsidiaries, disclosure by one company to another may constitute a breach of the duty of secrecy. disclosure in such circumstances was regarded by the court of appeal in bank of tokyo ltd. v. karoon, (1987) ac 45, as raising an arguable case of breach of contract; see also bhogal v. punjab national bank, (1988) 2 all er 296.14. in j. milnes holden's 'the law and practice of banking', volume 1 (at page 67), adverting to duty to the public to disclose the author refers to the abovesaid cases. the author refers to the observations of bankes, l.j. in tournier's case, (1924) 1 kb 461, wherein atkin, l.j. considered that the right to disclose exists 'to the extent to which it is reasonably necessary ..... for protecting the bank, or persons interested, or the public, against fraud or crime'. the author also refers to the report of the committee on privacy (the 'younger committee') (cmnd 5012(1972)).15. in tannan's 'banking law and practice in india', 18th edition, i989(atpage 175) the banker's obligation to secrecy is considered and reference is made to the decision in tournier case, (1924) 1 k.b 461. the author states that there are limitations in the rule to the extent mentioned in tournier's case.16. in shankarlal agarwalla v. statebank of india, air 1987 cal 29, padma khastgir,j. had occasion to deal with the issue of secrecy. in that case, the customer owned 261 bank currency notes of rs. l.000/-each. he tendered these notes to the bank with declaration form under the high denomination bank notes (demonetisation) act, 1978. the customer instructed the bank to make payment of the value of the bank notes to the credit of his current account. the bank made declaration made by the customer available to the income-tax department who issued a notice under sec. 226(3) of the income-tax act, attaching the said sum. later the sum was released. the calcutta high court referred to the paget's law of banking and observed that among the duties of the banker towards the customer was the duty of secrecy. such duty is a legal one arising out of the contract and was not merely a moral one. breach of it could, therefore, give a claim for nominal damages or for substantial damages if injury is resulted from the breach. it was, however, not an absolute duty. but was a qualified one subject to certain exceptions. the instances being (l)the duty to obey an order under the bankers' books evidence act. (2) cases where a higher duty than the private duty is involved, as where danger to the state or public duty may supersede the duty of the agent to his principal, (3) of a bank issuing a writ claiming payment of an overdraft, stating on the face the amount of overdraft, and (4) the familiar case where the customer authorises a reference to his banker. the learned judge further observed that the state bank of india was directed by the reserve bank of india and the ministry of finance to furnish all particulars regarding deposit of bank notes to the income-tax department as soon as such notices were received and has, therefore, come within the exceptions,17. from the aforesaid principles, it is clear that the banking practices and usages customary among bankers in india are same as in england. there can be gathered from paget's law of banking, j. milnes holden's 'the law and practice of banking' and tannan's 'banking law and practice in india'. the principles laid down therein have therefore been accepted in india too.18. the question, therefore, is whether the present case falls within the following four exceptions:(1) where disclosure is under compulsion by law, (2) where there is a duty to the public to disclose, (3) where the interests of the bank require disclosure, and (4) where the disclosure is made by the express or implied consent of the customer. the instances where instructions could be given as stated in paget's 'law of banking' are:(a) the duty to obey an order under the bankers' books evidence act, (b) cases where a higher duty than the private duty is involved, as where danger to the state or public duty may supersede the duty of the agent to his principal, (c) of a bank issuing a writ claiming payment of an overdraft, stafing on the face of it the amount of the overdraft, and. (d) the familiar case where the customer authorises a reference to his banker. 19. so far as section 6 of the bankers' books evidence act, 1891 is concerned, the words 'party to a legal proceeding' used there would enable inspection to be made only if such inspection was necessary for the 'purpose of such proceeding'. in other words, there should be a main proceeding in. which the court might come to the conclusion that such inspection was necessary and it would only in such a proceeding that order could be passed for inspection. it was argued that, so far as this o.p. is concerned, the validity of ext. p4 can be treated as a main case in which the question of the inspection of account of the third respondent has incidentally arisen and that therefore s. 6 applies. but this is again difficult to accept for the following reasons.20. it is, no doubt, true that one of the points in the present case is whether ext. p4 letter dated 10-9-1991 issued by the regionaloffice of the state bank of travancore, trivandrum, is correct or not. that question relates only to the extent and scope of the secrecy to be maintained by the bank. for the purpose of deciding that question, it does not become necessary to direct inspection of the bank accounts. therefore, we are of the view that the present case cannot be brought within section 6 of the bankers' books evidence act, 1891.21. the next question would be whether, as stated in paget's 'law of banking' and as stated in weld-blundell v. stephens, (1920) ac 956 at 965, the bank could be said to have a higher duty than the private duty and whether the danger to the state or public duty supersedes the private duty of the bank. in the present case before us, the appellant-transport corporation is a public sector undertaking of the state of tamil nadu. the third respondent was an employee of the said corporation. the disciplinary control of the employment is governed by the tamil nadu civil services (classification, control and appeal) rules. if the funds of the public sector undertaking (which are public funds) are to be paid to its employees, without legal justification, ii can, in our view, definitely be said that a matter of public interest arises. the sum paid to the employee here is rupees 1,53,567.16 and it is established that the employee was gainfully employd in doha and 'was making remittances between 1978 and 1984 to the bank, it could be said that public funds were released in favour of a peson employed who was not entitled to the same. if the employee is to be directed to refund the said amount, the amount would again come back to the public funds of the public sector undertaking, namely, the transport corporation. in our view, this is a case where question of excess payment of public funds is involved. this is not a case merely of a private contract between a private employer and its employee. therefore, when public funds are involved, the courts do have power to see that they are spent for proper purpose and they are not spent for purposes not warranted by law. further, it is necessary to note that the judgment of the madras high court in wa 1269 of 1990 dated 23-1-1991 is a judg-ment of a high court and the appellant-corporation has certain obligations under the said judgment. if it has to discharge its obligations under the judgment of a high court, and wants certain information, can it be said that it is not entitled to seek help from a court of law for discharging its legal obligations? in our view, the corporation is entitled to seek the assistance of this court for the aforesaid purposes. the matter clearly comes within the four corners of duty owed by the bank to the public, and therefore, its private duty to the third respondent cannot prevail.22. it is, however argued that this court cannot issue any direction under article 226 of the constitution of india inasmuch as the contract between the third respondent and the bank is a private contract and no writ could be issued. it is also argued that since no other proceeding is pending in which the issue of inspection of bank account arises, we cannot entertain a writ petition only for the purpose of collection of information or evidence.23. we have considered this aspect carefully. it is true that no other main proceeding is pending before us. but, the question here is whether ext. p4 letter of the first respondent-bank, could rely on s. 52 of the state bank of india (subsidiary banks) act, 1959 for claiming absolute protection to the bank. we have already held that there is no absolute protection. consequently, it may not be correct to say that this court cannot, even in exceptional circumstances, exercise its power to call for information, from the bank.24. let us take a case where no legal proceeding is pending in a court of law. 'a person may seek to obtain a certified copy of a document from a sub-registrar's office under the registration act. or, he may seek to get a copy of a proceeding from a revenue authority. if the said authority does not furnish copies, he may, in our opinion, take proceedings only for the purpose of getting such copies. if he gets the documents, he may, after looking into them, not go to court at all. or, he may, file a proper suit or a writ which the circumstances of the case may justify rather than an irrelevant suit or writs. can itbe said that a person should first file a suit or writ in a court and then only seek directions ;to the public authority by way of an interlocutory application? we do not think so. in a proper case the high court can be resorted to for the purpose of securing evidence. it is not as if the court would issue directions for the mere asking of it, the court must be satisfied that there is a prima facie case made out before any such directions are issued as stated in central bank of india v. shamdasani, air 1938 bom 33. notice must also be issued to the bank.25. in the present case, the fact remains that the third respondent admits that he was in doha from 1978 to 1984. in other words, after the dismissal from the services of the appellant in 1975, the third respondent went to doha and stayed there for six years. that he has a bank account with the state bank of travancore is not denied by the bank. the question is whether, for the purposes of domplying with the directions given by the madras high court in wa 1269 of 1990, the public sector undertaking of the state of tamil nadu, the appellant before us, is not entitled to seek the information by way of a writ as to whether any remittances have been made by the third respondent to the bank? if there is proof of such remittances, that would certainly reduce the liability of the transport corporation in regard to payment of back-wages for the period between the date of dismissal and date of reinstatement. there is substantial material in this case to come to a prima facie conclusion that the appellant-public sector undertaking does require this information for the purpose of fulfilling its obligations in the judgment in wa 1269 of 1990 of the madras high court. therefore, even though no other main proceeding is pending before us, we are of the view that this court is not powerless to issue appropriate directions to the first respondent-bank to furnish the information relating to the nri account of the third respondent with its branch at kollangode.for the aforesaid reasons, the writ appeal is allowed. thejudgment of the learned single judge is set aside. ext. p4 letter dated 10-9-1991 of the first respondent is quashed and the first respondent is directed to issue orders' to its branch office at kollangode (second respondent) to furnish the details of the remittances made by the third respondent to the second respondent-branch during the period 1978 to 1984. in the circumstances, there will be no order as to costs.