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High Court Of Calcutta
Khwaja Mohammad Yusuf
PRANAB KUMAR RAY - Appellant
Versus
RESERVE BANK OF INDIA - Respondent
Matter 1890 Of 1990
Decided On : 08/26/1992
FOREIGN EXCHANGE - RELEASE FOR STUDIES ABROAD - POLICY GUIDELINES OF RESERVE BANK OF INDIA - DISCRIMINATORY AND UNREASONABLE - VIOLATIVE OF ARTICLE 14 OF THE CONSTITUTION - WRIT PETITION MAINTAINABLE.
Fact of the Case:
Petitioner No. 2, after securing admission in the University of Leeds for L.L.B. (Hons.) course, applied to the Reserve Bank of India (RBI) for release of foreign exchange. The RBI rejected the request, citing policy guidelines that allowed release of foreign exchange for L.L.B. (Hons.) course only at Cambridge/Oxford Universities. The petitioner challenged the validity of the RBI's decision and the policy guidelines, arguing that they were discriminatory and unreasonable, and violated Article 14 of the Constitution.
Finding of the Court:
The Court held that the policy guidelines followed by the RBI, which allowed release of foreign exchange for L.L.B. (Hons.) course only at Cambridge and Oxford Universities, were discriminatory and unreasonable, and violative of Article 14 of the Constitution. The Court found that there was no rational or proximate nexus between the object of the Foreign Exchange Regulation Act (FERA) and the condition imposed by the RBI in this case. The Court also held that the RBI and the Union of India had acted in a discriminatory and unreasonable manner by not allowing foreign exchange to the petitioner for pursuing studies in the University of Leeds, while extending the same facilities to those prosecuting Law Studies in the Universities of Oxford and Cambridge.
Issues: 1. Whether the policy guidelines of the Reserve Bank of India (RBI) relating to release of foreign exchange for studies abroad were discriminatory and unreasonable. 2. Whether the policy guidelines violated Article 14 of the Constitution.
Ratio Decidendi: 1. The Court held that the policy guidelines of the RBI, which allowed release of foreign exchange for L.L.B. (Hons.) course only at Cambridge and Oxford Universities, were discriminatory and unreasonable. The Court found that there was no rational or proximate nexus between the object of the Foreign Exchange Regulation Act (FERA) and the condition imposed by the RBI in this case. 2. The Court held that the policy guidelines violated Article 14 of the Constitution, as they created an arbitrary and unreasonable classification between students pursuing L.L.B. (Hons.) course at Cambridge/Oxford Universities and those pursuing the same course at other universities in the United Kingdom.
Final Decision: The Court quashed the RBI's decision rejecting the petitioner's request for release of foreign exchange, and also quashed the policy guidelines followed by the RBI. The Court directed the RBI and the Union of India to release foreign exchange to the petitioner for pursuing his studies in L.L.B. (Hons.) Degree Course at the University of Leeds.
( 1 ) THE Court : The writ petitioners have challenged the validity of the decision of the Reserve Bank of India as communicated by letter dated 13th January, 1990 rejecting the request of the petitioner No. 1 to release foreign exchange for his son, petitioner No. 2, for prosecuting L. L. B. (Hons.) Course at the University of Leeds in the United Kingdom. Since the impugned letter dated 17th January, 1990 refers to policy guidelines contained in the Book of Instructions of the Reserve Bank of India relating to release of foreign exchange for L. L. B. Course leading to Honours degree at Cambridge/oxford Universities only, these guidelines have become an issue in this writ proceeding as the discloser of the same justifies the action of the Reserve Bank of India. The prayer is to quash the communication dated 28th September, 1989 by the RBI expressing regret to release any foreign exchange under the Existing Control Regulations and also the impugned communication dated 13th January, 1990 by the RBI to the effect that under the policy guidelines presently followed by the Bank foreign exchange cannot be released for L. L. B. Course leading to Honours degree except only at Cambridge/ Oxford Universities.
( 2 ) THE petitioner No. 2 was able to secure a confirmed admission in the University of Leeds for higher studies in L. L. B. (Hons.) of three-year degree course with the intention of joining the legal profession in India. The petitioner No. 1, the father of the petitioner No. 2, having adequate means was willing to render financial support to his son for prosecuting his studies abroad. Soon after the publication of Part-II Examination by the University of Calcutta in September, 1989 the petitioner No. 2 duly applied to the RBI for requisite permission for release of foreign exchange for higher studies in U. K. as the session was to commence from 4th October, 1989 at Leeds. The petitioner No. 2 was subjected to various queries by the RBI. It is alleged in the petition that the respondent No. 3 who is E. C. O. of the Exchange Control Department became obstructive from the very outset by his act and conduct and stood in the way of the petitioner No. 2 and ultimately succeeded. The uncle of the petitioner No. 2 extended the helping hand by sending sponsorship certificate and the visa was issued by the Deputy High Commissioner for the United Kingdom in Calcutta in October 1989. The petitioner No. 2 left Calcutta and got himself admitted at the University of Leeds on 9th October, 1989.
( 3 ) MR. Pal appearing for the petitioners made submissions relating to some undisputed facts In 1972 the Bar Council of India adopted a resolution vide section 24 (1) (c) (iv) of the Advocates Act, 1961 that the L. L. B. degree of Leeds University obtained after graduation from any Indian University is hereby recognized. The petitioner No. 2 graduated in Political Science from Calcutta University in 1989. It appears from the Affidavit-in-Opposition by the Bank that the undersecretary by D. O. dated 3rd January, 1989 advised the Regional Offices not to release foreign exchange for Honours degree in Law to be prosecuted of any other University in U. K. The petitioner No. 2 on 5th September, 1989 applied to RBI for requisite permission for the release of foreign exchange and the Bank asked him to furnish some particulars relating to his admission in the foreign University etc. which were duly furnished. On 16th September, 1989 the Joint Controller RBI, Calcutta, telexed to the Controller, RBI, Bombay, seeking advice whether RBI would release admissible exchange after obtaining and undertaking from the student that the course would lead to Honours degree as appears from the Affidavit of the Bank. But the answer came in the negative and the petitioner No. 2 was advised that the Bank regrets its inability to release any exchange on the above subject under the Existing Exchange Control Regulations. When it was pointed out that there w
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