Background of the case.
The case of RICBL vs Ugyen Wangchuk revolves around a loan default case that amounted to Nu. 102 million. During the initial filing of the petition, the principal amounted Nu. 61.123 million, interest amounted Nu. 14.236 million, Penalties amounting to Nu. 0.765 million and in total defaulted loan outstanding Nu. 78.368 (amounts to only Nu. 77.123). The initial judgement by the District Court ruled that Ugyen Wangchuk was to pay the principal amount of Nu. 71 million, and the interest and penalties amounted to Nu. 25 million were to be shared equally amounting Nu. 12 million each between RICBL and Ugyen Wangchuk, based on the international principle that "when both parties are at fault, the losses have to be shared equally." In addition, Ugyen Wangchuk was sentenced to 1 ½ years of imprisonment for deceptive practice for double mortgage of Land at Debsi which was mortgaged with RICBL was subsequently mortgaged with BIL, for selling the mortgage Land at Trashigang and Prado without the consent of RICBL.
Both parties appealed to the High Court, which changed the judgement to state that the entire Nu. 102 million, including interest and penalties, should be shared equally in three portions between firstly, Ugyen Wangchuk; secondly, the relevant/dealing officials; thirdly, the RICBL amounting to Nu. 34 million each. This decision was also based on the same international principle that "when both parties are at fault, the losses have to be shared equally." The imprisonment sentence of 1 ½ years for Ugyen Wangchuk was dismissed by the High Court.
RICBL, not satisfied with the decision of the High Court appealed to the Supreme Court. After the review hearing, the Supreme Court dismissed the case and upheld the decision of the High Court, which meant that RICBL had to pay a portion of the loan amount, along with the dealing officials and Ugyen Wangchuk of Nu. 34 million each.
RICBL appealed to the Office of the Gyalpoi Zimpon, emphasizing only the faults of four select employees who were partly involved in CRSC/2010/84 and mentioned in the case summary (Sherchud) on Page 21 for the case review. This was instead of addressing the primary contention of why each of the 12 loans, including bank guarantees mentioned on Pages 17-34, were ruled in favor of Ugyen Wangchuk. Owing to this unclear appeal submission, the appeal was dismissed. Consequently, both parties to the case, RICBL and Ugyen Wangchuk, as well as relevant employees who were not party to the case, were made liable for the Nu. 34 million (Ngultrum Thirty-Four Million Only) each. Notably, these four employees were not identified by name in the Judgements and Kaja of any of the three courts. Furthermore, despite Ugyen Wangchuk not contesting these claims during the witness testimonies at the District Court, RICBL deliberately shifted the blame onto these four unfortunate employees.
RICBL Enforcement of High Court Judgement
The four employees, who were not parties to the case, were informed about the judgment only after the dismissal of the appeal submissions from OGZ, through a show-cause notice on October 4, 2022. It is noteworthy that the High Court's judgment specified eight points concerning the faults of the relevant/dealing officials in the 12 loans and 7 bank guarantees. However, RICBL cited just one sentence from the judgment and referenced one sentence each for each of the four employees from the Case Summary - Sherchud mentioned particularly on Page No. 21, designating these employees as liable for Nu. 8.5 million each. Moreover, regarding the High Court judgment Order - Kaja on the breach of contract where RICBL could have recovered around Nu.10 Million through the enforcement of the District Court judgment and the auction of mortgage assets to offset against the loans of Ugyen Wangchuk, RICBL's legal representative made no effort to enforce the recovery related to Ugyen Wangchuk's Sister Tshering Pem and Dechen Pelden; the auctioning of the mortgage assets, among other things ordered by the Court, was not enforced to allegedly favor Ugyen Wangchuk.
Upon examining the judgments of the courts, there was a constitutional violation concerning the representation of the four employees if RICBL claims that only these four employees were the relevant/dealing officials for the 12 loans and BGs. If RICBL determined that one-third of the liability should be borne by these four employees, the legal representative failed to seek Jabmi and power of attorney forms 11 and 12 to act and represent them during the Supreme Court appeal. Yet, the legal representative and the Legal Department conceal the fact that during the appeal submission to the Supreme Court, the representation was made on behalf of RICBL and its employees (not four select named employees). When the case was lost to Ugyen Wangchuk, the Legal Department conveyed to the Management of RICBL, the Board of Directors, the Royal Monetary Authority, and the Enforcement Department of the District Court that the High Court ruled in favor of Ugyen Wangchuk due to faults mentioned on Page 21 of the High Court's Case Summary, holding Ugyen Wangchuk liable for only one-third of his 12 Loans and 7 Bank Guarantees while two-third were liable for the RICBL and four select employees (not its employees).
Furthermore, during the enforcement of the High Court Judgement, the Legal Department, supported by the Board of Directors and the Management of RICBL misled the Enforcement Department by submitting an enforcement letter on January 16, 2023 naming 1. Ugyen Wangchuk, 2. Relevant Officials and 3. RICBL. When the Enforcement Department inquired about the names of the second party, the Legal Representative provided four names one page each for each of the employees, each page with individual details by their citizen details, permanent address, current address, and phone numbers. During the enforcement hearing in February 1, 2023, Ugyen Wangchuk, the Legal Representative, and Jigme Namgyal were summoned in the morning through a telephone call. On the same afternoon, during the enforcement hearing, first, the seizure orders for the mortgaged collateral were issued; secondly, arrest warrants for Jigme Namgyal and three other employees were issued. Third, for RICBL, when the Hon'ble Judge asked who should be issued arrest warrants for RICBL - the CEO, the Legal Head, or himself, the legal representative rushed back to the office and submitted a letter, signed by himself, stating that the one-third liability for RICBL would be written off during the next board meeting. However, all Management officials, including the CEO, were at a retreat in Phuentsholing, the RICBL even in the present day, passed verbal instructions to Legal Representative for the above letter.
Where was the due process for the documentation of the write-off? Does a Legal Representative, not even certified by the BAR council, have the authority to decide on a write-off? The more pressing question is: has the Legal Department, in conjunction with Management, been misleading the Board of Directors and the shareholders up to the present day?
RICBL failed to enforce the specific District Court judgment. In response, the High Court issued an Order - Kaja for breach of contract and the seizure of Ugyen Wangchuk's collateral, intended to be adjusted against his loans. The order did not specify that the sale proceeds of the collateral assets were only for one-third of Ugyen Wangchuk's liability. This oversight signifies RICBL's disregard for the rule of law and its act of misleading the Enforcement Department of the District Court. RICBL directly implicated its employees, specifically naming four employees, by issuing arrest warrants. This resulted in numerous administrative actions leading to resignations due to continuous harassment and mental torture. To exacerbate matters, even after their resignations, RICBL issued an injunction request letter to bar Tashi Penjor from leaving the country. This action was taken citing the recent departure of Jigme Namgyal for Australia and by claiming all the post-service benefits of Kuenzang Choden. Kuenzang Choden also resigned from RICBL, disturbed by constant reminders about "Cha" and discussions concerning the four employees by the management.
However, Ugyen Wangchuk appealed to the Office of the Chief Justice of Bhutan, which resulted in the cancellation of the mortgaged property seizure, granting him a three-month extension based on OGZ's appeal submission. In contrast, the lawyer representing the four employees and Jigme Namgyal himself were warned about "Contempt of Court" by the Clerk of the Supreme Court.
Regarding the enforcement of the High Court Order for the Management or RICBL portion, when the RICBL's legal representative informed the Enforcement Department that RICBL's one-third liability would be proposed for write-off to the Board of Directors, it raised questions of partiality. The faults of the relevant/dealing officials for the 12 Loans and 7 Bank Guarantees mentioned in 12 pointers were lapses of all of the relevant employees (which includes these four employees). If the management's faults can be written off, why can't those of the relevant/dealing officials of RICBL be treated similarly? This discrepancy highlights issues of equity and fairness within the organization.
Why were four employees named in the Case Summary - Sherchud
Regarding the four staff members, Jigme Namgyal and Jurme Chetsho were cited in the case summary for a Nu. 2,440,000 transaction in 2012 involving the sale of 15 decimal land at Debsi to Ugyen Wangchuk. While they had acquired verbal consent from Ugyen Wangchuk for transactions linked to the land from Loan Account CRCS/84, a practice during the previous management, the testimony was recorded, and written rebuttal submissions were presented to the District Court concerning these transactions. Ugyen Wangchuk did not challenge them.
Tashi Penjor was noted in the case summary for withdrawing Nu. 186,000 from Ugyen Wangchuk's loan account OD/230 without consent in 2012. Nevertheless, the amount was given in cash to his wife after receiving verbal consent via phone in the presence of the supervisory officer. The same rebuttal submissions were presented to the District Court, and Ugyen Wangchuk acknowledged before the Judge that he had forgotten about the transactions and retracted his claim on the transaction.
Ugyen Lhamo adjusted Ugyen Wangchuk's loan amounts from one account (OD/217) to another (CRCS/84), amounting to Nu. 1,662,834, at year-end 2012. This practice, known as loan greening, was carried out by RICBL's management to show reduced NPL, resulting in higher profits. The greening was executed per the Recovery Team's directions and upon Ugyen Wangchuk's request due to his failure to meet his outstanding dues. Therefore, both RICBL and Ugyen Wangchuk benefitted from this action.
All these transactions were explicitly highlighted in the High Court's case summary as "without the consent of Mr. Ugyen Wangchuk." However, during the district court hearing, Ugyen Wangchuk did not claim these particular transactions, as it could be proven to the Hon'ble Judge that all dealings were per his verbal instructions. He accepted these transactions as his own. No specific judgment ruled that the four employees owed any restitution to Ugyen Wangchuk or RICBL.
The management initially took administrative actions, including internal transfers to non-credit departments and promotion withholding during the trial. After OGZ's appeal was dismissed, RICBL suspended the two active employees for an investigation and later revoked, and for the two employees who had left, their post service benefits were withheld.
Conclusion
These details underline the point that RICBL Board, Management and Legal Department acted without adequately understanding the Judgments of the Courts. The failure to follow proper procedure during the enforcement of the Judgement, which led to denying constitutional reights of the four employees questions the issues of equity and fairness. Further, the way the four employees were treated, especially in the context of the entire case, raises ethical and moral questions about the RICBL's Management's conduct and decisions.
Update !!! (October 2023)
The Hon'ble Bench II of High Court issues Clarification Letter to the Enforcement Department, District Court naming four employees as "Relevant Officials of the Bank" issued on October 2, 2023 (received on October 10, 2023)
Click here for the Clarification Letter
This webpage is created with the sole purpose of shedding light on the experiences of four unfortunate employees named by RICBL.
It is not intended to undermine or challenge the decisions of the Hon'ble Courts but rather aims to explore how the institution they served for 16 years may have shifted responsibility in the context of a Loan Default Case from 40+ employees to only 4 employees.
Update: The Hon'ble High Court names four employees after the clarification issued on October 2, 2023.