Dismissed

Indrajit Singh and 34 Ors. v. Union of India and 6 Ors.

Allahabad HC22 May 2018WRIC/10154/2018

Case brief

AI extract

What is this about?

In a writ petition, petitioners challenging the cessation of their Business Correspondent status by State Bank of India upon contract expiry. The court dismissed the petition, holding that engagement was purely contractual and no vested right existed to insist on renewal post-expiry.

What did the court decide?

The petition was dismissed and the petitioner was directed to stop functioning as a Business Correspondent with effect from 1 March 2018.

Indrajit Singh and 34 Ors. Vs Union of… — Contract and Commercial Disputes | Allahabad HC (2018)

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Court No.39

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Case :- WRIT - C No. - 10154 of 2018

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Petitioner :- Indrajit Singh And 34 Ors. Respondent :- Union Of India And 6 Ors. Counsel for Petitioner :- Suresh Singh,Bhanu Pratap Singh Counsel for Respondent :- A.S.G.I.,Satish Chaturvedi,Tapeshwari Prasad

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Hon'ble Dilip Gupta, J. Hon'ble Neeraj Tiwari, J.

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The petitioners were appointed as Business Correspondents in the State Bank of India in several districts under Farrukhabad Region for a period of one year for which a contract was entered into between the petitioners and the State Bank of India. In September 2016, a fresh agreement was executed for a period of one year which expired in September 2017. The petitioners are aggrieved by the communication dated 28 February 2018 sent by the State Bank of India informing them that since the agreement expired on 28 February 2018, the petitioners cannot act as Business Correspondents with the Bank with effect from 1 March 2018. Accordingly, their business correspondence code would also be deactivated.

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Learned counsel for the petitioners has contended that initially a communication dated 20 September 2017 was sent to the petitioners requiring them to get the renewal of their Consumer Service Point agreement but subsequently as the petitioners did not get the renewal done, the order dated 28

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2 February 2018 was passed. It is submitted that a very short period was granted to them to submit the renewal.

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Learned counsel appearing for the respondents, however, contended that the petitioners did not have a vested right to continue as Business Correspondents after the expiry of the period of contract and in any case even the renewal that was granted to such Business Correspondents who had submitted the renewal applications in time was not subsequently renewed. Learned counsel has also placed before the Court decisions dismissing the claims of such Business Correspondents.

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We have considered the submissions advanced by learned counsel for the parties.

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A Division Bench of this Court, in regard to the similar controversy, dismissed Writ-C No.5359 of 2018 by a detailed judgment dated 8 February 2018, which is reproduced below:-

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“1. Sri Abhai Raj holding brief of Shri A. Chaturvedi, Advocate has filed a vakalatnama on behalf of respondent No.3, which is taken on record.

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Heard Shri Radha Kant Ojha, Senior Advocate assisted by Shri Shivendu Ojha, learned counsel for the petitioners, Shri Satish Chaturvedi, learned Advocate appearing on behalf of respondent Nos. 5, 6 & 8 and perused the record.

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The instant writ petition has been filed with a prayer to issue a writ of certiorari quashing the impugned orders dated 10.01.2018, 25.01.2018 and 30.01.2018 (Annexure Nos.17 to the writ petition), passed by respondent No.8 and further to issue a writ of mandamus commanding the respondent-Bank not to interfere in the peaceful functioning of the petitioners as B.Cs.with their link branches and also not to compel the petitioners to close their systems and merge with National B.Cs. (CSP), as systems of the petitioners' B.Cs. are automatically

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renewed upto 2027 as would be clear by perusal of the SBI KIOSK ADMIN SITE.

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Learned counsel for the petitioners submitted that there was a scheme of the State Government under the scheme of Reserve Bank of India for providing facilities to the individual Business Correspondents (in short B.Cs) in between the customers and bank. The petitioners were working as Service Providers/ Business Facilitators. Subsequently nomenclature was changed and now they were appointed as Business Correspondents. There was an agreement and they have to deposit Rs.50,000/- as security. They were appointed and time to time their agreements were extended. Thereafter on 12.4.2017 and 19.5.2017 circulars were issued to the effect that a decision was taken that Central Service Providers were well established with National Business Correspondence, and as such, the individual Business Correspondence should be engaged with prior approval from the Circle Management Committee, if they were converting them as Central Service Provider of National Business Correspondents. Consequently, petitions were filed and the interim order was passed. Thereafter, by circular dated 6.10.2017, both the circulars dated 12.4.2017 and 19.5.2017 were cancelled. Subsequently, though the agreement was subject to renewal, however with ulterior motive, the earlier circulars were cancelled and withdrawn but agreement was not renewed without giving any reason as to why the agreement was not renewed. He stopped the petitioners to work as Business Correspondences. Since they were being compelled to work as Central Service Provider, which is arbitrarily, illegal and against the principles of natural justice, hence the impugned orders/ circulars are liable to be quashed.

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Learned counsel for the State Bank of India vehementally opposed the prayer and submitted that it was only a contractual service, which was subject to renewal of the agreement. After expiry of the period of agreement, the petitioners have no right to continue as a Business Correspondence and the letter dated 10.01.2018 annexed with Annexure no.17 belongs to other State.

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Considered the submissions of the learned counsel for the parties. Admittedly the engagement of the petitioners was in pursuance to the agreement executed, which was time to time renewed. However subsequently, the decision was taken that the Individual Business Correspondents should work with Central Service Providers. After expiry of the agreement of individual Business Correspondence, the Bank may or may not extend the agreement for extra period. Further, in case of

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those Business Correspondents including the petitioners, agreements have expired. Hence the direction was given to stop opening of the account and further advised that they may convert themselves as Central Service Provider, if they were interested to work as Business Service Providers. If the Bank was not interested to take facility of Business Correspondents and the period was expired then it is not a fit case to issue a writ of mandamus to the Bank to renew the agreement because it is a purely contractual service.

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Under such circumstances, it is not a fit case to interfere in the matter under Article 226 of the Constitution by issuing a writ of certiorari or a writ of mandamus.

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Accordingly, the present writ petition is hereby dismissed.”

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In the instant case, the term expired in September 2017. A communication was sent to the petitioners to submit the renewal application. The petitioners did not submit any application and thereafter the order dated 28 February 2018 was passed informing the petitioners that they will not act as Business Correspondents with effect from 1 March 2018.

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The petitioners may have been asked to submit applications by communication dated 20 September 2017 for renewal but, as noted above, they did not submit any application. In any case, where the applications were submitted for renewal, renewal was granted only upto 28 February 2018. The petitioners did not have the vested right to continue as Business Correspondents. Once a policy decision has been taken not to renew the term, the petitioners cannot insist for renewal of their term. This is also what has been held by the Division Bench of this Court in Writ-C No.5359 of 2018.

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The writ petition is, accordingly, dismissed.

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Order Date :- 22.05.2018 GS

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(Dilip Gupta, J.)

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(Neeraj Tiwari, J.)

Indrajit Singh and 34 Ors. v. Union of India and 6 Ors.

Case brief

What is this about?

What did the court decide?

Indrajit Singh and 34 Ors. v. Union of India and 6 Ors.

Case brief

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What did the court decide?

What the court decided

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