Dismissed

Vishal Singh v. Reserve Bank of India and 2 Others

Allahabad HC18 Jan 2021WRIC/25302/2020

Case brief

AI extract

What is this about?

The High Court dismissed a writ petition filed by a borrower against a private bank and the RBI, holding the petition non-maintainable as the dispute involves private contractual rights. Citing Federal Bank, the court ruled private banks are not 'State' under Article 12.

What did the court decide?

The writ petition was dismissed as not maintainable against a private bank under Article 12.

Vishal Singh Vs Reserve Bank of India and 2 Others — Writ and Judicial Review | Allahabad HC (2021)

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Court No. - 39

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Case :- WRIT - C No. - 25302 of 2020

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Petitioner :- Vishal Singh Respondent :- Reserve Bank Of India And 2 Others Counsel for Petitioner :- Surendra Kumar Mishra Counsel for Respondent :- Pranjal Mehrotra

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Hon'ble Naheed Ara Moonis,J. Hon'ble Dinesh Pathak,J.

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Case called out in the revised call. None is present on behalf of the petitioner to address the court. However, Sri Pawan Kumar Mishra holding brief of Sri Pranjal Mehrotra, learned counsel appearing on behalf of the respondents submits that the present writ petition is not maintainable against the private respondents.

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The petitioner had taken a vehicle after being financed by Mahindra and Mahindra Finance, which is a private bank. It is an admitted case of the petitioner that an agreement was executed between the petitioner and the bank. The petitioner defaulted in payment of instalments and as such the vehicle is being seized by the bank.

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The respondent no. 2 is a private bank and not an instrumentality of the State within the meaning of Article 12 of the Constitution of India. The dispute evidently is between two private parties, namely, the petitioner, who is the borrower, and the respondent no. 2, who is the Bank. The writ petition is not maintainable to enforce a contract between two private entities nor can any direction be issued for quashing the consequential proceedings in exercise of writ jurisdiction in the facts of the present case.

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In the case of Federal Bank Ltd. v. Sagar Thomas and others, (2003) 10 SCC 733 : AIR 2003 SC 4325, the Hon'ble Supreme Court has held as under:

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"28. ...As indicated earlier, share capital of the appellant bank is not held at all by the Government nor is any financial assistance provided by the State, nothing to say which may meet almost the entire expenditure of the company. The third factor is also not answered since the appellant bank does not enjoy any monopoly status nor can it be said to be an institution having State protection. So far as control over the affairs of the appellant bank is concerned, they are managed by the Board of Directors elected by its shareholders. No governmental agency or officer is connected with the affairs of the appellant bank nor is anyone of them a member of the Board of Directors. In the normal functioning of the private banking company there is no participation or interference of the State or its authorities. The statutes have been framed regulating the financial and commercial activities so that fiscal equilibrium may be kept maintained and not get disturbed by the malfunctioning of such companies or institutions involved in the business of banking. These are regulatory measures for the purposes of maintaining a healthy economic atmosphere in the country.

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29. ..... Any business or commercial activity, may be banking,

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manufacturing units or related to any other kind of business generating resources, employment, production and resulting in circulation of money are no doubt, such which do have impact on the economy of the country in general. But such activities cannot be classified as one falling in the category of discharging duties or functions of a public nature. Thus the case does not fall in the fifth category of cases enumerated in the case of Ajay Hasia [Ajay Hasia v. Khalid Mujib Sehravardi, (1981) 1 SCC 722]. Again we find that the activity which is carried on by the appellant is not one which may have been earlier carried on by the Government and transferred to the appellant company."

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Following the law laid down by the Hon'ble Supreme Court in the above decision that the private financial institutions, carrying of business or commercial activity, may be performing public duties, but cannot be considered to be covered under the definition of "State" under Article 12 of the Constitution of India, the writ petition against such entity is not maintainable before the High Court.

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Accordingly, the writ petition is hereby dismissed.

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Order Date :- 18.1.2021 Shahnawaz

Vishal Singh v. Reserve Bank of India and 2 Others

Case brief

What is this about?

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Vishal Singh v. Reserve Bank of India and 2 Others

Case brief

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