In an appeal regarding a vehicle release dispute between a borrower and H.D.B. Financial Services, the court held the writ petition not maintainable. It ruled that private financial institutions are not 'State' entities under Article 12 and contractual disputes fall outside the High Court's writ jurisdiction.
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Court No. - 39
Case :- WRIT - C No. - 26132 of 2020
Petitioner :- Sanjay Singh
Respondent :- General Manager H.D.B. Financial Service And 2 Others Counsel for Petitioner :- Man Singh Verma,Syed Irfan Ali
Hon'ble Naheed Ara Moonis,J. Hon'ble Dinesh Pathak,J.
Heard learned counsel for the petitioner and the learned counsel for the respondents bank.
The instant petition has been filed seeking following relief:
"I. Issue a writ, order or direction in the nature of Mandamus to direct the respondent to release the vehicle make and REgn. No.JCB 3DX, U.P. 71T8984 Chasis No.HAR3DXSSH025037 Engine No.H00144628 in favour of the petitioner;
II. Issue other writ which this Hon'ble Court may deem fit in the circumstances of the case;
III. Award the cost of the petition to the petitioner."
The petitioner had taken JCB after being financed by the respondent no.2/HDB Financial Services. The petitioner defaulted in payment of installments. Thus the dispute evidently is between the petitioner who is the borrower and the respondent no.2/HDB Financial Services who is a private financial institution.
At the outset learned counsel for the respondents-bank has raised a preliminary objection that the present writ petition is not maintainable as respondents are a private financial institution and not an instrumentality of the 'State' under Article 12 of the Constitution of India. The writ petition is not maintainable to enforce a contract between two entities.
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:
"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.
29. ..... Any business or commercial activity, may be banking, 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."
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.
Hence, in view of the settled principle of law the present writ petition is not maintainable. That apart, since disputed question of facts are involved, we decline to exercise our extraordinary jurisdiction under Article 226 of the Constitution of India on this ground also. Accordingly, the writ petition is hereby dismissed.
Order Date :- 18.1.2021 M. Tariq
3 issues framed by the court
Whether a writ petition is maintainable against a private financial institution under Article 12 of the Constitution of India.
Whether the High Court can exercise extraordinary jurisdiction under Article 226 for a contractual dispute between a borrower and a private financier.
Whether a writ petition filed to enjoin release of a vehicle seized by a private financial institution is maintainable.
Colour shows how this judgement treated each authority
Federal Bank Ltd. v. Sagar Thomas and othersFollowed¶17
Federal Bank Ltd. v. Sagar Thomas and others, (2003) 10 SCC 733 : AIR 2003 SC 4325 · Who else cites this
Ajay Hasia v. Khalid Mujib SehravardiReferred¶16
Ajay Hasia v. Khalid Mujib Sehravardi, (1981) 1 SCC 722 · Who else cites this
Sanjay Singh
General Manager H.D.B. Financial Service
2 Others
Naheed Ara Moonis
Dinesh Pathak
As recorded by the court registry
Judgements on the same questions, provisions and authorities, from every court
