Kerala High Court
The Federal Bank Limited vs M/S. Inkel Ltd on 28 July, 2025
WA 2130 of 2024
1
2025:KER:54652
IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT
THE HONOURABLE MR.JUSTICE SUSHRUT ARVIND DHARMADHIKARI
&
THE HONOURABLE MR. JUSTICE SYAM KUMAR V.M.
MONDAY, THE 28TH DAY OF JULY 2025 / 6TH SRAVANA, 1947
WA NO. 2130 OF 2024
AGAINST THE ORDER/JUDGMENT DATED 28.11.2024 IN WP(C) NO.18685
OF 2023 OF HIGH COURT OF KERALA
APPELLANTS:
1 THE FEDERAL BANK LIMITED,
REPRESENTED BY ITS ASSISTANT VICE PRESIDENT, ERNAKULAM
NORTH BRANCH, P.B. NO. 1927, PNVM ARCADE, ERNAKULAM,
PIN - 682018
2 THE ASSISTANT GENERAL MANAGER,
THE FEDERAL BANK LIMITED, ERNAKULAM NORTH BRANCH, P.B.
NO. 1927, PNVM ARCADE, ERNAKULAM, PIN - 682018
3 THE DEPUTY VICE PRESIDENT AND BRANCH HEAD,
THE FEDERAL BANK LIMITED, ERNAKULAM NORTH BRANCH, P.B.
NO. 1927, PNVM ARCADE, ERNAKULAM, PIN - 682018
BY ADV SHRI.MOHAN JACOB GEORGE
RESPONDENT:
M/S. INKEL LTD.,
HAVING ITS REGISTERED OFFICE AT DOOR NO.14/812 & 813,
1ST FLOOR, AJIYAL COMPLEX, KAKKANAD, COCHIN, ERNAKULAM,
KERALA, REPRESENTED BY ITS DEPUTY MANAGER (LEGAL), PIN
- 682030
THIS WRIT APPEAL HAVING COME UP FOR ADMISSION ON 16.07.2025, THE
COURT ON 28.07.2025 DELIVERED THE FOLLOWING:
WA 2130 of 2024
2
2025:KER:54652
JUDGMENT
Sushrut Arvind Dharmadhikari, J.
Heard finally with the consent of both the parties.
2. The present intra-court appeal filed under Section 5 of the Kerala High Court Act, 1958 assails the judgment dated 28.11.2024 passed in WP(C) No.18685/2023, whereby the learned Single Judge has disposed of the Writ Petition with certain directions.
3. The brief facts of the case are that the respondent herein entered into a Limited Liability Partnership Agreement (LLP) with M/s.Seguro Foundation and Structures Pvt. Limited and was functioning under the name and style "Seguro - INKEL Consortium LLP". The said LLP had obtained some credit facility from the 1 st appellant herein for Rs.24 Crores, and the respondent herein stood as guarantor, executing a corporate guarantee with the 1 st appellant herein, mortgaging the properties covered by the sale deed No.701/2014 of Koothattukulam SRO. The guarantee executed by the respondent is also produced along with the writ petition as Ext.P1, which would show that the respondent stood as guarantor only as against the LLP referred to above. The 1st appellant herein filed O.A.No.158 of 2021 before the Debt Recovery Tribunal-I, Ernakulam (for short, 'DRT') against the LLP and the respondent herein, since the LLP committed default in repayment, for realisation of WA 2130 of 2024 3 2025:KER:54652 Rs.2,70,65,555.78. It is stated that the respondent remitted the entire amount demanded and obtained a clearance dated 11.08.2022 from the 1st appellant herein produced as Ext.P3. A perusal of Ext.P3 would show that the entire amount due to the 1st appellant was paid by the LLP and the account also stood closed.
4. In such circumstances, the respondent submitted Ext.P4 before the 2nd appellant herein, pointing out the clearance at Ext.P3 and requesting the return of the corporate guarantee as well as the collateral security furnished by the respondent as above. It also prayed for the issue of No Objection Certificate for production before the Registrar of Companies for releasing the charge created as above.
5. The learned counsel for the appellants relied on a judgment passed by the Hon'ble Apex Court in S.Shobha v. Muthoot Finance Ltd., 2025 (2) KHC 229 and paragraph nos. 7, 8 & 9 of the said judgment reads thus:
"7. Applying the above test, the respondent herein cannot be called a public body. It has no duty towards the public. It's duty is towards its account holders, which may include the borrowers having availed of the loan facility. It has no power to take any action, or pass any order affecting the rights of the members of the public. The binding nature of its orders and actions is confined to its account holders and borrowers and to its employees.
Its functions are also not akin to Governmental functions.
8. A body, public or private, should not be categorized as "amenable" or "not amenable" to writ jurisdiction. The most important and vital consideration should WA 2130 of 2024 4 2025:KER:54652 be the "function" test as regards the maintainability of a writ application. If a public duty or public function is involved, any body, public or private, concerned or connection with that duty or function, and limited to that, would be subject to judicial scrutiny under the extraordinary writ jurisdiction of Article 226 of the Constitution of India.
9. We may sum up thus:
(1) For issuing writ against a legal entity, it would have to be an instrumentality or agency of a State or should have been entrusted with such functions as are Governmental or closely associated therewith by being of public importance or being fundamental to the life of the people and hence Governmental.
(2) A writ petition under Article 226 of the Constitution of India may be maintainable against (i) the State Government;
(ii) Authority; (iii) a statutory body; (iv) an instrumentality or agency of the State; (v) a company which is financed and owned by the State; (vi) a private body run substantially on State funding; (vii) a private body discharging public duty or positive obligation of public nature; and (viii) a person or a body under liability to discharge any function under any Statute, to compel it to perform such a statutory function.
(3) Although a non-banking finance company like the Muthoot Finance Ltd. with which we are concerned is duty bound to follow and abide by the guidelines provided by the Reserve Bank of India for smooth conduct of its affairs in carrying on its business, yet those are of regulatory measures to keep a check and provide guideline and not a participatory dominance or control over the affairs of the company.
(4) A private company carrying on banking business as a Scheduled bank cannot be termed as a company carrying on any public function or public duty.
(5) Normally, mandamus is issued to a public body or authority to compel it to perform some public duty cast upon it by some statute or statutory rule. In exceptional cases a writ of mandamus or a writ in the nature of mandamus may issue to a private body, but only where a public duty is cast upon such private body by a statute or WA 2130 of 2024 5 2025:KER:54652 statutory rule and only to compel such body to perform its public duty.
(6) Merely because a statue or a rule having the force of a statute requires a company or some other body to do a particular thing, it does not possess the attribute of a statutory body.
(7) If a private body is discharging a public function and the denial of any rights is in connection with the public duty imposed on such body, the public law remedy can be enforced.
The duty cast on the public body may be either statutory or otherwise and the source of such power is immaterial but, nevertheless, there must be the public law element in such action.
(8) According to Halsbury's Laws of England, 3rd Ed. Vol.30,p.682, "a public authority is a body not necessarily a county council, municipal corporation or other local authority which has public statutory duties to perform, and which perform the duties and carries out its transactions for the benefit of the public and not for private profit". There cannot be any general definition of public authority or public action. The facts of each case decide the point."
6. The learned counsel for the appellants submitted that the learned Single Judge could not have entertained the Writ petition against a private Bank who would normally not be amenable to Writ Jurisdiction under Article 226 of the Constitution of India. Secondly, the learned Single Judge also could not have directed the respondent herein to file appropriate application seeking return of documents before the DRT, Ernakulam. The aspect of maintainability was not considered at all. It is settled legal position that private banks are not 'state' within the meaning of Article 12 of the Constitution of India as such, not amenable to writ jurisdiction under Article 226 of the Constitution of India. The judgment passed by the learned Single WA 2130 of 2024 6 2025:KER:54652 Judge deserves to be set aside.
7. Per contra, learned counsel appearing for the respondent/petitioner contended that although the finance company or the private bank may not be strictly falling within the ambit of 'State', yet being governed by the Rules and Regulations framed by the Reserve Bank of India and if those Rules are breached by the private bank, then the private bank would be amenable to Writ Jurisdiction under Article 226 of the Constitution inasmuch as, the same is discharging public functions or could be said to be in the public realm. In view of the aforesaid, the judgment passed by the learned Single Judge may be affirmed. Writ Appeal be dismissed.
8. Heard Sri. Mohan Jacob George, learned counsel appearing for the appellants, Sri.M.S.Amal Dharsan and Sri.K.Gopalakrishna Kurup, learned counsel appearing for the respondent and perused the records.
9. The Hon'ble Apex Court in the case of Federal Bank Ltd. v. Sagar Thomas and others reported in (2003) 10 SCC 733 has held that, private companies, including private banks, would normally not be amenable to the writ jurisdiction under Article 226 of the Constitution of India. However, there are certain circumstances where a writ may be issued to private bodies or persons if there are statutes that need to be complied with by all concerned, including WA 2130 of 2024 7 2025:KER:54652 private companies. It is further held that merely because the Reserve Bank of India has laid down the banking policy in the interest of the banking system and in the interest of monetary stability or sound economic growth having due regard to the interests of the depositors, that does not mean that the private companies carrying on the business or commercial activity of banking, discharge any public function or public duty.
10. A Division Bench of this Court in Mathew Ignitious C. v. Catholic Syrian Bank Limited (2019 (5) KHC 835), has categorically held that a scheduled bank registered as a company under the Companies Act do not fall within the purview of 'State' or other authorities under Article 12 of the Constitution of India. Therefore, such a bank is not amenable to the jurisdiction under Article 226 of the Constitution of India.
11. Admittedly, in the present case, the appellant bank is a private commercial bank, therefore, the same is not amenable to writ jurisdiction under Article 226 of the Constitution of India. The learned Single Judge has committed an error in entertaining the Writ Petition and issuing certain directions. In the case of Mathew Ignitious (supra), it has been already held that the private scheduled bank registered under the Companies Act do not fall within the purview of "State" or other authorities under Article 12 of the WA 2130 of 2024 8 2025:KER:54652 Constitution of India. As such, the judgment of the learned Single Judge is hereby set aside. The Writ Petition stands dismissed as not maintainable. However, the respondent herein would be at liberty to workout the remedies in accordance with law, if so advised. Accordingly, this Writ Appeal is allowed.
No order as to costs.
sd/-
SUSHRUT ARVIND DHARMADHIKARI JUDGE sd/-
SYAM KUMAR V.M. JUDGE Nsd WA 2130 of 2024 9 2025:KER:54652 APPENDIX OF WA 2130/2024 PETITIONER ANNEXURES Annexure A-1 COPY OF THE EMAIL DATED 10.11.2017 OF THE RESPONDENT TO THE BANK Annexure A-2 COPY OF THE SANCTION ORDER DATED 02.03.2018 Annexure A-3 COPY OF THE LETTER DATED 05.03.2018 OF THE WRIT PETITIONER/RESPONDENT Annexure A- 4 COPY OF THE LETTER DATED 05.03.2018 OF SEGURO FOUNDS AND STRUCTURES PRIVATE LIMITED Annexure A-5 COPY OF THE AMENDED SANCTION ORDER DATED 15.03.2018 Annexure A-6 COPY OF THE BOARD RESOLUTION DATED 16.11.2017 OF THE RESPONDENT CONSTITUTING TWO OF ITS OFFICERS AS THE AUTHORIZED PERSONS TO OPERATE THE FINANCIAL FACILITIES SANCTIONED BY THE APPELLANT BANK Annexure A-7 COPY OF THE UNDERTAKING DATED 09.01.2018 SUBMITTED BY THE RESPONDENT Annexure A-8 COPY OF THE MINUTES OF THE 55TH BOARD MEETING OF THE RESPONDENT DATED 30.10.2018 Annexure A-9 COPY OF THE RESOLUTION PASSED BY THE MEMBERS AT THE ANNUAL GENERAL MEETING OF THE RESPONDENT HELD ON 24.09.2018 RESOLVING TO EXECUTE THE CORPORATE GUARANTEE Annexure A-10 COPY OF THE MINUTES OF THE 82 ND BOARD MEETING HELD ON 01.01.2019 OF M/S. SEGURO FOUNDATIONS AND STRUCTURES PVT. LTD Annexure A-11 COPY OF THE LETTER DATED 31.12.2019 OF THE APPELLANT BANK TO THE RESPONDENT