Karnataka High Court
Canara Bank, Masur Branch vs The Warehousing Development on 17 September, 2025
Author: Suraj Govindaraj
Bench: Suraj Govindaraj
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R
IN THE HIGH COURT OF KARNATAKA,AT DHARWAD
DATED THIS THE 17TH DAY OF SEPTEMBER, 2025
BEFORE
THE HON'BLE MR. JUSTICE SURAJ GOVINDARAJ
WRIT PETITION NO. 101644 OF 2025 (GM-RES)
BETWEEN:
CANARA BANK, MASUR BRANCH
AK PATIL COMPLEX, NEAR OLD BUS STAND,
MASUR-581210,
RATTIHALLI TALUK, HAVERI DISTRICT,
REPRESENTED BY ITS SENIOR MANAGER.
...PETITIONER
(BY SRI. SURESH S. GUNDI, ADVOCATE)
AND:
1. THE WAREHOUSING DEVELOPMENT
AND REGULATORY AUTHORITY,
4TH FLOOR, NCUI BUILDING,
Digitally signed 3, SIRI INSTITUTIONAL AREA,
by SAROJA
HANGARAKI AUGUST KRANTI MARG,
Location: High HAUZ KHAS, NEW DELHI-110016,
Court of REPRESENTED BY ITS CHAIRMAN.
Karnataka,
Dharwad Bench,
Dharwad 2. SMT. BHAGYAMMA
W/O. NAGARAJ CHALAGERI,
PROPRIETOR OF M/S. SHREE KOLLUR MOOKAMBIKA
WAREHOUSE, KODAMAGGI VILLAGE,
MASUR POST-581210,
SHIKARIPUR ROAD, HIREKERUR,
RATTIHALLI-TALUK, HAVERI DISTRICT.
...RESPONDENTS
(BY SRI. SHASHANK MANISH, ADVOCATE APPEARED FOR
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SRI. SIDDAPPA S. SAJJAN, ADVOCATE FOR R1;
SRI. MRUTYUNJAYA TATA BANGI, ADVOCATE FOR R2)
THIS WP IS FILED UNDER ARTICLE 226 AND 227 OF
CONSTITUTION OF INDIA, PRAYING TO (1) ALLOW THE BANK
AND ITS DULY AUTHORIZED AGENTS TO VERIFY THE PLEDGED
GOODS STORED IN THE WAREHOUSE IMMEDIATELY. (2)
DIRECT THE RESPONDENT NO.1 TO TAKE THE CONTROL OF THE
WAREHOUSE AND PLEDGED GOODS BY ENFORCING THEIR
RIGHT AND DUTIES AS PER THE WDRA ACT AND RULES. (3) TO
PRESERVE THE QUALITY AND QUANTITY OF THE PLEDGED
STOCKS AND TAKE SUFFICIENT AND APPROPRIATE STEPS TO
SAFEGUARD THE INTEREST OF THE PETITIONER BANK. (4)
SEGREGATE THE PLEDGED GOODS STORED IN THE WAREHOUSE
E-NWR WISE TO IDENTIFY THE GOODS OF EACH DEBTOR. (5)
FACILITATE THE BANK IN CONDUCTING AN AUCTION OF THE
PLEDGED GOODS IN ACCORDANCE WITH THE LAW AND THE
TERMS OF THE LOAN AGREEMENT.
THIS PETITION, HAVING BEEN HEARD AND RESERVED ON
21.08.2025, COMING ON FOR PRONOUNCEMENT OF ORDER THIS DAY,
THE COURT DELIVERED THE FOLLOWING:
CAV ORDER
(PER: THE HON'BLE MR. JUSTICE SURAJ GOVINDARAJ)
1. The Petitioner/Canara Bank is before this Court seeking the
following reliefs:
"(1) Allow the Bank and its duly authorized
agents to verify the pledged goods stored
in the warehouse immediately.
(2) Direct the Respondent no.1 to take the
control of the warehouse and pledged
goods by enforcing their right and duties
as per the WDRA Act and Rules.
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(3) To preserve the quality and quantity of
the pledged stocks and take sufficient and
appropriate steps to safeguard the
interest of the petitioner bank.
(4) Segregate the pledged goods stored in
the warehouse e-NWR wise to identify the
goods of each debtor.
(5) Facilitate the Bank in conducting an
auction of the pledged goods in
accordance with the law and the terms of
the loan agreement."
2. Brief facts of the case are as under:
2.1. The Petitioner Bank claims that it has sanctioned a
total of 54 credit facilities by way of loans to 53
borrowers/farmers on the security of pledges of
Electronic Negotiable Warehouse Receipts (E-
NWRs). These receipts are issued by M/s. National
E-Repository Limited (NERL), which is sponsored
by M/s. National Commodity and Derivatives
Exchange Limited (NCDEL) and CCRL, which is
sponsored by M/s. Central Depository Services
Limited (CDSL), and functioning under the purview
of the Warehousing (Development and Regulation)
Act, 2007 (hereinafter referred to as 'WDRA' Act).
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2.2. It is contended that the underlying stocks for the
said E-NWRs are areca nuts/betel nuts stored by
the farmers/borrowers in the registered warehouse
of Respondent No. 2, in compliance with the
provisions of the WDRA Act and the rules made
thereunder. As security for the loans sanctioned by
the bank in their favour, it is alleged that the
borrowers have created a pledge of the E-NWRs in
favour of the Petitioner Bank as per the provisions
of the WDRA Act. Respondent No. 2, a
warehouseman under the WDRA Act, had also
entered into an agreement with the Petitioner Bank
in respect of the pledged goods.
2.3. The loan accounts having become irregular and the
borrowers having failed to regularise/close the loan
accounts, the Bank was constrained to classify the
accounts of 30 such borrowers as Non-Performing
Assets (NPAs) as on 11.02.2025, in terms of the
directives/guidelines of the Reserve Bank of India
(RBI). The remaining 23 accounts of the borrowers
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have been classified as Special Mention Accounts
(SMAs), again in terms of the directives/guidelines
issued by the RBI.
2.4. To recover the dues, the Bank invoked the pledge
in terms of the E-NWRs and accordingly, it is
claimed that the title to all the E-NWRs was
required to be transferred in favour of the Bank.
Respondent No. 2/warehouseman, holding the
goods underlying the E-NWRs as a trustee on
behalf of the bank, was duty-bound to protect the
interest of the bank. The Bank had called upon
Respondent No. 2 to permit, assist, and cooperate
with the bank officials for the inspection and
identification of the goods. Despite such a request
being made, the warehouseman failed to comply.
2.5. The warehouseman instead of segregating the
goods had mixed up several of the goods, and
whenever inquiries were made, showed the same
goods as belonging to each of the borrowers. In
that background, the Petitioner had several
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correspondences with Respondent No. 2 to
segregate the goods and allow the bank officers to
identify and demarcate the goods, with which
Respondent No. 2 did not cooperate.
2.6. Meanwhile, one of the borrowers had approached
this Court in W.P. No. 100064 of 2025, for a
direction to the bank to release one of the
warehouse bills. In the said petition, this Court had,
vide interim order on 07.01.2025, directed the
borrower's guarantor to cooperate with the bank in
segregating the goods held by Respondent No. 2.
Despite the said order, when the Bank had
approached the warehouseman, he did not take the
necessary action. When the officer of the Bank
visited on 12.01.2025, the officer was requested to
visit the premises on 15.01.2025. On 15.01.2025,
though some goods were shown, they were not
segregated, and no tags were attached, as required
by the WDRA Act.
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2.7. On account of the warehouseman, Respondent No.
2 not complying with the requirements of the
WDRA Act, the Petitioner Bank took up the matter
with Respondent No.1 Authority and called upon it
to take steps in terms of the WDRA Act. Though it
is contended by Respondent No.1 Authority that it
had taken action, the same did not yield any result,
and as such, the Petitioner Bank continued to
correspond with Respondent No.1, providing all
available documents (Annexure-K series).
2.8. Apprehending misappropriation of the underlying
goods of the NWRs and collusion between
Respondent No. 1 and Respondent No. 2, the
Petitioner is before this Court seeking the aforesaid
reliefs.
3. Shri Suresh S Gundi, learned counsel appearing for the
Petitioner/Bank submits that :
3.1. The WDRA Act has been promulgated to provide
security to fiduciaries and creditors, so as to enable
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the trading of and in negotiable receipts, and to
provide confidence to such bankers and creditors. It
is on account of the WDRA Act that warehouses
have been established across the country, and
banks have started trusting the receipts issued by
warehousemen under the said statute. The
warehousemen are essentially discharging a public
duty, inasmuch as the State is not in a position to
establish warehouses. Private participation is being
permitted to establish such warehouses, which
function within the ambit and scope of the WDRA
Act and the Warehousing Development and
Regulation (Registration of Warehouses) Rules,
2017 (for short the Rules, 2017).
3.2. "Authority" means the Warehousing Development
and Regulatory Authority established under sub-
section (1) of Section 24 of the WDRA Act. The said
Section 24 is reproduced hereunder for easy
reference:
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"24. Establishment and incorporation of
Authority.--
(1) With effect from such date as the Central
Government may, by notification, specify in
this behalf, there shall be constituted an
authority to be called the Warehousing
Development and Regulatory Authority to
exercise the powers conferred on, and to
perform the functions assigned to it by or
under this Act.
(2) The Authority shall be a body corporate by
the name aforesaid having perpetual
succession and a common seal with power,
subject to the provisions of this Act, to
acquire, hold and dispose of property, both
movable and immovable, and to contract and
shall, by the said name, sue or be sued.
(3) The head office of the Authority shall be at
New Delhi and the Authority may, with the
previous approval of the Central Government,
establish offices at other places in India."
3.3. By referring to Clause (v) of Section 2 of the WDRA
Act, he submits that "warehouseman" means any
person who is granted a certificate of registration in
respect of any warehouse or warehouses by the
authority for carrying on the business of
warehousing. The said clause is reproduced
hereunder for easy reference:
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"(v) "warehouseman" means any person who
is granted a certificate of registration in
respect of any warehouse or warehouses by
the Authority for carrying on the business of
warehousing."
3.4. By relying on sub-section (t), he submits that
"warehousing business" means the business of
maintaining warehouses in the storage of goods
and issuing negotiable warehouse receipts. Thus,
he submits that the warehousing business does not
only mean maintaining warehouses but also
includes issuing negotiable warehouse receipts.
3.5. By relying on sub-section (n) of Section 2 of the
WDRA Act, he submits that a "non-negotiable
warehouse receipt" means a warehouse receipt
other than a negotiable warehouse receipt.
3.6. By relying on clause (m) of Section 2 of the WDRA
Act, he submits that a "negotiable warehouse
receipt" means a warehouse receipt under which
the goods represented therein are deliverable to
the depositor or order, the endorsement of which
has the effect of transfer of goods represented
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thereby and the endorsee for which takes a good
title.
3.7. He submits that it is on the basis of this negotiable
warehouse receipt, which has been issued in terms
of "fungible goods" as defined under clause (h) of
Section 2 of the WDRA Act and "goods" which are
defined under clause (i) of Section 2 of the WDRA
Act, that the Petitioner Bank had advanced the
amounts to the borrowers. Respondent No. 2 has
registered himself as a warehouse in terms of
Section 4 of the WDRA Act. Section 4 of the WDRA
Act is reproduced hereunder for easy reference:
"4. Registration of warehouses.--(1) Any
person desirous of commencing or carrying on
the business of maintaining a warehouse
issuing negotiable warehouse receipts may
make an application to the Authority for
registration in respect of one or more
warehouses owned or occupied by him.
(2) Every application for registration under
sub-section (1) shall be in such form and
manner and shall be accompanied by such fees
as may be prescribed.
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(3) The Authority may, after such enquiry and
subject to such terms and conditions as it
thinks fit, grant a certificate of registration of
the warehouse in the prescribed form and
bearing a registration number to the applicant
authorising him to carry on the business of
maintaining a warehouse or warehouses and to
issue negotiable warehouse receipts.
(4) The Authority may not grant a certificate of
registration under this section unless it is
satisfied that the warehouse in respect of
which the application has been made has
adequate facilities and safeguards required to
warehouse the goods of the nature specified in
the application and the applicant satisfies the
financial, managerial and other eligibility
criteria and competence as may be prescribed:
Provided that no certificate of registration shall
be refused to any applicant under this section
unless the applicant has been given an
opportunity of being heard."
3.8. He submits that Chapter 3 of the WDRA Act deals
with warehousemen. Section 6 deals with liabilities,
Section 7 deals with duties, and Section 8 deals
particularly with the duty to keep records and
accounts of the warehouse business. Sections 6, 7,
and 8 of the WDRA Act are reproduced hereunder
for easy reference:
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"6. Liabilities of warehousemen.--(1) A
warehouseman is liable for loss of, or injury to,
goods caused by his failure to exercise such
care and diligence in regard to the goods as a
careful and vigilant owner of the goods of the
same bulk, quality and value would exercise in
the custody of them in similar conditions.
(2) In case the goods are damaged or lost in
spite of taking all care and precautions by the
warehouseman due to unavoidable
circumstances, the compensation equal to the
value of goods at the time of deposit of the
goods shall be payable by the warehouseman.
(3) In case the goods are damaged or lost due
to the negligence of the warehouseman, then,
the compensation shall be equal to the value
of goods plus the loss of profit to the holder of
the receipt.
(4) The warehouseman shall not be
responsible for any loss, destruction, damage
or deterioration of the goods delivered to him
for storage attributable to circumstances such
as force majeure, act of war, act of public
enemies and the like.
7. Duties of warehousemen.--(1) In the
absence of a lawful excuse, a warehouseman
shall deliver the goods referred to in a
negotiable receipt, to the holder of the receipt
on demand made by the holder and on the
holder fulfilling all the following conditions,
namely:--
(a) satisfying the warehouse lien;
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(b) surrendering the receipt in case of non-
negotiable receipt and surrendering the receipt
with endorsements in case of negotiable
receipt; and
(c) acknowledging in writing the receipt of the
goods.
(2) If a warehouseman refuses or fails to
deliver the goods in compliance with the
provisions of this section, the burden of proof
shall lie on the warehouseman to establish the
existence of a lawful excuse for the refusal or
failure.
8. Duties of warehouseman to keep
records and accounts of warehouse
business.--(1) Every warehouseman shall
keep in a place of safety a complete and
accurate set of records and accounts of all
transactions pertaining to the operation of a
warehouse including records and accounts of
all goods received in the warehouse and
withdrawn therefrom, of all unissued receipts
in his possession, of all receipts issued,
returned to, or cancelled, by him.
(2) Subject to the provisions of sub-section
(1), the warehouseman shall keep all the
records and accounts of the warehouse
business in numerical sequence separate and
distinct from the records and accounts of any
other business in such form and in such
manner and for such period as the Authority
may, by regulations, specify.
(3) The warehouseman shall make available to
the Authority for inspection the records and
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accounts of the warehouse business at any
time as may be desired by the Authority."
3.9. By referring to sub-section (3) of Section 10 of the
WDRA Act, he submits that in case of any
endorsement on the face of a negotiable warehouse
receipt by a bank or the warehouseman, such
endorsement shall be evidence of a pledge and the
pledgee shall have priority over the interest of the
holder of the receipt. In that background, he
submits that a pledge having been created in
favour of the Bank, the Bank has priority over any
other interest.
3.10. By referring to sub-section (4) of Section 10 of the
WDRA Act, he submits that in terms of the pledge
referred to in sub-section (3) of Section 10 of the
WDRA Act, the warehouseman shall not deliver the
goods unless the endorsement of the pledge has
been duly cancelled.
3.11. By referring to Section 11 of the WDRA Act, he
submits that warehouse receipts are issued in
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terms of Section 11 of the WDRA Act, which is
reproduced hereunder for easy reference:
"11. Warehouse receipts.--(1) A warehouse
receipt, which may be either in writing or in
electronic form, shall be a document of title to
goods in writing if it contains all the following
particulars, namely:--
(a) receipt number;
(b) warehouse registration number and date
up to which it is valid;
(c) name of the warehouse and its complete
postal address;
(d) name and address of the person by whom
or on whose behalf the goods are deposited;
(e) date of issue of the warehouse receipt;
(f) statement that the goods received shall be
delivered to the holder thereof, or that the
goods shall be delivered to the order of a
named person;
(g) rates of storage charges and handling
charges;
(h) description of the goods or of the packages
containing them with particulars of quantity
and quality or grade;
(i) market value of the goods at the time of
deposit;
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(j) private marks of depositor on the goods or
packages, if any, except in the case of fungible
goods;
(k) name of the insurance company
indemnifying for fire, flood, theft, burglary,
misappropriation, riots, strikes or terrorism;
(l) whether the warehouse receipt is negotiable
or non-negotiable;
(m) statement of the amount of any advance
made and of any liability incurred for which the
warehouseman claims his lien;
(n) date and signature of the warehouseman
or his authorised agent;
(o) declared shelf-life of goods;
(p) the fact that the warehouseman holds the
lien on the goods deposited for his storage and
handling charges;
(q) that the receipt would be valid only till the
date of expiry of declared shelf-life of the
goods for which it is issued."
(2) In case a warehouseman willfully omits
from a negotiable warehouse receipt any of the
particulars set out in sub-section(1), he shall
be liable for damages caused by such
omission.
(3) No warehouse receipt shall, by reason of
the omission only of any of the particulars set-
forth in
sub-section(1), be deemed to be invalid for the
purpose of settlement of disputes or claims.
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(4) Authority may, with the prior approval
of the Central Government, add, delete or
modify any particulars as specified in sub-
clause(1) for all or any commodity or class of
commodities or for any class for warehouses."
3.12. By referring to Section 21 of the WDRA Act, he
submits that a negotiable warehouse receipt is
conclusive evidence of the title to the goods on its
production.
3.13. By referring to Chapter 5 of the WDRA Act, he
submits that the Warehousing Development and
Regulatory Authority (Authority or Warehousing
Authority) has been established thereunder, and
by referring to Section 35 of Chapter 6 of the WDRA
Act, he submits that the warehousing authority,
namely Respondent No. 1, has to discharge its
powers and functions in such a manner that it
facilitates security for any advance made on the
basis of a negotiable warehouse receipt. The
authority as such is vested with a duty to protect
the interests of the pledger, pledgee,
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warehouseman, and any creditor who has acted in
terms of the WDRA Act.
3.14. Section 35 of Chapter 6 of the WDRA Act is
reproduced for easy reference:
"35. Powers and functions of Authority.--
(1) Subject to the provisions of this Act and
any other law for the time being in force, the
Authority shall have the duty to regulate and
ensure implementation of the provisions of this
Act and promote orderly growth of the
warehousing business.
(2) Without prejudice to the generality of the
foregoing provisions, the powers and functions
of the Authority shall include the following,
namely:--
(a) to issue to the applicants a certificate of
registration or renew, modify, withdraw,
suspend or cancel such registration;
(b) to regulate the registration and functioning
of accreditation agencies, renew, modify,
withdraw, suspend or cancel such registration
and specify the code of conduct for officials of
accreditation agencies for accreditation of the
warehouses:
(c) to specify, by regulations, the
qualifications, code of conduct and practical
training for warehousemen and staff engaged
in warehousing business;
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(d) to regulate the process of pledge, creation
of charges and enforcement thereof in respect
of goods deposited with the warehouse;
(e) to promote efficiency in conduct of
warehouse business;
(f) to make regulations laying down the
standards for approval of certifying agencies
for grading of goods;
(g) to promote professional organisations
connected with the warehousing business;
(h) to determine the rate of, and levy, the fees
and other charges for carrying out the
provisions of this Act;
(i) to call for information from, undertaking
inspection of, conducting enquiries and
investigations including audit of the
warehouses, accreditation agencies and other
organisations connected with the warehousing
business;
(j) to regulate the rates, advantages, terms
and conditions that may be offered by
warehousemen in respect of warehousing
business;
(k) to specify, by regulations, the form and
manner in which books of account shall be
maintained and statement of accounts shall be
rendered by warehousemen;
(l) to maintain a panel of arbitrators and to
nominate arbitrators from such panel in
disputes between warehouses and warehouse
receipt holders;
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(m) to regulate and develop electronic system
of holding and transfer of credit balances of
fungible goods deposited in the warehouses;
(n) to determine the minimum percentage of
space to be kept reserved for storage of
agricultural commodities in a registered
warehouse;
(o) to specify the duties and responsibilities of
the warehouseman;
(p) to exercise such other powers and perform
such other functions as may be prescribed."
3.15. In that background, he submits that Respondent
No. 1 is an authority of the State, coming within the
parameters of Article 12 of the Constitution. Insofar
as Respondent No. 2 is concerned, he submits that
Respondent No. 2 discharges a public function.
Respondent No. 2, being permitted to discharge
such functions under the WDRA Act, is also
amenable to writ jurisdiction. In this regard, he
relies upon the decision of the Hon'ble Apex Court
in Marwari Balika Vidyalaya V/s Asha
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Srivastava and others1 more particularly
paragraphs 15 and 16 thereof.
"15. Writ application was clearly maintainable
in view of aforesaid discussion and more so in
view of the decision of this Court in Ramesh
Ahluwalia v. State of Punjab in which this
Court has considered the issue at length and
has thus observed : (SCC pp. 336-37, paras
13 & 14)
"13. In the aforesaid case, this Court was
also considering a situation where the
services of a Lecturer had been
terminated who was working in the
college run by the Andi Mukti Sadguru
Shree Muktajee Vandas Swami Suvarna
Jayanti Mahotsav Smarak Trust. In those
circumstances, this Court has clearly
observed as under : (V.R. Rudani case,
SCC pp. 700-701, paras 20 & 22)
'20. The term "authority" used in Article 226,
in the context, must receive a liberal meaning
unlike the term in Article 12. Article 12 is
relevant only for the purpose of enforcement
of fundamental rights under Article 32. Article
226 confers power on the High Courts to issue
writs for enforcement of the fundamental
rights as well as non-fundamental rights. The
words "any person or authority" used in Article
226 are, therefore, not to be confined only to
statutory authorities and instrumentalities of
1
(2020) 14 SCC 449
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the State. They may cover any other person or
body performing public duty. The form of the
body concerned is not very much relevant.
What is relevant is the nature of the duty
imposed on the body. The duty must be
judged in the light of positive obligation owed
by the person or authority to the affected
party. No matter by what means the duty is
imposed, if a positive obligation exists
mandamus cannot be denied.
22. Here again, we may point out that
mandamus cannot be denied on the ground
that the duty to be enforced is not imposed by
the statute. Commenting on the development
of this law, Professor de Smith states: "To be
enforceable by mandamus a public duty does
not necessarily have to be one imposed by
statute. It may be sufficient for the duty to
have been imposed by charter, common law,
custom or even contract". We share this view.
The judicial control over the fast expanding
maze of bodies affecting the rights of the
people should not be put into watertight
compartment. It should remain flexible to
meet the requirements of variable
circumstances. Mandamus is a very wide
remedy which must be easily available "to
reach injustice wherever it is found".
Technicalities should not come in the way of
granting that relief under Article 226. We,
therefore, reject the contention urged for the
appellant on the maintainability of the writ
petition.'
The aforesaid observations have been
repeated and reiterated in numerous
judgments of this Court including the
judgments in Unni and Zee Telefilms Ltd.
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brought to our notice by the learned counsel
for the appellant Mr Parikh.
14. In view of the law laid down in the
aforementioned judgment of this Court,
the judgment of the learned Single Judge as
also the Division Bench of the High Court
cannot be sustained on the proposition that
the writ petition would not maintainable
merely because the respondent institution is a
purely unaided private educational institution.
The appellant had specifically taken the plea
that the respondents perform public functions
i.e. providing education to children in their
institutions throughout India."
(emphasis supplied)
16. It is apparent from the aforesaid decisions
that the writ application is maintainable in such
a matter even as against the private unaided
educational institutions."
3.16. By relying on the Marwari Balika Vidyalaya's
case, he submits that the words "any person or
authority" used in Article 226 of the Constitution of
India are not confined to only a statutory authority
and instrumentality of a state, but they cover any
other person or body performing a public duty, and
that the duty must be judged in light of the positive
obligation owed by the person or authority to the
affected party.
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3.17. So long as a positive obligation exists, a mandamus
cannot be denied. By referring to the facts of that
case, he submits that a writ was issued against a
private, unaided educational institution. He refers
to the decision of the Hon'ble Apex Court in St.
Mary's Education Society and Another V/s
Rajendra Prasad Bhargava and Others2, more
particularly paragraphs 40, 41, 42, and 43 thereof.
"40. Para 11 of the judgment in Binny is
reproduced below : (SCC pp. 665-66)
"11. Judicial review is designed to prevent the
cases of abuse of power and neglect of duty by
public authorities. However, under our
Constitution, Article 226 is couched in such a
way that a writ of mandamus could be issued
even against a private authority. However,
such private authority must be discharging a
public function and that the decision sought to
be corrected or enforced must be in discharge
of a public function. The role of the State
expanded enormously and attempts have been
made to create various agencies to perform
the governmental functions. Several
corporations and companies have also been
formed by the Government to run industries
and to carry on trading activities. These have
come to be known as public sector
2 (2023) 4 SCC 498
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undertakings. However, in the interpretation
given to Article 12 of the Constitution, this
Court took the view that many of these
companies and corporations could come within
the sweep of Article 12 of the Constitution. At
the same time, there are private bodies also
which may be discharging public functions. It
is difficult to draw a line between public
functions and private functions when it is being
discharged by a purely private authority. A
body is performing a "public function" when it
seeks to achieve some collective benefit for the
public or a section of the public and is
accepted by the public or that section of the
public as having authority to do so. Bodies
therefore exercise public functions when they
intervene or participate in social or economic
affairs in the public interest."
(emphasis supplied)
41. This Court considered various of its other
decisions to examine the question of public law
remedy under Article 226 of the Constitution.
This Court observed in Binny case as under :
(SCC p. 673, para 29)
"29. Thus, it can be seen that a writ of
mandamus or the remedy under Article 226 is
pre-eminently a public law remedy and is not
generally available as a remedy against private
wrongs. It is used for enforcement of various
rights of the public or to compel the
public/statutory authorities to discharge their
duties and to act within their bounds. It may
be used to do justice when there is wrongful
exercise of power or a refusal to perform
duties. This writ is admirably equipped to serve
as a judicial control over administrative
actions. This writ could also be issued against
any private body or person, specially in view of
the words used in Article 226 of the
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Constitution. However, the scope of
mandamus is limited to enforcement of public
duty. The scope of mandamus is determined
by the nature of the duty to be enforced,
rather than the identity of the authority
against whom it is sought. If the private body
is discharging a public function and the denial
of any right 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.
Sometimes, it is difficult to distinguish between
public law and private law remedies."
(emphasis supplied)
42. In the penultimate paragraph, this Court
ruled as under : (Binny case SCC p. 674, para
32)
"32. Applying these principles, it can very well
be said that a writ of mandamus can be issued
against a private body which is not "State"
within the meaning of Article 12 of the
Constitution and such body is amenable to the
jurisdiction under Article 226 of the
Constitution and the High Court under Article
226 of the Constitution can exercise judicial
review of the action challenged by a party. But
there must be a public law element and it
cannot be exercised to enforce purely private
contracts entered into between the parties."
(emphasis supplied)
43. In the background of the above legal
position, it can be safely concluded that power
of judicial review under Article 226 of the
Constitution of India can be exercised by the
High Court even if the body against which an
action is sought is not State or an authority or
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an instrumentality of the State but there must
be a public element in the action complained
of."
3.18. By referring to St. Mary's Education Society's
case, he again submits that judicial review is
designed to prevent abuse of power. If a private
authority is discharging a public function and there
is an abuse of power, the same would be amenable
to writ jurisdiction under Article 226 of the
Constitution of India. One of the tests for
ascertaining a public function is whether a body is
performing a public function when it seeks to
achieve some collective benefit for the public or a
section of the public. In that background, he
submits that a warehouseman is discharging a
public duty and a public function and as such would
be amenable to the writ jurisdiction of this Court.
He therefore submits that this Court ought to
intercede and allow the writ petition by granting the
reliefs which have been sought.
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4. Shri Shashank Manish, instructed by Shri Siddhappa S.
Sajjan, learned counsel for respondent No. 1 submits that
4.1. Though Respondent No. 1 wishes to act in terms of
the WDRA Act and the Rules, Respondent No. 1 has
not been permitted to carry out an inspection of the
warehouse premises and prepare an inventory of
the goods. The innumerable correspondences which
have been made by Respondent No. 1 to
Respondent No. 2 have not yielded any results.
4.2. Despite the orders passed by this Court earlier in
W.P. No. 100064/2025, when the officers of
Respondent No. 1, along with the officers of the
Petitioner, had visited the premises of the
warehouse, no such inspection was permitted, and
they were asked to come back on another day.
When they went back on that day, they were told
that the keys were not available, and it is thereafter
that this Court had directed respondent No. 1 to
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deposit the keys with this Court, which are held in
safe custody by the Registry.
4.3. His submission is that, on account of the defaults
on the part of the warehouseman, the license
issued to the warehouseman has been cancelled;
however, the possession of the goods could not be
taken since a joint inspection and joint inventory
have not been prepared. This, he submits, is for the
reason that without such joint inspection and
inventory, there could be allegations made against
the Authority, and it is for that reason that
possession has not been taken.
4.4. As regards the maintainability of the writ petition,
he supports the contention of the counsel for the
Petitioner, and in that regard, he relies upon the
decision of the Hon'ble Apex Court in K.K. Saksena
V/s International Commission on Irrigation &
Drainage and Others3 more particularly
3
(2015) 4 SCC 670
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paragraphs 37, 41, 43, 45 and 51 thereof, which
are reproduced hereunder for easy reference:
"37. Further, the Court explained in para 20
in Andi Mukta Sadguru that the term
"authority" used in Article 226, in the context,
would receive a liberal meaning unlike the
term in Article 12, inasmuch as Article 12 was
relevant only for the purpose of enforcement
of fundamental rights under Article 31,
whereas Article 226 confers power on the High
Courts to issue writs not only for enforcement
of fundamental rights but also non-
fundamental rights. What is relevant is the
dicta of the Court that the term "authority"
appearing in Article 226 of the Constitution
would cover any other person or body
performing public duty. The guiding factor,
therefore, is the nature of duty imposed on
such a body, namely, public duty to make it
exigible to Article 226.
41. In Binny Ltd. v. V. Sadasivan the Court
clarified that though writ can be issued against
any private body or person, the scope of
mandamus is limited to enforcement of public
duty. It is the nature of duty performed by
such person/body which is the determinative
factor as the Court is to enforce the said duty
and the identity of authority against whom the
right is sought is not relevant. Such duty, the
Court clarified, can either be statutory or even
otherwise, but, there has to be public law
element in the action of that body.
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43. What follows from a minute and careful
reading of the aforesaid judgments of this
Court is that if a person or authority is "State"
within the meaning of Article 12 of the
Constitution, admittedly a writ petition under
Article 226 would lie against such a person or
body. However, we may add that even in such
cases writ would not lie to enforce private law
rights. There are a catena of judgments on this
aspect and it is not necessary to refer to those
judgments as that is the basic principle of
judicial review of an action under the
administrative law. The reason is obvious. A
private law is that part of a legal system which
is a part of common law that involves
relationships between individuals, such as law
of contract or torts. Therefore, even if writ
petition would be maintainable against an
authority, which is "State" under Article 12 of
the Constitution, before issuing any writ,
particularly writ of mandamus, the Court has
to satisfy that action of such an authority,
which is challenged, is in the domain of public
law as distinguished from private law.
45. On the other hand, even if a person or
authority does not come within the sweep of
Article 12 of the Constitution, but is performing
public duty, writ petition can lie and writ of
mandamus or appropriate writ can be issued.
However, as noted in Federal Bank Ltd. such a
private body should either run substantially on
State funding or discharge public duty/positive
obligation of public nature or is under liability
to discharge any function under any statute, to
compel it to perform such a statutory function.
51. Even in Andi Mukta Sadguru, which took a
revolutionary turn and departure from the
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earlier views, this Court held that "any other
authority" mentioned in Article 226 is not
confined to statutory authorities or
instrumentalities of the State defined under
Article 12 of the Constitution, it also
emphasised that if the rights are purely of a
private character, no mandamus could issue."
4.5. By relying on the K.K. Saksena's case, he submits
that even if a person or authority does not come
within the sweep of Article 12 of the Constitution
but is performing a public duty, a writ petition can
lie, and a writ of mandamus or an appropriate writ
can be issued. On that basis, he submits that
Respondent No. 1 is ready to perform any duty that
may be called upon it to be performed by this
Court. Respondent No. 1, having already cancelled
the license of the warehouseman in terms of Rule
34 of the Rules, it is only in the presence of the
warehouseman that an inspection and inventory
could be made.
5. Shri Mrutyunjaya Tatabangi, learned counsel appearing for
Respondent No. 2/Warehouseman, submits that
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5.1. Respondent No. 2 is a private entity engaged in
business activities. Even according to the Petitioner,
there is a contract between the Petitioner and
Respondent No.2. As such, it is the contractual
remedies that the Petitioner would be entitled to
enforce.
5.2. Insofar as the warehouse receipts are concerned,
his submission is that the said receipts, having
been issued by borrowers, form the security for the
loans advanced by the Petitioner Bank. The
Petitioner Bank would be required to initiate
necessary proceedings for recovery of money
before the Debt Recovery Tribunal and/or for
enforcing its security interest under the SARFAESI
Act. In that background, he submits that no
direction can be issued against Respondent No. 2 in
a writ petition. The only remedy available to the
Bank is to initiate necessary proceedings as
aforesaid.
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5.3. The borrowers have not been made parties to these
proceedings, and without the borrowers being
parties, no order can be passed against Respondent
No. 2, who is only storing the goods of the
borrowers. If any inspection of the goods and
inventory has to be made, the same would have to
be done in the presence of such borrowers, who are
not parties to this petition, and no order in that
regard can be issued by this Court.
5.4. Respondent No. 2 has also not been paid for the
services rendered by it, and as such, Respondent
No. 2 has a lien on the goods. Until such payment
is made, the Petitioner cannot remove or auction
such goods.
5.5. In this regard, he relies upon the judgment of the
Hon'ble Apex Court in Board of Control for
Cricket in India V/s Cricket Association of
Bihar and Others4 more particularly paragraph
4
(2015) 3 SCC 251
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Nos. 29, 33, 35, which are reproduced hereunder
for easy reference:
"29. In Board of Control for Cricket in
India v. Netaji Cricket Club, this Court had an
occasion to consider the role and the nature of
functions being discharged by BCCI. This Court
held that the Board's control over the sport of
cricket was deep and pervasive and that it
exercised enormous public functions, which
made it obligatory for the Board to follow the
doctrine of "fairness and good faith". This
Court said : (SCC pp. 762-63, paras 80-81)
"80. The Board is a society registered under
the Tamil Nadu Societies Registration Act. It
enjoys a monopoly status as regards
regulation of the sport of cricket in terms of its
Memorandum of Association and Articles of
Association. It controls the sport of cricket and
lays down the law therefor. It inter alia enjoys
benefits by way of tax exemption and right to
use stadia at nominal annual rent. It earns a
huge revenue not only by selling tickets to
viewers but also selling right to exhibit films
live on TV and broadcasting the
same. Ordinarily, its full members are the
State associations except Association of Indian
Universities, Railway Sports Control Board and
Services Sports Control Board. As a member of
ICC, it represents the country in the
international fora. It exercises enormous public
functions. It has the authority to select
players, umpires and officials to represent the
country in the international fora. It exercises
total control over the players, umpires and
other officers. The Rules of the Board clearly
demonstrate that without its recognition no
competitive cricket can be hosted either within
or outside the country. Its control over the
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sport of competitive cricket is deeply pervasive
and complete.
81. In law, there cannot be any dispute that
having regard to the enormity of power
exercised by it, the Board is bound to follow
the doctrine of 'fairness' and 'good faith' in all
its activities. Having regard to the fact that it
has to fulfil the hopes and aspirations of
millions, it has a duty to act reasonably. It
cannot act arbitrarily, whimsically or
capriciously. As the Board controls the
profession of cricketers, its actions are
required to be judged and viewed by higher
standards."
33. The majority view thus favours the view
that BCCI is amenable to the writ jurisdiction
of the High Court under Article 226 even when
it is not "State" within the meaning of Article
12. The rationale underlying that view if we
may say with utmost respect lies in the
"nature of duties and functions" which BCCI
performs. It is common ground that the
respondent Board has a complete sway over
the game of cricket in this country. It regulates
and controls the game to the exclusion of all
others. It formulates rules, regulations, norms
and standards covering all aspects of the
game. It enjoys the power of choosing the
members of the national team and the
umpires. It exercises the power of
disqualifying players which may at times put
an end to the sporting career of a person. It
spends crores of rupees on building and
maintaining infrastructure like stadia, running
of cricket academies and supporting State
associations. It frames pension schemes and
incurs expenditure on coaches, trainers, etc. It
sells broadcast and telecast rights and collects
admission fee to venues where the matches
are played. All these activities are undertaken
with the tacit concurrence of the State
Government and the Government of India who
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are not only fully aware but supportive of the
activities of the Board. The State has not
chosen to bring any law or taken any other
step that would either deprive or dilute the
Board's monopoly in the field of cricket. On the
contrary, the Government of India has allowed
the Board to select the national team which is
then recognised by all concerned and
applauded by the entire nation including at
times by the highest of the dignitaries when
they win tournaments and bring laurels home.
Those distinguishing themselves in the
international arena are conferred highest
civilian awards like the Bharat Ratna, Padma
Vibhushan, Padma Bhushan and Padma Shri
apart from sporting awards instituted by the
Government. Such is the passion for this game
in this country that cricketers are seen as icons
by youngsters, middle aged and the old alike.
Any organisation or entity that has such
pervasive control over the game and its affairs
and such powers as can make dreams end up
in smoke or come true cannot be said to be
undertaking any private activity.
35. Our answer to Question (i), therefore, is in
the negative, qua, the first part and affirmative
qua the second. BCCI may not be "State"
under Article 12 of the Constitution but is
certainly amenable to writ jurisdiction under
Article 226 of the Constitution of India."
5.6. By relying on BCCI's case he submits that the
Board, being a society registered under the Tamil
Nadu Societies Registration Act, is not an authority
under Article 12 of the Constitution of India.
Similarly, he submits that Respondent No. 2, being
a private entity, would not be a State under Article
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12 and would not be amenable to jurisdiction under
Article 12.
5.7. He relies upon the judgment of the Hon'ble Apex
Court in Jatya Pal Singh & Others V/s Union of
India & others5 more particularly paragraph
Nos.44, 47, 52, which are reproduced hereunder for
easy reference:
"44. It is a matter of record that with effect
from 13-2-2002, the shareholding of the
Government of India is 26.97%. Soon
thereafter, the total shareholding of the Tata
Group in VSNL increased to 44.99% of the
paid-up share capital in 2002. It is also an
accepted fact that shareholding of the Tata
Group in VSNL is 15.11%. It is also noteworthy
that since 2002, VSNL was a Tata Group
company and accordingly on 28-1-2008 its
name was changed to "Tata Communication
Ltd." In our opinion, the aforesaid facts make
it abundantly clear that the Government of
India did not have sufficient interest in the
control of either management or policy-making
functions of Tata Communication Ltd.
47. The learned counsel for the appellants had
placed strong reliance on the judgment of this
Court in Air India Statutory Corpn. [Air India
Statutory Corpn. v. United Labour Union,
(1997) 9 SCC 377 : 1997 SCC (L&S) 1344]
However, the aforesaid judgment is of no
assistance to the appellants as it was
5
(2013) 6 SCC 452
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subsequently overruled by a Constitution
Bench in SAIL v. National Union Waterfront
Workers [(2001) 7 SCC 1 : 2001 SCC (L&S)
1121] .
52. These observations make it abundantly
clear that in order for it to be held that the
body is performing a public function, the
appellant would have to prove that the body
seeks to achieve some collective benefit for the
public or a section of public and accepted by
the public as having authority to do so."
5.8. By relying on Jatya Pal Singh's case he submits
that a limited company which is not under the
control of the Government of India, and where the
Government of India does not control the
management or policy making functions, would not
be an authority under Article 12 of the Constitution.
5.9. He relies upon the judgment of the Hon'ble Apex
Court in Ramkrishna Mission and another V/s
Kago Kunya & Others6 paragraph Nos. 29, 30,
31, 32, 33, 34, 35, which are reproduced hereunder
for easy reference:
6
AIR 2020 SC(CIV) 627
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"29. More recently in K. K. Saksena v.
International Commission on Irrigation and
Drainage, another two judge Bench of this
Court held that a writ would not lie to enforce
purely private law rights. Consequently, even if
a body is performing a public duty and is
amenable to the exercise of writ jurisdiction,
all its decisions would not be subject to judicial
review. The Court held thus:
"43. What follows from a minute and careful
reading of the aforesaid judgments of this
Court is that if a person or authority is "State"
within the meaning of Article 12 of the
Constitution, admittedly a writ petition under
Article 226 would lie against such a person or
body. However, we may add that even in such
cases writ would not lie to enforce private law
rights. There are a catena of judgments on this
aspect and it is not necessary to refer to those
judgments as that is the basic principle of
judicial review of an action under the
administrative law. The reason is obvious. A
private law is that part of a legal system which
is a part of common law that involves
relationships between individuals, such as law
of contract or torts. Therefore, even if writ
petition would be maintainable against an
authority, which is "State" under Article 12 of
the Constitution, before issuing any writ,
particularly writ of mandamus, the Court has
to satisfy that action of such an authority,
which is challenged, is in the domain of public
law as distinguished from private law."
Thus, even if the body discharges a public
function in a wider sense, there is no public
law element involved in the enforcement of a
private contract of service.
30. Having analysed the circumstances which
were relied upon by the State of Arunachal
Pradesh, we are of the view that in running the
hospital, Ramakrishna Mission does not
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discharge a public function. Undoubtedly, the
hospital is in receipt of some element of grant.
The grants which are received by the hospital
cover only a part of the expenditure. The
terms of the grant do not indicate any form of
governmental control in the management or
day to day functioning of the hospital. The
nature of the work which is rendered by
Ramakrishna Mission, in general, including in
relation to its activities concerning the hospital
in question is purely voluntary.
31. Before an organisation can be held to
discharge a public function, the function must
be of a character that is closely related to
functions which are performed by the State in
its sovereign capacity. There is nothing on
record to indicate that the hospital performs
functions which are akin to those solely
performed by State authorities. Medical
services are provided by private as well as
State entities. The character of the
organisation as a public authority is dependent
on the circumstances of the case. In setting up
the hospital, the Mission cannot be construed
as having assumed a public function. The
hospital has no monopoly status conferred or
mandated by law. That it was the first in the
State to provide service of a particular
dispensation does not make it an 'authority'
within the meaning of Article 226. State
governments provide concessional terms to a
variety of organisations in order to attract
them to set up establishments within the
territorial jurisdiction of the State. The State
may encourage them as an adjunct of its social
policy or the imperatives of economic
development. The mere fact that land had
been provided on a concessional basis to the
hospital would not by itself result in the
conclusion that the hospital performs a public
function. In the present case, the absence of
state control in the management of the
hospital has a significant bearing on our
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coming to the conclusion that the hospital does
not come within the ambit of a public
authority.
32. It has been submitted before us that the
hospital is subject to regulation by the Clinical
Establishments (Registration and Regulation)
Act 2010. Does the regulation of hospitals and
nursing homes by law render the hospital a
statutory body? Private individuals and
organizations are subject to diverse obligations
under the law. The law is a ubiquitous
phenomenon. From the registration of birth to
the reporting of death, law imposes obligations
on diverse aspects of individual lives. From
incorporation to dissolution, business has to
act in compliance with law. But that does not
make every entity or activity an authority
under Article 226. Regulation by a statute does
not constitute the hospital as a body which is
constituted under the statute. Individuals and
organisations are subject to statutory
requirements in a whole host of activities
today. That by itself cannot be conclusive of
whether such an individual SC5580 or
organisation discharges a public function. In
Federal Bank (AIR 2003 SC 4325, Para 32)
(supra), while deciding whether a private bank
that is regulated by the Banking Regulation
Act, 1949 discharges any public function, the
court held thus:
"33 in our view, a private company carrying
on banking business as a scheduled bank,
cannot be termed as an institution or a
company carrying on any statutory or public
duty. A private body or a person may be
amenable to writ jurisdiction only where it may
become necessary to compel such body or
association to enforce any statutory obligations
or such obligations of public nature casting
positive obligation upon it. We don't find such
conditions are fulfilled in respect of a private
company carrying on a commercial activity of
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banking.Merely regulatory provisions to ensure
such activity carried on by private bodies work
within a discipline, do not confer any such
status upon the company nor put any such
obligation upon it which may be enforced
through issue of a writ under Article 226 of the
Constitution. Present is a case of disciplinary
action being taken against its employee by the
appellant Bank. The respondent's service with
the Bank stands terminated. The action of the
Bank was challenged by the respondent by
filing a writ petition under Article 226 of the
Constitution of India. The respondent is not
trying to enforce any statutory duty on the
part of the Bank"
(emphasis supplied)
33. Thus, contracts of a purely private nature
would not be subject to writ jurisdiction merely
by reason of the fact that they are structured
by statutory provisions. The only exception to
this principle arises in a situation where the
contract of service is governed or regulated by
a statutory provision. Hence, for instance, in K
K Saksena (supra) this Court held that when
an employee is a workman governed by the
Industrial Disputes Act, 1947, it constitutes an
exception to the general principle that a
contract of personal service is not capable of
being specifically enforced or performed.
34. It is of relevance to note that the Act was
enacted to provide for the regulation and
registration of clinical establishments with a
view to prescribe minimum standards of
facilities and services. The Act, inter alia,
stipulates conditions to be satisfied by clinical
establishments for registration. However, the
Act does not govern contracts of service
entered into by the Hospital with respect to its
employees. These fall within the ambit of
purely private contracts, against which writ
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jurisdiction cannot lie. The sanctity of this
distinction must be preserved.
35.For the above reasons, we are of the view
that the Division Bench of the High Court was
not justified in coming to the conclusion that
the appellants are amenable to the writ
jurisdiction under Article 226 of the
Constitution as an authority within the
meaning of the Article."
5.10. By relying on Ramkrishna Mission's case he
submits that even for an organization to be able to
discharge a public function, the function must be of
a character that is closely related to the functions
that are performed by the State in its sovereign
capacity. In that case, he submitted that the
Hon'ble Apex Court was of the opinion that the
hospital run by Ramakrishna Mission was not
performing a sovereign function. Similarly, he
submitted that the activities of the respondent do
not conform to the requirement of a sovereign
function as laid down in the Ramakrishna Mission's
case.
5.11. He places reliance on the judgment of Hon'ble Apex
Court in General Manager, Kisan Sahkari Chini
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Mills Ltd., Sultanpur, U.P V/s Satrughan
Nishad and others7. Particularily paragraph No.8,
which is reproduced hereunder for easy reference:
"8. From the decisions referred to above, it
would be clear that the form in which the body
is constituted, namely, whether it is a society
or a cooperative society or a company, is not
decisive. The real status of the body with
respect to the control of Government would
have to be looked into. The various tests, as
indicated above, would have to be applied and
considered cumulatively. There can be no
hard-and-fast formula and in different
facts/situations, different factors may be found
to be overwhelming and indicating that the
body is an authority under Article 12 of the
Constitution. In this context, bye-laws of the
Mill would have to be seen. In the instant case,
in one of the writ applications filed before the
High Court, it was asserted that the
Government of Uttar Pradesh held 50% shares
in the Mill which fact was denied in the
counter-affidavit filed on behalf of the State
and it was averred that majority of the shares
were held by canegrowers. Of course, it was
not said that the Government of Uttar Pradesh
did not hold any share. Before this Court, it
was stated on behalf of the contesting
respondents in the counter-affidavit that the
Government of Uttar Pradesh held 50% shares
in the Mill which was not denied on behalf of
the Mill. Therefore, even if it is taken to be
admitted due to non-traverse, the share of the
State Government would be only 50% and not
entire. Thus, the first test laid down is not
fulfilled by the Mill. It has been stated on
behalf of the contesting respondents that the
7
(2003) 8 SCC 639
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Mill used to receive some financial assistance
from the Government. According to the Mill,
the Government had advanced some loans to
the Mill. It has nowhere been stated that the
State used to meet any expenditure of the Mill
much less almost the entire one, but, as a
matter of fact, it operates on the basis of self-
generated finances. There is nothing to show
that the Mill enjoys monopoly status in the
matter of production of sugar. A perusal of the
bye-laws of the Mill would show that its
membership is open to canegrowers, other
societies, Gram Sabha, State Government etc.
and under Bye-law 52, a Committee of
Management consisting of fifteen members is
constituted, out of whom, five members are
required to be elected by the representatives
of individual members, three out of the
cooperative society and other institutions and
two representatives of financial institutions
besides five members who are required to be
nominated by the State Government which
shall be inclusive of the Chairman and
Administrator. Thus, the ratio of the nominees
of the State Government in the Committee is
only 1/3rd and the management of the
Committee is dominated by 2/3rd non-
government members. Under the bye-laws,
the State Government can neither issue any
direction to the Mill nor determine its policy as
it is an autonomous body. The State has no
control at all in the functioning of the Mill much
less a deep and pervasive one. The role of the
Federation, which is the apex body and whose
ex officio Chairman-cum-Managing Director is
the Secretary, Department of Sugar Industry
and Cane, Government of Uttar Pradesh, is
only advisory and to guide its members. The
letter sent by the Managing Director of the
Federation on 22-11-1999 was merely by way
of an advice and was in the nature of a
suggestion to the Mill in view of its
deteriorating financial condition. From the said
letter, which is in the advisory capacity, it
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cannot be inferred that the State had any deep
and pervasive control over the Mill. Thus, we
find none of the indicia exists in the case of the
Mill, as such the same being neither an
instrumentality nor an agency of the
Government cannot be said to be an authority
and, therefore, it is not State within the
meaning of Article 12 of the Constitution."
5.12. By relying on Satrughan Nishad's case he submits
that an entity over which the State exercises no
control with respect to its management or
functioning cannot be considered an
'instrumentality' or 'agency' of the State.
Consequently, such an entity would not fall within
the ambit of 'State' as defined under Article 12 of
the Constitution. He further submitted that
respondent No. 2, being a private entity
administered and controlled by private individuals,
is not subject to governmental control in policy-
making or administration. Therefore, in light of the
principles laid down in Satrughan Nishad's case,
respondent No. 2 would not be amenable to writ
jurisdiction under Article 226 of the Constitution.
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5.13. He relies on the judgment of Hon'ble Apex Court in
G. Bassi Reddy V/s International Crops
Research Institute & another8 more particularly
paragraph Nos. 27, 28 and 29, which are
reproduced hereunder for easy reference:
"26. The facts which have been narrated
earlier clearly show that ICRISAT does not fulfil
any of these tests. It was not set up by the
Government and it gives its services
voluntarily to a large number of countries
besides India. It is not controlled by nor is it
accountable to the Government. The Indian
Government's financial contribution to ICRISAT
is minimal. Its participation in ICRISAT's
administration is limited to 3 out of 15
members. It cannot therefore be said that
ICRISAT is a State or other authority as
defined in Article 12 of the Constitution.
27. It is true that a writ under Article 226 also
lies against a "person" for "any other purpose".
The power of the High Court to issue such a
writ to "any person" can only mean the power
to issue such a writ to any person to whom,
according to the well-established principles, a
writ lay. That a writ may issue to an
appropriate person for the enforcement of any
of the rights conferred by Part III is clear
enough from the language used. But the words
"and for any other purpose" must mean "for
any other purpose for which any of the writs
mentioned would, according to well-
established principles issue".
8
(2003) 4 SCC 225
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28. A writ under Article 226 can lie against a
"person" if it is a statutory body or performs a
public function or discharges a public or
statutory duty (Praga Tools Corpn. v. C.A.
Imanual [(1969) 1 SCC 585 : AIR 1969 SC
1306] , Shri Anadi Mukta Sadguru Trust v.
V.R. Rudani [(1989) 2 SCC 691] SCC at p. 698
and VST Industries Ltd. v. Workers' Union
[(2001) 1 SCC 298 : 2001 SCC (L&S) 227] ).
ICRISAT has not been set up by a statute nor
are its activities statutorily controlled.
Although, it is not easy to define what a public
function or public duty is, it can reasonably be
said that such functions are similar to or
closely related to those performable by the
State in its sovereign capacity. The primary
activity of ICRISAT is to conduct research and
training programmes in the sphere of
agriculture purely on a voluntary basis. A
service voluntarily undertaken cannot be said
to be a public duty. Besides ICRISAT has a role
which extends beyond the territorial
boundaries of India and its activities are
designed to benefit people from all over the
world. While the Indian public may be the
beneficiary of the activities of the Institute, it
certainly cannot be said that ICRISAT owes a
duty to the Indian public to provide research
and training facilities. In Praga Tools Corpn. v.
C.V. Imanual [(1969) 1 SCC 585 : AIR 1969
SC 1306] this Court construed Article 226 to
hold that the High Court could issue a writ of
mandamus "to secure the performance of a
public or statutory duty in the performance of
which the one who applies for it has a
sufficient legal interest". The Court also held
that : (SCC p. 589, para 6)
"[A]n application for mandamus will not lie for
an order of reinstatement to an office which is
essentially of a private character nor can such
an application be maintained to secure
performance of obligations owed by a company
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towards its workmen or to resolve any private
dispute. (See Sohan Lal v. Union of India.)
29. We are therefore of the view that the High
Court was right in its conclusion that the writ
petition of the appellant was not maintainable
against ICRISAT."
5.14. By relying on G. Bassi Reddy's case he submits
that if an entity is not established by a statute, nor
are its activities regulated or controlled by any
statutory provisions, it would not be amenable to
writ jurisdiction. Mere engagement in activities
intended to benefit the general public would not, by
itself, render such an entity subject to writ
jurisdiction under Article 226 of the Constitution
5.15. He relies on the judgment of Hon'ble Apex Court in
Assistant Collector of Central Excise, Chandan
Nagar West Bengal V/s Dunlop India Ltd. &
Others9 more particularly paragraph No. 3, which
is reproduced hereunder for easy reference:
" 3. In Titaghur Paper Mills Co. Ltd. v. State of
Orissa [(1983) 2 SCC 433 : 1983 SCC (Tax)
131 : 1983 Tax LR 2905 : (1983) 142 ITR 663
9
(1985) 1 SCC 260
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: (1983) 53 STC 315] A.P. Sen, E.S.
Venkataramiah and R.B. Misra, JJ. held that
where the statute itself provided the
petitioners with an efficacious alternative
remedy by way of an appeal to the Prescribed
Authority, a second appeal to the tribunal and
thereafter to have the case stated to the High
Court, it was not for the High Court to exercise
its extraordinary jurisdiction under Article 226
of the Constitution ignoring as it were, the
complete statutory machinery. That it has
become necessary, even now, for us to repeat
this admonition is indeed a matter of tragic
concern to us. Article 226 is not meant to
short-circuit or circumvent statutory
procedures. It is only where statutory
remedies are entirely ill-suited to meet the
demands of extraordinary situations, as for
instance where the very vires of the statute is
in question or where private or public wrongs
are so inextricably mixed up and the
prevention of public injury and the vindication
of public justice require it that recourse may
be had to Article 226 of the Constitution. But
then the Court must have good and sufficient
reason to bypass the alternative remedy
provided by statute. Surely matters involving
the revenue where statutory remedies are
available are not such matters. We can also
take judicial notice of the fact that the vast
majority of the petitions under Article 226 of
the Constitution are filed solely for the purpose
of obtaining interim orders and thereafter
prolong the proceedings by one device or the
other. The practice certainly needs to be
strongly discouraged."
5.16. By relying on Dunlop India Ltd.'s he submits that
Article 226 of the Constitution of India is not meant
to circumvent or short-circuit the statutory
procedure. Where an alternative remedy is provided
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under the statute, the parties are expected to
exhaust such remedy. In the present case, since
respondent no. 1 has already cancelled the license
of respondent no.2, it is for respondent no. 1 to
take appropriate action in accordance with law, and
not for the petitioner to seek the relief as prayed
for in the present writ petition. Writ jurisdiction
cannot be invoked to bypass or circumvent a
statutory remedy. Where the statute provides an
alternative remedy, parties must first exhaust that
remedy.
5.17. He relies on the judgment of Hon'ble Apex Court in
Carl Still G.m.b.H. & Another V/s State of
Bihar & Others10 more particularly paragraph
No.20 which is reproduced hereunder for easy
reference:
" 20. As I have already observed, the
investigation of facts on the question of the
liability to pay tax has to be made by the
10
AIR 1961 SC 1615
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taxing authorities in whom that jurisdiction is
vested. Before the facts on which the liability
to tax depends are ascertained, the High Court
could not be asked to assume that the
transaction was in the nature of a pure works
contract and to decide the question as to the
liability of the appellants on that footing. There
is no ground for assuming that the taxing
authorities will not give effect to the decision
of this court in Gannon Dunkerley's case (1)
after the true nature of the transaction is
ascertained."
5.18. By relying on Carl Still's case he submits that
when disputed facts arise, as in the present case, it
is for the concerned authority to decide the matter
after examining the facts, and this Court ought not
to exercise its writ jurisdiction.
5.19. He relies on the judgment of Hon'ble Apex Court in
Phoenix Arc Private Limited V/s Vishwa
Bharati Vidya Mandir and Others11 more
particularly paragraph Nos. 15, 16, 21 which are
reproduced hereunder for easy reference:
" 15. It is required to be noted that it is the
case on behalf of the appellant that as such
the communication dated 13-8-2015 cannot be
11
(2022) 5 SCC 345
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said to be a notice under Section 13(4) of the
Sarfaesi Act at all. According to the appellant,
after the notice under Section 13(2) of the
Sarfaesi Act was issued in the year 2013 and
thereafter despite the letter of acceptance
dated 27-2-2015, no further amount was paid,
the appellant called upon the borrowers to
make the payment within two weeks failing
which a further proceeding under Section
13(4) of the Sarfaesi Act was proposed. Thus,
according to the appellant, it was a proposed
action. Therefore, the writ petitions filed
against the proposed action under Section
13(4) of the Sarfaesi Act was not maintainable
and/or entertainable at all.
16. Assuming that the communication dated
13-8-2015 can be said to be a notice under
Section 13(4) of the Sarfaesi Act, in that case
also, in view of the statutory remedy available
under Section 17 of the Sarfaesi Act and in
view of the law laid down by this Court in the
cases referred to hereinabove, the writ
petitions against the notice under Section
13(4) of the Sarfaesi Act was not required to
be entertained by the High Court. Therefore,
the High Court has erred in entertaining the
writ petitions against the communication dated
13-8-2015 and also passing the ex parte ad
interim orders directing to maintain the status
quo with respect to possession of secured
properties on the condition directing the
borrowers to pay Rs 1 crore only (in all Rs 3
crores in view of the subsequent orders passed
by the High Court extending the ex parte ad
interim order dated 26-8-2015 [Vishwa
Bharathi Vidya Mandir v. Authorized Officer,
WP No. 35564 of 2015, order dated 26-8-2015
(Kar)] ) against the total dues of approximate
Rs 117 crores. Even the High Court ought to
have considered and disposed of the
application for vacating the ex parte ad interim
relief, which was filed in the year 2016 at the
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earliest considering the fact that a large sum
of Rs 117 crores was involved.
21. Applying the law laid down by this Court
in Mathew K.C. [State Bank of Travancore v.
Mathew K.C., (2018) 3 SCC 85 : (2018) 2 SCC
(Civ) 41] to the facts on hand, we are of the
opinion that filing of the writ petitions by the
borrowers before the High Court under Article
226 of the Constitution of India is an abuse of
process of the court. The writ petitions have
been filed against the proposed action to be
taken under Section 13(4). As observed
hereinabove, even assuming that the
communication dated 13-8-2015 was a notice
under Section 13(4), in that case also, in view
of the statutory, efficacious remedy available
by way of appeal under Section 17 of the
Sarfaesi Act, the High Court ought not to have
entertained the writ petitions. Even the
impugned orders passed by the High Court
directing to maintain the status quo with
respect to the possession of the secured
properties on payment of Rs 1 crore only (in all
Rs 3 crores) is absolutely unjustifiable. The
dues are to the extent of approximately Rs 117
crores. The ad interim relief has been
continued since 2015 and the secured creditor
is deprived of proceeding further with the
action under the Sarfaesi Act. Filing of the writ
petition by the borrowers before the High
Court is nothing but an abuse of process of
court. It appears that the High Court has
initially granted an ex parte ad interim order
mechanically and without assigning any
reasons. The High Court ought to have
appreciated that by passing such an interim
order, the rights of the secured creditor to
recover the amount due and payable have
been seriously prejudiced. The secured creditor
and/or its assignor have a right to recover the
amount due and payable to it from the
borrowers. The stay granted by the High Court
would have serious adverse impact on the
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financial health of the secured
creditor/assignor. Therefore, the High Court
should have been extremely careful and
circumspect in exercising its discretion while
granting stay in such matters. In these
circumstances, the proceedings before the
High Court deserve to be dismissed."
5.20. By relying on the Bharati Vidya Mandir's case, he
submits that when there is an efficacious alternate
statutory remedy, writ jurisdiction ought not to be
exercised.
5.21. He relies on the judgment of Hon'ble Apex Court in
Authorized Officer, State Bank of Travancore
and Another V/s Mathew K.C.12 more
particularly paragraph No. 5 which is reproduced
hereunder for easy reference:
"5. We have considered the submissions on
behalf of the parties. Normally this Court in
exercise of jurisdiction under Article 136 of the
Constitution is loath to interfere with an
interim order passed in a pending proceeding
before the High Court, except in special
circumstances, to prevent manifest injustice or
abuse of the process of the court. In the
present case, the facts are not in dispute. The
discretionary jurisdiction under Article 226 is
not absolute but has to be exercised
12
(2018) 3 SCC 85
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judiciously in the given facts of a case and in
accordance with law. The normal rule is that a
writ petition under Article 226 of the
Constitution ought not to be entertained if
alternate statutory remedies are available,
except in cases falling within the well-defined
exceptions as observed in CIT v. Chhabil Dass
Agarwal [CIT v. Chhabil Dass Agarwal, (2014)
1 SCC 603] , as follows: (SCC p. 611, para 15)
Ikbal [Sri Siddeshwara Coop. Bank Ltd. v.
Ikbal, (2013) 10 SCC 83 : (2013) 4 SCC (Civ)
638] it was observed that the action of the
bank under Section 13(4) of the Sarfaesi Act
available to challenge by the aggrieved under
Section 17 was an efficacious remedy and the
institution directly under Article 226 was not
sustainable, relying upon Satyawati Tondon
[United Bank of India v. Satyawati Tondon,
(2010) 8 SCC 110 : (2010) 3 SCC (Civ) 260]
observing: (Ikbal case [Sri Siddeshwara Coop.
Bank Ltd. v. Ikbal, (2013) 10 SCC 83 : (2013)
4 SCC (Civ) 638] , SCC pp. 94-95, paras 27-
28)
"27. No doubt an alternative remedy is not an
absolute bar to the exercise of extraordinary
jurisdiction under Article 226 but by now it is
well settled that where a statute provides
efficacious and adequate remedy, the High
Court will do well in not entertaining a petition
under Article 226. On misplaced
considerations, statutory procedures cannot be
allowed to be circumvented.
28. ... In our view, there was no justification
whatsoever for the learned Single Judge [Ikbal
v. Registrar of Coop. Societies, 2011 SCC
OnLine Kar 4456] to allow the borrower to
bypass the efficacious remedy provided to him
under Section 17 and invoke the extraordinary
jurisdiction in his favour when he had
disentitled himself for such relief by his
conduct. The Single Judge was clearly in error
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in invoking his extraordinary jurisdiction under
Article 226 in light of the peculiar facts
indicated above. The Division Bench [Sri
Siddeshwara Coop. Bank Ltd. v. Ikbal, 2012
SCC OnLine Kar 8816] also erred in affirming
the erroneous order of the Single Judge."
5.22. By relying on Mathew K.C.'s case, he again
submits that a writ petition under Article 226 of the
Constitution of India cannot be entertained if
alternative statutory remedies are available.
6. Heard Shri Suresh S Gundi learned counsel for petitioner,
Shri Shashank Manish, instructed by Shri Siddhappa S.
Sajjan, learned counsel for Respondent No. 1, and Shri
Mrutyunjaya Tatabangi, learned counsel for Respondent
No. 2 and perused the papers.
7. The points that would arise for consideration are:
i. Whether a writ petition is
maintainable against Respondent
No. 2, the Warehouseman?
ii. Whether the present writ petition
is not maintainable on account of
an alternative statutory remedy
being available to the petitioner?
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iii. Whether any direction could be
issued by this Court to Respondent
No. 2 as sought for in the prayer
column of the present writ
petition?
iv. Whether Respondent No. 2 can
deny inspection and/or the
process of inventorization of the
goods stored with it on a request
made by Respondent No. 1? If so,
is Respondent No. 1 powerless to
carry out inventorization in the
absence of cooperation from the
warehouseman?
v. What order?
8. I answer the above points as under:
9. Answer to Point No. (i): Whether a writ petition is
maintainable against Respondent No. 2, the
Warehouseman?
9.1. It is not in dispute that Respondent No. 1 is an
authority set up under the WDRA Act. It is further
not in dispute that it is only in terms of a license
issued by Respondent No. 1 that Respondent No. 2
is functioning as a warehouse under the WDRA Act.
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9.2. Though the contention of Shri Mrutyunjaya Tata
Bangi, learned counsel for Respondent No. 2, is
that it carries on a private business of warehousing
and acts in terms of contracts between the parties
for which it charges a fee, the same, in my
considered opinion, will not divest this Court of its
jurisdiction over Respondent No. 2. This is for the
simple reason that warehousing under the WDRA
Act is different from warehousing in general. Any
person can carry on the business of warehousing
for storing the goods of another person or entity. In
such cases, the transaction is solely between the
person running the warehouse and the person
availing its services.
9.3. However, under the WDRA Act, a
"warehouseman" is one who is granted a
certificate of registration by the Authority for
carrying on the business of warehousing. A
"warehouse," in terms of Section 2(s), is a
premises conforming to all requirements specified
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by the Authority and regulations, wherein the
warehouseman takes custody of goods deposited by
a depositor. The "warehousing business," under
Section 2(t), means the business of maintaining
warehouses, storing goods, and issuing negotiable
warehouse receipts. A person who normally carries
on the business of warehousing would not be
issuing negotiable warehouse receipts. It is only a
registered warehouseman carrying on warehousing
business in a registered warehouse that can issue
negotiable warehouse receipts, which, in terms of
Section 2(m) of the WDRA Act, are freely
transferable and negotiable. This is the very reason
why the WDRA Act was established.
9.4. The statement of objects and reasons of the WDRA
Act reads as under:
"At present, the warehousing receipts issued
by the warehouses in the country do not enjoy
the fiduciary trust of depositors and banks as
there is a fear that it is not possible to recover
the loans in case of fraud, mis-management,
etc., by the warehousemen or insolvency of
the depositor. The available legal remedies are
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also time consuming and inadequate. Further,
the format of warehouse receipts issued by the
various warehouses in the country is not
uniform. Hence, there are considerable
impediments in the negotiability of warehouse
receipts creating difficulties to the farmers and
other depositors of goods. Having regard to
the above, it is proposed to establish a
negotiable warehouse receipt system for all
commodities including agricultural
commodities. On the one hand, it will make
warehouse receipts a prime tool of trade and
facilitate finance against it throughout the
country, on the other, it will allow banks to
improve the quality of their lending portfolio
and enhance their interest in lending in respect
of goods deposited in warehouses. It is,
therefore, proposed to lay down the
requirements for warehouse receipts to
become valid negotiable instruments.
2. It is expected that the system of negotiable
warehouse receipts would result in providing
considerable benefits, both at the macro as
well as micro levels and increase the liquidity
in the rural areas, encourage scientific
warehousing of goods, lower cost of financing,
improve supply chains, enhance rewards for
grading and quality and better price risk
management. This would, in turn, result in
higher returns to farmers and better services
to consumers. It is also proposed to provide
necessary administrative mechanism and
legislative backup for regulating and
streamlining the warehousing sector issuing
negotiable warehouse receipts.
3. The proposed legislation, inter alia, seeks to
provide for-
(i) the regulation of warehousing business by
registering warehouses issuing negotiable
warehouse receipts;
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(ii) the registration of accreditation agencies
for warehouses which would issue
accreditation certificates to the warehouses
following certain required norms;
(iii) the liabilities, duties and lien of
warehousemen;
(iv) the contents of negotiable warehouse
receipts;
(v) the conditions for negotiability of
warehouse receipts by delivery and
endorsement;
(vi) the transfer of negotiable warehouse
receipts without endorsement and warranties
on sale of warehouse receipts;
(vii) the issue of duplicate receipts in case of
loss or destruction;
(viii) the establishment and incorporation of an
Authority to be called the Warehousing
Development and Regulatory Authority to
regulate and ensure implementation of the
provisions of the proposed legislation and to
promote orderly growth of the warehouse
business in the country;
(ix) the empowerment of the Central
Government to issue directions on questions of
policy to the Authority and to supersede the
Authority in certain circumstances;
(x) the appeal to the appellate authority; and
(xi) defining the offences and penalties in
respect of such offences.
4. The Notes on clauses explain in detail the
various provisions contained in the Bill.
5. The Bill seeks to achieve the above objects."
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9.5. A perusal of the above objects and reasons
categorically indicates that the need for establishing
a warehousing authority and for promulgating such
an enactment arose from a lack of trust in securing
goods stored in warehouses and in enabling banks
or financial institutions to advance money on the
security of such goods. It is for that reason that
Respondent No. 1, the warehousing authority, was
created and vested with powers and duties. The
warehousing business is required to be carried out
in terms of the WDRA Act and its regulations to
bring about transparency and to enable financial
institutions, banks, and creditors to have trust and
faith in warehouses that issue negotiable
warehouse receipts, thereby securing the loans
advanced.
9.6. It is therefore clear that the warehouseman must
act under the WDRA Act, which has been enacted
to instill confidence in financial institutions and
creditors regarding the business of warehousing.
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This is particularly true when a warehouse
registered under the WDRA Act is required to carry
on its business in accordance with the provisions of
the WDRA Act. As indicated supra, the very purpose
of the establishment of the warehousing authority
to issue licenses to warehouses is in the larger
public good to enable the securitization of goods
stored in the warehouse and the advancement of
loans on the basis of such security. Thus, in my
considered opinion, a warehouseman is discharging
public duties and, in terms of the decisions of the
Hon'ble Apex Court in the cases of Marwari Balika
Vidyalaya, St. Mary's Education Society and
K.K. Saksena, would be a private body discharging
public functions amenable to writ jurisdiction.
9.7. The decision relied upon by Shri Mrutyunjaya
Tatabangi in Board of Control for Cricket in
India's (for short BCCI) case would not benefit
Respondent No. 2, inasmuch as the Hon'ble Apex
Court in that case, after exhaustively dealing with
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the matter, came to a final conclusion that though
the BCCI may not be a "State" under Article 12, it
is certainly amenable to writ jurisdiction under
Article 226. Thus, even as per the decision relied
upon by the counsel for Respondent No. 2, if public
functions are discharged by a private body, it would
be amenable to this Court's writ jurisdiction.
9.8. The decision in Jatya Pal Singh's case would also
not be applicable in the present matter, inasmuch
as that case pertained to a company engaged in
commercial activities wherein Tata Communications
Limited was held not be amenable to writ
jurisdiction solely on the ground that the
Government did not hold a majority shareholding in
the company. However, in the present case,
Respondent No. 2 is required to act in conformity
with the requirements of the WDRA Act. It issues
certificates under the said Act, which are relied
upon by pledgees, banks, and other stakeholders.
Therefore, Respondent No. 2 is performing a public
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duty, and in such circumstances, the decision in
Jatya Pal Singh's case would not be applicable.
9.9. As regards the decision in Ramakrishna Mission's
case, it pertained to a hospital run by the
Ramakrishna Mission, where medical services were
being rendered. While it could be argued that such
medical services are to be provided in accordance
with applicable laws, the mere rendering of medical
services does not, in itself, render the activities of
the hospital as constituting a public act. The
Hon'ble Apex Court, in that context, also applied
the additional test of whether sovereign functions
were being performed. It was held that operating a
hospital does not amount to performing a sovereign
function. In contrast, in the present case,
Respondent No. 2 issues certificates under the
WDRA Act. These certificates can be endorsed and
acted upon by the holder, who in turn may further
endorse them to third parties. Consequently, the
certification issued by Respondent No. 2 has legal
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consequences that extend beyond the original
certificate holder. Such endorsements and
transactions by third parties are based on the
guarantees and warranties provided under the
WDRA. Therefore, the certification issued by
Respondent No. 2 can result in benefit, loss, or
injury to parties other than the one to whom the
certificate was originally issued. These third parties
rely on the certificate solely due to the statutory
backing and guarantees extended by the State
under the WDRA which specifically includes the
performance of obligations on part of the
warehouseman. In this context, Respondent No. 2
is not merely performing a private or commercial
activity, but a public function governed by statute.
As such, the ratio in Ramakrishna Mission's case
would not be applicable to the facts of the present
case.
9.10. The decision in Satrughan Nishad's case
pertained to an entity operating a sugar mill, and
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the only aspect that was considered was with
regard to the ownership of the Mill being a purely
commercial enterprise, and the Court held that the
actions of such a commercial enterprise could not
be considered public acts. As such, there is no
dispute in terms of the decision in Satrughan
Nishad's case. However, the same would not be
applicable to the present matter.
9.11. The decision in Bassi Reddy's case pertained to
ICRISAT, which was neither governed by any
specific enactment nor under the control of the
Government in the said organization. Thus, that
decision would also not be applicable to the present
facts.
9.12. All the above decisions having been found to be
inapplicable, and having come to the conclusion
that Respondent No. 2 is discharging a public duty,
I am of the considered opinion that Respondent No.
2 would be amenable to writ jurisdiction.
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9.13. Hence, I answer Point No. (i) by holding that a
warehouse registered under Section 4 of the WDRA
Act is one that discharges public duties and as
such, though not a "State" within the definition of
Article 12, would be amenable to writ jurisdiction
under Article 226 of the Constitution of India.
10. Answer to Point No. (ii): Whether the present
writ petition is not maintainable on account of
an alternative statutory remedy being available
to the petitioner?
10.1. It cannot be disputed that whenever a statute
provides for an alternative remedy, it is incumbent
upon the party to first approach the authority
before whom such statutory remedy is available, so
long as the reliefs required falls within the scope of
that remedy.
10.2. The decision in Dunlop India Limited's case
related to the availability of an alternative remedy
provided under the statute. However, the non-
discharge of obligations on the part of Respondent
No. 2 in the present case cannot be said to be a
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matter in respect of which the petitioner has an
effective alternative remedy. Therefore, that
decision would also not be applicable to the present
case.
10.3. The decision in Carl Still's case pertained to the
liability to pay tax. In that case, the Hon'ble Apex
Court held that the High Court cannot adjudicate
upon the nature, extent, or quantum of tax liability,
as such matters are to be determined in the
manner prescribed under the relevant statutory
framework. Accordingly, the Court concluded that
such issues must be decided through the statutory
remedy available. Therefore, that decision would
also not be applicable to the present facts.
10.4. The decision in Vishwa Bharati Vidya Mandir's
case also dealt with the issue of alternative
statutory remedy under the SARFAESI Act, in the
context of a private transaction. There can be no
dispute regarding the fact that the Act provides for
appellate remedies under the statute. However,
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such remedies are specific to the provisions of the
SARFAESI Act. In the present case, no such
appellate remedy is available or provided under the
WDRA with respect to the actions of Respondent
No. 2. Therefore, the said decision would also not
be applicable to the present facts.
10.5. In the present case, the WDRA Act does not provide
for any alternative statutory remedy to the
petitioner. It was for Respondent No. 1 to initiate
appropriate action against Respondent No. 2. The
petitioner has already approached Respondent No.
1, requesting such action; however, no steps have
been taken in this regard. The petitioner, by
himself, has no independent remedy under the
WDRA, and Respondent No. 1, having failed to
completely and effectively discharge his obligations,
leaves the petitioner with no other option but to
approach this Court seeking a writ of mandamus.
10.6. Respondent No. 1 is admittedly a public authority,
and Respondent No. 2, in the present matter, is
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engaged in the discharge of public functions, as
already discussed and concluded in Point No. 1.
10.7. Hence, I answer Point No. 2 by holding that no
alternative statutory remedy is available to the
petitioner, and accordingly, the present writ petition
is maintainable.
11. Answer to Point No. (iii): Whether any direction
could be issued by this Court to Respondent No. 2 as
sought for in the prayer column of the present writ
petition?
11.1. Having come to the conclusion that the writ petition
is maintainable both against Respondent Nos. 1 and
2, what would have to be considered is the
directions which could be issued to Respondent No.
2 in a writ petition. The relevant provisions have
been reproduced hereinabove, it being clear that:
11.2. A warehouseman can conduct his business only
upon registration under the WDRA Act. Without
such registration, the business under WDRA Act
cannot be conducted by any warehouseman.
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11.3. Section 6 of the WDRA Act deals with the liability of
a warehouseman, whether the warehouseman is
liable for loss of or injury to goods caused by his
failure to exercise such care and diligence in regard
to the goods as a careful and vigilant owner of
goods of the same bulk, quality, and value would
exercise in the custody of them in similar
conditions.
11.4. In terms of Section 7 of the WDRA Act, a
warehouseman is required to deliver the goods
referred to in the negotiable receipt to the holder of
the receipt on demand made by the holder.
11.5. In terms of Section 8 of the WDRA Act, every
warehouseman shall keep in a place of safety a
complete and accurate set of records and accounts
of all unissued receipts in his possession and all
receipts issued, returned to, or cancelled. The set of
records and accounts is required to be kept in
normal condition, numerical sequence, separate
and distinct from the records and accounts of any
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other business, and the warehouseman, in terms of
subsection 3 of Section 8 of the WDRA Act, shall
make available to the authority for inspection the
records and accounts of the warehouse business at
any time as may be desired by the authority.
11.6. Section 43 of the WDRA Act deals with offences and
penalties in warehousing. Some of the offences
relate to the issuance of receipts and/or duplicate
receipts.
11.7. In terms of the Rules of 2010, there are various
ancillary rules which have been brought into force,
like the Warehousing (Development and
Regulation) Registration of Accreditation Agencies
Rules, 2010, the Warehousing (Development and
Regulation) Appellate Authority Procedure Rules
2010, the Warehousing Development and
Regulatory Authority (Registration of Accredited
Agency) Regulations 2011, the Warehousing
Development and Regulatory Authority (Warehouse
Accreditation) Regulations 2011, and the
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Warehousing Development and Regulatory
Authority (Negotiable Warehouse Receipts)
Regulations 2011.
11.8. The Warehousing Development and Regulatory
(Registration of Warehouse) Rules 2017 (for short
the Rules 2017) deal with the manner in which the
authority has superintendence over the warehouse
and the manner in which the warehouseman is
required to conduct its business. Rule 25 of the
Rules 2017 speaks of the general obligation of a
warehouseman, which is reproduced hereunder for
easy reference.
"25. General obligations of a
warehouseman. - In the conduct of its
warehousing business, a warehouseman shall-
(a) issue a negotiable warehouse receipt
only in respect of such goods that have been
[notified] by the Authority from time to time;
(b) deliver the goods referred to in a
negotiable warehouse receipt, holder of the
negotiable warehouse receipt on demand
made by the holder after satisfying the
warehousing lien;
(c) ensure that the negotiable warehouse
receipt holder, on receiving the goods from the
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warehouseman, acknowledges the receipt of
the goods in a form and manner required by
the Authority;
(d) take necessary actions to maintain the
quality and quantity of goods stored in the
warehouse;
(e) maintain and record a complete and
accurate set of records and accounts of all
transactions pertaining to the operation of a
registered warehouse as per the requirements
that the Authority may specify from time to
time;
(f) ensure that the physical inventory tallies
exactly with the record;
(g) maintain effective control of all
registered warehouse storage space:
(h) provide necessary assistance in the
execution of inspections and audits by the
Authority;
(i) resolve grievances efficaciously;
(j) not differentiate among depositors
regarding use of and access to a warehouse;
(k) not store goods belonging to itself in a
registered warehouse, and
(l) not sell, remove or dispose of the goods
deposited in a registered warehouse except as
permitted under the Act."
11.9. In terms of Rule 25 of the Rules 2017, it is an
obligation of the warehouseman to ensure that the
physical inventory tallies exactly with the record,
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and to provide necessary assistance in the
execution of inspection orders by the authority.
Among several other obligations, in terms of Rule
29 of the Rules 2017, the warehouseman is
required to submit information regarding
warehouse receipts.
11.10.The authority, in terms of Rule 30 of the Rules
2017, has the power to suspend the registration of
a warehouseman in the event of any default
committed as regards the obligation of the
warehouseman, as also to cancel the registration in
terms of Rule 33 of the Rules 2017.
11.11.Respondent No.1 in the present matter, having
called upon the warehouseman, Respondent No. 2,
to provide inspection on several occasions, and
Respondent No. 2 not having so provided
inspection, has led to the license of Respondent No.
2 being cancelled by Respondent No. 1 authority.
However, it is on account of the non-cooperation of
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the warehouseman that inspection or
inventorization could not be conducted.
11.12.The submission of Shri Shashank Manish, learned
counsel, being that even the Superintendent of
Police could not get Respondent No. 2 to open the
warehouse for the purpose of such inspection. In
this background, though it is clear that there are
several obligations on the part of the
warehouseman as indicated, it is on account of
non-cooperation by the warehouseman that the
authority has not taken any further steps beyond
cancellation. It is rather strange that an authority
who is vested with an obligation to safeguard the
interests of all depositors, banks, etc., like the
petitioner herein, Respondent No. 1, has not been
able to carry out an inspection and/or
inventorization.
11.13.In my considered opinion, there would be no
requirement for Respondent No. 2 to co-operate
with Respondent No. 1 in that regard, and also for
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Respondent No. 1 to wait for Respondent No. 2 to
co-operate for the purpose of carrying out an
inspection. Once a demand was made by
Respondent No.1, which was not answered
adequately by Respondent No.2, Respondent No.1
was duty bound to act as per the applicable law and
carry out such inspection or the like as required
under law.
11.14.Any and all obligations on the part of Respondent
No. 2 under the Act and the various rules indicated
supra would be amenable to writ jurisdiction on
account of Respondent No. 2 discharging a public
duty, as is clear from a reading of the statement of
objects and reasons of the WDRA Act.
11.15.A reading of various obligations on the part of the
authority and the warehouseman in terms of the
WDRA Act and the relief which are sought for by
the petitioner in the present matter could also be
granted to a large extent.
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11.16.Thus, I answer Point No. 2 by holding that
Respondent No. 2 is discharging a public duty. This
court, in exercise of its powers under Article 226,
can issue any direction to Respondent No. 2 for
compliance with the WDRA Act and the various
rules framed thereunder.
12. Answer to Point No. (iv): Whether Respondent No. 2
can deny inspection and/or the process of
inventorization of the goods stored with it on a
request made by Respondent No. 1? If so, is
Respondent No. 1 powerless to carry out
inventorization in the absence of cooperation from
the warehouseman?
12.1. In the present matter, as indicated supra,
Respondent No. 2 has denied inspection to the
authority/Respondent No. 1, as well as to the
Petitioner Bank. Even though Respondent No. 2 is
obligated to make available all the records,
documents, and goods that are the subject matter
of the negotiable receipts issued by Respondent No.
2, on which basis the Petitioner has advanced loans
to the borrowers, one of the basic requirements is
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to permit inspection of the goods stored in the
warehouse by the concerned borrower.
Furthermore, while doing so, an inventory must be
prepared in respect of the said goods.
12.2. In this regard, when the authority has called upon
the warehouseman to permit inspection and carry
out inventory, Respondent No. 2 has denied the
same. The contention of the learned counsel for
Respondent No. 1 is that due to non-cooperation,
inspection and inventory could not be conducted,
despite the Superintendent of Police being directed
to assist in the same. Even then, Respondent No. 2
did not open the warehouse for such inspection.
12.3. The learned counsel for Respondent No. 1
submitted that cooperation is required to prevent
situations where a warehouseman might later claim
that certain goods have been damaged, stolen, or
pilfered. It is for this reason, to avoid such
allegations, that the Respondent No. 1 authority
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has been unable to carry out the inspection and
inventory by itself.
12.4. In my considered opinion, the law is clear that
there is an obligation imposed upon the authority,
which has been set up to protect the interests of
depositors and creditors, like banks. The very
system of issuing warehousing receipts would be
rendered redundant if the authority were not in a
position to protect the interests of such depositors
and banks. More importantly, if those interests are
not protected, the very purpose of issuing
warehousing receipts and the state's
encouragement of warehousing in the country
would become entirely useless.
12.5. In that view of the matter, the right of the authority
to call upon a warehouseman to permit inspection
would carry with it the power and authority to
inspect the premises, regardless of whether the
warehouseman cooperates or not. This is
particularly true when a cancellation, suspension, or
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revocation of a license would not protect the
interests of the depositor, creditor, or banker.
12.6. In such circumstances, if there is any apprehension
on the part of Respondent No. 1 authority regarding
allegations from a warehouseman, it could always
be the responsibility of the authority to videograph
the entire process, have independent witnesses
present during the inspection and inventorization,
and involve such other authorities as are available,
including revenue and police authorities, during the
inspection and inventorization.
12.7. Hence, I answer Point No. (iii) by holding that a
warehouseman/Respondent No. 2 cannot deny
inspection or inventorization of the goods. In the
event of such denial, Respondent No. 1 authority
could exercise its powers to carry out the inspection
and inventorization with the assistance of revenue
and police authorities.
13. Answer to Point No. (v): what order?
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13.1. In view of my findings in respect of all the above
points, I pass the following:
ORDER
i) Writ petition is allowed.
ii) A mandamus is issued to Respondent No. 1 and 2
to permit the petitioner/bank to verify the
pledged goods stored in the warehouse of
Respondent No. 2 in terms of warehouse receipts issued by Respondent No. 2 and pledged with the petitioner/bank.
iii) Since the keys of the Warehouse are deposited with this court, registry is directed to release the keys to the authorised representative of Respondent No.1 who shall carry out such inspection as is required in accordance with he observations made herein above within 10 days of the receipt of this order.
iv) Respondent No. 1 is directed to take possession and control of the warehouse, carry out a reconciliation of the said goods with the receipts issued by Respondent No. 2.
v) Respondent No. 1 is also directed to take such steps as are necessary to preserve the quality and quantity of the pledged stock by segregating the pledged goods, as per each date, and make
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vi) Insofar as recovery of money and/or auction of the pledged goods are concerned, the said pledged goods being a security within the definition of the Securitization Act, liberty is reserved to the bank to initiate proceedings under the said Act, in accordance with the prescribed procedure.
vii) All the actions on the part of Respondent No. 1 in carrying out the inspection, preparing the inventorization, and segregation of pledged goods as directed above are to be completed within a period of four weeks from the date of receipt of the copy of this order.
viii) Needless to say, if there is any shortfall or violation on the part of Respondent No.2/warehouseman in carrying out his obligation under the WDRA Act and/or the other rules, Respondent No.1/authority, as also the bank, would be entitled to initiate such action against Respondent No.2/warehouseman, as permissible under law.
Sd/-
(SURAJ GOVINDARAJ) JUDGE VB/ct:pa/List No.: 1 Sl No.: 184