Madhya Pradesh High Court
H K Kalchuri Education Trust Acting vs Hdfc Bank Limited on 22 July, 2025
Author: Atul Sreedharan
Bench: Atul Sreedharan
NEUTRAL CITATION NO. 2025:MPHC-JBP:33334
1 WP-12094-2025
IN THE HIGH COURT OF MADHYA PRADESH
AT JABALPUR
BEFORE
HON'BLE SHRI JUSTICE ATUL SREEDHARAN
&
HON'BLE SHRI JUSTICE DEEPAK KHOT
ON THE 22nd OF JULY, 2025
WRIT PETITION No. 12094 of 2025
H K KALCHURI EDUCATION TRUST ACTING
Versus
HDFC BANK LIMITED AND OTHERS
Appearance:
Shri Siddharth Gulatee - Senior Advocate with Mrs. Tulika Gulatee -
Advocate and Shri Ankit Kumar Pandey - Advocate for the petitioner.
Shri Shashank Verma - Senior Advocate with Shri Mallikarjun Khare -
Advocate with Shri Akhilesh Rai - Advocate for respondents No.1 to 4.
Shri Aditya Narayan Sharma - Advocate for the respondent No.5.
Shri Siddharth Radhe Lal Gupta - Advocate and Shri Deependra
Mishra - Advocate for the respondent No.6.
.....................................................................................................................................
WRIT PETITION No. 28345 of 2025
SHRI ASTHA FOUNDATION FOR EDUCATION SOCIETY AND
OTHERS
Versus
HDFC BANK LIMITED AND OTHERS
Appearance:
Shri Siddharth Radhe Lal Gupta - Advocate and Shri Deependra
Mishra - Advocate for petitioner.
Signature Not Verified
Signed by: PANKAJ NAGLE
Signing time: 8/14/2025
2:40:52 PM
NEUTRAL CITATION NO. 2025:MPHC-JBP:33334
2 WP-12094-2025
Shri Shashank Verma - Senior Advocate with Shri Mallikarjun Khare -
Advocate with Shri Akhilesh Rai - Advocate for respondents No.1.
Shri Aditya Narayan Sharma - Advocate for respondent No.3 and 4.
ORDER
Per: Justice Atul Sreedharan The two petitions which are being decided by this common order. One is W.P. No.28345 of 2025 (Shri Astha Foundation for Education Society and another Vs. HDFC Bank Limited and others) and other is H.K. Kalchuri Education Trust Vs. HDFC Bank Limited and others. As both these petitions and the parties are interconnected and the cause of action is also similar, they are being decided by a common order.
2. For the purpose of convenience, W.P. No.12094 of 2025 is being treated as a main case. The crux of the grievance of the petitioners in the lead case is the liquidation of Fixed Deposits given by it as a guarantor to the respondents/Bank amounting to about Rs.48/- crores.
3. Even before the commencement of arguments by learned Senior counsel appearing on behalf of the petitioners, the learned Senior counsel for the respondents/Bank has taken a preliminary objection with regard to the maintainability/ entertainability of this petition under Article 226. Learned Senior counsel appearing for the respondent has stated that there exists an alternate remedy in the form of complaints before the Banking Ombudsman, a civil suit for recovery or a complaint before the Consumer Forum. The next argument was that the Bank is not amenable to the writ jurisdiction in a matter relating to the liquidation of the FDs given by the petitioners as a Signature Not Verified Signed by: PANKAJ NAGLE Signing time: 8/14/2025 2:40:52 PM NEUTRAL CITATION NO. 2025:MPHC-JBP:33334 3 WP-12094-2025 Guarantors.
4. Learned Senior counsel for the respondents has referred two judgments of the Supreme Court which are Federal Bank Limited Vs. Sagar Thomas and others (2003) 10 SCC 733 and S. Shobha Vs. Muthoot Finance Limited 2025 SCC Online SC 177. This Court proposes to refer to the said judgments and their relevance to the arguments put forth by the learned counsel for the respondents in the latter part of this judgment.
5. Learned Senior counsel appearing for the petitioners in this case has drawn the attention of this Court to the list of dates and events filed by him which, according to the learned counsel for the petitioner is extremely relevant in this case as it lays down the foundation of a meandering cause of action commencing from the year 2024. He has further submitted that on 23.04.2024, in W.P. No.27769/2023, this Court vide order dated 23.04.2024 directed elections based on 2016 Membership List. In order to give clarity to this fact, it is necessary to state here that the petition aforementioned was filed by the then office bearers of one Shri Astha Foundation for Education Society, whose management was sought to be taken over by the respondent in that petition, who are also petitioners before this Court. The respondent/Bank had provided loan facility to the aforesaid Foundation and sanctioned Rs.68/- crores and disbursed Rs.48/- crores. For this loan, the petitioner herein (respondent No.6 in WP No. 12094/2025) stood as Guarantors and opened the FDRs with the respondent-Bank for an amount of Rs.48/- crores over which the Bank exercised a lien, as stated by the learned Senior counsel for the respondent/Bank.
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6. On 15.05.2024, the petitioners approached the Hon'ble Supreme Court in Civil Appeal No.6448 of 2024 challenging the order passed by this Court dated 23.04.2024 which had directed the elections to the Foundation to be conducted on the basis of the Membership list existing in the year 2016. The Supreme Court vide its order dated 15.05.2024 set aside the High Court's direction to use the list of 2016 and remanded the case to the High Court for determination of a valid voter list, thereby emphasizing that the elections in 2024 could not be held on the basis of a voter lists of 2016. After the matter was remanded to this Court, vide order dated 04.10.2024, this Court once again directed that the elections to the Astha Foundation be based on the voter list of the year 2016. On the basis of the said order, the elections were held to the Foundation and the erstwhile Managing Committee of Astha Foundation comes to power. The said elections and the results being adverse to the interest of the petitioners, the petitioners approached the Supreme Court again by C.A. No.1249 of 2025, whereby the Hon'ble Supreme Court vide order dated 18.10.2025 set aside the order passed by this Court dated 04.10.2024 and directed that elections be conducted on the basis of a voter list drawn for the year 2024. Between 22.11.2024 and 03.01.2025, five notices were issued by the respondent/Bank to Astha Foundation which was at the material point of time under the control of the petitioners in WP No.27769 of 2023.
7. On 06.01.2025, payment of Rs.23,00,000/- was made by the petitioner trust to the respondent/Bank in lieu of EMI default. Again on 07.01.2025, the petitioners paid an amount of Rs.19,94,734/- to the respondent/Bank and Signature Not Verified Signed by: PANKAJ NAGLE Signing time: 8/14/2025 2:40:52 PM NEUTRAL CITATION NO. 2025:MPHC-JBP:33334 5 WP-12094-2025 cleared up the EMI defaults. On 07.01.2025, the final impugned recall notice was passed by the respondent. On 16.01.2025, the respondent/Bank liquidated FDRs worth Rs.48/- crores belonging to the petitioners. Learned counsel for the petitioners has submitted that at the time when the FDRs were liquidated, there was Rs.10/- crores balance in Astha Foundation's Account. The debit was from the FDRs' Account of the Guarantors (petitioners), but there was no corresponding credit into the Account of Astha Foundation and that straight away a discharge certificate was issued to Asha Foundation.
8. Vide order dated 04.02.2025, the Supreme Court set aside the order passed by the High Court and directed that the election to the Management Committee of the Foundation was also set aside and directed that WP No.27769 of 2023 to be decided by the High Court clarifying that the 2016 list of members was not to be used.
9. On 01.04.2025, the present writ petition was filed and on 21.04.2025, the Coordinate Bench of the Court in W.P. No.27769 of 2023, after considering and hearing the parties afresh passed a detailed order by which the High Court approved a final List of Members eligible to vote and issued directions for conducting the elections of the society forthwith. The judgment of the Coordinate Bench dated 21.04.2025 finally disposing of WP No.27769 of 2023 attend finality as it has never been challenged. Pursuant to the aforementioned order, on 05.05.2025, elections to the society were held and the results were declared, wherein petitioners/Guarantors were elected to the Board of Management of Astha Foundation.
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10. On 08.05.2025, the preliminary objections were filed by the respondent/HDFC regarding maintainability of this petition, which is now being considered by this Court.
11. Learned Senior counsel appearing on behalf of the petitioners ( H.K. Kalchuri Education Trust) has alleged a malicious nexus between the Bank and the previous governing committee of Asta Foundation, on account of which, one day before the hearing in the Supreme Court, the Bank liquidated the FDRs of the Guarantor (the petitioners herein) and appropriated the same towards Account. The challenge to the maintainability of the petition is purely on a legal ground which is that there exists an alternate remedy available to the petitioners of approaching the Banking Ombudsman, filing a civil suit for recovery or approaching the Consumer Forum. For this, learned counsel for the petitioner has argued that there is a sabotage of the judicial process and so, the writ jurisdiction under Article 226 can be invoked and such a petition would be maintainable. He has also argued that the Bank is a scheduled Bank under the RBI Act of 1934 which is performing vital public functions and that the determinative test for the writ jurisdiction is the public function test and whether the body is State under Article 12 of the Constitution. He has further argued that the petitioner is a Registered Public Trust and its deposits are statutorily controlled by Section 13 of the MP Public Trust Act and, therefore, deposited in scheduled Bank with the permission of the Registrar. Is also argued with great vehemence that the public trust runs more than twenty Colleges, Schools and Hospitals providing education and health service to the public at large which is essentially a Signature Not Verified Signed by: PANKAJ NAGLE Signing time: 8/14/2025 2:40:52 PM NEUTRAL CITATION NO. 2025:MPHC-JBP:33334 7 WP-12094-2025 function of the State. He further argued that the money deposited with the HDFC Bank and its subsequent misappropriation was an act of sabotage of judicial proceedings bringing the Bank into the realm of public law action and thereby making it amenable to proceedings under Article 226. He has also argued that the grievance redressal under the statute which is the Banking Ombudsman has failed to redress the issue and, therefore, a statutory remedy was not efficacious thereby making the writ petition maintainable. It is relevant to point out here that the learned counsel for the RBI has submitted that the complaints of the petitioners in both the writ petitions have only been rejected for the time being as they were premature and the right is still open. This Court shall advert to the same and examine its relevance in a later part of this judgment.
12. Learned Senior counsel for the petitioners has referred several judgments of the Supreme Court, some of which this Court feels is essential to advert and examine. These are Andi Mukta Sadguru Shree Muktajee Vandas Swami Suvarna Jayanit Mahotsav Smarak Trust and others Vs. V.R. Rudani and others (1989) 2 SCC 691, Central Bureau of Investigation, Bank Securities and Fraud Cell Vs. Ramesh Gelli and others (2016) 3 SCC 788, Binny Ltd. and another Vs. V. Sadasivan and others (2005) 6 SCC 657 and Maharashtra Chess Association Vs. Union of India and others, (2020) 13 SCC 285. In Andi Mukta Sadguru's case, the Supreme Court was examining the jurisdiction of the High Court under Article 226 and whether a writ of mandamus can be issued against a private body and if yes, when it can be issued. In that case, the petitioner was a public trust running a Science Signature Not Verified Signed by: PANKAJ NAGLE Signing time: 8/14/2025 2:40:52 PM NEUTRAL CITATION NO. 2025:MPHC-JBP:33334 8 WP-12094-2025 College in Ahmedabad. It had a temporary affiliation to Gujarat University initially but from 15.06.1973 onwards, the affiliation was made permanent. The University teachers and those employed in the affiliated Colleges were paid in the pay scale recommended by the UGC and at some point of time there was a dispute between the University Area Teachers Association and the University with regard to the implementation of certain pay scales. By agreement of the parties, the dispute was referred to the Chancellor of the University, who gave an award dated 12.06.1970. The award was accepted by the State Government as well as the University, which issued direction to all affiliated Colleges to pay teachers in the terms thereof. The appellant before the Supreme Court, instead of implementing the award, served the notice of termination upon 11 teachers on the ground that they were surplus, and gave the University permission to remove them.
13. Learned Senior counsel for the petitioners has specifically drawn the attention of this Court to paragraph 20, where the Supreme Court, elucidating on the term "authority" in Article 226 held that it had to be construed liberally unlike the term "State" in Article 12 which was relevant only for the purpose of enforcement of Fundamental Rights under Article 32. It is further held that Article 226 confers power on the High Court to issue writs for the enforcement of fundamental as well as non-fundamental rights. It further went on to hold that the phrase "any person" or "authority" in Article 226 should not be given a narrow construction to mean thereby only statutory authority and instrumentalities of the State and that such other persons performing public duty may also be covered. The Supreme Court Signature Not Verified Signed by: PANKAJ NAGLE Signing time: 8/14/2025 2:40:52 PM NEUTRAL CITATION NO. 2025:MPHC-JBP:33334 9 WP-12094-2025 held that what was important was the nature of the duty imposed on the body which must be judged in the light of positive obligation owed by a person in authority, to the affected party. Attention has also been drawn of this Court to paragraph 22, where the Supreme Court held that a mandamus cannot be denied only on the ground that duty to be enforced is not imposed by statute. Quoting Professor De Smith; the Supreme Court held that a public duty to be enforceable by mandamus does not necessarily have to be one imposed by statute and that, it may be sufficient that it is a duty imposed by charter, common law, custom or even contract. Accepting the view, the Supreme Court held that judicial review should not be put into watertight compartments where it concerns the rights of people and that it must demonstrate flexibility to make itself applicable in the change of circumstances. It is further held that technicalities must not come in the way of granting relief under Article 226.
14. Learned senior counsel for the petitioners has further placed reliance upon the judgment passed in case of Central Bureau of Investigation VS Ramesh Gelli (supra). In that judgment, the Supreme Court was examining the scope of application of the Prevention of Corruption Act on the Chairman and Managing Director and Executive Director of a Private Bank in respect of offences punishable under Sections 120-B read with sections 409 & 420 of IPC and under Section 13(2) read with Section and 13(1)(d) of the Prevention of Corruption Act, 1988 pending before the Special Judge. In that particular case, the Special Judge had declined to take cognizance of offences punishable under the P.C. Act on the ground that the accused Signature Not Verified Signed by: PANKAJ NAGLE Signing time: 8/14/2025 2:40:52 PM NEUTRAL CITATION NO. 2025:MPHC-JBP:33334 10 WP-12094-2025 persons were not public servants on the date of the transaction and returned the charge sheets for submission before the appropriate Metropolitan Magistrate for taking cognizance in respect of offences punishable under IPC, the High Court had upheld the order passed by the learned trial Court. Before the Supreme Court, the issue was whether the respondents before it, who were Managing Director and Executive Director, could be prosecuted as public servants. An important aspect of that judgment was the element of casus omissus or an inadvertent omission on the part of the legislative draftsman on account of which, a category was excluded from the application of the P.C. Act. In that case, the relevant provision was the Banking Regulation Act with specific reference to Section 46-A which included the Officers of a Bank/Banking Institution as public servants for the purpose of prosecution for an offence under Chapter 9 of the Indian Penal Code. Subsequently, when the Prevention of Corruption Act, 1988 came into force, the definition of public servant did not specifically include those persons mentioned under Section 46-A of the Banking Regulation Act. The P.C. Act of 1988 also had repealed Chapter 9 of the IPC thereby amalgamating the offences against public servants into the new P.C. Act of 1988. The issue before the Supreme Court was that the application of Section 46-A of the Banking Regulation Act which made the Officers of the Bank triable as public servants only for the purpose of Chapter 9 of the IPC and not for offences under the P.C. Act of 1988. The P.C. Act of 1988 having not taken into account the Provisions of Section 46-A of the Banking Regulation Act, resulted in a situation where there was a conflict between Section 46-A Signature Not Verified Signed by: PANKAJ NAGLE Signing time: 8/14/2025 2:40:52 PM NEUTRAL CITATION NO. 2025:MPHC-JBP:33334 11 WP-12094-2025 of the Banking Regulation Act and the definition of a public servant given in the Prevention of Corruption Act of 1988. In this context, the Supreme Court held that the definition of public servant under the Prevention of Corruption Act would also take into account the Officials of the Bank who were public servants for the purpose of Chapter 9 of the IPC. In other words, the Supreme Court held that an omission on the part of the draftsman to cater to this anomaly will not render the Officials of the Bank immune to prosecution under the Prevention of Corruption Act, 1988. In this background, the learned senior counsel for the petitioners has specifically referred to paragraphs 27, 28, 34 and 36 which may be summarized as follows.The Supreme Court held that the object of enacting the P.C. Act of 1988 was to make anti-corruption law more effective and widen its coverage and held that the Managing Director and Executive Director of a Banking company who are defined as public servants under Section 46-A of the Banking Regulation Act of 1949, must be given proper meaning and that Section 46-A of the Banking Regulation Act of 1949 cannot be left meaningless and requires a harmonious constructions and held that the respondents in that case were public servants for the purpose of the Prevention of Corruption Act, 1988.
15. Learned senior counsel for the petitioners has also referred the judgment passed in case of Velankani Information Systems Limited Vs. Secretary, Ministry of Home Affairs Government of India and Others, 2020 SCC Online 835, in order to support his contentions, that 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 Signature Not Verified Signed by: PANKAJ NAGLE Signing time: 8/14/2025 2:40:52 PM NEUTRAL CITATION NO. 2025:MPHC-JBP:33334 12 WP-12094-2025 obligations or such obligations of public nature casting positive obligation upon it. The specific reference to the first question which the Hon'ble High Court of Karnataka posed to itself in paragraph 21.1 was whether the writ of mandamus lay against the private Bank to implement the circular issued by the RBI dated 27.03.2020. In answering the said question, the Hon'ble of High Court of Karnataka held in paragraph No.21.18, that the grievance of the petitioner before it related to compliance/non-compliance by the Banks of the RBI Circular relating to the enforcement of statutory obligations, or obligations of public nature, casting a positive obligation upon the Banks (Respondents No.5 to 7) to implement the same. The Hon'ble High Court of Karnataka held that in terms of the RBI circular, a right is created in the petitioner as a borrower from the Bank to avail a moratorium which has been rejected by the Bank, which according to the petitioner is a violation by the Banks of the Circular of the RBI (this case is related to demand of moratorium by the borrower in view of the Covid Pandemic during which the RBI Circular in question required the Banks to issue a moratorium to their borrowers which in the case of petitioner before the Karnataka High Court, was declined by the Banks in derogation of the RBI Circular) and in considering the same, the Hon'ble High Court of Karnataka held in paragraph 21.19 that a writ petition would be maintainable against the respondents in the facts and circumstances of that case for the enforcement of the public duty under the Circular (of the RBI) dated 27.03.2020. However, it would also be relevant to refer the paragraph 21.17 of the judgment, wherein the Karnataka High Court held that the facts and Signature Not Verified Signed by: PANKAJ NAGLE Signing time: 8/14/2025 2:40:52 PM NEUTRAL CITATION NO. 2025:MPHC-JBP:33334 13 WP-12094-2025 circumstances of the case before it, there was no Employer-employee dispute, recruitment dispute or one relating to Contractual Terms, but the dispute had arisen relating to the enforcement of a Circular issued by the RBI and it was in that context that the Hon'ble High Court of Karnataka held that the writ would be maintainable on account of violation/non-compliance by the Banks of the Circular dated 27.03.2020 issued by the RBI.
16. Giving his rejoinder to the submissions put forth by the learned Senior counsel appearing on behalf of the petitioner (H.K. Kalchuri Education Trust), the learned Senior counsel appearing on behalf of the Bank/HDFC, submitted that the arguments of public duty, public trust etc. has not been averred in the petition. Specifically, this Court has been informed that there are no pleadings that the petitioner is a Public Trust under Section 13 of the Madhya Pradesh Public Trust Act, 1951. Before adverting further to the arguments of the learned counsel for the respondents, this Court feels that it is essential to lay down the context of the arguments put forth by the learned counsel for the petitioners with regard to Section 13 of the Madhya Pradesh Public Trust Act, 1951. In this regard, learned counsel for the petitioner giving reference to Section 13 of the Trust Act, 1951 has explained that all monies belonging to a public trust, other than monies required for the day-to- day expenditure of the trust, shall be kept in a scheduled Bank (such as the respondent/HDFC Bank) or a Post Office or in any Bank registered under the Co-operative Societies Act or with the approval of the Registrar, with any banker or person acting as a banker who is given such security for the safe custody and repayment on demand, of the monies so deposited, as the Signature Not Verified Signed by: PANKAJ NAGLE Signing time: 8/14/2025 2:40:52 PM NEUTRAL CITATION NO. 2025:MPHC-JBP:33334 14 WP-12094-2025 Registrar may in each case think as sufficient.
17. Learned counsel for the petitioner, on the basis of Section 13 has submitted, that the FDRs which were deposited with the HDFC Bank belonging to the petitioner as a public trust and, therefore, its liquidation and appropriation to the Bank would be in violation of Section 13 of the Madhya Pradesh Public Trust Act, 1951 and, therefore, the respondent is amendable to the jurisdiction of this court under Article 226.
18. Learned counsel for the respondent/Bank has argued that there is no allegation of malice and no averment of the Ombudsman not being an efficacious alternate remedy. Learned counsel for the petitioner has submitted that these arguments by the petitioners have been made in the response to the application of the respondent raising preliminary objection relating to the maintainability of this petition.
19. Mr. Siddharth Radhe Lal Gupta, learned counsel appearing on behalf of the petitioner (Shri Astha Foundation for Education Society in W.P. No.28345/2025) has argued with great vehemence that there was a violation of RBI Master Circular and, therefore, brings his case within the similar category of the petitioner in the case before Karnataka High Court.
20. Learned Senior counsel appearing on behalf of the petitioner (Shri Ashtha Foundation) has referred to Annexure-15 which is the Master Circular dated 02.04.2024 with specific reference to Clause-2 which gives the definition for a non performing assets in clause 2.1 and 'Out of Order' status in Clause 2.2 and 'Overdue' in Clause 2.3. However, these are not Guidelines or Rules/Regulations but are merely clauses defining the Signature Not Verified Signed by: PANKAJ NAGLE Signing time: 8/14/2025 2:40:52 PM NEUTRAL CITATION NO. 2025:MPHC-JBP:33334 15 WP-12094-2025 aforesaid words and phrases. The contentions put forth by learned counsel for the petitioner that the Rules/Regulations violated by the respondent/HDFC Bank on account of which the writ petition becomes maintainable, is an argument that this Court is unable to agree with it, as what has been pointed out by the learned counsel for the petitioner, as already mentioned hereinabove, are merely definitions. They are not Guidelines or directives which have been violated by the respondent/Bank. If one applies the ratio in similar circumstances, as were applied by the Hon'ble High Court of Karnataka in the aforementioned case, then a Bank or Financial Institution would become amendable to the writ jurisdiction of the High Court, where it is brought on record that the Bank or the Financial Institution acted in violation of the RBI Circular or Regulations. In this regard, this Court is of the opinion that the violation of a Circular or Regulations necessarily means a directive of the RBI requiring the Bank or Financial Institution to conduct its business in a particular manner which has been violated by the Bank or the Financial Institution or, where the RBI circular or Regulation directs the bank or financial institution to desist from working in a particular manner and where the Bank or financial institution has acted to the contrary, by doing that what was prohibited by the RBI Guidelines/Regulations.
21. The learned counsel for the petitioner has been unable to show as to which of the Guidelines/Regulations of the RBI requiring the respondent/Bank to act in a particular manner has been violated by the Bank. As no argument has been forthcoming to reflect the same, the argument put Signature Not Verified Signed by: PANKAJ NAGLE Signing time: 8/14/2025 2:40:52 PM NEUTRAL CITATION NO. 2025:MPHC-JBP:33334 16 WP-12094-2025 forth by learned counsel for the petitioner is rejected and this Court holds that there has been no violation of any Guidelines or Regulation of the RBI by the respondent/Bank that would make this writ petition maintainable/entertainable before this Court on that ground alone.
22. Clause-20 of the agreement between the respondent/Bank and the borrower discloses that the Bank in its own discretion, without assigning any reason, and upon written notice mailed or delivered to the Borrower, may cancel the loan granted and demand payment thereof. In this regard, it must be mentioned that the Bank has issued five notices to the original Borrower, which has not been denied by the petitioner. However, learned counsel for the petitioner has relied on Clause-21 (A to H), which according to the learned counsel for the petitioners, are conditions precedent before the Bank can liquidate the FDs of the petitioner. This court is unable to agree with the same as Clause-21(a) to Clause-21(h) would only apply in a situation, where the Bank has canceled the loan without issuing written notice to the Borrower, but in the present case, the Bank has issued written notices to the Borrower and so Clause-20 would apply and not Clause-21.
23. Now, this Court considers the judgments which have been cited by the learned counsel for the respondent/Bank which is Federal Bank Limited Vs. Sagar Thomas (supra), wherein the Supreme Court in paragraph 18, after analyzing three previous judgments passed by the Supreme Court itself, held that a writ petition under Article 226 of the Constitution of India may be maintainable against the State (Govt.); an Authority; a statutory body; an instrumentality or Agency of the State; a company which is financed and Signature Not Verified Signed by: PANKAJ NAGLE Signing time: 8/14/2025 2:40:52 PM NEUTRAL CITATION NO. 2025:MPHC-JBP:33334 17 WP-12094-2025 owned by the State; a private body run substantially on State funding; a private body discharging public duty or positive obligation of public nature and a person or a body under liability to discharge any function under any Statute, to compel it to perform such a statutory function. It is also held in paragraph 32 that the Reserve Bank of India which lays down the Banking Policy in the interest of the banking system does not mean that the private companies carrying on the business of or commercial activity of banking, discharges any public function or public duty. It is further held that the Banking Policy of the Reserve Bank of India is merely a regulatory measure applicable to those carrying on the business of, or commercial activity of banking, and these companies would have to suffer consequences, where they do not act in accordance with the Banking Policy. Thereafter, in paragraph 33, the Supreme Court held that 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. Likewise, learned counsel for the respondent has also relied upon the judgment of the Supreme Court in the case of S. Shobha Vs. Muthoot Finance (supra) . In that case, the petitioner before the Supreme Court, had filed a writ petition before the high court against the respondent, where despite the objection taken by the respondent it is not amendable to the writ jurisdiction of the High Court, the learned Single Judge held in favour of the petitioner. The finance company challenged the order before the Division Bench, which allowed the appeal and set aside the order passed by the learned Single Judge and held that the respondent Muthoot Finance was not amendable to the writ jurisdiction of Signature Not Verified Signed by: PANKAJ NAGLE Signing time: 8/14/2025 2:40:52 PM NEUTRAL CITATION NO. 2025:MPHC-JBP:33334 18 WP-12094-2025 the High Court. The order of Division Bench was challenged before the Supreme Court which held in paragraph 3 that the Division Bench of the High Court was right in taking the view that Muthoot Finance Ltd is not State within the meaning of Article 12 of the Constitution and, therefore, not amendable to the writ jurisdiction of the High Court. In that case also, the argument was taken by the learned counsel for the petitioner that though the Finance Company may not be within the ambit of State, yet it being a non- banking Financial Institution, is governed by Rules and Regulation framed by the RBI and if the statutory Rules and Regulations framed by the RBI were breached, then as a statutory authority such finance company would be amenable to the writ jurisdiction. The Supreme Court rejected this contention after referring to certain judgments of the Supreme Court itself and held that Muthoot Finance Company cannot be called a public body as it has no duty towards the public. It is also held that its duty is towards its account holders which may include borrowers having availed loan facility and it has no part to take any action or pass an order affecting the rights of the members of the public. It is further held that a body, public or private should not be categorized as "amendable" or "not amendable" to the writ jurisdiction and held the most vital consideration should be the "function" test as regards the maintainability of a writ petition. In other words, it means that if a public duty or a public function is involved, anybody, public or private, concerned or connected with the duty or function, and limited to that, would be subject to judicial scrutiny under Article 226 and thereafter, in paragraph 9 (iv) and
(v) held that a private company carrying on banking business as a scheduled Signature Not Verified Signed by: PANKAJ NAGLE Signing time: 8/14/2025 2:40:52 PM NEUTRAL CITATION NO. 2025:MPHC-JBP:33334 19 WP-12094-2025 bank cannot be termed as a company carry on any public function or public duty and also held that normally, mandamus is against the public body or authority to compel the performance of a public duty. It however held that in exceptional cases a writ of mandamus or a writ in the nature of a mandamus may issue to a private body but only when a public duty is cast upon such private body by a statute or statutory rule, only to compel such body to perform its public duty.
24. Having considered the contesting arguments of both the sides, and being informed by the learned counsel for the RBI that the complaints by the petitioners in both the cases before the Ombudsman has been rejected only because it was premature and that liberty is still available and open to them to take the grievance before the Ombudsman as an alternate remedy. As regards the question of bringing the respondent/Bank within the ambit and scope of Article 226, the settled law reflects that the same is possible only if there is a violation of any Rule or Regulation of the RBI or the State requiring such Bank/public Financial Institution to act in a particular way or desist from acting in a particular way and the Bank violates the same. In such a situation, undoubtedly the question of maintainability would be in favor of the petitioners, but the question of entertainability would still have to be looked into whether it is so necessary to entertain the writ petition even in the presence of alternate remedy. However, in this case, the petitioners have not been able to demonstrate the violation of any of the Rules, Regulation, Directives Guidelines of the RBI in order to to sustain this petition even in the presence of an alternative remedy.
Signature Not Verified Signed by: PANKAJ NAGLE Signing time: 8/14/2025 2:40:52 PMNEUTRAL CITATION NO. 2025:MPHC-JBP:33334 20 WP-12094-2025
25. Finally, the petitioners have not been able to demonstrate how the alternate remedy of approaching the Ombudsman, preferring a civil suit for recovery or approaching the Consumer Forum by way of a complaint, is not equally efficacious in order to sustain these petitions before this Court.
26. Therefore, the preliminary objection taken by the respondent/Bank is allowed and this Court holds that in the presence of sufficient alternate remedy available to the petitioners and in the absence of any violation of any Rules, Regulation, Direction and Guidelines of the RBI, these petitions before this Court is not entertainable as the petitioners have failed to demonstrate how the alternate remedy is not equally efficacious.
27. Under the circumstances, these petitions are dismissed on the grounds of lack of entertainability in view of available alternate remedy. However, it goes without saying that such remedy available to the petitioners under the law can still be availed by them, dismissal of these petitions notwithstanding. The petitions stand disposed of.
(ATUL SREEDHARAN) (DEEPAK KHOT)
JUDGE JUDGE
pn
Signature Not Verified
Signed by: PANKAJ NAGLE
Signing time: 8/14/2025
2:40:52 PM