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2020 (8) TMI 881 - HC - Indian LawsSeeking issuance of Solvency Certificate - appellant's account was classified as NPA or not - power of Revenue Department to issue the Solvency Certificate - HELD THAT - Among other defence, learned counsel for the respondent therein, has raised a preliminary objection that the writ petition is not maintainable, because the grant of solvency certificate is regulated by Government instructions, which are non-statutory. In support of his contention learned counsel for the respondent therein has relied on two decisions of the Hon'ble Supreme Court, the State of Assam v. Ajit Kumar Sharma, in 1964 (10) TMI 104 - SUPREME COURT and G.J. Fernandez v. State of Mysore, 1967 (4) TMI 200 - SUPREME COURT wherein, it was held mere administrative instructions do not confer any right on any member of the public, to ask for a writ against the Government to enforce the same. Question considered by the Hon'ble Madhya Pradesh High Court in Pt. Girija Shankar Sharma's case 1973 (8) TMI 174 - MADHYA PRADESH HIGH COURT was whether a public body enjoined with a public duty has to act fairly, and whether the discretion conferred on such public authority Collector therein, had discharged his duties, no matter, whether he has governed by administrative instructions or not. In Pt. Girija Shankar Sharma's case, it is evident that the exercise of power by the Collector was found to be erroneous and hence the court set aside the order impugned therein. There cannot be any doubt that Collector is exercising a public duty. Question as to whether bank is discharging public duty or not, was not a question raised therein. Said judgment is totally inapposite to the case on hand. It cannot be treated as a precedent to the instant writ petition. The bank is not performing any public duty and hence, writ petition is not maintainable - Appeal dismissed.
Issues Involved:
1. Classification of the appellant's account as Non-Performing Asset (NPA). 2. Issuance of Solvency Certificate by the respondent bank. 3. Maintainability of writ petition against a private bank. 4. Public duty and function of the bank. 5. Fundamental rights under Articles 14 and 19(1)(g) of the Constitution of India. Issue-wise Detailed Analysis: 1. Classification of the Appellant's Account as Non-Performing Asset (NPA): The appellant contended that the classification of his account as NPA was erroneous and discriminatory. The appellant argued that as per the Master Circular dated 1.7.2015 on income recognition and asset classification issued by the Reserve Bank of India (RBI), his account did not qualify to be classified as NPA. The appellant had been regularly paying interest and carrying out transactions through his account till January 2020. Despite this, the respondent bank classified his account as NPA, which the appellant claimed was arbitrary and without any application of mind. 2. Issuance of Solvency Certificate by the Respondent Bank: The appellant, a government works contractor, required a Solvency Certificate to renew his license as mandated by the State Government. Despite repeated requests and assurances from the bank, the respondent bank refused to issue the Solvency Certificate, citing the NPA status of the appellant's account. The appellant argued that the refusal was arbitrary and affected his livelihood and that of his employees. The appellant also highlighted that the bank had previously issued Solvency Certificates to accounts classified as NPA. 3. Maintainability of Writ Petition Against a Private Bank: The core question before the court was whether a writ petition is maintainable against a private bank. The court referred to the Supreme Court's decision in Federal Bank Ltd. v. Sagar Thomas and others, which held that a private bank does not perform any sovereign function nor does it exercise any authority over a third person. The nature of the activity of the bank is that of a commercial undertaking. The court concluded that the bank is not performing a public duty and hence, a writ petition is not maintainable against it. 4. Public Duty and Function of the Bank: The appellant argued that the issuance of a Solvency Certificate is a function of the Revenue Department, and since the Kerala Government mandated that the certificate be obtained from a bank, the bank was performing a public duty. The court, however, held that the bank's activities are commercial in nature and do not constitute a public duty. The court emphasized that a writ of mandamus can only be issued against a private body if it discharges a public function, which was not the case here. 5. Fundamental Rights Under Articles 14 and 19(1)(g) of the Constitution of India: The appellant contended that the refusal to issue the Solvency Certificate violated his fundamental rights under Articles 14 and 19(1)(g) of the Constitution, which guarantee equality before the law and the right to practice any profession or to carry on any occupation, trade, or business. The court, however, did not delve deeply into this argument, as it primarily focused on the maintainability of the writ petition against the bank. Conclusion: The High Court dismissed the writ petition, holding that the bank is not performing any public duty and hence, a writ petition is not maintainable. The court emphasized that the bank's activities are commercial in nature and do not constitute a public function. Consequently, the writ appeal was dismissed, and the appellant was advised to seek redressal through other appropriate forums.
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