2020 (3) TMI 301 - HC - Indian Laws

Termination of petitioner - Petitioner sought to refrain ICICI from recovering and/or cancelling the benefits granted to the Petitioner for early retirement. Petitioner sought a declaration to exercise the benefits of stock options - whether the Section 35B(1)(b) of the Act can be said to govern the service conditions of the Petitioner so as to impose a statutory duty on the ICICI bank and whether the petitioner can challenge exercise under writ jurisdiction? HELD THAT - When employments in a private entity is regulated by contracts, the courts do not to exercise the writ jurisdiction. Courts exercise writ jurisdiction when a public law element involved, if the services are governed by a statute. For that purpose the nature of the concerned enactment and its purpose and scope has to be ascertained - The Banking Regulation Act is enacted to supervise and regulate commercial banking. The Act empowers the Reserve Bank to issue directions to the banks, regulate the shareholding and the operations of banks in the interest of banking policy. Part II of the Act deals with banking companies. The Reserve Bank, constituted under the Reserve Bank of India Act, is a Central Bank exercising supervisory and regulatory powers. The Reserve Bank, exercises power under the Act to grant approvals. It issues directions to the banks under the Act in furtherance of economic and banking policy. It is invested with various powers in the interest of depositors, efficient use of deposits and banking resources. The predominant object of conferment of power on the Reserve Bank is the interest of banking policy. Banking companies such as ICICI have the freedom to conduct their affairs; however, Reserve bank ensures that their activities will not affect the economy in general. Section 35B(1)(b) is also enacted with the same object, that is to ensure that the actions of a bank does not have an adverse impact on the banking. Various situations may arise under Section 35B(1)(b) of the Act. For instance, an order returning the proposal of the employer as not being in the interest of the banking system. In this petition, in the context of public law element we are only concerned with fact situation of approval for termination and therefore our discussion on this provision is in this context. When a proposal for termination of employee is received from the employer bank, the Reserve Bank looks at it from the perspective of its impact on general banking - Reserve Bank would be obliged to enter into the factual disputes, examine and construe the contract terms, and comment on the rights and obligations of the employer and employee, their breach and justifications. All this is not clearly not contemplated under by the legislature. Section 35B(1)(b) enacted to examine the situation post termination, that is, its impact on the larger banking interest. The focus of scrutiny under this provision is not the rights of the employee. Section 35B(1)(b) is not a provision enacted to regulate the service conditions between the employer and employee. ICICI is a private body. It is not an instrumentality of the State. It receives no public funding. Service conditions of the Petitioner are not governed by any statute. The dispute raised in this Petition arises from a contract of personal service. The termination of the Petitioner is in the realm of contractual relationship. Since Section 35B(1)(b) does not regulate service conditions , approval for termination under it does not adjudicate the rights of the Petitioner as an employee. Though Section 35B(1)(b) postulates that the termination would not come into effect if there is no prior approval of the Reserve Bank, the cause of action for the Petitioner is the termination by ICICI - merely because the approval under section 35B(1)(b) is questioned, that cannot infuse a public law element in this dispute, which remains a contractual dispute. For the contractual remedies, the Petitioner will have to approach the appropriate forum and not writ jurisdiction. The Writ Petition is dismissed as not maintainable.

Issues Involved:
1. Maintainability of the Writ Petition
2. Public Duty and Statutory Duty of ICICI Bank
3. Applicability of Section 35B(1)(b) of the Banking Regulation Act
4. Jurisdiction under Article 226 of the Constitution of India

Issue-wise Detailed Analysis:

1. Maintainability of the Writ Petition:
The primary issue addressed was whether the Writ Petition was maintainable. The respondents argued that ICICI Bank is a private entity not performing any public duty and, therefore, not subject to writ jurisdiction under Article 226 of the Constitution. The petitioner countered, asserting that the Reserve Bank of India's (RBI) approval for termination under Section 35B(1)(b) of the Banking Regulation Act introduced a statutory element, making the writ jurisdiction applicable. The court concluded that ICICI Bank, being a private entity with no public funding or statutory establishment, is not amenable to writ jurisdiction. The court emphasized that the dispute was purely contractual, arising from the employment relationship governed by private contract terms, and thus not maintainable under writ jurisdiction.

2. Public Duty and Statutory Duty of ICICI Bank:
The petitioner argued that ICICI Bank, by virtue of Section 35B(1)(b) of the Banking Regulation Act, performed a public duty in its employment decisions, which could be enforced through writ jurisdiction. The court analyzed the nature of public duty and statutory obligations, noting that writs can be issued to entities performing public functions or duties. However, the court found that ICICI Bank's employment decisions did not constitute public duty, as the bank is a private entity with no substantial state funding and operates independently of statutory obligations in its employment practices.

3. Applicability of Section 35B(1)(b) of the Banking Regulation Act:
The petitioner claimed that Section 35B(1)(b), which requires RBI's prior approval for the termination of a managing director, governed the employment relationship, thereby introducing a statutory duty. The court clarified that Section 35B(1)(b) is intended to ensure that banking actions do not adversely impact the banking system and depositors, rather than to regulate employment conditions. The RBI's role under this section is to oversee the broader impact on banking policy, not to adjudicate individual employment disputes. Therefore, the court concluded that this provision did not transform the private employment dispute into a public law issue.

4. Jurisdiction under Article 226 of the Constitution of India:
The court examined the scope of Article 226, which allows writs to be issued to various entities, including those performing public duties. However, it reiterated that writ jurisdiction is generally not applicable to private contractual disputes unless a public law element is involved. The court referenced several precedents, emphasizing that writs are not available for enforcing private law rights arising from contractual relationships. It was determined that the petitioner’s dispute with ICICI Bank remained within the realm of private law, and the involvement of Section 35B(1)(b) did not introduce a sufficient public law element to invoke writ jurisdiction.

Conclusion:
The court upheld the respondents' preliminary objection, dismissing the Writ Petition as not maintainable. The judgment emphasized that ICICI Bank, as a private entity, is not subject to writ jurisdiction for employment disputes, and Section 35B(1)(b) of the Banking Regulation Act does not alter the private nature of the employment relationship. The petitioner was advised to seek remedies through appropriate forums for contractual disputes rather than through writ jurisdiction.

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