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TMI Blog2020 (8) TMI 881X X X X Extracts X X X X X X X X Extracts X X X X ..... s 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. - W.A. No. 1018 of 2020 - - - Dated:- 11-8-2020 - S. Manikumar and S.P. Chaly, JJ. For Appellant: B.J. John Prakash, Adv. For Respondents: Surin George Ipe, Sr. G.P. and K.P. Sujesh Kumar, SC JUDGMENT S. Manikumar, J. 1. Brief facts leading to this appeal are that the appellant is an Engineering Contractor and duly registered as a MSME service provider. The appellant is also a partners ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d upto 15.4.2020 and thereafter, upto 30.6.2020 vide G.O. (Rt) No. 510/2020/PWD dated 8.6.2020, due to the lockdown imposed by Central Government, in order to combat COVID 19 pandemic. 4. However, despite repeated requests made by the appellant, the respondent bank though initially agreed to issue the Solvency Certificate, later issued Ext. P6 letter, declining to issue the Solvency Certificate, alleging that the appellant's account was classified as NPA. It is submitted by the appellant that the respondent bank has acted in an arbitrary manner and without any application of mind, refused to issue the solvency certificate, despite incurring no liability by the appellant. 5. It is submitted that the appellant being a Government works contractor is entitled to his livelihood, which could be secured only through renewal of his license, as mandated by the State Government. Non issue of the Solvency Certificate is clearly, a means to stifle the very livelihood of the appellant and hundreds of employees working under him. A Solvency Certificate in the financial world is a proof of solvency, which only means that the person's assets are more than his liabilities. A bank may ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ounts which have been classified as NPA. In the instant case, appellant had been regularly paying interest due and carrying out the transactions, through his account till January, 2020. The account of the appellant is active, and dues are being regularly paid by the appellant, which according to the petitioner is seen from Ext. P10 statement. 10. As per the directions contained in the Master Circular dated 1.7.2015 on income recognition, asset classification etc. issued by the Reserve Bank of India, classification of the appellant's account as NPA is erroneous. Ext. P11 clearly defines assets that are to be classified as NPA. It is the contention of the learned counsel for the appellant, that the appellant's account as seen from Ext. P10 does not qualify to be classified as NPA. Hence, the entire action of the respondent bank is discriminatory. The issue of a solvency certificate is a discretion that is vested in the respondent bank. 11. It is the case of the appellant that the account of the partnership firm, in which the appellant is a partner has been classified as NPA pursuant to which, the appellant's account has been arbitrarily classified as NPA. The appell ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... certificate. 12. Being aggrieved, instant writ appeal is filed. 15. Adverting to the pleadings and submissions, writ court, vide judgment in W.P.(C) No. 12774 of 2020 dated 23.7.2020 dismissed the writ petition thus: 5. The learned counsel for the petitioner places reliance on the decisions of the Apex Court in Binny Ltd. Anr. v. V. Sadasivan Ors. (2005) 6 SCC 657], in Central Bank of India v. Ravindra and Ors. [(2002) 1 SCC 367] and of the Madhya Pradesh High Court in Pt. Girija Shankar Sharma v. Collector, Hoshangabad [AIR 1974 MP 83]. It is contended that the decision in Sagar Thomas's case was issued in the factual backdrop where a service dispute was sought to be raised in a writ petition by an employee of the Federal Bank and it was in the said circumstances that the Apex Court held that a private company carrying on banking business as a scheduled bank cannot be termed to be an institution carrying on any statutory or public duty and that as such a writ petition is not maintainable. It is contended that the rules and conditions for registration of contractors as contained in the Government Order dated 17.7.2013 makes it incumbent on contractors who requir ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... RBI, the Banking Ombudsman or any other authority empowered to consider the factual aspects of such a complaint. The petitioner has directly approached this Court seeking the setting aside of a decision taken by the Bank not to issue the solvency certificate and seeks a reconsideration of the matter on the basis of the RBI guidelines. Having considered the contentions advanced and having given anxious consideration to the decisions relied on, I am of the opinion that the prayers as sought for cannot be granted since the 2nd respondent is not 'State' under Article 12 and is not entrusted with any public duty in the matter of its commercial banking operations. The writ petition therefore fails and the same is accordingly, dismissed. 16. As argued before the writ court, Mr. John Prakash. B.J., learned counsel for the appellant, made an attempt to distinguish Federal Bank Ltd. v. Sagar Thomas and others reported in (2003) 10 SCC 733 and contended that in the said case was a service dispute between an employee and bank, and that the decision in Sagar Thomas's case cannot be applied to the case on hand, where the bank as per clause 1906.1 in G.O. (MS) No. 59/2013/P ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... An individual or firm desirous of registering directly as a contractor in the Public Works Department to any category shall produce Solvency Certificate from a nationalized/scheduled bank to prove his financial capability for investing money up to the limits detailed below. A Capability Certificate issued by a nationalized/scheduled bank for the same limits shall be produced for up gradation of category of registration or renewal of registration. 22. Contention of the learned counsel for the appellant is that it is the Revenue Department which has to issue the Solvency Certificate. If the Government had relegated the power of issuance of Solvency Certificate to the banks, it is for the appellant to challenge the same, if he desirous to do so. But the facts remains that as per the G.O. (MS) No. 59/2013/PWD dated 17.7.2013 the appellant has to produce a Solvency Certificate from the bank, and accordingly, the request made has been rejected by the bank. 23. Though learned counsel for the appellant has raised a contention that on the facts and circumstances of the case, whether the account of the appellant can be declared as NPA or not, we are not inclined to delve into the same ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lector therein, had discharged his duties, no matter, whether he has governed by administrative instructions or not. In Pt. Girija Shankar Sharma's case, the Hon'ble Madhya Pradesh High Court held thus: 5. It is no doubt true that grant of a solvency certificate is not regulated by any statutory provision but a Government Officer is expected to exercise his administrative functions bona fide with a fair mind. If he acts arbitrarily and abuses his administrative powers to the prejudice of a party, his action is open to challenge by the party adversely affected on the ground that it is discriminatory. The discrimination in such cases arises out of malice or personal bias and as such it offends Article 14 of the Constitution of India. 6. Whenever a discretion is vested in a public body or other authority, the discretion must be exercised fairly and honestly with due regard to the purpose for which it is vested and not arbitrarily with an ulterior purpose. In Susannah Sharp v. Wakefield, 1891 AC 173, Lord Halsbury L.C. observed as under while dealing with the exercise of discretion by Magistrates in the matter of grant of licences under the Licensing Act: An extensive ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n attempt to distinguish Sagar Thomas's case, on the ground that, in the context of a challenge to the termination of services of an employee, the Hon'ble Apex Court dismissed the challenge and that therefore the said judgment is not applicable to the proposition that a writ against a bank is not maintainable and further contended that the bank is performing a public duty, we are not in agreement with the contentions that, as regards the nature of duty performed by the bank, the Hon'ble Supreme Court has categorically held that, the bank does not perform any sovereign function nor does it exercise any authority over a third person. Hon'ble Supreme Court further held that the nature of the activity of the bank is that of a commercial undertaking which receives deposits from the individuals and advances loans and performs other ancillary monetary transactions. 32. In Binny Limited and another v. Sadasivan and others reported in (2005) 6 SCC 657, the challenge was to a clause 8 in an agreement read with the termination order challenged on the grounds that it is violative of Section 23 of the Indian Contracts Act, 1872 and Article 21 of the Constitution of India. Bes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. We are unable to perceive any public law element in the termination of the employees by the appellant in Civil Appeal No. 1976 of 1998 and the remedy available to the respondents is to seek redressal of their grievance in civil law or under the labour law enactments especially in view of the disputed questions involved as regards the status of employees and other matters. So also, in the civil appeal arising out of SLP(Civil) No. 6016 of 2002, the writ petition has been rightly dismissed by the High Court. We see no merit in the contention advanced by the appellant therein. The High Court rightly held that there is no public law element and the remedy open to the appellant is to seek appropriate relief other than judicial review of the action taken by the respondent company. In the result, we set aside the declaration ord ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that deep and pervasive control is one of the distinguishing features of State or other authority within the meaning of Article 12. what is meant is deep and pervasive financial control and not strict and severe statutory restriction. .................................................................................................... .................................................................................................... 12. In the result, we agree with the learned single judge that the two scheduled banks, the Catholic Syrian Bank Ltd., and the South Indian Bank Ltd., are not amenable to the writ jurisdiction under Article 226 of the Constitution as they are not other authorities within the meaning of Article 12. The writ petitions are not maintainable and they were rightly dismissed. 35. In Mathew Ignitious C. v. Catholic Syrian Bank Limited reported in 2020 (1) KLJ 132, an employee challenged the order of transfer, issued by the bank. Contention was raised that employees of the bank are dealing with public money and hence the duty discharged by them are public duties and therefore bank is amendable to writ jurisdiction. After considering various de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... there is no control by the Government over the Respondent in the manner mentioned above, we have no doubt in our mind that the Respondent cannot be said to be falling within the expression 'State' under Article 12 of the Constitution of India. 9. The question that remains to be answered is whether the Writ Petition is maintainable against the Respondent on the ground that it discharges public duty. This Court in Andi Mukta Sadguru S. M. V. S. S. J. M.S.T. and Ors. v. V.R. Rudani and Ors. (supra) held The term 'authority' used in Article 226 of the Constitution of India, must receive a liberal meaning unlike the term other authorities 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 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 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... na (supra), this Court observed that the Respondent therein would not be amenable to Writ jurisdiction under Article 226 of the Constitution of India, as the activities were voluntarily undertaken by the Respondents and there was no obligation to discharge certain activities which were statutory or of public character. Reference was made to the Federal Bank case wherein it was held that the Writ Petition was not maintainable under Article 226 of the Constitution of India in spite of the regulatory regime of the Banking Regulation Act and the other statutes being in operation. The relevant questions, according to this Court in K.K. Saksena (supra), to be answered for the purpose of deciding whether a Writ Petition is maintainable under Article 226 are: a) Whether a private body which is a non-governmental organization partakes the nature of public duty or State action? b) Whether there is any public element in the discharge of its functions? c) Whether there is any positive obligation of a public nature in the discharge of its functions? d) Whether the activities undertaken by the body are voluntary, which many a non-governmental organization perform? 14. The Responde ..... X X X X Extracts X X X X X X X X Extracts X X X X
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