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TMI Blog2021 (7) TMI 1457X X X X Extracts X X X X X X X X Extracts X X X X ..... tainability of the writ against a private person or private legal entity is concerned, the legal position is no more res integra. There are numerous judgments of the Hon'ble Supreme Court and various High Courts holding that the issuance of writ cannot be denied merely because it is sought to be issued against a private person or private entity. Therefore, this Court does not wish to open up any fresh vista on the rudimentary understanding of the progressive expansion of public law jurisdiction in matters where the Court finds interplay of private interest and public duty. It is axiomatic that writ would lie against private person or private entity in certain circumstances scripted in various decisions of the Hon'ble Supreme Court and High Courts from time to time. The benefit of moratorium as envisaged in Reserve Bank of India Circulars is not available to the petitioner at all is the case of the 4th respondent. It was further argued that the grant of benefit of the moratorium in this case would not arise even otherwise, as the defaults in discharge of the loan occurred several years before the pandemic crisis which led to the Master Restructuring Agreement in 2018 and the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of funds, the definition of lenders as stated in the clarification letter dated 16.06.2020, the terms of MRA dated 26.07.2018 etc. - even assuming the Circulars of RBI need to be implemented across the spectrum, regardless of the nature of defaults by the defaulting party, merely because the 4th respondent has not complied with the circulars, can that failure alone provide a door way to the petitioner to invoke the extraordinary jurisdiction of this Court in the realm of public law remedy? The answer may have to be in the negative. It cannot be in dispute that the RBI circular is regulatory in nature for ensuring monetary stability across the country. It is again not in dispute that every financial institution is bound to follow the directives of the Reserve Bank of India issued from time to time for maintaining fiscal discipline. The very entitlement of the benefit of moratorium is being questioned seriously and this Court is also prima facie of the view that there appears to be substantial force in the submission made on behalf of the 4th respondent in this regard. Therefore, the applicability of Reserve Bank of India circular itself being an unsure case of the petitioner, the q ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... porated under the Companies Act, 1956 and is an Asset Reconstruction Company, hereinafter referred to as 'EARC'. The letter dated 30.04.2021, which is impugned in the writ petition, is a fall out of default committed by the petitioner Company towards discharge of the debts forcing the 4th respondent EARC, which company has been assigned the debts due to 9 Initial Lenders under various Agreements between July, 2015 and September, 2016. 2. The petitioner herein is one of the principal promoters of the 1st respondent Company, namely Karaikal Port Trust Limited. Originally, the 2nd respondent, the Government of Puducherry executed a Concession Agreement for the development of Karaikal Port Trust on 25.01.2006 whereby, the petitioner was granted Concession on a public private partnership of BOT (Building, Operate, Transfer) basis for developing and operating Greenfield Port in Union Territory of Puducherry. The term of Concession Agreement initially is stated to be for a period of 30 years which commenced from 01.06.2009 and subsequently on 06.11.2006, all the rights/interest, commitments, responsibilities and obligations were transferred from the petitioner to the 1st responden ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ening the petitioner that they would be forced to revoke the restructuring agreement if the entire debts running to Rs. 19,95,95,17,808/- was not discharged in seven days. According to the petitioner, the 4th respondent, being an Asset Restructuring Company, which stepped into the shoes of the initial lenders is bound to follow the circular issued by the Reserve Bank of India, the 5th respondent herein, in order to ameliorate the adverse effects impacted on all business due to the onslaught of the corona virus. 6. Further, the petitioner case is that the impugned action of the 4th respondent amounted to throttling the Port activities of the 1st respondent which would have far reaching impact on the economy of the Region. The Port activities are meant to cater to the general public needs and if the activities are crippled or allowed to suffer, it will have irreparable adverse impact on public interest. Therefore, being aggrieved by the letter dated 30.04.2021 of the 4th respondent, the petitioner herein as a promoter and guarantor of the 1st respondent Company, has come forward with this writ petition assailing the action of the 4th respondent by invoking the Constitutional jurisdic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nstruction company shall on such acquisition, be deemed to be the lender and all the rights of such bank or financial institution shall vest in such company in relation to such financial assets. According to the learned Senior Counsel, once the reconstruction company deemed to be a lender under SARFAESI Act, it is bound to follow the Reserve Bank of India regulations issued from time to time and in such event, the moratorium circular issued by the Reserve Bank of India on 27.03.2020 and on 23.05.2020 are to be followed before taking any coercive action by the 4th respondent against the writ petitioner. iii) Thirdly, the unjust coercive action, if it is pursued vigorously pursuant to the impugned letter, it would only result in far reaching adverse implications on the financial stability and economy of the Region and such consequence would inevitably and gravely undermine public interest at large. This is more particularly so, when the Concession Agreement originally entered into between the 2nd respondent Government and the petitioner dated 21.01.2006 was to last for a period of 30 years and 18 years more left for the contract to conclude. In such situation, failure on the part of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... against a private person or private body, alleging infringement of a fundamental right or legal right, if (i) the private person or private body against whom the grievance is made, does not discharge any public duty or perform any public function; or (ii) the act complained of is by a private person or private body, not in the course of performance of a public duty or a public function (even though such a private person or private body may at other times or in other capacities may exercise public duties or perform public functions). In a nutshell, a writ petition can be maintained against a private individual or a private body, if the grievance is against the action of such private person or body, in exercise of a public duty or performance of a public function, and not otherwise. 11. A public duty is one in the discharge of which the public i.e., the community at large is interested, as affecting their legal rights and liabilities. Of course, public or community does not necessarily or always mean all the citizens of the Country or the State, but may also refer to a defined class of citizens. A duty will not be a public duty if it is to be performed to the benefit of a specified p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ture of prerogative writs as understood in England; but the scope of those writs also is widened by the use of the expression 'nature', for the said expression does not equate the writs that can be issued in India with those in England, but only draws an analogy from them. That apart, High Courts can also issue directions, orders or writs other than the prerogative writs. It enables the High Court to mould the reliefs to meet the peculiar and complicated requirements of this country. Any attempt to equate the scope of the power of the High Court under Article 226 of the Constitution with that of the English courts to issue prerogative writs is to introduce the unnecessary procedural restrictions grown over the years in a comparatively small country like England with a unitary from of Government into a vast country like India functioning under a federal structure. Such a construction defeats the purpose of the article itself. 10. The writ of mandamus lies to secure the performance of a public or a statutory duty. The prerogative remedy of mandamus has long provided the normal means of enforcing the performance of public duties by public authorities. Originally, the writ of m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... use 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 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 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 they are being discharged by a purely private authority. A body is performing a public function when it seeks to achieve some colle ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... earned Senior Counsel, however would concede that the Hon'ble Supreme Court had ultimately found that the subject matter of Civil Appeal would not attract any public element and the dismissal of the writ petition on the ground of maintainability was eventually upheld. (3) In MANU/SC/1351/2009 Civil Appeal Nos. 4970 to 4971 of 2009 dated 31.07.2009 (Sardar Associates and Ors. Vs. Punjab and Sind Bank and Ors.), the learned Senior Counsel in extenso relied on the submissions, discussions and observations in paragraph Nos. 12, 15, 16, 36, 37, 40, 41 46, which are extracted hereunder: 12. Dr. Abhishek Manu Singhvi, learned senior counsel appearing on behalf of the appellants would contend that the scheme in relation to one time settlement having been issued by the Reserve Bank of India in exercise of its statutory power conferred upon it under Section 21 of the Banking Regulation Act, 1949 (for short the 1949 Act ), the impugned judgment cannot be sustained. The learned counsel in this behalf has furthermore drawn our attention to various correspondences exchanged by and between the parties to urge that the respondent-Bank entertained the said application asking for proposal from t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ven to it under this section. 16. A bare perusal of the aforementioned provision would clearly show that the Reserve Bank of India is entitled to formulate the policies which the banking companies are bound to follow. Sub-section (3) of Section 21 of the 1949 Act clearly mandates that every banking company shall be bound to comply with the directions given to it in terms thereof. Section 35A of the 1949 Act, which was inserted by the Banking Companies (Amendment) Act, 1956, empowers the Reserve Bank to issue directions inter alia in the interest of banking policy. Section 36 of the 1949 Act also provides for further powers and functions of the Reserve Bank of India; clause (d) of Sub-section (1) whereof reads as under: 36. Further powers and functions of Reserve Bank-(1) The Reserve Bank may- (a) *** *** *** (b) *** *** *** (c) *** *** *** (d) at any time, if it is satisfied that in the public interest or in the interest of banking policy or for preventing the affairs of the banking company being conducted in a manner detrimental to the interests of the banking company or its depositors it is necessary so to do, by order in writing and on such terms and conditions as may be specifi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng directions/circulars from time to time which, inter alia, deal with the rate of interest which can be charged and the periods at the end of which rests can be struck down, interest calculated thereon and charged and capitalised. It should continue to issue such directives. Its circulars shall bind those who fall within the net of such directives. For such transaction which are not squarely governed by such circulars, the RBI directives may be treated as standards for the purpose of deciding whether the interest charged is excessive, usurious or opposed to public policy. 37. Yet again in Corporation Bank v. D.S. Gowda and Another [(1994) 5 SCC 213], this Court held: 17. ...As pointed out earlier, under the Banking Regulation Act wide powers are conferred on the Reserve Bank to enable it to exercise effective control over all banks. Sections 21 and 35-A enable it to issue directives in public interest to regulate the charging of interest on loans or advances made from time to time... .... ... 40. If in terms of the guidelines issued by the Reserve Bank of India a right is created in a borrower, we see no reason as to why a writ of mandamus could not be issued. We would assume, as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... words, if there were indeed any past defaults these seem to have been resolved at least until December 2019. The Petitioners agree that the amounts under the repayment schedule due on 15th January 2020 and again on 15th February 2020 were not paid. They accept that those two defaults did occur. The default amounts have not been paid until now. That, too, is undisputed. Now the consequences under the respective and applicable RBI circulars and notifications is that if payment is not made and the accounts are not regularised within 90 days of the date of default then the borrower's account gets classified as an NPA. Other consequences automatically follow. These include consequences to directors, associated companies, affiliates etc. The 90-day period in respect of 15th January 2020 default would take us to 15th April 2020. The 90-day period for the 15th February 2020 default would take us to 15th May 2020. 4. In the meantime, there has occurred this global coronavirus or Covid-19 pandemic. Many states, cities and countries have declared lockdowns for various durations and of varying degrees. In India itself there has been a national lockdown. This is presently in force. Whether ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... writ would not lie to enforce purely private law rights. Even if a body is performing a public duty and is amenable to writ jurisdiction, all its decisions would not be subject to judicial review. Contractual duties are enforceable as matters of private law by ordinary contractual remedies such as damages, injunction, specific performance and declaration. Before issuing any writ, particularly writ of mandamus, the Court has to satisfy that action of such authority, is in the domain of public law as distinguished from private law. For a function to be of a public character, the function must be closely related to functions performed by the State in its sovereign capacity. A writ of mandamus or the remedy under Article 226 is a public law remedy and is not generally available as a remedy against private wrongs. Mandamus is limited to enforcement of public duty. 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 statutory or otherwise, and the source of such power is immaterial, but there must be the public law element ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ant consequences. The question of maintainability is kept at large for an appropriate date. In the above case, the Bombay High Court has held that the writ petition was maintainable against a Private Bank, particularly, in consideration of the moratorium benefits extended during the period of the present pandemic crisis. After elaborate discussion, the learned Judge of the Bombay High Court has held that the Mandamus could be issued to a Private Bank and would also direct the Private Bank to reckon the moratorium period for the purpose of readjustment of the repayment schedule. The learned Senior counsel would state that in similar circumstances, in this case also, such a direction could be issued to the 4th respondent and in that view of the matter, the writ petition cannot be stated to be not maintainable at all. (5) In (Velankani Information Systems Limited rep. by its Managing Director, Kiron D. Shan vs. Secretary, Ministry of Home Affairs, Government of India and Ors.), the learned Senior Counsel would draw the attention of this Court to paragraphs Nos. 7.5, 7.6, 19, 19.1, 19.2, 19.3, 19.4.19.5 to 19.9, 20, 20.1, 20.2 20.19, which are extracted hereunder: 7. ..... 7.5. It is f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at even a purely private body, where the State has no control over its internal affairs, would be amenable to the jurisdiction of the High Court under Article 226 of the Constitution, for issuance of a writ of mandamus. Provided, of course, the private body is performing public functions which are normally expected to be performed by the State Authorities. 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 Mukta 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. 700701. 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 225 are, therefore, not to be confined only to statutory authoritie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not only restricted to taking of a pound of flesh, but such taking of the flesh would kill the Petitioner inasmuch as non-payment of dues to Respondent No. 7 would automatically result in the Petitioner's account being treated as an NPA. 19.6. The Circular issued by the RBI has to be implemented in its true letter and spirit. No technical defences or objections could be raised by the Banks which would come in the way of achieving the objectives of the Circular dated 27.03.2020 issued by the RBI inasmuch as the aim and objects of the Circular being to keep the economy and businesses running. The actions of Respondents 5 to 7 would have the effect of closing down the business of the Petitioner, which in today's economic condition would affect not only the Petitioner but also the economy as a whole. 19.7. The Policy is applicable even to the LRD loan and the loan amounts having been obtained by the Petitioner for the purposes of its business which is similar to that, as available under a term loan or a working capital loan. 19.8. As per the Board approved Policy produced by the Respondent No. 4, a moratorium is applicable to all retail loan customers who pay a fixed/structured ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... anks, has a public duty to follow RBI Circular and it cannot be gainsaid by the 4th respondent that the transaction is purely governed by Private Agreements on a private domain and therefore, no public element is involved and resist the writ petition on the ground of its maintainability. He would finally add that in an extraordinary situation like the present one, call for extraordinary, heightened remedy, in order to prevent miscarriage of justice and also to protect public interest, in the process. 13. Mr. P.H. Aravind Pandian, learned Senior Counsel appearing for the first respondent Company would submit that the writ petition is maintainable as the Courts have consistently held that writs can be issued against private entities also in certain circumstances. According to him, the first respondent handles more than 2000 ships every year and he would draw reference to the major customers of the Port are IL FS, TANGEDCO, CPCL, TNPL, IFFCO, IPL, JSW, Ramco Cement, Chettinad Cement, India Cement, Dalmia Cement, Chemplast Sanmar etc. 14. According to him, more than 80 Million tonnes of Cargo has been handled by the Port annually comprising coal, iron ore or fertilizers, limestone, cem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tatute or at any rate, definitely bound by the provisions of the Act and also further bound by the Reserve Bank of India directives. In the light of the same, it may not be laid down as a broad proposition that under no circumstances, the actions of such a party as the 1st respondent-ARCIL can be called in question before a writ Court. It is one thing to say that the Writ Petition itself is not maintainable and it is yet another thing to say that the power of judicial review not to be exercised inasmuch as a lis would fall within the realm of contractual field. This Court makes it clear that these are two different aspects altogether. When the governance of the statutory flavour on the operation of the actions and activities of the 1st respondent-ARCIL cannot be totally ruled out, then such actions to be in accordance with such provisions, guidelines or the rules and these infractions or violations, if any-may be just an irregularity or may be a grave illegality touching the very root of the transaction by virtue of which the action may be vitiated, such actions not to be arbitrary and to be rational and reasonable and not to be violative of Article 14 of the Constitution of India. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inning from Rajasthan State Electricity Board v. Mohan Lal [(1967) 3 SCR 377], Ajay Hasia v. Khalid Mujib Sehravardi [(1981) 1 SCC 722] and other decisions including a Seven-Judge Bench decision of this Court in Pradeep Kumar Biswas v. Indian Institute of Chemical Biology [(2002) 5 SCC 111]. 9. We may also notice that P.K. Ramachandra Iyer and Others v. Union of India and Others [(1984) 2 SCC 141] wherein Indian Council for Agricultural Research (ICAR) was held to be a State within the meaning of Article 12 of the Constitution of India, was distinguished in Chander Mohan Khanna v. National Council of Educational Research and Training. However, Chander Mohan Khanna (supra) was overruled in Pradeep Kumar Biswas (supra) to the extent it followed the decision in Sabhajit Tewary v. Union of India [(1975) 1 SCC 485]. 10. In Mysore Paper Mills Ltd. v. Mysore Paper Mills Officers Association and Another [(2002) 2 SCC 167] Mysore Paper Mills Ltd. was held to be a State within the meaning of Article 12 of the Constitution of India as it was substantially financed and controlled by the Government, managed by the Board of Directors nominated and removable at the instance of the Government and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ance of the State is so much as to meet almost entire expenditure of the Corporation, it would afford some indication of the Corporation being impregnated with Governmental character. (SCC p. 508, para 15). (3) It may also be a relevant factor ... whether the Corporation enjoys monopoly status which is State conferred or State protected. (SCC p. 508, para 15). (4) Existence of deep and pervasive State control may afford an indication that the Corporation is a State agency or instrumentality. (SCC p. 508, para 15). (5) If the functions of the Corporation are of public importance and closely related to Governmental functions, it would be a relevant factor in classifying the Corporation as an instrumentality or agency of Government. (SCC p. 509, para 16). (6) Specifically, if a Department of Government is transferred to a Corporation, it would be a strong factor supportive of this inference of the Corporation being an instrumentality or agency of Government. (SCC p. 510, para 18). 14. It was held in Pradeep Kumar Biswas (supra): 40. The picture that ultimately emerges is that the tests formulated in Ajay Hasia are not a rigid set of principles so that if a body falls within any one of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he purpose of ascertaining as to whether any of them fulfils the requirements of law therefor or not. 80. The concept that all public sector undertakings incorporated under the Companies Act or the Societies Registration Act or any other Act for answering the description of State must be financed by the Central Government and be under its deep and pervasive control has in the past three decades undergone a sea change. The thrust now is not upon the composition of the body but the duties and functions performed by it. The primary question which is required to be posed is whether the body in question exercises public function. 110. Tests evolved by the Courts have, thus, been expanded from time to time and applied having regard to the factual matrix obtaining in each case. Development in this branch of law as in others has always found differences. Development of law had never been an easy task and probably would never be. The majority despite holding that BCC1 is not a v State within the meaning of Article 12 of the Constitution of India opined that a writ petition under Article 226 of the Constitution of India against it would be maintainable. (18) We take notice of the fact that i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... point which is ostensibly a point of law is required to be substantiated by fact, the party raising the point, if he is a writ petitioner, must plead and prove such facts by evidence which must appear from the writ petition. If the facts are not pleaded or the evidence in support of such facts is not annexed to the writ petition, the Court will not entertain the point. In this context, it would be expedient to rely upon a judgment of the Honourable Supreme Court in the case of Bharat Singh v. State of Haryana AIR 1988 SC 2181 where in paragraph 13 the Honourable Supreme Court has observed as under: In our opinion, when a point which is ostensibly a point of law is required to be substantiated by facts, the party raising the point, if he is the writ petitioner, must plead and prove such facts by evidence which must appear from the writ petition and if he is the respondent, from the counter-affidavit. If the facts are not pleaded or the evidence in support of such facts is not annexed to the writ petition or to the counter, affidavit, as the case may be, the Court will not entertain the point. In this context, it will not be out of place to point out that in this regard there is a di ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... opportunity to the petitioner for stabilising their business MRA was put in place. According to the learned Senior counsel, the dispute arising out of letter issued by the 4th respondent dated 30.04.2021 is entirely a private dispute governed by the contractual agreement dictated commercial consideration. While enforcing the contractual Clauses and seeking to recover the huge outstanding amounts from the petitioner, there is no public duty cast upon the lender nor any public interest is being undermined in the bargain. The simple and normal dispute between the borrower and the lender governed by the contractual terms and agreements on the private domain relationship is being unfortunately projected for collateral reasons as if the action taken by the 4th respondent amounted to affecting public interest and hence, the writ petition is maintainable. 18. The learned Senior counsel would submit that various contentions of the petitioner regarding the maintainability of the writ petition cannot be countenanced both in law and on facts. Firstly, the Reserve Bank of India's Circular is only a regulatory in nature and secondly, the Circular, even if it is to be followed mandatorily is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ated the issuance of impugned notice to the petitioner occurred after October, 2020 consecutively. As a matter of fact, the default period fell outside the moratorium period contemplated in the RBI circular and therefore, the emphasis placed on the RBI Circulars as a ruse to maintain the writ petition is devoid of any merit. The present attempt by the petitioner to invoke the public law remedy where no public function or public character attached to the relationship nor any public duty is imposed on the 4th respondent to make it amenable to the writ jurisdiction of this Court, is intended to scuttle the legitimate action of the 4th respondent seeking to recover a huge outstanding debts of more than 1900 Crores in terms of the bilateral agreements. 21. According to the learned senior counsel Even assuming there was a failure to follow any guidelines issued by the RBI, that is a matter of adjudication before private law remedies as the disputes of this nature would involve enquiry into facts of competing claims and such exercise is certainly not possible before this Court under Article 226 of Constitution of India. The question whether the petitioner is entitled to the benefit of mor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hose referred to in Clause 17.1 (Non-payment) unless such failure (Where capable of being remedied) is remedied or cured to the satisfaction of the Majority Restructuring Lenders within 60 dates of such failure having occurred. .... 18. RIGHTS UPON DEFAULT 18.1. Acceleration and enforcement of rights On and at any time after the occurrence of an Event of Default, each Restructuring Lender (except as otherwise stated below) may: (a) with notice to the Borrower, declare that all or part of the Facilities (provided by that Restructuring Lender), together with accrued interest, and all other amounts accrued or outstanding under the Restructuring Documents be immediately due and payable; (b) subject to approval of the Majority Restructuring Lenders, direct the enforcement of the Transaction Security with notice to the relevant Obligor which has created that Transaction Security (in accordance and if required under the relevant Security Document); and (c) with notice to a Sponsor or a Personal Guarantor claim the Secured Obligations from the Sponsor or Personal Guarantor (as the case may be) pursuant to the relevant Restated Guarantee; and (d) generally exercise all rights available to t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nies, carrying on banking activity. The banks finance the borrowers on any given rate of interest at a particular time. They advance loans as against securities. Therefore, it is obviously necessary to have regulatory check over such activities in the interest of the company itself, the shareholders, the depositors as well as to maintain the proper financial equilibrium of the national economy. The Banking companies have not been set up for the purposes of building economy of the State on the other hand such private companies have been voluntarily established for their own purposes and interest but their activities are kept under check so that their activities may not go wayward and harm the economy in general. A private banking company with all freedom that it has, has to act in a manner that it may not be in conflict with or against the fiscal policies of the State and for such purposes, guidelines are provided by the Reserve Bank so that a proper fiscal discipline, to conduct its affairs in carrying on its business, is maintained. So as to ensure adherence to such fiscal discipline, if need be, at times even the management of the company can be taken over. Nonetheless, as observ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Other remedies, as may be available, may have to be resorted to. 28. The six factors which have been enumerated in the case of Ajay Hasia (supra) and approved in the later decisions in the case of Ramana (supra) and the seven Judges Bench in the case of Pradeep Kumar Biswas (supra) may be applied to the facts of the present case and see as to those tests apply to the appellant bank or not. As indicated earlier, share capital of the appellant bank is not held at all by the government nor any financial assistance is provided by the State, nothing to say which may meet almost the entire expenditure of the company. The third factor is also not answered since the appellant bank does not enjoy any monopoly status nor it can be said to be an institution having State protection. So far control over the affairs of the appellant bank is concerned, they are managed by the Board of Directors elected by its shareholders. No governmental agency or officer is connected with the affairs of the appellant bank nor anyone of them is a member of the Board of Directors. In the normal functioning of the private banking company there is no participation or interference of the State or its authorities. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the sake of argument even if it may be assumed that one or the other test as provided in the case of Ajay Hasia (supra) may be attracted that by itself would not be sufficient to hold that it is an agency of the State or a company carrying on the functions of public nature. In this connection, observations made in the case of Pradeep Kumar Biswas (supra) quoted earlier would also be relevant. ..... 32. Merely because the Reserve Bank of India lays the banking policy in the interest of the banking system or in the interest of monetary stability or sound economic growth having due regard to the interests of the depositors etc. as provided under Section 5(c)(a) of the Banking Regulation Act does not mean that the private companies carrying on the business of or commercial activity of banking, discharge any public function or public duty. These are all regulatory measures applicable to those carrying on commercial activity in banking and these companies are to act according to these provisions failing which certain consequences follow as indicated in the Act itself. Provision regarding acquisition of a banking company by the Government, it may be pointed out that any private property ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ble against (i) the State (Govt.); (ii) Authority; (iii) a statutory body; (iv) an instrumentality or agency of the State; (v) a company which is financed and owned by the State; (vi) a private body run substantially on State funding; (vii) a private body discharging public duty or positive obligation of public nature (viii) a person or a body under liability to discharge any function under any Statute, to compel it to perform such a statutory function. In such background, on the private banking company, the Supreme Court observed that the banking is a kind of profession and a commercial activity and the primary motive behind it is to earn returns and profits. It works like any other private company in the banking business having no monopoly status. These companies have been voluntarily established for their own purpose and interest but their activities are kept under check so that their activities may not go way ward and harm the economy in general. After discussing the provisions of the Reserve Bank of India Act and Banking Regulation Act, the Supreme Court held that the guidelines provided therein are to maintain proper fiscal discipline and if need arises, the management of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... des above, there exists no pleadings whatsoever to show that either the opposite party No. 1 is a State within the meaning of Article 12 of the Constitution or is under an obligation to discharge any statutory function vis- -vis the grievance raised. Rather Mr. Pal as indicated earlier has fairly submitted that there exists no statutory rule to take care of the grievance of the petitioner. In such background, this Court has no hesitation in coming to a conclusion that this writ petition as laid is not maintainable. Accordingly, the same stands dismissed. However, the petitioner is at liberty to seek appropriate remedy before the appropriate forum as permitted under law, if so advised, for redressal of its grievances. (3) Rajpur Hydro Power Ltd., Vs. PTC India Financial Services Ltd., reported in . The learned Senior counsel referred to Paragraphs 19, 20, 21 29 which are extracted hereunder; 19. In rejoinder, Mr. Malhotra submits that when the writ petition was preferred, action under Section 13(4) of the SARFAESI Act had not yet been initiated, and merely because the same was initiated subsequently, the issue of maintainability of the writ petition cannot be decided on the basis of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and nothing more. Thus, the present writ petition is not maintainable. In this regard, we refer to with advantage to a Single Bench judgment dated 8.5.2017 passed by the Delhi High Court in WP(C) 8031 of 2016 M/s. Rajpur Hydro Power Ltd. and others vs. M/s. PTC India Financial Services Ltd.. After an exhaustive consideration of the law on the subject, it has been held that M/s. PTC India Financial Services Ltd. (supra) is a public limited company and a non-banking financial company notified under the SARFAESI Act and not amenable to writ jurisdiction. (5) Shanthini Vs. GM RBI Others., reported in The learned Senior counsel referred to Paragraph No. 3, which is extracted hereunder; 3. The prayer as it stands in the Writ Petition seeking a direction to the second respondent, who is admittedly a private Housing Finance Company, which is not maintainable to the writ jurisdiction of this Court. Further, no writ will lie against a private organization or establishment. In that view of the matter, the Writ Petition is not maintainable. (6) Vaibhav Samuel Vs. UOI; reported in (2019) 4 RLW 3470. The learned Senior counsel referred to Paragraph No. 8, which is extracted hereunder; 8. In the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... policies, in the interest of the banking system or monetary stability, it does not mean that private companies carrying on business or commercial activity of banking are discharging any public function or public duty. 27. The learned Senior counsel particularly emphasizes the fact that the Hon'ble Supreme Court in the said case had concluded that private company carrying on banking business cannot be termed as carrying on any statutory or public duty and therefore, not amenable to Writ Jurisdiction. The Orissa High Court has also held that a private finance company is not amenable to writ jurisdiction. The Delhi High Court has also held that NBFCs cannot be considered State or any other authority in terms of Article 12 and amenable to writ jurisdiction of the High Court. The Punjab and Haryana High Court has also held that the writ against NBFC is not maintainable and so is Rajasthan High Court. The above decisions have categorically held that Private Financial Institutions cannot termed as an Authority amenable to the writ jurisdiction, merely because their banking activities are regulated by RBI guidelines. 28. The learned Senior Counsel would submit that the facts and the m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d to the maintainability of the writ petition. The issue of maintainability of the writ petition would have to be confined in this case with reference to the relationship of the parties and the dispute arising thereunder and whether such dispute calls for a public remedial action or it must be relegated to the private law remedial recourse. 33. What is challenged in the writ petition is a communication dated 30.04.2021 issued by the 4th respondent, a private Company against the petitioner which is a private Company invoking certain clauses in terms of restructuring agreement of loan dated 26.07.2018(MRA) between the contesting parties. As far as the maintainability of the writ against a private person or private legal entity is concerned, the legal position is no more res integra. There are numerous judgments of the Hon'ble Supreme Court and various High Courts holding that the issuance of writ cannot be denied merely because it is sought to be issued against a private person or private entity. Therefore, this Court does not wish to open up any fresh vista on the rudimentary understanding of the progressive expansion of public law jurisdiction in matters where the Court finds i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re any adverse or coercive action to be initiated, forcing a borrower to come to terms with such action, the Finance Institution is required to take into consideration not only mutual rights and obligations expressed under the agreement but importantly the impact of such action on the economy of the region and the consequent fall out of such as public interest. In this case such consideration is completely absent as it could be seen from the materials and therefore, this Court could step in and issue appropriate command to the 4th respondent for its compliance with public duty. 37. Learned Senior Counsel has also laid emphasis that the entire relationship is centered on the 1st respondent Port operations and any coercive action by the 4th respondent would spell far reaching consequences affecting the interest of the general public in very many ways. When the activities of the Port Trust are sought to be crippled by throttling the petitioner, who is the principal promoter of the 1st respondent, the same would have palpable impact on the Port activities leading to disruption of supply of essential goods and other materials meant for public consumption and use. Apart from that, the le ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and there is no compulsion or mandate for grant of moratorium across the board. In any event, it was submitted that mere non-compliance of the regulatory circulars cannot provide a relief to the petitioner in a public law remedy. 41. The bedrock of the triangular relationship, as between the 1st petitioner and 1st respondent on one hand and the 4th respondent on the other is indisputably a private and commercial consideration with no shred of public element involved in discharge of their mutual obligation and rights among them. The facts narrated supra, would unequivocally demonstrate that the petitioner has been extended loans to the tune of several hundred crores by various Nationalised Banks since 2006 when first concessional agreement was signed on 25.01.2006 and the subsequent agreement on 06.11.2006 between the 1st respondent and the initial lenders, namely consortium of nationalised/private Institutions and in terms of which, the repayments were scheduled and the functioning of the 1st respondent had been governed and monitored by the lending institutions i.e., by initial lenders through the 3rd respondent Indian bank as their Agent. Over a period of time, it appeared that t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g Institutions vis-a-vis their customers or not? The circular dated 27.03.2020 which appeared to be the fulcrum of the petitioner's submission for maintaining the writ petition begins with the preamble that certain regulatory measures had been initiated and announced by the Reserve Bank of India for schedule of payment due to Covid-19 crisis. The circular envisages granting of moratorium that all payments due between March, 2020 and May, 2020 would be shifted by three months extending the period of the payment to August, 2020. The circular, while delineating the policy permitted the financial institutions to consider grant of the benefit of moratorium. The circular also envisages exemption from the benefit in regard to the loan accounts being declared as NPA. In the said circumstances, admittedly individual financial institutions are given a latitude and discretion to take a call in regard to the extension of the moratorium benefit to its borrowers. In which event, the entitlement of the petitioner as to the benefit falls squarely within the contractual frame work as between the 4th respondent and the petitioner herein. When the relationship is founded on the Commercial and the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he legal position that merely because some regulatory measures are issued by the RBI, a private company carrying on banking business cannot be termed as discharging public function or public duty. The succinct observation of the Hon'ble Supreme Court is again extracted hereunder as a pointer to the maintainability issue. 32. Merely because Reserve Bank of India lays the banking policy in the interest of the banking system or in the interest of monetary stability or sound economic growth having due regard to the interests of the depositors etc. as provided under Section 5(c)(a) of the Banking Regulation Act does not mean that the private companies carrying on the business or commercial activity of banking, discharge any public function or public duty. These are all regulatory measures applicable to those carrying on commercial activity in banking and these companies are to act according to those provisions failing which certain consequences follow as indicated in the Act itself. 47. In line with the above ruling, as far as the present case on hand is concerned, merely because circulars were issued during the pandemic crisis by the Reserve Bank of India it cannot change or transf ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ave 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 . [Ed.: S.A. de Smith, Judicial Review of Administrative Action (4th Edn., Stevens Sons Ltd., London 1980) at p. 540.] 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 above observation was made by the Hon'ble Supreme Court in case of Ramesh Ahluwalia v. State of Punjab (2012(12) SCC 331). 50. Thus public duty becomes enforceable only when there is legal compulsion for its adherence. First of all, in this case, there is no compulsion imposed on the 4th respondent to extend the benefit of moratorium, regardless of the nature of the default and the nature of a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tition maintainable. In fact, it has been submitted on behalf of the 4th respondent that there was no action initiated against the 1st respondent towards crippling of its operations. This Court, even otherwise, is of the view that if any action taken where the loan amounts involved to the tune of several hundreds of crores, there will always be a collateral issues like the present one but that does not mean that the petitioner herein can plead public interest and seek to wriggle out of the contractual imperatives binding upon them. This Court would certainly not countenance such arguments even at the instance of the 1st respondent as it is an attempt by the petitioner to stealthily subserve their private interest behind the facade of public interest citing port activities. 54. In fact, in the affidavit filed in support of the writ petition and also during the course of the oral submission, it was highlighted as to the bonafides of the petitioner in discharge of loan obligation promptly from the commencement of the agreements from 2006 and various loan transactions and the assignments of loans in favour of the 4th respondent, the various payments made and the restructuring of loan a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rsity Press) at page 621, the following opinion is expressed: A distinction which needs to be clarified is that between public duties enforceable by mandamus, which are usually statutory, and duties arising merely from contract. Contractual duties are enforceable as matters of private law by the ordinary contractual remedies, such as damages, injunction, specific performance and declaration. They are not enforceable by mandamus, which in the first place is confined to public duties and secondly is not granted where there are other adequate remedies. This difference is brought out by the relief granted in cases of ultra vires. If for example a minister or a licensing authority acts contrary to the principles of natural justice, certiorari and mandamus are standard remedies. But if a trade union disciplinary committee acts in the same way, these remedies are inapplicable: the rights of its members depend upon their contract of membership, and are to be protected by declaration and injunction, which accordingly are the remedies employed in such cases. 56. In the above decision, the Hon'ble Supreme Court ultimately held that the remedy open for the appellant therein is to seek reme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the borrower has approached the High Court of Bombay by invoking the writ jurisdiction on the ground that the respondent private Bank therein did not follow the circular issued by the Reserve Bank of India dated 27.03.2020 during Covid-19 crisis. The writ petition was entertained and directions were passed. 59. This Court has gone through the judgment but ultimately found that the case was decided on the basis of expediency by the learned Judge and eventhough, he left the principal issue of maintainability of the writ petition in such matters for future adjudication. In fact in paragraph No. 13 of the order, the learned Judge has stated that I do not intend to decide the question of maintainability at this ad-interim stage. I have taken up the matters because of the grave and extreme urgency so that there should not be by 15th April 2020, just a few days hence, an urgency automatic rendering of the petitioners' accounts as NPA and other attendant consequences . In paragraph No. 43, the learned Judge finally held that was a case ordered on the basis of concession and it should not be treated as any precedent. This decision is also not of any significant use for the petitioner t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... challenge to the maintainability of the writ petition. This Court in the course of the judicial discourse found that the decisions against the private entities rendered in the realm of public law remedy, are pertaining to the issue of writ of mandamus, thus, directed the entities to perform a particular public duty imposed on them under a statute or otherwise. But the present case has taken a quantum leap of seeking a Writ of Certiorari to be issued for quashing of the communication of the 4th respondent dated 30.04.2021 in terms of the exercise of right by the lender against the borrower. The prayer further seeks a command from this Court to regulate the contractual relationship between the petitioner and the 4th respondent converting the Constitutional Court to act as a facilitator in the private loan transaction between the parties. 64. A letter by a contracting party to another contracting party invoking the terms of agreement, if it is to be subjected to the writ jurisdiction for its quashment, the power of writ would be needlessly stretched, resulting in protecting one private interest against the other. Such certiorari remedy would certainly not be made available to a privat ..... X X X X Extracts X X X X X X X X Extracts X X X X
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