Kerala High Court Sets Aside Writ Petition Against Private Bank, Declares It Non-Maintainable

In a landmark decision, the Kerala High Court ruled that private banks are not amenable to writ jurisdiction under Article 226, emphasizing the limited scope of writ petitions against non-state entities.

In a significant ruling, the Kerala High Court has set aside a judgment by a Single Judge that entertained a writ petition against South Indian Bank, a private commercial entity. The Division Bench, comprising Justices Sushrut Arvind Dharmadhikari and Syam Kumar V.M., ruled that private banks do not fall under the definition of 'State' as per Article 12 of the Indian Constitution and are generally not subject to writ jurisdiction under Article 226.

The case, Authorised Officer South Indian Bank v. Sheela Francis Parakkal, revolved around the retention of original title deeds by the bank even after the closure of a loan account. The Single Judge had earlier directed the bank to release the title documents and imposed a cost of Rs. 50,000 on the bank, half of which was to be paid to the petitioners and the rest to the Kerala Legal Services Authority.

The appellants, represented by Advocates Shri. Sunil Shanker and others, contended that the writ petition should not have been entertained as the bank was not performing any public function or duty that could be subjected to writ jurisdiction. They cited precedents, including the Supreme Court ruling in Federal Bank Ltd. v. Sagar Thomas, to argue that private banks are not public bodies and thus not amenable to writ jurisdiction.

The Division Bench agreed with the appellants, reiterating that regulatory oversight by the Reserve Bank of India does not convert private banks into public authorities. The Court highlighted that the duties of private banks are limited to their account holders and do not extend to the public at large.

The judgment emphasizes the importance of the "function" test in determining the maintainability of writ petitions against private entities. It clarifies that only entities performing public duties or functions with a statutory obligation may be subject to judicial review under Article 226.

Respondents, represented by Advocates Shri. Praveen K. Joy and others, argued that the prolonged retention of documents violated the fundamental rights of the petitioners, warranting judicial intervention. However, the Court dismissed this argument, stating that the respondents should seek alternative legal remedies.

This ruling reaffirms the legal position that private banks, as non-state actors, are not typically within the purview of writ jurisdiction unless involved in statutory obligations or public functions. The decision aligns with previous judgments, including Mathew Ignitious C. v. Catholic Syrian Bank Limited, which held that scheduled banks registered as companies do not qualify as 'State' under Article 12.

Bottom Line:

Private banks are not "State" under Article 12 of the Constitution of India and are generally not amenable to writ jurisdiction under Article 226, except in specific circumstances involving statutory obligations or public functions.

Statutory provision(s): Constitution of India, Article 12, Article 226, Kerala High Court Act, 1958

Authorised Officer South Indian Bank v. Sheela Francis Parakkal, (Kerala)(DB) : Law Finder Doc Id # 2776369