A private company does not qualify as a 'State' under Article 12 of the Constitution and is not subject to writ jurisdiction unless it performs a public duty.

ORDER

1. Delay condoned.

2. The High Court in its impugned order has observed in para 5 as under:-

“5. While the Court examined the appeals and considered the controversy raised in the petitions, a conspicuous aspect surfaced that the petitions were filed against the Company named Muthoot Finance Limited. Admittedly, the respondent – Company is a Company registered under the Companies Act, 1956. It does not answer the definition of “State” within meaning of Article 12 of the Constitution. Nor the transaction of loan by pledging gold between the petitioner and the respondent could be said to be involving any public function or could be said to be in the public realm. Also the Company is not discharging any function which has the trapping of sovereign function. Respondent – Company is a Private Company registered under the law. It is not a”State”.

5.1 Once the above position is clear, the writ petitions would not lie against the respondent – Company. Learned Single Judge could not have, therefore, entertained the petitions on that ground alone.

5.2 Noticeably, learned Single Judge was aware of the said aspect that the respondent – Company did not have the status of the”State” under Article 12 of the Constitution. What was reasoned by the learned Single Judge to entertain the petitions notwithstanding the aforesaid aspect was that, since the financier had acted contrary to some interim order, the petitions merited entertainment. The Court does not endorse to the said view and to make the petitions maintainable on the said ground

5.3 The following was observed by learned Single Judge,”Since on this fact the financier has acted contrary to the interim order, the petition merited entertainment notwithstanding the fact that the respondent is a private financier and would not completely answer its status as being a State under Article 12 of the Constitution of India who performs public functions and loan is granted under the statutory requirement, as enunciated by Reserve Bank of India.

On all these factors, the petitions are entertained. The amount of Rs.24,39,085/- is in deposit before this Court.”

5.4 Thus, it is clear that though the learned Single Judge was well aware that the respondent – Company did not fall within the purview of the ‘state’ or its instrumentality under Article 12 of the Constitution, he proceeded to entertain the petitions and passed the order. The party-in-person submitted that it was a COVID-19 time when she approached the High Court by way of petitions, therefore, they ought to have been entertained. The Court is not impressed with the submission.

5.5 The remedy for the petitioner may be to institute the civil suit and to seek appropriate relief. It was further pointed out by learned advocate for the appellant that the loan agreement between the Company and the petitioner contains an arbitration clause. The loan agreement figures on record (page No.88 onwards) which is found to be containing arbitration clause. Paragraph No.6 (page No.100) of the loan agreement is the arbitration clause.”

3. The Division Bench of the High Court is right in taking the view that Muthoot Finance Ltd. is not a”State” within the meaning of Article 12 of the Constitution and therefore not amenable to writ jurisdiction of the High Court under Article 226 of Constitution.

4. The learned counsel appearing for the petitioner would submit that although the Finance Company may not be strictly falling within the ambit of State yet being a non-banking financial institution is governed by the rules and regulations framed by the RBI and if the statutory rules and regulations framed by the RBI are breached by a non-finance banking company then as a statutory authority such finance company is amenable to writ jurisdiction.

5. We are afraid the position of law is otherwise.

6. In the case of LIC of India v. Escorts Ltd. reported in AIR 1986 SC 1370, it was contended before this Court that the Life Insurance Corporation was an instrumentality of the State