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IN THE HIGH COURT OF CALCUTTA
Debangsu Basak, J.
Penguin Agro Products Pvt. Ltd. and Another – Appellants
Versus
Union of India and Others – Respondents
Writ Petition No. 11472 of 2015
Decided On : 02-01-2019
D.N. Sharma, Adv., S. Nigam, Adv., Chayan Gupta, Adv., S. Dasgupta, Adv., Ayan De, Adv.
A banking company is amenable to the writ jurisdiction only if it is found to be discharging any public function or necessary to compel the bank to enforce any statutory obligation or obligations of public nature.
Headnote:
Banking Regulation - Freezing of Bank Account - The court found that the private bank's action in freezing the bank account was in compliance with the request of the lead banker of the consortium and the Superintendent of Police, CBI. The court held that the bank's action did not fall within the parameters to make it amenable to a writ jurisdiction, as it was not found to be discharging any public function or necessary to compel the bank to enforce any statutory obligation or obligations of public nature.
Fact of the Case:
The first petitioner's bank account was frozen by a private bank based on a communication received from the lead banker of a consortium and a direction issued by the Superintendent of Police, CBI.
Finding of the Court:
The court found that the bank's action in freezing the account was in compliance with the request of the lead banker of the consortium and the Superintendent of Police, CBI. It held that the writ petition was not maintainable as the bank was not found to be discharging any public function or necessary to compel the bank to enforce any statutory obligation or obligations of public nature.
Issues: The main issue was the maintainability of the writ petition against the private bank for freezing the bank account.
Ratio Decidendi: The court applied the legal principle that a banking company is amenable to the writ jurisdiction only if it is found to be discharging any public function or necessary to compel the bank to enforce any statutory obligation or obligations of public nature.
Final Decision: The writ petition was dismissed, and there was no order as to costs.
Debangsu Basak, J.
An action of a private bank in freezing an account maintained by the first petitioner is under challenge in the present writ petition.
2. Learned advocate appearing for the petitioners relies upon (Gopal Chemical Industries Pvt. Ltd., Bangalore v. IndusInd Bank Ltd., Mumbai & Ors., 2013 SCConline(AP) 581) and submits that, a writ petition against the concerned bank is maintainable. He also submits that, in the facts of the present case, the private bank acted illegally in freezing the bank account of the petitioner.
3. Learned advocate appearing for the bank submits that, the writ petition is not maintainable. Simpliciter on the ground that, the bank is governed by the directions issued by the Reserve Bank of India and has to comply with the provisions of the Banking Regulation of 1949, does not make a private bank amenable to the writ jurisdiction. He relies upon (Federal Bank Ltd. v. Sagar Thomas & Ors., (2003) 10 SCC 733 : (AIR 2003 SC 4325) as well as (Standard Chartered Bank v. Standard Chartered Bank Pensioner s Association & Ors., (2007) 4 CalHN 369) in support of his contentions. He draws the attention of the Court to the pleadings made in the affidavit-in-opposition and submits that, the petitioners are under the control and management of the same natural person as that of REI Agro Ltd. REI Agro Ltd. has defrauded a consortium of banks of a sum of Rs.7,000 crores. The first petitioner is one of the instrumentalities in perpetrating such fraud. Moreover, the bank acted on the basis of a decision arrived at in the consortium's meeting and a direction issued by the Superintendent of Police, Central Bureau of Investigation.
4. It appears from the materials made available on record that, the first petitioner is under the control and management of the same natural person as that of REI Agro Ltd. REI Agro Ltd. has a sum in excess of Rs.7,000 crores due and payable to a consortium of bankers. The consortium of bankers in a meeting, resolved to lodge a complaint with the Central Bureau of Investigation, by treating, such exposure as a serious fraud. Central Bureau of Investigation apparently, required freezing of the bank accounts. The bank concerned herein, acted on the basis of a communication received from the lead banker of the consortium. It froze the bank account maintained by the petitioners. Such action is under challenge in the present writ petition.
5. As noted above, the bank concerned was acting at the request of the lead banker of the consortium and the Superintendent of Police, CBI. There is no irregularity in the action of the bank concerned, in adhering to such request.
6. So far as the maintainability of the writ petition is concerned, Federal Bank Ltd. (AIR 2003 SC 4325) (supra) is of the view that, a company incorporated under the Companies Act, 1956 is not amenable to a writ jurisdiction simpliciter on the ground that it has to comply with guidelines issued under the Act of 1956. Similarly a banking company merely because, it has to follow the banking policy of the Reserve Bank of India or act in accordance with the regulations formulated under the Banking Regulation Act is not amenable to the writ jurisdiction. However, a banking company is amenable to the writ jurisdiction, if it is found that, it is discharging any public function or that it is necessary to compel such bank to enforce any statutory obligation or such obligations which are of public nature casting positive obligations upon it. Applying the ratio laid down in Federal Bank Ltd. (supra) the Division Bench of our Court in Standard Chartered Bank Pensioner's Association & Ors. (supra) found that, in the facts of that case that, the writ petition was not maintainable. It found that, the writ petitioner was wanting to enforce a contractual settlement. The remedy of filing a suit was found to be available to the petitioners therein.
7. In the facts of the present case, I am not in a position to arrive at a finding that, the
