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2025 Supreme(Online)(Kar) 24214
KARNATAKA HIGH COURT
SURAJ GOVINDARAJ, J
Canara Bank – Appellant
Versus
The Warehousing Development and Regulatory Authority – Respondent
WRIT PETITION NO. 101644 OF 2025 (GM-RES)
For the Appellants/Petitioners: SRI. SURESH S. GUNDI
For the Respondents: SRI. SHASHANK MANISH, SRI. SIDDAPPA S. SAJJAN, SRI. MRUTYUNJAYA TATA BANGI
A warehouseman engaged under the WDRA Act discharges public duties and is amenable to writ jurisdiction; refusal to allow inspection violates obligations imposed by statute.
Headnote:(A) Warehousing (Development and Regulation) Act, 2007 - Sections 4, 6, 7, 8, and 35 - Petition by bank for verification of pledged goods stored in warehouse - Bank sanctioned credit facilities against Electronic Negotiable Warehouse Receipts (E-NWRs) issued under WDRA Act - Respondent 1, authority under WDRA, had not been able to conduct inspection due to non-cooperation by Respondent 2, the warehouseman - Court held that warehouseman performs public duties and is amenable to writ jurisdiction under Article 226 - Mandamus issued to permit verification of goods and for authority to take control and ensure preservation of pledged stocks. (Paras 9.2, 9.9, 12.7, and 13.1)
(B) Writ jurisdiction - Maintainability - Writ petition maintainable against a private body performing public functions under WDRA, despite the private nature of the relationship, due to statutory obligations. (Paras 9.6 and 10.1)
(C) Public duty - Warehouseman's obligations include delivering goods as per negotiable receipts and allowing inspections as mandated by the Act. Resulting obligations bind warehousing business within the legislative framework. (Paras 11.2 and 11.8)
Facts of the case:
Petitioner bank sought enforcement of its rights over pledged goods stored in Respondent 2's warehouse, which had failed to cooperate in inspections mandated under the WDRA Act, leading to the petition.
Findings of Court:
Respondent 2 is performing public duties under the WDRA, thus subject to writ jurisdiction, and must permit inspections as per statutory obligations.
Issues: (i) Maintainability of the writ petition against Respondent 2, (ii) Existence of alternative statutory remedies.
Ratio Decidendi: Public function performed by warehouseman within the regulatory framework of the WDRA justifies the exercise of writ jurisdiction; obligations under the Act must be enforced through appropriate judicial directions.
Result: Writ petition allowed, mandamus issued to facilitate bank's verification of pledged goods.
| Table of Content |
|---|
| 1. case initiation and factual overview (Para 1 , 2) |
| 2. legal arguments supporting petitioner's case (Para 3) |
| 3. hearing of arguments and deliberation over statutory obligations (Para 4 , 5 , 6 , 7) |
| 4. court's directives and conclusions on warehouseman compliance (Para 8 , 9 , 10 , 11 , 12 , 13) |
CAV ORDER
(PER: THE HON'BLE MR. JUSTICE SURAJ GOVINDARAJ)
1. The Petitioner/Canara Bank is before this Court seeking the following reliefs:
“(1) Allow the Bank and its duly authorized agents to verify the pledged goods stored in the warehouse immediately.
(2) Direct the Respondent no.1 to take the control of the warehouse and pledged goods by enforcing their right and duties as per the WDRA Act and Rules.
(3) To preserve the quality and quantity of the pledged stocks and take sufficient and appropriate steps to safeguard the interest of the petitioner bank.
(4) Segregate the pledged goods stored in the warehouse e-NWR wise to identify the goods of each debtor.
(5) Facilitate the Bank in conducting an auction of the pledged goods in accordance with the law and the terms of the loan agreement.”
2. Brief facts of the case are as under:
2.1. The Petitioner Bank claims that it has sanctioned a total of 54 credit facilities by way of loans to 53 borrowers/farmers on the security of pledges of Electronic Negotiable Warehouse Receipts (E- NWRs). These receipts are issued by M/s. National E-Repository Limited (NERL), which is sponsored by M/s. National Commodity and Derivatives Exchange Limited (NCDEL) and CCRL, which is sponsored by M/s. Central Depository Services Limited (CDSL), and functioning under the purview of the Warehousing (Development and Regulation) Act, 2007 (hereinafter referred to as ‘WDRA’ Act).
2.2. It is contended that the underlying stocks for the said E-NWRs are areca nuts/betel nuts stored by the farmers/borrowers in the registered warehouse of Respondent No. 2, in compliance with the provisions of the WDRA Act and the rules made thereunder. As security for the loans sanctioned by the bank in their favour, it is alleged that the borrowers have created a pledge of the E-NWRs in favour of the Petitioner Bank as per the provisions of the WDRA Act. Respondent No. 2, a warehouseman under the WDRA Act, had also entered into an agreement with the Petitioner Bank in respect of the pledged goods.
2.3. The loan accounts having become irregular and the borrowers having failed to regularise/close the loan accounts, the Bank was constrained to classify the accounts of 30 such borrowers as Non-Performing Assets (NPAs) as on 11.02.2025, in terms of the directives/guidelines of the Reserve Bank of India (RBI). The remaining 23 accounts of the borrowers have been classified as Special Mention Accounts (SMAs), again in terms of the directives/guidelines issued by the RBI.
2.4. To recover the dues, the Bank invoked the pledge in terms of the E-NWRs and accordingly, it is claimed that the title to all the E-NWRs was required to be transferred in favour of the Bank. Respondent No. 2/warehouseman, holding the goods underlying the E-NWRs as a trustee on behalf of the bank, was duty-bound to protect the interest of the bank. The Bank had called upon Respondent No. 2 to permit, assist, and cooperate with the bank officials for the inspection and identification of the goods. Despite such a request being made, the warehouseman failed to comply.
2.5. The warehouseman instead of segregating the goods had mixed up several of the goods, and whenever inquiries were made, showed the same goods as belonging to each of the borrowers. In that background, the Petitioner had several correspondences with Respondent No. 2 to segregate the goods and allow the bank officers to identify and demarcate the goods, with which Respondent No. 2 did not cooperate.
2.6. Meanwhile, one of the borrowers had approached this Court in W.P. No. 100064 of 2025, for a direction to the bank to release one of the warehouse bills. In the said petition, this Court had, vide interim orde
