Kerala High Court Rules Private Banks Are Not Amenable To Article 226 Writ Jurisdiction - 2025-08-22

Kerala High Court Rules Private Banks Are Not Amenable To Article 226 Writ Jurisdiction

In a significant ruling regarding the limits of judicial intervention in private commercial affairs, the High Court of Kerala has clarified the scope of its writ jurisdiction concerning private financial institutions. The Division Bench, comprising Justice Sushrut Arvind Dharmadhikari and Justice Syam Kumar V.M., held that private banks do not fall under the purview of "State" or other authorities under Article 12 of the Constitution of India and are therefore not generally amenable to writ jurisdiction under Article 226.

Case Background

The dispute arose from a writ petition filed by Sheela Francis Parakkal and others against the South Indian Bank, seeking the release of original title deeds withheld by the bank following the closure of a loan account. The learned Single Judge had initially declared that the bank had no authority to retain the documents and imposed a total cost of ₹50,000, split between the petitioners and the Kerala Legal Services Authority. Challenging this, the South Indian Bank filed an intra-court appeal, contending that as a private commercial entity, it was not subject to writ proceedings.

Arguments and Legal Framework

The Bank argued that its functions do not involve public duties, and therefore, the writ petition was not maintainable. The bank relied on the Supreme Court’s decision in Federal Bank Ltd. v. Sagar Thomas , which established that private banks, despite being regulated by the Reserve Bank of India, perform commercial activities rather than governmental or public functions.

Conversely, the respondents argued that the retention of documents for nine years after loan closure violated their fundamental rights, and that private banks performing banking operations are inherently discharging a public function.

Key Observations

The High Court drew heavily upon established precedents to distinguish between public and private functions. The Court noted:

• "A private company carrying on banking business as a Scheduled bank cannot be termed as a company carrying on any public function or public duty."
• "Merely because the Reserve Bank of India has laid down the banking policy... that does not mean that the private companies carrying on the business or commercial activity of banking, discharge any public function or public duty."
• "It is a settled legal position that private banks are not ‘state’ within the meaning of Article 12 of the Constitution of India as such, not amenable to writ jurisdiction under Article 226."

The Verdict and Practical Implications

The Division Bench set aside the order of the Single Judge, ruling that the writ petition was not maintainable. While the Court dismissed the petition, it clarified that the petitioners remain at liberty to seek alternative legal remedies. This decision reinforces the legal boundary that shields private commercial entities from extraordinary writ jurisdiction, emphasizing that unless a specific public duty is cast upon a private body by statute, individuals must pursue civil remedies for contract-based disputes.