The Calcutta High Court held that the Reserve Bank of India (RBI) is “State” under Article 12 of the Constitution and thus, a writ petition is maintainable against it.
The petitioner, M/s Pearson Drums & Barrels Pvt. Ltd is a company coming within the purview of the Micro, Small and Medium Enterprises Act, 2006 and is engaged in the business of manufacture and supply of M.S. Barrels to the Oil Sector and various other sectors.
A dispute between the Petitioner, a MSME and the IndusInd Bank with respect to refund of processing fee paid by the former, to the latter, pursuant to a prospective loan facility.
The Petitioner said that the Bank had assured that in case by any reason the sanction did not go through from its end, it would refund the fee. However, when the Petitioner sought refund of the processing fees against delay and non-receipt of final sanction letter, the Bank claimed that the processing fee was non-refundable.
By placing reliance on Federal Bank Limited Vs. Sagar Thomas and others, it has argued by learned counsel appearing for the respondent Bank that a writ petition under Article 226 of the Constitution is not maintainable against private banks.
The single judge bench of Justice Sabyasachi Bhattacharyya made the observations while dismissing objections made to the maintainability of a writ petition filed under Article 226 of the Constitution against the General Manager, Consumer Education and Protection Cell (CEPC) of the RBI and the IndusInd Bank, among other respondents.
“Since the Reserve Bank of India is an instrumentality of the State, it comes squarely within the meaning of ‘State’ as contemplated in Article 12 of the Constitution. Thus, the writ petition is maintainable,” the Court noted.
The court said that even private banks cannot seek refuge of being non-State actors, for the purpose of challenging maintainability of a writ petition against them, as their functions pertain to discharge of public duties.
The Court refused to apply the principle laid down by the Supreme Court in Federal Bank Limited v. Sagar Thomas & Ors, that a writ petition under Article 226 of the Constitution is not maintainable against private banks.
Subscribe Taxscan Premium to view the JudgmentSupport our journalism by subscribing to Taxscan AdFree. We welcome your comments at info@taxscan.in
