HC Cannot Direct ICICI to Take Possession of Mortgaged Property, Private Bank Not ‘State’ Under Article 12: Punjab and Haryana HC [Read Order]

The High Court of Punjab and Haryana at Chandigarh has dismissed a petition filed against ICICI Bank, a private bank, noting that fundamental rights to take possession of a mortgaged property cannot be enforced against private banks through writ petitions. Since they are not a “State” under Article 12 of the Constitution ofIndia.

The petitioner had approached the High Court challenging certain actions against ICICI bank in which relief was sought under Article 226, specifically praying that the Court direct ICICI Bank to take immediate steps to secure physical possession of mortgaged property and to auction it thereafter. The counsel for the petitioner submitted that the respondent bank had not taken any steps, and under Section 13(2) and 13(4) were issued in the year 2019, but petitioner’s outstanding dues are increasing day by day.

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The issue was whether a private bank, while carrying out functions in the public interest, such as accepting deposits, lending money, and expanding financial opportunities, can be subjected to writ jurisdiction as a “State” under Article 12.

However, the court dismissed the argument, stating that undertaking public roles doesn't by itself make a private entity a State agency.

The Court placed reliance on a string of Supreme Court precedents, including Phoenix ARC Private Limited vs. Vishwa Bharati Vidya Mandir & Ors., (2022) wherein it has been held that writ petition would not be maintainable against the action of a private financial institution;

The High Court also referred to the case of Federal Bank Ltd. v. Sagar Thomas, (2003) in which it was held that merely because a private company is carrying on commercial activity of banking, that by itself, would not make it a statutory obligation or one which is public in nature, so as to bring it within the scope of writ jurisdiction.

In light of the observations and precedents, the bench of Justice Anupinder Singh Grewal and Justice Deepak Manchanda observed that the present petition was not maintainable.

However, the Punjab and Haryana High Court abstained from expressing any opinion on the merits of the controversy and sustained the petitioner’s liberty to seek recourse to the alternative remedy available to him, in accordance with law.

The petitioner was represented by Anoop Verma, and none of them appeared for the respondent.

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