Introduction
Recent years have seen a lot of discussion over the viability of a writ suit against a private bank under Article 226 of the Indian Constitution. Although the Supreme Court has made several rulings on this matter, the law is still not entirely clear. There is no simple solution to the complex problem. Courts have, however, taken a number of things into account when assessing whether such petitions can be maintained.
Article 226 of the Indian Constitution:
The Indian Constitution’s Article 226 guarantees the right to file a writ petition. According to this article, if the High Courts believe that a person’s basic rights have been violated, they may issue writs, orders, or directives to any person or authority, including private organizations.
The High Court has the authority to issue writs, such as writs of habeas corpus, mandamus, quo warranto, certiorari, and prohibition, in order to vindicate the fundamental rights protected by the Constitution or to stop their violation.
Writs cannot, however, be issued against private individuals or organizations, according to the Supreme Court. The Supreme Court has ruled that the courts cannot evaluate the activities of private individuals or corporations unless they are carrying out a public purpose, and writs are a type of judicial review.
The Doctrine of Public Law Element:
A private entity must be proven to be carrying out a “public law element” in order for a writ petition to be viable against it. This implies that the body must be using a power typically reserved for the state, such as the power to regulate or tax.
It’s not always clear whether private banks are serving a public purpose in this situation. While some banks have been discovered to be carrying out public duties, others have not. The following are some of the elements that the courts take into account when deciding whether a private bank is carrying out a public function:
- The nature of the bank’s business.
- The extent to which the bank is regulated by the government.
- The degree to which the bank’s activities affect the public interest.
The likelihood that private banks are executing public functions has increased in recent years, according to the courts. This is partly a result of the growing importance of private banks to the public interest as well as their expanding size, influence, and power.
Recent case laws
The courts have taken into account the maintainability of writ petitions against private banks in a number of circumstances. In general, the courts have ruled that private banks cannot be the target of writ petitions unless they are carrying out a public law element.
In Phoenix ARC Private Limited v. Union of India, the Supreme Court of India decided in 2018 that a writ petition could be filed against a private asset rehabilitation company (ARC). In this instance, the State Bank of India had engaged the ARC to recover a loan that a private company had defaulted on. The Supreme Court determined that because the ARC was serving the public, a writ petition could be brought against it.
A writ petition against a private bank could not be brought, the Supreme Court of India declared in the matter of Universal Hospital Al Ain LLC v. Yes Bank Limited. In this instance, the hospital had fallen behind on a loan from Yes Bank. The hospital attempted to sue Yes Bank through a writ petition, but the Supreme Court rejected the petition after determining that Yes Bank was not serving a public purpose.
Exception:
The general rule that writ petitions cannot be maintained against private banks has one exception. In situations where the bank is representing the state, this exception applies. For instance, the Supreme Court determined that a writ petition against a private bank that was serving as the state’s agent in collecting taxes was maintainable in the case of State of Punjab v. Hindustan Petroleum Corporation Ltd.
Limitation period
A writ petition against a private bank may be filed at any time. There is no set statute of limitations. However, the courts will typically anticipate that a writ petition will be submitted in a timely manner. This usually entails submitting the petition shortly after the alleged infraction.
Remedies
The court may impose a number of remedies in the event that a writ petition is successful, including:
- A statement that the private bank’s actions were forbidden.
- An order prohibiting the private bank from carrying out the illegal conduct any longer.
- A judgment ordering the private bank to compensate the petitioner for losses.
Conclusion
It is complicated to determine whether a writ petition can be brought against a private bank. There is no simple solution, and the courts will take many things into account before ruling. However, unless the bank is performing a public law obligation or acting as an agent of the state, writ petitions against private banks are typically unmaintainable.
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