Writ jurisdiction and disputed bank fraud claims cannot justify binding committee findings or unconditional payment directions.
A writ court should not convert a private contractual dispute involving banks and depositors into a binding public law enquiry merely because a public sector bank is involved. The SC held that constituting a committee with adjudicatory powers and treating its non-unanimous findings as decisive was unjustified on these facts. Where entitlement to fixed-deposit payments turned on serious disputed facts and allegations of fraud, final mandatory relief in writ jurisdiction was inappropriate. Limited protective directions for verification and release to societies found unconnected with the fraud were permissible, while the unconditional payment mandate was set aside and criminal proceedings were directed to be expedited.
Issues: (i) Whether a writ court could convert a private contractual dispute involving banks and depositors into a public law proceeding and direct constitution of a committee with binding findings and interim payment directions. (ii) Whether, in the presence of serious disputed questions of fact and allegations of fraud, mandatory relief could be granted in writ jurisdiction in relation to payment under fixed deposits.
Issue (i): Whether a writ court could convert a private contractual dispute involving banks and depositors into a public law proceeding and direct constitution of a committee with binding findings and interim payment directions.
Analysis: The banks were amenable to writ jurisdiction as State instrumentalities, and directions under Section 35A of the Banking Regulation Act, 1949 could be issued by the Reserve Bank of India in appropriate cases. However, the dispute arose out of contract and the presence of a public sector bank did not by itself transform the controversy into a public interest litigation. The court held that the extraordinary procedure adopted by the High Court, by constituting a committee with adjudicatory powers and making its findings binding, was not justified on the facts. A committee report that was not unanimous on the crucial issue could not, without more, support final mandamus-like relief.
Conclusion: The High Court was not justified in converting the matter into a binding public law enquiry or in treating the committee process as decisive.
Issue (ii): Whether, in the presence of serious disputed questions of fact and allegations of fraud, mandatory relief could be granted in writ jurisdiction in relation to payment under fixed deposits.
Analysis: The controversy turned on unresolved factual questions as to who participated in the alleged fraud, whether the deposit documents were genuine, and whether the respondents were innocent depositors or part of the scheme. In such circumstances, the writ court ought to have been slow to grant final mandatory relief directing payment of the disputed amounts. At the same time, the court recognised that innocent cooperative societies should not be left remediless and that some practical protection was necessary pending proper ascertainment of liability. It therefore fashioned limited directions to enable verification and release of amounts to societies found unconnected with the fraud, while also safeguarding the banks.
Conclusion: Final mandatory payment directions on the existing record were not warranted, but limited protective directions for verification and release to eligible societies were .
Final Conclusion: The appeals succeeded to the extent that the High Court's binding committee-based directions and unconditional payment mandate were set aside, but the respondents were afforded limited relief through verification-based release of amounts to those found uninvolved, with the criminal proceedings to be expedited.
Ratio Decidendi: In a writ petition arising from a private contractual dispute against a State instrumentality, where the decisive issues depend on seriously disputed facts and alleged fraud, the High Court should not grant binding adjudicatory relief or final payment directions unless the public law element and entitlement are clearly established.
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