Court dismisses writ petition challenging bank's NPA classification; private banks not subject to writ jurisdiction

The High Court dismissed the writ petition challenging the classification of the appellant's account as a Non-Performing Asset (NPA) and the refusal of the respondent bank to issue a Solvency Certificate. The court held that a writ petition is not maintainable against a private bank as it does not perform a public duty. The court emphasized that the bank's activities are commercial in nature and do not constitute a public function. The appellant was advised to seek redressal through other appropriate forums.

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Issues Involved:
1. Classification of the appellant's account as Non-Performing Asset (NPA).
2. Issuance of Solvency Certificate by the respondent bank.
3. Maintainability of writ petition against a private bank.
4. Public duty and function of the bank.
5. Fundamental rights under Articles 14 and 19(1)(g) of the Constitution of India.

Issue-wise Detailed Analysis:

1. Classification of the Appellant's Account as Non-Performing Asset (NPA):
The appellant contended that the classification of his account as NPA was erroneous and discriminatory. The appellant argued that as per the Master Circular dated 1.7.2015 on income recognition and asset classification issued by the Reserve Bank of India (RBI), his account did not qualify to be classified as NPA. The appellant had been regularly paying interest and carrying out transactions through his account till January 2020. Despite this, the respondent bank classified his account as NPA, which the appellant claimed was arbitrary and without any application of mind.

2. Issuance of Solvency Certificate by the Respondent Bank:
The appellant, a government works contractor, required a Solvency Certificate to renew his license as mandated by the State Government. Despite repeated requests and assurances from the bank, the respondent bank refused to issue the Solvency Certificate, citing the NPA status of the appellant's account. The appellant argued that the refusal was arbitrary and affected his livelihood and that of his employees. The appellant also highlighted that the bank had previously issued Solvency Certificates to accounts classified as NPA.

3. Maintainability of Writ Petition Against a Private Bank:
The core question before the court was whether a writ petition is maintainable against a private bank. The court referred to the Supreme Court's decision in Federal Bank Ltd. v. Sagar Thomas and others, which held that a private bank does not perform any sovereign function nor does it exercise any authority over a third person. The nature of the activity of the bank is that of a commercial undertaking. The court concluded that the bank is not performing a public duty and hence, a writ petition is not maintainable against it.

4. Public Duty and Function of the Bank:
The appellant argued that the issuance of a Solvency Certificate is a function of the Revenue Department, and since the Kerala Government mandated that the certificate be obtained from a bank, the bank was performing a public duty. The court, however, held that the bank's activities are commercial in nature and do not constitute a public duty. The court emphasized that a writ of mandamus can only be issued against a private body if it discharges a public function, which was not the case here.

5. Fundamental Rights Under Articles 14 and 19(1)(g) of the Constitution of India:
The appellant contended that the refusal to issue the Solvency Certificate violated his fundamental rights under Articles 14 and 19(1)(g) of the Constitution, which guarantee equality before the law and the right to practice any profession or to carry on any occupation, trade, or business. The court, however, did not delve deeply into this argument, as it primarily focused on the maintainability of the writ petition against the bank.

Conclusion:
The High Court dismissed the writ petition, holding that the bank is not performing any public duty and hence, a writ petition is not maintainable. The court emphasized that the bank's activities are commercial in nature and do not constitute a public function. Consequently, the writ appeal was dismissed, and the appellant was advised to seek redressal through other appropriate forums.

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