Writ maintainability against private banks and RBI current-account controls were upheld on contractual and credit-discipline grounds.

A writ petition under Article 226 was held not maintainable against a private bank in a dispute arising from banking communications and contractual relations because no independent public duty or public function was shown; the matter remained essentially contractual. The RBI consolidated circular on opening and maintenance of current accounts and CC/OD accounts was construed as a credit-discipline measure aimed at monitoring cash flows and preventing diversion of funds, and it applied to current accounts that were already maintained, not only newly opened accounts. Pre-existing accounts with non-lending banks were therefore covered, and the action taken under the circular was upheld.

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Issues: (i) Whether a writ petition under Article 226 was maintainable against a private bank in a dispute arising out of banking communications and contractual relations. (ii) Whether the RBI consolidated circular on opening and maintenance of current accounts and CC/OD accounts applied to pre-existing current accounts maintained with non-lending banks when the borrower had credit facilities and substantial exposure in the banking system.

Issue (i): Whether a writ petition under Article 226 was maintainable against a private bank in a dispute arising out of banking communications and contractual relations.

Analysis: Maintainability depended on whether the private bank was shown to discharge a public duty or public function. The dispute concerned banking arrangements between the borrower and its banks, including the effect of communications sent by the private bank in aid of the RBI circular. No independent public law element was established merely because the dispute involved banking activity or because the RBI regulated the banking system. The controversy remained essentially contractual.

Conclusion: The writ remedy was not available against the private bank for this dispute and the petitioner did not succeed on maintainability.

Issue (ii): Whether the RBI consolidated circular on opening and maintenance of current accounts and CC/OD accounts applied to pre-existing current accounts maintained with non-lending banks when the borrower had credit facilities and substantial exposure in the banking system.

Analysis: The circular was read as a protective regulatory framework aimed at credit discipline, monitoring of cash flows, and prevention of diversion of funds and NPAs. Its language covered current accounts that were "opened or maintained" and not merely newly opened accounts. The presence of earlier current accounts did not create an implied exemption. On the record, allowing unrestricted use of pre-existing accounts outside the principal lending relationship would defeat the object of the circular and permit the very mischief it sought to curb. The RBI's consistent construction of the circular, reinforced by the banks' understanding, was treated as persuasive.

Conclusion: The circular applied to the petitioner's pre-existing current accounts, and the impugned action based on it was upheld.

Final Conclusion: The petition failed both on maintainability and on merits, and no relief was granted to the petitioner.

Ratio Decidendi: A private bank does not become amenable to writ jurisdiction in a purely contractual banking dispute absent a demonstrable public duty, and an RBI circular regulating current accounts must be construed according to its object so as to govern accounts that are maintained, not merely newly opened, where such construction is necessary to prevent diversion of funds and preserve credit discipline.

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