TaxTMI 
TaxTMI 
TaxTMI 
2017 (6) TMI 607
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....n respect of the project site. The petitioners state that by 01.11.2015, the respondent had disbursed a sum of Rs. 47 crores. By then 80% of the project was already complete but the balance loan amount was not being released by the respondent for completion of the project. Instead, the respondent served a notice dated 17.06.2016 on the petitioners threatening to acquire 100% equity shares of the promoters in the petitioner No.1/company. 2. Alleging that the respondent has failed to disburse the loan amounts on time despite several requests, which resulted in bringing the project to a grinding halt, the petitioners have filed the present petition praying inter alia that a writ of mandamus be issued to the respondent directing it not to proceed against the petitioner No.2, Director of the petitioner No.1/company and petitioner No.3, wife of the petitioner No.2, by acquiring their 100% equity share capital, or take any coercive steps against the assets of the petitioner No.1/company. Additionally, the petitioners seek directions to the respondent to disburse the complete sanctioned credit facilities and provide for overall costs of the project on account of the alleged non-disbursal ....
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....emicals Ltd.; (2002) 1 SCC 216 (ii) G. Bassi Reddy vs. International Crops Research Institute and Anr.; (2003) 4 SCC 225 (iii) Federal Bank Ltd. vs. Sagar Thomas and Ors.; (2003) 10 SCC 733 (iv) Binny Ltd. and Anr. vs. Sadasivan and Ors.; (2005) 6 SCC 657 (v) United Bank of India vs. Satyawati Tondon and Ors.; (2010) 8 SCC 110 (vi) K.K. Saksena vs. International Commission on Irrigation and Drainage and Ors.; (2015) 4 SCC 670 6. Per contra, Mr. Muneesh Malhotra, learned counsel for the petitioners controverted the stand taken by the respondent that it is not an authority or a State within the meaning of Article 12 of the Constitution of India and it is not amenable to writ jurisdiction under Article 226 of the Constitution of India. He contended that on the contrary, the respondent/company is directly controlled by the Government being a subsidiary of M/s PTC India Ltd (formerly known as Power Trading Corporation of India Ltd.); that four Central Government Public Sector Undertakings promote the respondent's parent company, which is completely controlled by the Government of India as an IRS Officer was appointed the Chairman of M/s PTC India Ltd. by the Government of India on....
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....veral authoritative judicial pronouncements that have held that a writ petition can be filed under Article 226 of the Constitution of India for invoking the extraordinary jurisdiction of the High Court not only against a government/authority that falls within the definition of a 'State' or 'any other person or authority', but also for "any other purpose". A writ under Article 226 can also lie against any "person" if it is a statutory body or performs a public function or discharges a public or statutory duty. (Refer: Praga Tools Corpn. vs. C.V. Imanual; (1969) 1 SCC 585, Shri Anadi Mukta Sadguru Trust vs. V.R. Rudani; (1989) 2 SCC 691 and VST Industries Ltd. vs. Workers' Union; (2001) 1 SCC 298). Further, a writ petition would be maintainable against an authority that is treated as a 'State' within the meaning of Article 12, for enforcement of fundamental and other rights. 11. It is equally well settled that the term "authority" used in Article 226 must receive a wider meaning than the term used in Article 12 and it cannot be confined only to statutory authorities and instrumentalities of the State, but may also cover any other person or body performing a public duty and such a du....
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....asic principle of judicial review of an action under the administrative law. The reason is obvious. A private law is that part of a legal system which is a part of common law that involves relationships between individuals, such as law of contract or torts. Therefore, even if writ petition would be maintainable against an authority, which is "State" under Article 12 of the Constitution, before issuing any writ, particularly writ of mandamus, the Court has to satisfy that action of such an authority, which is challenged, is in the domain of public law as distinguished from private law." (emphasis added) 14. It is also settled law that writ proceedings are not a remedy for enforcing contractual obligations and under the law, an aggrieved party must approach the court of competent jurisdiction for appropriate relief for breach of a contract. No doubt, the existence of an alternate remedy does not bar the jurisdiction of the High Court to issue a writ but ordinarily, that would be a good ground to refuse to exercise its discretion under Article 226 as disputed questions or rival claims of the parties with regard to breach of a contract are required to be determined on the basis of evi....
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....inition of a State or a local body/other authority under the control of the Government, for being amenable to writ proceedings under Article 226 of the Constitution, the Supreme Court had minutely examined the relevant provisions of the RBI Act and the Companies Act and expressed the following view:- "22. In view of the aforesaid provisions it is submitted that the control of Reserve Bank of India and the Central Government is all-pervasive over the banking companies: they can cause an inspection to be made, can make scrutiny of the working and accounts of the banking company, can remove the Chairman or appoint additional Directors; the functioning of the banking company can also be suspended, the undertaking can also be acquired. It is further submitted that Reserve Bank of India has been constituted to regulate issue of banknotes and for keeping reserves with a view to secure and maintain monetary stability in the country. It is with that end in view that powers have been vested in Reserve Bank of India to keep proper check on the working and functioning of the banking companies as also in the interest of the depositors and the own interest of the banking company. Such a nature ....
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....not be in conflict with or against the fiscal policies of the State and for such purposes, guidelines are provided by Reserve Bank so that a proper fiscal discipline, to conduct its affairs in carrying on its business, is maintained. So as to ensure adherence to such fiscal discipline, if need be, at times even the management of the company can be taken over. Nonetheless, as observed earlier, these are all regulatory measures to keep a check and provide guideline and not a participatory dominance or control over the affairs of the company. For other companies in general carrying on other business activities, maybe manufacturing, other industries or any business, such checks are provided under the provisions of the Companies Act, as indicated earlier. There also, the main consideration is that the company itself may not sink because of its own mismanagement or the interest of the shareholders or people generally may not be jeopardized for that reason. Besides taking care of such interest as indicated above, there is no other interest of the State, to control the affairs and management of the private companies. Care is taken in regard to the industries covered under the Industries (....
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....ank is not held at all by the Government nor is any financial assistance provided by the State, nothing to say which may meet almost the entire expenditure of the company. The third factor is also not answered since the appellant Bank does not enjoy any monopoly status nor can it be said to be an institution having State protection. So far as control over the affairs of the appellant Bank is concerned, they are managed by the Board of Directors elected by its shareholders. No governmental agency or officer is connected with the affairs of the appellant Bank nor is any one of them a member of the Board of Directors. In the normal functioning of the private banking company there is no participation or interference of the State or its authorities. The statutes have been framed regulating the financial and commercial activities so that fiscal equilibrium may be kept maintained and not get disturbed by the malfunctioning of such companies or institutions involved in the business of banking. These are regulatory measures for the purpose of maintaining a healthy economic atmosphere in the country. Such regulatory measures are provided for other companies also as well as industries manufac....
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....t was thus concluded in the captioned case that simply because the RBI lays down the banking policy, does not mean that private companies that carry on business or the commercial activity of banking, discharge any public function or public duty. Therefore, it cannot be stated that such companies are amenable to writ jurisdiction unless and until they are enforcing statutory obligations of a public nature, casting positive obligations on them. Holding that in a case where disciplinary action has been taken by the Bank against an employee and his services have been terminated, the employee is not trying to enforce any statutory duty cast on the bank by filing a writ petition under Article 226 of the Constitution of India, the Supreme Court had allowed the appeal filed by Federal Bank. 19. Coming to the instant case, as noted above, the respondent is a public limited company, promoted by M/s PTC India Ltd., another public limited company. It is a Non-Banking Financial Company (in short 'NBFC') duly notified under the SARFAESI Act and has been classified as an as an Infrastructure Finance Company by the RBI. The respondent does not accept any deposits from the public. It is listed on ....
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....he RBI, it being in the business of lending money on commercial terms, will not make it amenable to writ jurisdiction. The arguments advanced by learned counsel for the petitioners that 60% of the shares of the respondent/company are held by M/s PTC India Ltd., which is a Public Sector Undertaking, cannot be a determinative factor when it comes to examining the character and functions discharged by the respondent. Nor can the fact that M/s PTC India Ltd. is headed by bureaucrats or that its Board of Directors include bureaucrats/technocrats be of any relevance when the structure of the respondent/company is to be examined. In the normal functioning of the respondent, clearly, there is no participation by the State or its authorities. 21. As noted earlier, the shareholding capital of the respondent/company is not held by the Government. The petitioners have not been able to demonstrate that financial assistance of any nature is being provided by the State or its authorities to the respondent/company. The Board of Directors of the respondent/company are elected by its shareholders without any interference by the State or the Public Sector Companies. The petitioners have also miserab....
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....r does the decision in Gujarat State Financial Corporation (supra) have any application to the facts of the case at hand. 24. The inevitable conclusion is that the petitioners are not entitled to invoke Article 226 of the Constitution of India for relief against the respondent. Instead, they ought to exhaust the alternate efficacious remedy available to them under the SARFAESI Act, as contemplated in Mardia Chemicals (supra) and Satyawati Tondon (supra). Being a borrower, if the petitioners have a grievance against the creditor, then they have a right to ventilate same, but only before the forums that are available to them in law. The term "authority" cannot be given such a wide meaning so as to take in its ambit, the respondent herein, when the petitioners have failed to demonstrate the nature of public function being discharged by it. 25. It may be noted that at the time when the present petition was filed, the petitioner had claimed that the respondent had issued a notice dated 17.06.2016, calling upon them to discharge their liabilities under the Agreement dated 23.03.2013 and had cautioned them that in the event of failure to do so, it shall exercise its rights to acquire 10....