On Thursday, the Allahabad High Court reiterated that private financial institutions, carrying commercial activity or business, might be performing public duties. Still, they cannot be considered to be covered under the definition of ‘State’ as mentioned under Article 12 of the Indian Constitution.
The observation was made by a Division Bench comprising Hon’ble Justice Naheed Ara Moonis and Hon’ble Justice Vivek Varma in a petition which was filed against HDFC bank seeking an extension of the interest-free loan period in accordance with circular issued by the RBI due to Covid19 pandemic.
Hon’ble Court agreed with the submission made by the Bank’s lawyer that the petition was not maintainable as HDFC was a private entity.
Reliance was placed on Federal Bank Ltd. vs Sagar Thomas & Ors where the Apex Court held that any commercial activity or business which might be manufacturing units or banking related to any other kind of business generating employment, resources, or production which results in circulation of money would have an impact on the economy of the country. Still, it cannot be classified as a category of discharging functions or duties of a public nature.
A reference was made to Ajay Hasia vs Khalid Mujib and the Court opined none of the six factors mentioned in the judgement was fulfilled in case of a private bank. The six factors were:-
- When the Government holds the entire share capital, it indicates that the Corporation was an agency or instrument of the Government.
- In cases where the State provides the entire expenditure of the Corporation then it indicates its Government-owned.
- When States confer a monopoly status to the Corporation or the State protects it.
- Existence of pervasive and profound State control indicates that a corporation was an agency of the Government.
- If the Corporation performs functions of public importance or governmental functions, then it might indicate that it was a State agency.
- When a government department is transferred to a corporation, then it might be inferred that the Corporation was an agency of the Government.
Therefore, in accordance with the settled law, the petition was dismissed as non-maintainable.
Title: Kailashi Devi vs Branch Manager And Another
Case No.: WRIT – C No. – 18999 of 2020
Date of Order:26.11.2020
Coram:Hon’ble Justice Naheed Ara Moonis and Hon’ble Justice Vivek Varma
Counsel for Petitioner :- Manoj Kumar Mishra