Calcutta High Court (Appellete Side)
Society For Welfare Of The Handicapped … vs Union Of India And Ors on 6 May, 2025
IN THE HIGH COURT AT CALCUTTA
CONSTITUTIONAL WRIT JURISDICTION
APPELLATE SIDE
Present :-
The Hon'ble Justice PARTHA SARATHI SEN
WPA 8452 of 2015
With
CAN 1 of 2024
Society for Welfare of the Handicapped Persons and Anr.
Vs.
Union of India and Ors.
For the Petitioners: Mr. Pradip Kr. Dutta, Sr. Adv.
Mr. Sandip Ghose, Adv.,
Mr. Debayan Ghosh, Adv.,
Ms. Roshni Ghosh, Adv.
For the State: Mr. Somnath Ganguli, Sr. Adv.,
Ms. Pratiti Das Adv.
For respondent nos. 2 to 4: Mr. Alok Kumar Banerjee, Adv.,
Mr. Debabrata Das, Adv.,
Mr. Arunabha Sarkar, Adv.,
Mr. Pratik Acharjee Adv.
For respondent nos. 11 to 13: Mr. Jayanta Kumar Mitra, Sr. Adv.,
Mr. Debnath Ghosh, Sr. Adv.
Mr. Debtanay Banerjee, Adv.,
Mr. Sushovit Majumdar, Adv.,
Ms. Pubali Sinha, Adv.,
Ms. Ratnarlipa Sarkar, Adv.,
Ms. Arpita Dey, Adv.,
Ms. Biswadeepa Mandal, Adv.
Hearing concluded on: 21.04.2025.
Judgment on: 06.05.2025.
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PARTHA SARATHI SEN, J. : -
1. Though in the instant writ petition the writ petitioners have made
some specific prayers but in course of hearing Mr. Dutta, learned senior
advocate appearing on behalf of the writ petitioners in his usual fairness
submits before this Court that for the present his clients being the writ
petitioners are only pressing for prayer (b) and prayer (c) of the instant
writ petition under cover of which the writ petitioners have prayed for
issuance of appropriate writ/writs against the respondent nos.2 to 4
being the Reserve Bank of India and its functionaries commanding them
to initiate investigation in relation to opening of an alleged fake bank
account in the name of writ petitioner no.1 in the Prince Anwar Shah
Branch of respondent no.11 Bank i.e. Axis Bank.
2. In prayer (c) of the instant writ petition the writ petitioners have
prayed for adequate compensation from the respondent no.11/Axis Bank
for causing loss to the writ petitioners on account of alleged diversion of
funds as donated by different donors in the name of the writ petitioner
no.1/society.
3. For effective adjudication of the instant lis the facts leading to
initiation of the instant writ petition are required dealt to be with in a nut
shell and those are as under:-
i. According to the writ petitioners the writ petitioner
no.1/society is involved in diagnosis and treatment of leprosy
through multi drug therapy and homeopathic medicine.
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ii. The affairs and activities of the writ petitioner no.1/society are
managed through donations received from different generous
persons as well as from government grants. It is the further
case of the writ petitioners that all donations received by the
writ petitioner no.1/society are exempted from tax liability
under the provisions of Income Tax Act, 1961.
iii. The writ petitioner no.1/society maintains its bank accounts
with the following banks:-
a. Canara Bank, Durgapur Branch,
b. SBI, Durgapur Main Gate Branch, A- Zone
Branch and Champa Branch (in the State of
Chattisgarh),
c. Corporation Bank, Durgapur (two numbers of
accounts),
d. Indian Overseas Bank, Sealdah Branch (lying in
dormant condition).
iv. According to the writ petitioners, the writ petitioner
no.1/society has got no account in Axis Bank; particularly in
Prince Anwar Shah Road Branch.
v. In the year 2010-2011 the writ petitioner no.1/society was
informed by various persons that they had made some
donations in the name of the writ petitioner no.1/society but
on scrutiny of the bank accounts’ statements lying with the
4aforementioned banks the writ petitioners found no such
positive reflection in their credit.
vi. Subsequently the writ petitioners came to learn that a fake
bank account in the name of the writ petitioner no.1/society
was opened by the some fictitious persons with the Axis Bank,
Prince Anwar Shah Road Branch.
vii. The writ petitioner no.2 lodged a written complaint dated
29.06.2011 with the jurisdictional SDPO and on the basis of
the same Durgapur P.S Case no.261 of 2011 dated 05.07.2011
viii. Investigation was taken up and on completion of the same
charge sheet under Sections 420/465/467/468/471/120B
was submitted on 13.12.2016 against two accused persons
namely; Rajesh Karmakar and Bikash Roy @ Bikash Kumar
Roy. From the said charge sheet dated 13.12.2016 it reveals
that accused Rajesh Karmakar was at that material time i.e. at
the time of alleged commission of crime was posted as Branch
Sales Manager of the Axis Bank, Prince Anwar Shah Road.
ix. It is pertinent to mention herein that subsequently on
19.10.2022 a supplementary charge sheet was also filed
against accused Bikash Roy under Sections
x. It is pertinent to mention herein that the writ petitioner no.2 is
the President of the writ petitioner no.1/society.
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4. In course of his submission Mr. Dutta, learned Senior Advocate
appearing on behalf of the writ petitioners at the very outset draws
attention of this Court to the affidavit-in-opposition as filed by the
respondent no.2/Reserve Bank of India (hereinafter referred to as RBI in
short). It is submitted by Mr. Dutta that from paragraph no.5 of such
affidavit-in-opposition it would reveal that on receipt of a complaint from
the writ petitioner no.2 being the President of the writ petitioner
no.1/society the RBI caused a scrutiny and noticed the following lapses
on the part of Axis Bank namely:
i. Axis Bank did not obtain the Board resolution of the writ
petitioner no.1/society for operating the account and/or
change of address.
ii. The names of the father of both the signatories in the account
opening form (AOF in short) differed with the KYC documents
as submitted with the Axis Bank.
iii. As per RBI guidelines Axis Bank did not obtain the power of
attorney to open /operate the society /trust’s account.
iv. Axis Bank did not obtain any copy of the resolution
passed/approved by the Board/ Managing Committee of the
writ petitioner no.1/society.
v. Axis Bank also did not verify the address of the society.
5. In course of his submission Mr. Dutta took me to page no.25 of the
said affidavit-in-opposition of the RBI as affirmed on 30.01.2017. It is
submitted by Mr. Dutta that from the tabular statement at page no.25 of
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the said affidavit-in-opposition it would reveal that the RBI Authority had
found various lapses on the part of the Axis Bank. For better appreciation
of the instant writ petition this Court considers that the contents of the
said table are required to be looked into and those are quoted hereinbelow
in verbatim:-
RBI Observations Bank’s response Our comments
1. As per RBI As provided in the As per bye-laws 29 of
guidelines contained bye-laws (the the society, the
in MC on constitutional Secretary could sign a
KYC/AML/CFT documents of the cheque only on behalf
obligation of banks entity), the secretary of a duly authorized
under PMLA was empowered to member. The bank did
2002/operate the handle bank not obtain copy of any
society/trust accounts. Therefore, resolution for
account is required. no separate POA was authorizing any
However the same obtained. member for the
was not obtained by purpose.
the bank.
2. Neither copy of That the resolution For trust and
resolution has been passed was foundations,
passes/approved by certified by the resolution of the
the board/managing Secretary empowered managing body of the
committee for to handle such foundation
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opening and accounts (As per bye- /association for
operating the above laws) along with the opening an account is
bank account was President of the necessary as per KYC
obtained. society. Therefore no guidelines (Annex-1).
separate copy of the The bank should have
resolution was obtained a copy of the
obtained. Accordingly resolution.
the letter of the
authority was
obtained which
defined the delegation
of powers to the
Secretary and
President. This was in
line with the
provisions of the
constitutional
document of the
society.
3. The branch did not The bona fides of the No field verification
verify the address of customer were was found on record.
the society verified with the As per the bye-laws,
(mentioned as 27, documentary registered address was
8
Tagore Road, evidence produced, 32 School Road,
Durgapur-4 in the which was subject o Durgapur whereas
AOF) with reference audit and found to be address recorded in
to the documents KYC compliant Based the AOF was 27
viz. electricity on the enquiries Tagore Avenue. No
telephone bills etc. raised on this resolution for change
account, field of the registered office
verification was address was held on
conducted and the record. Further in
branch has confirmed mail from Branch
that the organization Head, Benachity
exists at 27, Tagore branch dated October
Avenue, Durgapur 4. 25, 2011, it was
reported that office of
the society was
untraceable.
4. The names of the The matter was The bank has
father of both the inadvertently accepted the lapse.
signatories (Shri overlooked by the
Dhruba Chakraborty bank. At best it can
and Prabir Ghoshal) be called on act of
differed in oversight.
documents (ration
9
and PAN card)
obtained by the
bank.
5. In the AOF it has The account was The bank's
been mentioned that opened with the explanation is
there was already an obtention of the KYC unacceptable.
existing relationship documents to the best
with the bank (A/c extent possible. The
255010100128712) noting of the A/c
KYC compliance and 25010100128712 was
nature of declared by the
transaction of the customer under
mentioned account 'Existing Banking
was not verified by Relationship' as a
the bank. part of completing the
AOF details.
6. The names of Since the organization There was no copy of
secretary and was registered way the resolution for
president in the back in 1981 and the change of office
'Memorandum of bank was satisfied bearers in record. The
Association' of the about its existence, bye-laws was counter
society differed from the change of office singed by Dhruba
those appearing in bearers were Chakraborty as
10
AOF. The construed as natural. President and Prabir
discrepancy was Ghoshal as Secretary
overlooked by the while the same bye-
bank. laws mentioned Shri
Ghatak as President
and Niranjan
Chakraborty as
Secretary. The names
of the President and
Secretary as per bye-
laws were different
from those mentioned
in AOF. The so called
letter of Authority did
not identify the
Secretary by name. In
addition Shri Kajal
Chakraborty was
shown as father of
Dhruba Chakrabory
as per ration card
where as in PAN Card
the father's name was
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Niranjan Chakraborty.
Father's name of
Prabir Ghoshal was
different in PAN and
Ration card.
6. It is thus submitted by Mr. Dutta that from the aforementioned
tabular versions the lapses on the part of the writ petitioner are found to
be prominent.
7. At this juncture Mr. Dutta draws attention of this Court to the
affidavit-in-opposition as filed by the respondent nos.11 to 13/Axis Bank
and its functionaries as affirmed on 21.01.2019. Attention of this Court is
also drawn to paragraph 4(a) to 4(d) of the said affidavit-in-opposition. It
is argued by Mr. Dutta that though in the said opposition the
respondent/ Axis Bank had made an attempt to justify their action by
saying that it is none but the respondent no.2 being the President of the
writ petitioner no.1/ society along with one Prabir Ghoshal claimed to be
the Secretary of the petitioner no.1/society were the joint signatories to
the AOF and while opening the said bank account the cheque issued by
the banker (Corporation Bank) of the writ petitioner no.1/society was
used, however it would reveal from the materials as placed before this
Court that the writ petitioner no.2 never opened the said bank account
with Prince Anwar Shah Road Branch of Axis Bank.
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8. At this juncture Mr. Dutta draws attention of this Court to the order
dated 04.07.2019 as passed by a Co-ordinate Bench thereby directing the
writ petitioners to produce the statement of accounts in respect of the
transaction from all the bank accounts of the writ petitioner no.1
supported by an affidavit. It is argued by Mr. Dutta that pursuant to such
direction the writ petitioners disclosed and annexed the statements of
accounts of the bank accounts of writ petitioner no.1/society while filing
the affidavit as affirmed on 23.07.2019. It is submitted by Mr. Dutta that
from page nos. 73 to 107 of the said affidavit dated 23.07.2019 it would
reveal that the writ petitioners have also annexed the entire statement of
accounts in respect of the two accounts as maintained with the
Corporation Bank, Durganagar Branch and Benachity Branch.
9. It is further submitted by Mr. Dutta that on close scrutiny of the
statements of accounts of the aforesaid two accounts lying with
Corporation Bank it would reveal that no cheque was issued for opening
of the alleged fake account in the name of the writ petitioner no.1/society
with the Prince Anwar Shah Road Branch of Axis Bank. It is further
argued by Mr. Dutta that in course of investigation the investigating
agency also did not find any involvement either of the writ petitioner no.2
or of any officials of the writ petitioner no.1/society in the alleged fraud.
10. At this juncture Mr. Dutta took me to page nos.108 to 118 of the
affidavit as affirmed by the writ petitioner no.2 on 23.07.2019 being the
copies of the statements of accounts of the alleged fake account as lying
with the Axis Bank, Prince Anwar Shah Road Branch in the name of the
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writ petitioner no.1/society. It is submitted by Mr. Dutta that from the
said statements of accounts of Axis Bank it would reveal that huge
amount of donations was credited in the said account and soon thereafter
the said amount was siphoned keeping the writ petitioner no1/society in
dark.
11. It is thus submitted by Mr. Dutta that from the aforementioned
materials as placed before this Court, in view of the categorical
observation as made by RBI and in view of the submission of the charge
sheet against one of the officials of the Axis Bank, the Axis Bank cannot
deny and disown its liability and/or fault and/or negligence in securing
the interest of a citizen especially when the said Axis Bank being a
scheduled bank under the Reserve Bank of India Act, 1934 (hereinafter
referred to as the said Act of 1934 in short) is discharging its public duty
in the field of business of banking.
12. In course of his submission Mr. Dutta further draws attention of
this Court to the different provisions of the said Act of 1934 as well as to
the Banking Regulation Act, 1949 (hereinafter referred to as the said Act
of 1949 in short).
13. In course of his submission Mr. Dutta further draws attention of
this Court to the circulars dated 15.02.1978, 08.04.2002 and 06.07.2017
as issued by the RBI to all commercial banks including the scheduled
commercial banks. It is submitted by Mr. Dutta that from the said
circulars it would reveal that time and again the RBI Authority reminded
all the scheduled commercial banks to be prompt in restoring the fund to
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the customers where on account of fraudulent activity the deposit of its
customers have been wasted either on account of the fault on the part of
the bank or on account of fault in the system. It is further submitted by
Mr. Dutta that from the circular dated 06.07.2017 it would reveal again
that the RBI directed the scheduled commercial banks that in case of zero
liability of a customer time limit should be maintained for crediting the
amount involved in unauthorized electronic transaction to the customer’s
account. It is further submitted by Mr. Dutta that the aforesaid
memos/guidelines were issued by the RBI as per the provisions of Section
35 A of the said Act of 1949 and therefore the said guidelines may be
considered as bye-laws.
14. It is further submitted by Mr. Dutta that on perusal of Sections 36,
46, 49 and 49A of the said Act of 1949 it would reveal further that the
legislatures on their own wisdom have enacted that in case of non-
compliance of the provisions of the said Act regarding compliance of the
statutory formalities of the scheduled commercial banks the said
scheduled banks are liable to penalties.
15. In course of his submission Mr. Dutta draws attention of this Court
to the circular dated 08.04.2002 as issued by the RBI Authority. It is
submitted by Mr. Dutta that from paragraph no.2 of the said circular it
would reveal that RBI Authority reminded its scheduled commercial
banks about a circular dated 15.02.1978 whereby and whereunder the
said banks were advised that once the said banks were convinced that if
any irregularity/fraud had been committed by its staff towards any
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constituents, it should at once acknowledge its liability and pay the just
claim. It is submitted on behalf of the writ petitioners that from the
materials as submitted on behalf of the writ petitioners as well as from
the affidavit-in-opposition of the RBI Authority it would reveal that the
said fake account in the name of the writ petitioner no.1/society has been
opened with Axis Bank, Prince Anwar Shah Road Branch with the active
involvement of one Rajesh Karmakar, the then Branch Sales Manager of
the Axis Bank and also on account of lapses on the part of the Axis Bank
Authority while opening the said account and even thereafter the Axis
Bank and its functionaries being the respondent nos. 11 to 13 had
neither acknowledged their liability nor paid the just claim of the writ
petitioners as per direction of the RBI Authority.
16. At this juncture Mr. Dutta requests this Court to peruse Article 12
and Article 226 of the Constitution of India. It is submitted by Mr. Dutta
that Article 12 of the Constitution of India deals with the definition of
“State” and Article 226 of the Constitution of India clearly envisages that a
writ under the said Article can be issued by a High Court not only against
an authority under Article 12 of the Constitution of India but also against
any person or body of persons who is/are performing public duty.
17. In course of his submission Mr. Dutta places his reliance upon the
reported decision of Andi Mukta Sadguru Shree Mukta
Jeevandasswami Suvarna Jaya Vs. V.R Rudani and Ors reported in
(1989)2 SCC 691. It is submitted by Mr. Dutta that in the reported
decision of Andi Mukta Sadguru (supra) it has been categorically held
16
by the Hon’ble Supreme Court that in the event a private body performing
public duty is subject to rules and regulations of the affiliating body and
its activities are closely supervised by the said affiliating authority, the
form of the body concerned is not much relevant and what is relevant is
the nature of the duty imposed on the body. It is further submitted by Mr.
Dutta that in the said reported decision it has also been held by the
Hon’ble Supreme Court that in such a case the nature of the duty as
imposed on such body is very much relevant and the duty must be judged
in the light of positive obligation owed by the person or authority to the
affected party.
18. On behalf of the writ petitioners reliance was also placed upon the
following reported decisions also namely:-
i. Praga Tools Corporation vs. C.A Imanual and Ors. reported
in (1969) 1 SCC 585;
ii. Binny Ltd. and Anr. vs. V. Sadasivan and Ors. reported in
(2005) 6 SCC 657;
iii. St. Mary’s Education Society and Anr. Vs Rajendra Prasad
Bhargava and Ors. reported in (2023) 4 SCC 498;
iv. Meghashyam Sadashivrao vs. State of Maharashtra and
Ors. reported in (2017) 13 SCC 681.
19. It is further submitted by Mr. Dutta that in assessing adequate
compensation as payable to the writ petitioner by the respondent
no.11/Axis Bank there cannot be any difficulty inasmuch as from the
statement of accounts of the fake account as opened in the Prince Anwar
17
Shah Road Branch of respondent no.11/Axis Bank in the name of the
writ petitioner no.1/society the amount credited and the interest accrued
thereon may be the basis of computation for granting relief as per prayer
(c) of the writ petition. It is thus submitted that the innocuous prayer of
the writ petitioner may not be turned down since adjudication of the
instant writ petition involves no complex and disputed question of facts.
20. It is thus submitted on behalf of the writ petitioners that
appropriate relief/reliefs may be granted to the writ petitioners in terms of
the prayer (b) and prayer (c) of the instant writ petition.
21. Per contra, Mr. Banerjee, learned advocate appearing on behalf of
the RBI Authority at the very outset draws attention of this Court to
prayer (b) of the instant writ petition whereby and whereunder the writ
petitioner has prayed for issuance of appropriate writ against the RBI to
cause investigation in relation to the opening of alleged fake bank account
in the name of the writ petitioner no.1/society with the Axis Bank, Prince
Anwar Shah Road Branch. It is submitted that pursuant to an order
dated 09.01.2017 as passed in the instant writ petition the RBI Authority
had taken all possible steps to ascertain as to whether the respondent
no.11/ Axis Bank has followed the KYC norms while opening the said
alleged account in the name of the writ petitioner no.1/society and from
the affidavit-in-opposition of the RBI as affirmed on 30.01.2017 it would
reveal that the RBI Authority has found sufficient lapses, particulars of
which has been mentioned at page nos.25 and 26 of the said affidavit-in-
opposition which has been quoted in verbatim in the foregoing paragraph.
18
While placing his reliance upon the reported decisions of Manohar lal vs.
UgraSen & Ors reported in (2010) 11 SCC 557 it is argued by Mr.
Banerjee since the RBI Authority has substantially complied with the
orders as passed in the instant writ petition there cannot be any need to
issue a writ against the RBI Authority at this stage.
22. While refuting the contentions as raised on behalf of the writ
petitioners, Mr. Mitra, learned Senior Advocate appearing on behalf of the
respondent nos. 11 to 13 contended that the instant writ petition is not
maintainable against the Axis Bank and its functionaries i.e. the
respondent nos. 11 to 13 in view of the fact that the writ petitioners have
miserably failed to prove that the Axis Bank being a private company
carrying on banking business as a scheduled bank is discharging any
statutory or public duty. It is submitted by Mr. Mitra that since the
respondent no.11 being a company is carrying on the profession of
banking, by no stretch of imagination it can be said that the activities of
the respondent no.11/Axis Bank can be classified as one falling in the
category of discharging duties or functions of public nature and is thus
not amenable to writ jurisdiction of this court.
23. It is further argued by Mr. Mitra that the disputes as involved in the
instant lis does not involve any public law and on the contrary such
disputes squarely comes under the periphery of a private dispute between
the respondent no.11/bank and one of its constituents for which remedy
lies elsewhere but not before a writ court exercising its plenary power
under Article 226 of the Constitution of India. Mr. Mitra further argues
19
that the subject matter of dispute in the instant writ petition is disputed
questions of facts which are required to be adjudicated by trial on
evidence which machinery this writ court does not possess and therefore
in absence of any mechanism to assess the quantum of alleged damages
as allegedly suffered by the writ petitioner no relief ought to be granted in
favour of the writ petitioner as prayed for.
24. In course of his submission Mr. Mitra places his reliance upon the
following reported decision namely:-
i. Federal Bank Limited vs. Sagar Thomas and Ors. reported
in (2003) 10 SCC 733: 2003 SCC Online SC 1082;
ii. S. Sobha vs. Muthoot Finance Ltd. reported in 2025 SCC
Online SC 177;
iii. The judgement and order dated 12.04.2021 as passed by
a Co-ordinate Bench of this Court in WPA 8800 of 2020 (
reported in (2019) 16 SCC 303;
v. City and Industrial Development Corpration vs. Dosu
Aardeshir Bhiwandiwala and Ors. reported in (2009) 1 SCC
168;
vi. Chairman, Grid Corporation of Orissa Ltd. (GRIDCO) and
Ors. vs. Sukamani Das and Anr. reported in (1999) 7 SCC
298.
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25. It is thus submitted by Mr. Mitra that the instant writ petition is
liable to be dismissed.
26. In course of his reply Mr. Dutta, learned Senior Advocate appearing
on behalf of the writ petitioners submits before this Court that the
reported decisions as cited from the side of respondent nos. 11 to 13 have
been passed in different context and thus those reported decisions are
distinguishable from the facts and circumstances of the instant writ
petition.
27. This Court has meticulously gone through the entire materials as
placed before this Court. This Court has given its anxious consideration
over the submissions of the learned advocates for the contending parties.
28. For effective adjudication of the instant writ petition this Court at
the very outset proposes to look to Articles 12 and 226 of the Constitution
of India which read as under:-
12. Definition
“In this part, unless the context otherwise requires, “the State” includes
the Government and Parliament of India and the Government and the
Legislature of each of the States and all local or other authorities
within the territory of India or under the control of the Government of
India.”
226. Power of High Courts to issue certain writs
(1)Notwithstanding anything in article 32 every High Court shall have
powers, throughout the territories in relation to which it exercise
jurisdiction, to issue to any person or authority, including in
appropriate cases, any Government, within those territories directions,
orders or writs, including writs in the nature of habeas corpus,
21mandamus, prohibition, quo warrantor and certiorari, or any of them,
for the enforcement of any of the rights conferred by Part III and for
any other purpose.
(2)The power conferred by clause (1) to issue directions, orders or writs
to any Government, authority or person may also be exercised by any
High Court exercising jurisdiction in relation to the territories within
which the cause of action, wholly or in part, arises for the exercise of
such power, notwithstanding that the scat of such Government or
authority or the residence of such person is not within those territories.
(3)Where any party against whom an interim order, whether by way of
injunction or stay or in any other manner, is made on, or in any
proceedings relating to, a petition under clause (1), without–
(a)furnishing to such party copies of such petition and all documents
in support of the plea for such interim order; and
(b)giving such party an opportunity of being heard, makes an
application to the High Court for the vacation of such order and
furnishes a copy of such application to the party in whose favour
such order has been made or the counsel of such party, the High
Court shall dispose of the application within a period of two weeks
from the date on which it is received or from the date on which the
copy of such application is so furnished, whichever is later, or where
the High Court is closed on the last day of that period, before the
expiry of the next day afterwards on which the High Court is open;
and if the application is not so disposed of, the interim order shall, on
the expiry of that period, or, as the case may be, the expiry of the
said next day, stand vacated.
(4)The power conferred on a High Court by this article shall not be in
derogation of the power conferred on the Supreme Court by clause (2)
of1article132.”
29. It is undisputed that the respondent no.11/Axis Bank is a private
limited company and is a scheduled bank as per Section 2 (e) read with
22
Second Schedule of the said Act of 1934. It further appears to this Court
that the respondent no.11 being a scheduled bank is governed by the said
Act of 1934 vis-à-vis the said Act of 1949. On perusal of the provisions of
Section 45 B, 45 D and Section 42 of the said Act of 1934 it reveals to this
Court that RBI Authority is empowered to collect credit information from
the respondent no.11/bank and Section 42 of the said Act of 1934
postulates that the respondent no.11 being a scheduled bank is duty
bound to keep cash reserves with the RBI Authority.
30. At this juncture if I look to the different provisions of the said Act of
1949 it appears to this Court that the respondent no.11 being a
scheduled banking company had to obtain licence from the RBI Authority
and the RBI Authority is empowered to cancel such licence on account of
failure on the part of the respondent no.11 to comply with the conditions
of the licence.
31. Section 35A of the said Act of 1949 in considered view of this Court
is very much vital inasmuch as the said Section empowers the RBI
Authority to give directions to the banking companies. Section 35 A of the
said Act of 1949 is quoted hereinbelow in verbatim:-
“35A. Power of the Reserve Bank to give directions
(1)Where the Reserve Bank is satisfied that-
(a) in the public interest; or
(aa) in the interest of banking policy; or
(b) to prevent the affairs of any banking company being conducted in a
manner detrimental to the interests of the depositor or in a manner
prejudicial to the interests of the banking company; or
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(c) to secure the proper management of any banking company
generally, it is necessary to issue directions to the banking companies
generally to any banking company in particular, it may , from time to
time, issue such direction as it deems fit, and the banking companies
or the banking company, as the case may be, shall be bound to comply
with such directions.
(2) the Reserve Bank may, on representation made to it or on its own
motion modify or cancel any direction issued under sub-section (1),
and in so modifying or cancelling any direction may impose such
conditions as it thinks fit, subject to which the modification or
cancellation shall have effect.”
32. Section 36 of the said Act of 1949 deals with further powers and
functions of the RBI Authority and in exercise of such powers the RBI
Authority is empowered to pass appropriate order either in the public
interest or in the interest of the bank policy or for preventing affairs of the
banking company being conducted in a manner detrimental to the
interest of the banking company or its depositors, if necessary.
33. Section 35 of the said Act of 1949 empowers the RBI Authority to
cause inspection of the banking companies who are doing the business of
banking after obtaining licence from RBI Authority.
34. Section 46 of the said Act of 1949 empowers the RBI Authority to
impose penalty while Section 49 and Section 49A of the said Act of 1949
deals with certain restrictions which may be imposed by the RBI
Authority over a banking company.
35. On careful consideration of the aforementioned Sections of the said
Act of 1934 as well as of the said Act of 1949 it thus appears to this Court
24
that the respondent no.11 being a scheduled bank is duty bound to carry
on its banking business within the periphery of the statutory provisions of
the said two Acts as well as under the control and surveillance of the RBI
Authority.
36. In view of such, this Court has got no hesitation to hold that the
respondent no.11/Axis Bank is duty bound to carry out the directions
issued time to time by the RBI Authority under cover of its different
circulars.
37. Before entering into the factual aspects of the instant writ petition I
propose to look to the reported decisions as cited from the Bar.
38. In the reported decision of Praga Tools Corporation (supra) it has
been held by the Hon’ble Supreme Court that a mandamus can be issued
to an official of a society to compel him to carry out the terms of the
statute under or by which the society is constituted or governed and also
to companies or corporations to carry out duties placed on them by the
statute authorizing their undertaking. A mandamus would also lie against
a company constituted by the statute for the purpose of fulfilling public
responsibilities.
39. In the reported decision of Andi Mukta (supra) the Hon’ble
Supreme Court also considered the proposition of law as decided in the
case of Praga Tools (supra) and in the said judgement it has been held
that Article 226 of the Constitution confers power on the High Courts to
issue writs for enforcement of the fundamental rights as well as non-
fundamental rights. It has been held further that the words “any person
25
or authority” used in Article 226 of the Constitution are therefore, not to
be confined only to statutory instruments of the State. The form of the
body concerned is not much relevant. What is relevant is the nature of the
duty imposed on the body and the duty must be judged in the light of
positive obligation owed by the person or authority to the affected party. It
has been held further that no matter by what means the duty is imposed,
if a positive obligation exists mandamus cannot be denied.
In the reported decision of Andi Mukta (supra) it has also been held
that the judicial control over the fast expanding maze of bodies affecting
the rights of people should not be put into watertight compartment and
on the contrary it should remain flexible to meet the requirements of
variable circumstances. It has been further stated that mandamus is a
very wide remedy which must be easily available to meet injustice
wherever it is found.
40. In the reported decisions of Binnny Ltd. (supra) it has been held by
the Hon’ble Supreme Court that the scope of mandamus is limited to
enforcement of public duty and such scope is determined by the nature of
the duty to be enforced rather than the identity of the authority against
whom it is sought. It has also been held that in the event a private body is
discharging public function and the denial of any right is in connection
with the public duty imposed on such body, the public law remedy can be
enforced.
41. The same view was taken in the reported decision of St. Mary’s
Education Society (supra).
26
42. In the reported decision of Meghashyam Sadashivrao Vadhave
(Supra) the Hon’ble Apex Court while disposing the writ petition awarded
compensation for the loss occurred to the appellant due to the arbitrary
act of the respondent/ government authority.
43. In the reported decision of Federal Bank Limited (supra) it has
been held by the Hon’ble Supreme Court that a private company carrying
on banking business as a scheduled bank cannot be termed as an
institution or a company carrying on any statutory or public duty. It has
been held further that merely because RBI lays banking policy in the
interest of the banking system or in the interest of the monetary stability
or sound economic growth having due regard to the interest of the
depositors, etc it does not mean that the private companies carrying on
business or commercial activity of banking discharge any pubic function
or public duty and is thus not amenable to the writ jurisdiction of the
High Court.
44. In the reported decision of S. Shobha (supra) it has been held
that a private company carrying banking business as a scheduled bank
cannot be termed as a company carrying on any public function or public
duty. The same view was taken in the case of Niloy Ganguly vs. Axis
Bank (supra) by a Co-ordinate Bench of this Court as well as in the
reported decision of Kago Kunya (supra).
45. In the reported decision of City and Industrial Development
Corporation (supra) it has been held that while exercising its
extraordinary jurisdiction under Article 226 of the Constitution the High
27
Court is duty bound to take all the relevant facts and circumstances into
consideration namely;
a. adjudication of writ petition involves any complex and
disputed questions of facts and whether they can be
satisfactorily resolved;
b. the petition reveals all material facts;
c. the petitioner has any alternative or effective remedy for the
resolution of the dispute;
d. person invoking the jurisdiction is guilty of unexplained delay
and laches;
e. ex facie barred by any laws of limitation;
f. grant of relief is against public policy or barred by any valid
law; and host of other factors.
46. In the reported decision of Sukamani Das (supra) the Hon’ble Apex
Court held that where disputed question of facts are involved a petition
under Article 226 of the Constitution of India is not a proper remedy.
47. Keeping in mind the aforementioned legislative provisions of the
said Act of 1934 as well as of the said Act of 1949 and the propositions of
law as decided in the reported decisions as cited from the Bar if I look to
the factual aspects of this case it appears to this Court that the grievance
of the writ petitioners that on account of laches on the part of the
respondent nos. 11 to 13 and on account of prima facie involvement of
one of the Branch’s Sales Manager of the respondent no.11/ Axis Bank an
account in the name of the writ petitioner no.1/society was opened in the
28
Prince Anwar Shah Road Branch of respondent no.11/Axis Bank.
Materials has have been placed before this Court by way of affidavit that
in the said account huge donations as received from the well wishers of
the writ petitioner no. 1/ society were credited keeping the writ petitioners
in dark and soon thereafter the miscreatant(s) have withdrawn the said
money from the said fake account.
48. On comparative study of the affidavit-in-opposition of the
respondent nos.11, 12 and 13 vis-à-vis the affidavit-in-opposition of the
respondent no.2 i.e. RBI Authority it appears that while opening the said
fake account in the name of the writ petitioner no.1/society the
respondent nos. 11, 12, and 13 i.e the Axis Bank and its functionaries
have committed several serious lapses in gross violation of the directives
as issued time to time by the RBI Authority. In considered view of this
Court that while filing affidavit-in-opposition the respondent nos. 11 to 13
could not justify at all with regard to their negligence and lapses as
noticed by the RBI authority in course of enquiry pursuant to an order
dated 09.01.2017 as passed in the instant writ petition.
49. In course of his argument Mr. Mitra also made no endeavor to
justify the said in-action of the Axis Bank.
50. In view of such, this Court has got no hesitation to hold that
respondent nos.11 i.e. the Axis Bank cannot avoid its liability in the
process of opening of a fake bank account at its Prince Anwar Shah Road
Branch in the name of the writ petitioner no.1/society. It further appears
to this Court that though an attempt has been made on behalf of the
29
respondent nos. 11 to 13 to substantiate that the writ petitioner no.2 was
actively involved in the opening of the said bank account at its Prince
Anwar Shah Road Branch however, such claim is found to be futile
inasmuch as sufficient materials have been placed before this Court that
in course of investigation in connection with the aforementioned P.S case
the involvement of the writ petitioner no.2 was not at all found. It has also
been noticed by this Court that the allegation of the respondent no.11
that the said fake bank account at its Prince Anwar Shah Road was
opened by using a cheque by the writ petitioners’ banker i.e. Corporation
Bank is found to be contrary to the truth.
51. At this juncture the moot question that arises for consideration is
as to whether on account of such negligent act and/or lapses on the part
of the Axis Bank a writ will lie against the Axis Bank or not.
52. It is undisputed that respondent no.11 is a body corporate and is
involved in the business of banking. Therefore, by no stretch of
imagination it can be said that it is an authority within the meaning of
Article 12 of the Constitution of India. As rightly pointed out by Mr. Dutta
that Article 226 of the Constitution clearly envisages that the High court
under Article 226 has power to issue writ throughout the territories in
relation to which it exercises its jurisdiction against any person or
authority for the enforcement of the rights under Part III as well as for the
enforcement of any other constitutional rights.
53. From the reported decisions as cited from the Bar it appears that it
is the consistent view of the Supreme Court as well as of different High
30
Courts including our High Court that such plenary power under Article
226 can be issued against any person or body of persons and even
against a company or a corporation in the event such persons or body of
persons or company or corporation discharge public duties or
responsibilities imposed upon it by a statute. It thus appear to this Court
that in order to ascertain the maintainability of a writ petition against a
person or body of persons or company or corporation the identity of the
said person or body of persons or company or corporation need not be
looked into however, it has to be ascertained as to whether the said
private body is at all discharging any public function that is to say that
there must be a public law element in the action of the said person or
body of persons, etc.
54. At this juncture if I look to the provision of Section 35A of the said
Act of 1949 as quoted in the foregoing paragraph it appears to this Court
that by virtue of the said Section the RBI Authority either in the public
interest or in the interest of banking policy or to prevent the affairs of any
banking company have conducted in a manner detrimental to the interest
of the depositors or in a manner prejudicial to the interest of the banking
company or to secure the proper management of any banking company is
empowered to issue directions to banking companies and the banking
company is duty bound to comply with such directions.
55. Keeping in mind the provisions of Section 35 A of the said Act of
1949 if I look to the various circulars as cited from the side of the writ
petitioners it appears to this Court that it is the strict direction of the RBI
31
to the scheduled banks that once a bank is convinced that an
irregularity/fraud has been committed by its staff towards any
constituents it should at once acknowledge its liability and pay the just
claim. Admittedly, the respondent no.11/Axis Bank had not complied
with such direction.
56. It further appears from the circular dated 06.07.2017 as issued by
the RBI that it is also the specific direction of the RBI that in the event
deficiencies lies neither with the bank nor with the customers but lies
elsewhere in the system the bank is duty bound to notify the customers
within three working days of the receiving of the communication from the
bank regarding the unauthorized transaction.
57. From the circular dated May 04, 1995 it reveals that the RBI
reminded the scheduled banks to adhere to their circulars dated
18.11.1993 and 23.09.1994 regarding the guidelines and procedures for
opening and operating the deposit accounts to safeguard against the
unscrupulous opening (benami fictitious action ) namely to use them as
conduit for fraudulently encashing third party cheques, drafts, etc.
58. From the affidavit-in-opposition of the RBI Authority it appears to
this Court that pursuant to a direction passed by a Co-ordinate Bench in
the instant writ petition on 09.01.2017 the RBI Authority has noticed that
the respondent no.11 has flouted all such circulars as has been issued
under Section 35 A of the said Act of 1949.
59. For the sake of argument even if this Court accepts that the
disputes between the writ petitioner and the respondent nos. 11 to 13
32
pertains to a private dispute i.e. a dispute between bank and its
constituents but in considered view of this Court by no stretch of
imagination it can be said that the duty as imposed upon the respondent
nos. 11 to 13 pursuant to the provisions of Section 35A of the said Act of
1949 vis-à-vis various directions/circulars are not public responsibilities.
60. On the contrary it appears to this Court that the RBI Authority in
discharge of its statutory obligation as enshrined under Section 35A of
the said Act of 1949 has time to time issued various directions and
circulars in order to prevent the affairs of the respondent nos. 11 to 13 as
well as other scheduled banks in a manner which must not be
detrimental to the interest of the depositor and thus a corresponding
obligation lies with the respondent nos. 11 to 13 to carry out such
direction and/or circulars in letter and spirit for the purpose of fulfilling
its public responsibilities.
61. At this juncture if I look to the reported decision of Praga Tools
Corporation (supra) it appears to this Court that the Hon’ble Supreme
Court while deciding as to whether a writ under Article 226 of the
Constitution will lie against a company expressed the following view:-
“6…………………………………..It is, however, not necessary that the
persons or the authority on whom the statutory duty is imposed need
be a public official or an official body. A mandamus can issue, for
instance, to an official or a society to compel him to carry out the
terms of the statute under or by which the society is constituted or
governed and also to companies or corporations to carry out duties
placed on them by the statutes authorizing their undertakings. A
33mandamus would also lie against a company constituted by a
statute for the purpose of fulfilling public responsibilities.”
62. In the reported decision of Andi Mukta (surpa) the Hon’ble
Supreme Court expressed the following view:-
“20. The term “authority” used in Article 226, in the context, must
receive a liberal meaning unlike the term in Article 12. Article 12 is
relevant only for the purpose of enforcement of fundamental rights
under Article 32. Article 226 confers power on the High Courts to
issue writs for enforcement of the fundamental rights as well as
non-fundamental rights. The words “any person or authority” used
in Article 226 are, therefore, not to be confined only to statutory
authorities and instrumentalities of the State. They may cover any
other person or body performing public duty. The form of the body
concerned is not very much relevant. What is relevant is the nature
of the duty imposed on the body. The duty must be judged in the
light of positive obligation owed by the person or authority to the
affected party. No matter by what means the duty is imposed, if a
positive obligation exists mandamus cannot be denied.
21. In Praga Tools Corpn. v. C.A. Imanual [(1969) 1 SCC 585 : (1969)
3 SCR 773] this Court said that a mandamus can issue against a
person or body to carry out the duties placed on them by the statutes
even though they are not public officials or statutory body. It was
observed: (SCC p. 589, para 6 : SCR p. 778)
“It is, however, not necessary that the person or the authority on
whom the statutory duty is imposed need be a public official or an
official body. A niandamus can issue, for instance, to an official of a
society to compel him to carry out the terms of the statute under or by
which the society is constituted or governed and also to companies or
corporations to carry out duties placed on them by the statutes
authorising their undertakings. A mandamus would also lie against a
34company constituted by a statute for the purpose of fulfilling public
responsibilities. (Cf. Halsbury’s Laws of England, 3rd Edn., Vol. II, p.
52 and onwards.)”
63. From the factual matrix as involved in the instant lis it very much
appears to this Court that respondent nos.11 to 13 cannot deny their
obligation to an affected person who is its constituent especially when the
said constituent (the writ petitioner herein) suffered substantially on
account of failure on the part of the said respondents to perform its duties
and obligations which they are bound to perform in terms of provisions of
Section 35 A of the said Act of 1949 vis-avis the different circulars/
direction of the RBI which are basically meant either for the public
interest or for the purpose of preventing the affairs of the said
respondents in a manner detrimental to the interest of the depositors.
64. This Court is thus of considered view that on account of failure on
the part of the respondent nos. 11 to 13 to discharge positive statutory
obligation there cannot be any embargo in issuing a writ of mandamus as
prayed for.
65. This Court is conscious regarding the propositions of law as
discussed in the reported decisions as cited from the side of the
respondent nos. 11 to 13. Admittedly, in the reported decisions of
Federal Bank Ltd. (supra) the Hon’ble Supreme Court in categorical
terms expressed that a private company involved in banking business as
a scheduled bank cannot be termed as an institution or a company
carrying on any statutory or public duty. It has been decided further that
35
since a company carrying on the profession of banking, such activity
cannot be classified as one falling in the category of discharging public
duties or functions of a public nature.
66. In the reported decision of S. Shobha (supra) however, the Hon’ble
Apex Court expressed the following view:-
“9……..
9.1…
9.2…
9.3…
9.4…
9.5. Normally, mandamus is issued to a public body or authority to
compel it to perform some public duty cast upon it by some statute or
statutory rule. In exceptional cases a writ of mandamus or a writ in
the nature of mandamus may issue to a private body, but only where
a public duty is cast upon such private body by a statute or statutory
rule and only to compel such body to perform its public duty.”
67. As rightly pointed out by Mr. Dutta that the reported decisions as
cited from the side of respondent nos. 11 to 13 have been passed in
completely different context inasmuch as in most of such cases the
Hon’ble Supreme Court found that a writ petition against a private
banking company is not maintainable at the instance of its dismissed
employee challenging the order of dismissal.
68. However, it appears to this Court that in the reported decision of
Andi Mukta (supra) and Praga Tools Corporation (supra) as well as in
the reported decision of S.Shobha (supra) the Hon’ble Supreme Court
had occasion to consider the scope of issuing mandamus against a private
36
body only when a public duty is cast upon it by a statute or a statutory
rule as in the case in hand.
69. In course of argument Mr. Mitra was very vocal that on account of
several disputed questions of facts this Writ Court is practically
handicapped to deal with those issues.
70. It has been argued further that such disputed facts can be taken
care of in a common law forum by trial on evidence which mechanism a
writ court is lacking and therefore the relief as sought for in terms of the
prayer (c) of the instant writ petition cannot be granted.
71. This Court is in respectful disagreement with such submission of
Mr. Mitra inasmuch as from the statement of accounts of the said fake
bank account as has been opened in the Prince Anwar Shah Road Branch
of respondent no.11/ Axis Bank the entire credited and debited amount
can be assessed and there cannot be any difficulty to make a computation
with regard to the calculation of interest on such credited amount as has
been deposited in the name of the writ petitioner no.1/society in such
fake account.
72. This Court is thus of considered view that there cannot be any
difficulty to assess the loss suffered by the writ petitioner no.1/ society on
account of the laches and/or negligence and/or failure to perform the
statutory obligation and/or directions of the RBI under Section 35A of the
said Act of 1949.
73. In view of the discussion made hereinabove, the instant writ
petition succeeds and is hereby allowed.
37
74. This Court thus directs the respondent nos. 2 to 4 i.e. RBI and its
functionaries to constitute a high level committee consisting of atleast
three members within a period of 7 days from the date of communication
of server copy of this judgement to them.
75. It is further directed that the said committee shall make a thorough
enquiry regarding the laches and/or negligence for non-compliance of the
provisions of the Banking Regulations Act, 1949, the Reserve Bank of
India Act, 1934 and on account of violation of various circulars of the RBI.
The said committee shall before coming to conclusion of such enquiry
shall give an opportunity of hearing to the respondent no.11 and/or its
functionaries and/or its authorised representative and thereafter shall
pass appropriate reasoned order in terms of the provisions of the said Act
of 1934 and the said Act of 1949 and shall communicate the said decision
to the respondent no.11 forthwith through e-mail to the respondent
no.11. Liberty is given to the Reserve Bank of India to take punitive action
against the respondent no.11 in the event such laches and/or negligence
of respondent no.11/Axis Bank is proved on conclusion of such enquiry.
76. It is further directed that the said committee shall also make a
thorough scrutiny over the transactions in the said fake bank account as
opened in the name of writ petitioner no.1/ society in the Axis Bank,
Prince Anwar Shah Road Branch. The said committee shall come to a
finding with regard to the amount credited in the said account together
with interest accrued thereon. The said committee shall also give an
opportunity of hearing to the writ petitioner no.2 and the authorized
38
representative of the respondent no.11/Axis Bank and shall pass a
reasoned order with regard to the quantum of loss suffered by the writ
petitioner no.1/ society and shall also communicate such order including
the assessed amount of loss suffered by the writ petitioner no.1/ society
both to the writ petitioners as well as to the respondent no.11 and upon
such communication respondent no.11/Axis Bank shall disburse the said
assessed amount in favour of the writ petitioner no.1/ society within 15
working days from the date of communication of such assessment order
towards compensation on account of loss suffered by the writ petitioner
no.1/society.
77. It is further directed that the entire exercise as indicated in the
foregoing paragraphs are to be completed by the Reserve Bank of India
within thirty working days from the date of communication of the server
copy of this judgement. The time limit as fixed by this Court is mandatory
and peremptory.
78. Considering the harassment of the writ petitioners in pursuing the
instant legal proceedings and also considering the trauma and agony
suffered on account of laches and negligence on the part of the
respondent no.11/Axis Bank and its functionaries and keeping in mind
that a huge amount of transaction took place in the said fake account,
this Court imposes a cost of Rs. 25 lacs upon the respondent no.11/Axis
Bank which is also to be paid to the writ petitioner no.1/society by the
respondent nos. 11 to 13 within 30 working days from the date of
communication of the server copy of this judgement.
39
79. Liberty is given to the learned advocate on record for the writ
petitioners to communicate the server copy of this judgement to the
respondent nos. 2, 3, 11 and 13 for their immediate compliances. The
aforementioned respondents are directed to act on the server copies of the
instant judgement and order.
80. With the disposal of the instant writ petition CAN 1 of 2024 is also
disposed of.
81. Urgent photostat certified copy of this judgement, if applied for, be
given to the parties on completion of usual formalities.
(PARTHA SARATHI SEN, J.)
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