Nadar Mahajana Sangam vs Reserve Bank of India, Central Office Department of Banking Operation and Development Centre-I and Others

K. Raviraja Pandian, J.—The petitioner Nadar Mahajana Sangam, Madurai claiming itself as the apex body of Nadar Mahamais

(Associations) spread all over India, registered itself under he Societies Act, filed the present writ petition seeking or the relief of issuance of a writ

of mandamus forbearing he first respondent - Reserve Bank of India and the second respondent - the Tamil Nadu Mercantile Bank Limited a

private bank incorporated under the provisions of Companies Act, from effecting transfer or allow private respondents No. 3 to 5 to deal with

95,418 shares in an manner by contending that the second respondent Bank had been created to foster and develop the resources of the

community or class called ""Nadars"" and the Bank is acting against the purpose for which it was created, that one Essar group with the object of

taking over the management of the second respondent bank entered into a memorandum of undertaking with its shareholder to buy 67% of its

shares in the names of seven companies. Such an undertaking was against the Reserve Bank of India guidelines and as such permission has not

been granted for transfer of the names by the first respondent. The petitioner also referred to several litigations in respect of the internal

management of the bank and irregularity in conducting the annual general body meeting held on 12.3.2004 and on those grounds filed the above

writ petition with the prayer as stated above.

The respondents resisted the writ petition mainly on the ground that the writ petition at the hands of the petitioner complaining about the internal

management of the Bank is not maintainable in law as the writ petition seeks to set at naught the powers of attorney executed by certain

shareholders appointing respondents No. 3 to 5 as their duly constituted agents, which is private contract in nature. The arraying of Reserve Bank

of India as the first respondent cannot be itself be a reason for maintaining a writ petition and it is nothing but an abuse of process of law as the

prayer sought for is in the nature of injunction against the second respondent from dealing with the shares. For such a relief, a writ petition is not

maintainable. On merits also, it was contended that the meeting held on 12.3.2004 is only in accordance with the directions issued by the Division

Bench of this Court that the meeting was chaired by a retired High Court judge of this Court pursuant to the order of the Company Law Board

that the conduct of the meeting has been found legal by the Company Law Board in its order dated 18.6.2004. When such being the position, the

writ petition deserves to be dismissed as not maintainable.

I heard the argument of the learned counsel for the respondents, who argued before this Court. However, though the case was twice adjourned

for the purpose of argument of learned counsel for the petitioner, the counsel has only submitted written submissions on 25.1.2005.

In the written submissions, it was stated that the challenge in the writ petition is only on the ground that the first respondent having refused to

acknowledge the transfer of the shares, the second respondent cannot be permitted to effect transfer. Section 35-A of the Banking Regulation Act

deals with the power of Reserve Bank of India to give direction to the Bank. Similarly Section 36 empowers Reserve Bank to caution or prohibit

Banking Companies against entering into any particular transaction or transactions. Hence, the second respondent is bound by the direction of the

first respondent, which is a State under Article 12 of the Constitution of India. Incidentally, in the written submissions, the judgment Federal Bank

Ltd. Vs. Sagar Thomas and Others, , has also been cited to contend that normally a private company, in this case, the second respondent is not

amenable to writ jurisdiction. However, a writ may be issued to a private bank for non-compliance of statutes.

I have perused the material placed on record.

I am of the view that the issue of maintainability of a writ petition against a private bank is no longer res integra, It is very well settled by the

judgment of the Supreme Court in the case of Federal Bank Ltd. Vs. Sagar Thomas and Others, in which the Supreme Court has categorically laid

down the law thus:

A private company carrying on banking business as a scheduled bank, cannot be termed as an institution or company carrying on any statutory or

public duty. A private body or a person may be amenable to writ jurisdiction only where it may become necessary to compel such body or

association to enforce any statutory obligations or such obligations of public nature casting positive obligation upon it. Such conditions are not

fulfilled in respect of a private company carrying on a commercial activity of banking. Merely regulatory provisions to ensure such activity carried

on by private bodies work within a discipline, do not confer any such status upon the company nor puts any such obligation upon it which may be

enforced through issue of a writ under Article 226 of the Constitution of India"".

On facts, incidentally, it is also mentioned in this case that the Reserve Bank of India, the first respondent has declined acknowledgment of the

transfer. As already stated, a whirlpool of litigations are pending in various forums including Company Law Board and Civil Court in respect of

internal management and rights and liabilities of shareholders. The petitioner has not made out any case, in the sense, the petitioner has not stated

any reason what so ever, how they are interested in the internal management of affairs of the second respondent Bank, which is a private Bank and

registered as Company under the provisions of Companies Act. Except saying that the company has been incorporated only for the purpose of

fostering and developing the resources of community or class of ""Nadars"" there is no whisper what so ever in what way the petitioner is interested

in the affairs of the second respondent Bank or effected by the internal management of the second respondent. Even assuming that the second

respondent bank is involved in oppression, misfeasance and non-feasance, for that purpose, a writ under Article 226 of the Constitution of India

cannot be maintained in view of the law of the land as laid down by the Supreme Court in the above referred Federal Bank case.

Apart from that, in the second respondent''s own case, when a writ petition was filed before this Court by arraying the Reserve Bank of India as

a party, this Court in the case of R.P. Rajah Vs. The Chairman, Tamil Nadu Mercantile Bank Ltd., The Governor, Reserve Bank of India and The

Secretary, Ministry of Finance Government of India, , following the Federal Bank case referred to above, refused to entertain the writ petition

against the second respondent bank for issuance of certiorarified mandamus to quash the proceedings dated 21.4.1989 passed by the Executive,

Administration in pursuance of the forced resignation and its subsequent relieving order issued by the Manager dated 12.7.1989 to the Department

of the petitioner therein and for issuance of a further direction.

Having regard to the position of law a s stated above, particularly, the decision of the Supreme Court, I am of the view that the petitioner cannot

maintain a writ petition of the present nature and on that ground, the writ petition is dismissed. However, there is no order as to costs.

Consequently, the connected W.P.M.P. is also dismissed. As the writ petition is dismissed as not maintainable, this Court has refrained itself from

dealing with the factual matrix of the issue involved in the writ petition.