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Ajesh Kumar Shankar

MANU/KA/1251/2015i

IN THE HIGH COURT OF KARNATAKA AT BENGALURU

Writ Petition Nos. 709 to 711/2015 (GM-RES)

Decided On: 01.06.2015

Appellants: The Prestige Monte Carlo Apartment Owners’ Association and Ors. Vs.

Respondent: The Reserve Bank of India and Ors.

Hon’ble Judges/Coram:

S. Abdul Nazeer, J.

Counsels:

For Appellant/Petitioner/Plaintiff: S. Ajesh Kumar, Adv.

Case Note:

CONSTITUTION OF INDIA – ARTICLES 226 AND 227-Communication sent by the second respondent/private Bank freezing the bank account of the petitioners-Challenge to-Serious dispute in relation to the election of the office bearers of the petitioners/Association-Pendency of civil suit-Matter involves disputed question of fact-Relief sought against a private BankMaintainability of Writ Petition-HELD, Writ Petition is not maintainable against a private Bank.FURTHER HELD,(a) The matter involves disputed questions of fact. The bank account has to be operated by a legally constituted managing committee of the Association. The question as to who should operate the bank account is incidental to the main issue, which can also be decided by the Civil Court. However, the second respondent/Bank may have to be impleaded in the suit for effective adjudication of the dispute. Therefore, petitioner Nos. 2 and 3 have to approach the Civil Court for appropriate reliefs. Since a suit between the parties on the same issue is pending, question of entertaining the writ petitions does not arise. [8](b) A writ petition under Article 226 of the Constitution of India may be maintainable against the State (Govt.), Authority, a statutory body, an instrumentality or agency of the State, a company which is financed and owned by the State, a private body run substantially on State funding, a private body discharging public duty or positive obligation of public nature, a person or a body under liability to discharge any function under any Statute, to compel it to perform such a statutory function.-A private company carrying on banking business as Scheduled Bank cannot be termed as an Institution or Company carrying on any statutory or public duty. [10](c) 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. Hence, Writ Petition against second respondent is not maintainable. [11]Writ Petitions are Dismissed. ORDER

1. In these cases, the petitioners have sought for quashing the communication at Annexure ‘A’ dated 24.12.2014 sent by M/s. ICICI Bank, Yelahanka New Town Branch, Bangalore-the second respondent herein informing them that the bank account bearing No. 041101000888 has been freezed subject to further orders in the suit O.S. No. 1463/2014 filed by the Prestige Monte Carlo Apartment Owners Association represented by Mr. Amit Chatterjee
2. The first petitioner contends that it is an association incorporated under the Karnataka Apartments Owners Act, 1972. The residential apartment complex comprises of 440 flats known as ‘Prestige Monte Carlo Apartment’ situated at Doddaballapur Road, Yelahanka, Bangalore. The apartment building has several amenities such as security, swimming pool, club house, lifts, etc. Each of the apartment owners in the apartment building contribute certain amount every month towards the maintenance of the aforesaid amenities. It is further contended that the general body of the first petitioner-association passed a resolution during the emergency general body meeting held on 19.10.2014 electing the second petitioner as its President, the third petitioner as its treasurer and certain other apartment owners as the Secretary and members of the managing committee of the association. The general body removed the erstwhile office bearers of the managing committee in accordance with the bye laws. The association deposits the maintenance charges in the aforesaid account in the first respondent-Bank from time to time and cheques are issued to various service providers for the maintenance of common area and for providing other facilities. The second petitioner and other office bearers have been operating the aforesaid bank account. The previous President of the association, namely, Mr. Jubm Varky and previous Secretary Mr. Amit Chatterjee have filed O.S. No. 1463/2014 against a few residents including the new office bearers of the association. There is sufficient balance in the bank account of the association. However, the Bank has sent a communication at Annexure ‘A’ freezing the bank account of the association contrary to law.
3. Respondent No. 3 has filed the statement of objections contending that petitioner Nos. 2 and 3 are only self-styled President and Secretary of the Prestige Monte Carlo Apartment Owners’ Association. Respondent Nos. 3 to 5 are the elected President, Secretary and Treasurer of the association. They have been duly elected in a meeting held on 20.7.2014 for a term of one year as per bye-law 24 of the Bye-laws of the Association. The so called special meeting conduced by petitioner Nos. 2 and 3 is not in accordance with the bye-laws. Respondent No. 5 as the Secretary of the association has filed a suit O.S. 1463/2014 before the Civil Court seeking a declaration that the alleged special meeting of 19.10.2014 is illegal and does not bind the association The petitioners have entered appearance in the suit and have filed their written statement. The mandamus sought for by the petitioners is not preceded by a demand. Respondent No. 2 is a private Bank and not amenable to writ jurisdiction of this Court. If the petitioners are aggrieved by the impugned letter, their remedy is only a civil remedy. Therefore, the writ petitions are not maintainable. They have denied the other averments made in the writ petitions.
4. Learned Counsel for the petitioners would contend that petitioner Nos. 2 and 3 are the duly elected President and Treasurer of the first petitioner-association. The second respondent-Bank has illegally freezed the account of the first petitioner-association. Merely because the suit has been filed by respondent Nos. 3 to 5, the Bank cannot freeze account. No interim order has been passed by the Civil Court in the suit. He submits that the second respondent cannot freeze the account contrary to the 12-06-2017 (Page 2 of 5 ) www.manupatra.com AKS Law Regulations of the Reserve Bank of India.
5. On the other hand, learned Counsel appearing for respondent Nos. 3 to 5 submits that the relief sought for by the petitioners is against the second respondent, which is a private Bank. It is not amenable to the writ jurisdiction of this Court. Therefore, writ petitions are not maintainable. Alternatively, he submits that respondent Nos. 3 to 5 are the duly elected office bearers of the first petitioner-association. The alleged special general body meeting of the association held on 19.10.2014 is illegal and violative of the bye-laws. Petitioner Nos. 2 and 3 are not duly elected office bearers of the association. It is argued that if the petitioners are aggrieved by the impugned communication, they have to approach the Civil Court for appropriate reliefs. Respondent Nos. 3 to 5 have already filed a civil suit against petitioner Nos. 2 and 3 and so called other office bearers of the first petitioner-association, which is pending. The jurisdiction of this Court cannot be invoked for deciding the dispute between petitioner Nos. 2 and 3 and the other so called office bearers and respondent Nos. 3 to 5. He prays for dismissal of the writ petitions.
6. I have carefully considered the arguments of the learned Counsel made at the Bar and perused the materials placed on record
7. The relief sought for in these writ petitions is for quashing the communication at Annexure ‘A’ freezing the bank account of the first petitioner-association. In this communication, it has been intimated to respondent Nos. 3 to 5 that in view of the pendency of the suit in O.S. No. 1463/2014 in relation to the constitution of the association, the bank account has been freezed subject to further clarification/direction or order which may be passed by the Civil Court. The contention of the petitioners is that petitioner Nos. 2 and 3 have been elected as the President and the Treasurer of the association in the emergency general body meeting held on 19.10.2014. The contention of respondent Nos. 3 to 5 is that they are the duly elected members of the association in the meeting held on 20.7.2014 and their term continues till July, 2015. There is no provision in the bye-laws to hold special general body meeting.
8. It is thus clear that there is a serious dispute in relation to the election of the office bearers of the association. Respondent Nos. 3 to 5 have already filed a civil suit O.S. No. 1463/2014 for a declaration that holding of the meeting called by defendants therein (petitioner Nos. 2 and 3 in these writ petitions) dated 19.10.2014 and the other office bearers is illegal and does not bind the association. Petitioner Nos. 2 and 3 have already filed their written statement in the said suit. The matter involves disputed questions of fact. The bank account has to be operated by a legally constituted managing committee of the association. The question as to who should operate the bank account is incidental to the main issue, which can also be decided by the Civil Court. However, the second respondent-Bank may have to be impleaded in the suit for effective adjudication of the dispute. Therefore, petitioner Nos. 2 and 3 have to approach the Civil Court for appropriate reliefs. Since a suit between the parties on the same issue is pending, question of entertaining these writ petitions does not arise.
9. Apart from the above, the relief sought is against respondent No. 2, which is a private Bank. Respondent Nos. 3 to 5 have raised a contention that the 2nd respondent is not amenable to writ jurisdiction of this Court.
10. A writ petition under Article 226 of the Constitution of India may be maintainable against (i) the State (Govt.); (11) Authority; (iii) a statutory body; (iv) an instrumentality or agency of the State; (v) a company which is financed and owned by the State; (vi) a private body run substantially on State funding; (vii) a private body discharging public duty or positive obligation of public nature (viii) a person or a body under liability to discharge any function under any Statute, to compel it to perform such a statutory function.
11. In Federal Bank Ltd. v. Sagar Thomas and Others – MANU/SC/0769/2003 : AIR 2003 SC 4325, the Apex Court has held that 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. A company carrying on the profession of banking cannot be said to be close to the Governmental functions. Hence, a writ petition against such banking company cannot be maintainable.
12. It is also settled that merely because the RBI lays the banking policy in the interest of the banking system or in the interest of monetary stability or sound economic growth having due regard to the interests of the depositors etc., as provided under Section 5(c)(a) of the Banking Regulation Act does not mean that the private companies carrying on the business of or commercial activity of banking, discharge any public function or public duty. These are all regulatory measures applicable to those carrying on commercial activity in banking and these companies are to act according to these provisions. It has been further held in Federal Bank’s case as under:

“32. For the discussion held above, in our view, 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. We don’t find such conditions are 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. Present is a case disciplinary action being taken against its employee by the appellant Bank. Respondent’s service with the bank stands terminated. The action of the Bank was challenged by the respondent by filing a writ petition under Article 226 of the Constitution of India. The respondent is not trying to enforce any statutory duty on the part of the Bank. That being the position, the appeal deserves to be allowed.”

1. It is thus clear that the writ petition against the second respondent is not maintainable. The decision relied on by the learned Counsel for petitioners in Civil Appeal No. 4235/2014 and other connected matters disposed of on 22.1.2015 has no application to the facts of this case.
2. In the light of the above discussions, I pass the following:

“(i) The plaintiff (The Prestige Monte Carlo Apartment Owners’ Association) in O.S. No. 1463/2014 represented by Mr. Amit Chatterjee (respondent No. 4 herein) is directed to implead the second respondent-Bank as an additional defendant in the suit.

(ii) Parties are permitted to seek interim orders from time to time in the said suit.

(iii) The service charges paid pursuant to the interim orders passed in these cases is subject to the orders, which may be passed by the Civil Court.

(iv) Writ petitions are dismissed subject to the above observations.”

15. In view of the dismissal of the writ petitions as above, I.A. Nos. 2/2015, 4/2015 and 5/2015 do not survive for consideration. They are accordingly dismissed. No costs.

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