Introduction:
In The Authorised Officer, South Indian Bank and Another v. Sheela Francis Parakkal and Others, reported as 2025 LiveLaw (Ker) 826, the Kerala High Court revisited the long-settled question of whether a private commercial bank can be subjected to writ jurisdiction under Article 226 of the Constitution of India. A Division Bench comprising Justice Arvind Sushrut Dharmadhikari and Justice Syam Kumar V.R. set aside the judgment of a Single Judge which had entertained a writ petition against South Indian Bank, a private scheduled bank, and imposed costs of ₹50,000 for failure to return original title deeds even nine years after closure of the loan account.
The judgment is significant because it draws a clear constitutional boundary between public law remedies and private law disputes, reiterating that even serious grievances against private banks—however distressing—cannot automatically be converted into writ proceedings merely by invoking fundamental rights. The decision reinforces judicial discipline under Article 226 and emphasizes that remedy lies in appropriate civil or statutory forums, not constitutional writs, when the respondent is a private entity not falling within the definition of “State” or “other authority” under Article 12.
Factual Background:
The dispute arose from a joint loan transaction availed by the original petitioners from South Indian Bank, a private commercial bank registered under the Companies Act and operating as a scheduled bank. The loan account was admittedly closed nearly nine years prior to the filing of the writ petition. Despite closure of the loan and satisfaction of all liabilities, the bank failed to return the original title deeds deposited as security.
Aggrieved by the prolonged non-return of documents, the borrowers and subsequently their legal heirs approached the Kerala High Court under Article 226, seeking a writ directing the bank to return the original title deeds, along with compensation for the alleged illegal retention of documents.
The Single Judge, while considering the writ petition, held that the bank had no authority to retain the documents after closure of the loan account. However, since the bank contended that the documents were not traceable or available, the Court refrained from issuing a mandatory direction to return them. The Single Judge also declined the prayer for compensation but granted liberty to the petitioners to approach an appropriate forum for relief.
Notwithstanding this, the Single Judge imposed a cost of ₹50,000 on the bank, directing that ₹25,000 be paid to the petitioners and ₹25,000 to the Kerala State Legal Services Authority (KeLSA), clearly expressing disapproval of the bank’s conduct in retaining the documents for such a prolonged period.
Challenging this order, South Indian Bank preferred a writ appeal before the Division Bench, primarily contending that the writ petition itself was not maintainable against a private bank and that the Single Judge erred in entertaining it on merits.
Arguments on Behalf of the Appellants (South Indian Bank):
The appellant bank, represented by Senior Counsel Sunil Shanker along with other counsel, raised a foundational objection to the maintainability of the writ petition. It was argued that South Indian Bank is a private commercial bank, neither owned nor controlled by the Government, and therefore does not fall within the ambit of “State” or “other authority” under Article 12 of the Constitution.
The appellants relied heavily on the Supreme Court judgment in Federal Bank Ltd. v. Sagar Thomas and Others [(2003) 10 SCC 733], wherein it was categorically held that private banks do not discharge public functions so as to attract writ jurisdiction, even though they may be regulated by statutory authorities such as the Reserve Bank of India. Regulation, it was submitted, does not equate to public duty.
Further reliance was placed on the Kerala High Court’s own precedent in Mathew Ignitious C. v. Catholic Syrian Bank Limited [2019 (5) KHC 835], which reiterated that private scheduled banks registered under the Companies Act are not amenable to writ jurisdiction, and disputes arising out of contractual or banking transactions must be resolved through civil suits or statutory remedies.
The appellants contended that the Single Judge committed a jurisdictional error by examining the conduct of the bank on merits, issuing declaratory findings, and imposing costs, despite the lack of maintainability of the writ petition. It was argued that once the Court lacked jurisdiction under Article 226, it ought to have dismissed the writ petition at the threshold without adjudicating rights or liabilities.
The bank also submitted that imposition of costs in a non-maintainable writ petition was legally unsustainable and amounted to penalising the bank without authority of law.
Arguments on Behalf of the Respondents (Borrowers and Legal Heirs):
The respondents, represented by Advocate Praveen K. Joy and a team of counsel, defended the Single Judge’s approach by contending that private banks today perform functions of great public importance, including management of public money, housing loans, and credit facilities affecting the socio-economic rights of citizens.
It was argued that the non-return of original title deeds for nearly nine years after closure of the loan account amounted to an arbitrary and unreasonable action, infringing the respondents’ right to property under Article 300A and their right to livelihood under Article 21. Such a grave violation, according to the respondents, could not be brushed aside merely by labeling the bank as a private entity.
The respondents further contended that writ jurisdiction under Article 226 is wider than Article 12, and the High Court is empowered to issue writs not only against the State but also against private bodies when they discharge public duties or when fundamental rights are violated.
It was submitted that banks, though private, operate under strict regulatory control, deal with public deposits, and perform functions that are inseparable from public interest. Therefore, failure to return documents essential for dealing with immovable property justified the invocation of writ jurisdiction.
The respondents supported the imposition of costs, arguing that it was a necessary measure to deter negligent and irresponsible conduct by banks and to ensure accountability.
Court’s Judgment and Reasoning:
After carefully considering the rival submissions, the Division Bench allowed the writ appeal and set aside the Single Judge’s judgment in its entirety.
The Court unequivocally held that South Indian Bank, being a private commercial bank, is not amenable to writ jurisdiction under Article 226. The Bench emphasized that the issue was no longer res integra and stood conclusively settled by binding precedents.
Relying on Federal Bank Ltd. v. Sagar Thomas, the Court reiterated that mere regulation by statutory authorities does not convert a private entity into “State”. The nature of functions performed by private banks, though important to the economy, remain essentially contractual and commercial, governed by private law.
The Court also referred to Mathew Ignitious C. v. Catholic Syrian Bank Limited, wherein it was categorically held that private scheduled banks registered under the Companies Act do not fall within the purview of Article 12, and writ petitions against them are not maintainable in the absence of exceptional circumstances.
The Division Bench observed:
“Admittedly, in the present case, the appellant bank is a private commercial bank, therefore, the same is not amenable to writ jurisdiction under Article 226 of the Constitution of India. The learned Single Judge has committed an error in entertaining the Writ Petition and issuing certain directions.”
The Court found that once the writ petition itself was not maintainable, the Single Judge ought not to have made any declaration regarding the bank’s authority, nor imposed costs. Such findings, the Bench held, were without jurisdiction.
Importantly, the Court clarified that its decision did not absolve the bank of responsibility, nor did it leave the borrowers remediless. The respondents were expressly granted liberty to work out their remedies in accordance with law, including approaching civil courts, consumer forums, or any other competent authority.
Consequently, the writ appeal was allowed, the Single Judge’s order was set aside, and the writ petition stood dismissed as not maintainable.