IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE S.SIRI JAGAN WEDNESDAY, THE 19TH NOVEMBER 2008 / 28TH KARTHIKA 1930 WP(C).No. 32370 of 2007(C) -------------------------- PETITIONER(S): --------------- KURIEN E. KALATHIL, AGED 57 YEARS, S/O. LATE V.K.EAPEN, T.C. 14/1004,VAZHUTHACAUD, THIRUVANATHAPURAM-695 010. BY ADV. SRI.A.V.THOMAS SRI.JOJO GEORGE SRI.NIDHI SAM JOHNS RESPONDENT(S): --------------- 1. CREDIT INFORMATION BUREAU (INDIA)LIMITED HOECHST HOUSE, 6TH FLOOR, 193, BACK BAY RECLAMATION, NARIMAN POINT, MUMBAI 400021. 2. LORD KRISHNA BANK LTD, INDIAN EXPRESS BUILDINGS,KALOOR, KOCHI-682 017,REPRESENTED BY DEPUTY GENERAL MANAGER.(SUBSTITUTED) 3. RESERVCE BANK OF INDIA, CENTRAL OFFICE,MUMBAI-400 001 REPRESENTED BY CHIEF GENERAL MANAGER. THE NAME OF THE 2ND RT IN THE CAUSE TITLE IS SUBSTITUTED AS 'H.D.F.C. BANK' , INDIAN EXPRESS BUILDINGS, KALOOR, KOCHI – 682017 – VIDE ORDER DT. 13-8-2008 IN I.A.NO.8597/08. ADV. SRI.P.JACOB VARGHESE, SC, RBI FOR R3 SRI.P.B.SURESH KUMAR FOR R2 SRI.GEORGE THOMAS (MEVADA) FOR R1 THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 19/11/2008 THE COURT, ON THE SAME DAY, DELIVERED THE FOLLOWING: PETITIONER'S EXHIBITS: W.P.C.NO. 32370/2007 ------------------------------------------------------------------- EXT.P1 TRUE COPY OF CIRCULAR DT. 18-5-1992. EXT.P2 SANCTION MEMO DT. 23-5-1992. EXT.P3 SANCTION LETTER DT. 2-1-1993. EXT.P4 LETTER DT. 24-9-1994. EXT.P5 PRINTOUT OBTAINED FROM THE WEBSITE OF R1. EXT.P6 DO. DO. EXT.P7 DO. DO. EXT.P8 DO. DO. EXT.P9 DO. DO. EXT.P10 DO. DO. EXT.P11 CIRCULAR DT. 4-6-2002. EXT.P12 CIRCULAR DT. 17-6-2004. EXT.P13 CIRCULAR DT. 6-11-2004. EXT.P14 CIRCULAR DT. 26-5-2004. EXT.P15 CIRCULAR DT. 17-6-2004. EXT.P16 JUDGMENT IN O.P.NO. 29013/2000. RESPONDENTS' EXHIBITS: -------------------------------------- EXT.R1 A CIRCULAR DT. 1-10-2002. EXT.R1 B CIRCULAR DT. 10-2-2003. EXT.R1 C LETTER DT. 2-7-2007. EXT.R1 D GAZETTE NOTIFICATION DT. 14-12-2006. EXT.R2(a) CIRCULAR DT. 20-2-1999 EXT.R2(b) LETTER DT. 7-8-2000. EXT.R2(c) CIRCULAR DT. 30-5-2002. EXT.R2(d) CIRCULAR DT. 1-10-2002. EXT.R2(e) CIRCULAR DT. 10-2-2003. EXT.R2(f) MINUTES OF MEETING DT. 27-3-1999. EXT.R2(g) MINUTES OF MEETING DT. 9-10-2002. EXT.R2(h) MINUTES OF THE MEETING DT. 25-6-2003. [TRUE COPY] P.S TO JUDGE. S. Siri Jagan, J. =-=-=-=-=-=-=-=--=-=-=-=-=-=-=-=-=-= W. P (C) No. 32370 of 2007 =-=-=-=-=-=-=-=-=--=-=-=-=-=-=-=-=-= Dated this, the 19th November, 2008. J U D G M E N T The petitioner is a contractor undertaking contract works on behalf of various institutions including public sector institutions. He is aggrieved by the publication of his name in the website of the 1st respondent as a wilful defaulter on the basis of information supplied by the 2nd respondent-Bank to the 3rd respondent-Reserve Bank of India, which was in turn forwarded by the Reserve Bank to the 1st respondent for publication in the website. The facts necessary for the disposal of the writ petition may be summarised as follows: 2. The petitioner undertook certain works for the Konkan Railway Project, for which he had to purchase certain heavy machinery. For the purpose of grant of instalment facilities by the manufacturer for payment for those machinery, the petitioner had to provide a deferred payment guarantee by a Bank in favouor of the manufacturer. Since the 2nd respondent-Bank offered such facilities, the petitioner approached the 2nd respondent-Bank for such a guarantee. Ext. P1 is the guidelines issued by the Bank for issue of a deferred payment guarantee. In accordance with the said guidelines, on behalf of the petitioner, the 2nd respondent-Bank gave the manufacturer of the machinery a deferred payment guarantee as sanctioned by Ext. P2. While the petitioner was executing the work, because of the agitation by the local people, the work undertaken by him had to be temporarily suspended. As a result, there was no sufficient cash flow for the petitioner to pay the instalment amounts due to the manufacturer. As a result, there was some default which, in turn, was passed on to the 2nd respondent-Bank as the guarantor. The petitioner became liable to reimburse the said amount paid by the Bank to the manufacturer in compliance with the guarantee, to the 2nd respondent Bank. The petitioner therefore submitted Ext. P4 letter W.P.C. No. 32370/07 -: 2 :- before the Bank requesting that fixed deposits belonging to the petitioner available with the Bank to the tune of Rs. 86.68 lakhs, the total value of which with interest would come to Rs. 111.68 lakhs may be re-arranged to meet the deferred payment guarantee dues undertaken by the Bank on behalf of the petitioner. The petitioner did not receive any reply to the same. Instead, the Bank created a temporary overdraft in the name of the petitioner on their own from which payment was effected to the manufacturer, in respect of which 23.25% interest was also debited to the account of the petitioner, which interest was far higher than the interest payable by the Bank to the petitioner on the fixed deposits. 3. On 11-12-1999, the Bank filed an O.A before the Debt Recovery Tribunal for realisation of the amounts due from the petitioner and attached properties belonging to him for an amount of Rs. 58,57,628/-. Against such attachment, the petitioner approached this Court by filing O.P.No. 29013/2000 in which, while setting aside the interim attachment orders effected by the Tribunal, the petitioner was directed to dispose of the properties under attachment and to deposit a sum of Rs. 30 lakhs from out of the sale proceeds to the 2nd respondent-Bank, which was to be acknowledged by the Bank. Pursuant thereto, the petitioner paid the amount of Rs. 30 lakhs. The petitioner submits that even apart from that payment, the petitioner had paid the following amounts also: Rs. 28,77,780.00 on 28-10-1998. Rs. 8,36,882.00 on 23-1-1999. Rs. 2,48,025.00 on 11-3-1999. Rs. 1,58,962.00 on 7-7-2000. Rs. 6,00,000 on 31-10-2000. 4. While the O.A was pending, according to the petitioner, when W.P.C. No. 32370/07 -: 3 :- the petitioner approached a nationalised Bank for finance, he was told that his name has been published in the website maintained by the 1st respondent on behalf of the Reserve Bank of India as a “wilful defaulter” and consequently finance was denied to the petitioner. Immediately, the petitioner searched the website of the 1st respondent and came to understand that the petitioner's name was being published in the website as a wilful defaulter from the year commencing from 31-3-2002 as evidenced by Exts.P6 to P10. Immediately, the petitioner filed this writ petition challenging the action of the respondent in publishing the petitioner's name in the website of the 1st respondent as a “wilful defaulter”, seeking the following reliefs: “i) Issue a writ of mandamus or other appropriate writ, order or direction to the 1st respondent to remove the name of the petitioner from the list of 'suit filed accounts' (willful defaulters); ii) Issue a writ of mandamus or other appropriate writ, order or direction to the 3rd respondent to compel the 1st respondent to remove the name of the petitioner from the list of 'suit filed accounts' (willful defaulters); iii) Issue a writ of mandamus or other appropriate writ, order or direction to the 2nd respondent to withdraw the information supplied to the 1st respondent for removal of the name of the petitioner from the list of 'suit filed accounts' (willful defaulters).” 5. The petitioner submits that he was never a wilful defaulter although for circumstances beyond his control, he was irregular in payment of the amounts due under the deferred payment guarantee sanctioned by Ext. P2. He would further submit that there was no occasion for the Bank to include his name as a wilful defaulter since, immediately on default in payment of the amounts due under the deferred payment guarantee, the petitioner had issued Ext. P4 letter to the Bank requesting them to re-arrange the fixed deposits available with the same Bank, belonging to the petitioner, to meet the W.P.C. No. 32370/07 -: 4 :- commitments of the deferred payment guarantee to which the Bank never replied. He would further submit that he was bona fide prosecuting the O.A filed by the Bank on sustainable grounds which O.A is pending even now and the Bank has not been able to obtain a decree, although the same was filed as early as in 1999. He would also submit that the Bank has not complied with the directions of the Reserve Bank of India contained in Ext. R2(a) circular for the purpose. According to the petitioner, Ext. R2(a) circular, although it does not refer to an opportunity of being heard to the petitioner, by the very scheme envisaged by the same, implies an opportunity of being heard to a defaulter before including the defaulter in the list of wilful defaulters to be forwarded to the Reserve Bank of India in accordance with Ext. R2(a) circular. The contention of the petitioner is that the petitioner was never even informed of any proceedings by the Bank to forward his name to the Reserve Bank of India as a wilful defaulter. Further, he would point out that further circulars issued by the Reserve Bank of India, namely, Exts.P14 and P15 and the circular dated 29-7-2003 referred to therein expressly contemplates an opportunity of being heard before a person is classified as a wilful defaulter, which procedure has not been followed by the 2nd respondent-Bank before deciding to classify the petitioner as a wilful defaulter for the purpose of Ext. R2(a) circular of the Reserve Bank of India. He raises a further contention that as per Ext. R2(a), the Bank is expected to form a committee consisting of three GMs/DGMs or equivalent to GMs/DGMs for identifying the cases of wilful defaulters. According to the petitioner, no such committee was ever constituted, which is in violation of Ext. R2(a). The petitioner also relies on the decision of the High Court of Calcutta in Ruia Cotex Ltd. v. Corporation Bank & Ors, AIR 2007 Calcutta 241, for the proposition W.P.C. No. 32370/07 -: 5 :- that right to an opportunity of being heard to the defaulter is inherent in Ext. R2(a) circular of the Reserve Bank of India for the purpose of classifying a person as a wilful defaulter, even though there is no express provision therein. The petitioner also refers to the decision of the Supreme Court in State of Orissa & others v. Md. Illiyas, AIR 2006 SC 258 for the proposition that merely because a person commits default in doing a thing that default does not become wilful unless it is intentional, conscious and deliberate, which ingredients are totally absent in the case of the petitioner. The petitioner submits that the action of the 2nd respondent in forwarding the name of the petitioner classifying him as a wilful defaulter for the purpose of Ext. R2(a) to the Reserve Bank of India and consequent publication of the petitioner's name as a wilful defaulter in the website maintained by the 1st respondent on behalf of the 3rd respondent Reserve Bank of India is unsustainable and the respondents are liable to be directed to remove the petitioner's name from the website of the 1st respondent. 6. The 2nd respondent with the help of a counter affidavit and additional documents produced by them along with I.A.No. 11070/2008, would support the action of the Bank in the matter. They would raise several contentions. The first is that the 2nd respondent being only a scheduled Bank with no Government or public sector participation, no writ petition is maintainable against the 2nd respondent-Bank. The 2nd respondent relies on the decision of the Supreme Court in Federal Bank Ltd. v. Sagar Thomas & Ors, (2003) 10 SCC 733 in support of the said contention. The second contention is that the petitioner's name was forwarded to the Reserve Bank of India classifying him as a wilful defaulter as early as on 7-8- 2000 and the petitioner has challenged the said action only on 30-10- 2007, seven years thereafter and therefore the writ petition is bad for W.P.C. No. 32370/07 -: 6 :- the vices of delay and laches. Thirdly, the 2nd respondent would contend that the petitioner is a wilful defaulter as is evidenced by the pendency of the O.A before the Debt Recovery Tribunal filed in 1999. According to the 2nd respondent, a committee as contemplated by Ext. R2(a) was constituted as is evidenced by Ext. R2(f) on 27-3-1999 and that committee considered the materials relevant for the purpose and came to the bona fide conclusion that the petitioner is a wilful defaulter, which is not liable to be challenged in the absence of any allegations of mala fides. It is further contended that no consent of the defaulter is necessary for the purpose of classifying him as a wilful defaulter. The 5th contention is that at the time when the petitioner was classified as a wilful defaulter, in 1999, by the 2nd respondent-Bank, Exts.P14 and P15 circulars of the Reserve Bank of India making opportunity of being heard to the defaulter mandatory, were not in existence and what was relevant was only Ext. R2(a), which did not contemplate an opportunity of being heard to the defaulter and therefore the petitioner was, at the relevant time, not entitled to an opportunity of being heard. Lastly, a contention is raised that by including the petitioner's name in the website as a wilful defaulter, the petitioner has not suffered any injury, since he has been in the website as a wilful defaulter for the past seven years and he has not detailed the injuries suffered by him on account of that, in the writ petition. Further, in any event, since the O.A against the petitioner was pending for recovery of defaulted amounts, the petitioner is actually a defaulter which is a known fact and as such the petitioner has not suffered any injury because of the fact that his name has been published in the website maintained by the 1st respondent as a wilful defaulter. 7. The 1st respondent has filed a counter affidavit wherein it is W.P.C. No. 32370/07 -: 7 :- specifically stated that they have no responsibility for the contents of the website in so far as their role is only to collect correct information given by various Banks/Financial Institutions, assemble it and publish in the website in accordance with the directions of the Reserve Bank of India, which only they had done. They are not in any way responsible for the contents of the website, is their contention. The counsel for the 1st respondent reiterates the contentions in the counter affidavit during his arguments. 8. In answer to the contentions of the 2nd respondent, the petitioner would contend that there is no merit in the contention of the 2nd respondent that the writ petition is not maintainable since the 2nd respondent is only a scheduled Bank. Relying on the very same decisions cited by the 2nd respondent, as also the decision of the Supreme Court in Canara Bank v. P.R.N. Upadhyaya and others, [(1998) 6 SCC 526], Division Bench decisions of this Court in Suter Paul v. Sobhana English Medium School, (2003 (3) KLT 1019, Academy of Medical Sciences v. Regine, (2004 (3) KLT 628) as also a decision of a Single Judge in Abdul Azeez v. Alappuzha Bar Association, (1992 (2) KLT 443), the petitioner would point out that even a private party discharging a public duty or a positive obligation of a public nature or a person or a body under a liability to discharge any function under any statute to compel it to perform such statutory function, a writ petition under Article 226 of the Constitution of India against such private body is maintainable. The petitioner points out that the transaction involved is not a mere banking transaction between the petitioner and the 2nd respondent- Bank. On the other hand, the 2nd respondent was performing an obligation cast on it by the 3rd respondent Reserve Bank of India by Ext. R2(a), which itself has been issued in exercise of the powers of W.P.C. No. 32370/07 -: 8 :- the Reserve Bank of India under Section 35A of the Banking Regulation Act, 1949 and is statutory in nature. That being so, in the matter of classification of the petitioner as a wilful defaulter, the 2nd respondent was performing a statutory duty cast upon them by the Reserve Bank of India, in respect of which certainly a writ petition would lie under Article 226 of the Constitution of India. Regarding the question of delay and laches, the petitioner would assert that the petitioner was never informed by the Bank about their intention to classify him as a wilful defaulter for the purpose of Ext. R2(a). He points out that the O.A was filed in the Debt Recovery Tribunal on 11- 12-1999 in which there was no reference to the fact that the petitioner has been classified as a wilful defaulter, although, even according to the 2nd respondent, the petitioner was classified as such in 1999. The petitioner reiterates that he was totally unaware of the fact that his name was included in the website as a wilful defaulter by the 1st respondent until the same was pointed out to him by a Nationalised Bank as averred by him in ground (C) of the writ petition, immediately after which, he approached this Court with this writ petition. 9. I have considered the rival contentions in detail. 10. Since the objection against the maintainability of the writ petition goes to the root of the case, I shall first consider the sustainability of that objection. 11. The 2nd respondent's contention is that the 2nd respondent being a scheduled bank, without any State participation, going by the ratio of the decision in Federal Bank's case (supra), no writ petition under Article 226 of the Constitution is maintainable. In paragraph 18 of that decision itself, the Supreme Court has held thus: “18. From the decisions referred to above, the position that emerges is that a writ petition under Article 226 of the W.P.C. No. 32370/07 -: 9 :- Constitution of India may be maintainable against (i) the State (Government); (2) an 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; and (viii) a person or a body under liability to discharge any function under any statute, to compel it to perform such a statutory function.” (Emphasis supplied) 12. The powers of the High Court under Article 226 of the Constitution of India has been explained in many earlier decisions also. In Andi Mukta Sadguru Shree Muktajee Vandas Swami Suvarma Jayanti Mohotsav Smarak Trust v. V.R. Rudani & Ors., AIR 1989 SC 1607, Supreme Court held thus: “Art. 226 confers wide powers on the High Courts to issue writs in the nature of prerogative writs. This is a striking departure from the English law. Under Art. 226, writs can be issued to “any person or authority”. It can be issued for the enforcement of any of the fundamental rights and for any other purpose.” It was further observed by their Lordships as hereunder: “The term 'authority' used in Art. 226, in the context, must receive a liberal meaning unlike the term in Art. 12. Art. 12 is relevant only for the purpose of enforcement of fundamental rights under Art. 32. Art. 226 confers powers 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 Art. 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. They duty must be judged in the light of positive obligation owned 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”.” 13. Following that decision, a Division Bench of this Court in Suter Paul's case (supra) held that a petition under Article 226 is maintainable against the Manager of a recognised unaided school W.P.C. No. 32370/07 -: 10 :- since the Government had reserved to itself a great deal of control over such institutions under the Kerala Education Act and Rules. 14. Following the very same Supreme Court decision, another Division Bench of this Court in Regina's case (supra) held that students of private educational institutions are entitled to enforce the conditions regarding admissions statutorily imposed on such private educational institutions invoking Article 226 of the Constitution of India even if such institutions are not within the fold of Article 12. 15. A learned Single Judge of this Court, relying on Rudani's case (supra) held that an Advocates' Association, although a private body, which is performing statutory duties under the Advocate Welfare Fund Act are amenable to jurisdiction under Article 226 in respect of challenge by members of the Association against expelling them from the Association. 16. Section 35A of the Banking Regulation Act reads thus: “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 depositors or in a manner prejudicial to the interests of the banking company; or (c) to secure the proper management of any banking company generally, it is necessary to issue directions to banking companies generally or to any banking company in particular, it may, from time to time, issue such directions 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 W.P.C. No. 32370/07 -: 11 :- 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.” Ext. R2(a) has been issued by the Reserve Bank of India in exercise of powers under that Section. Apparently, Ext. R2(a) has been issued by the Reserve Bank of India to secure the proper management of a banking company generally and in the interest of banking policy and in public interest. The Supreme Court has in Canara Bank's decision (supra) held that circulars issued by the Reserve Bank of India under Section 21 or 35 of the Banking Regulation Act, 1949 are statutory in nature and are required to be complied with by the Banks. Although what is referred to therein is Section 35, it is clear that the same refers to Section 35A only, since Section 35 deals with inspections and it is Section 35A which deals with the powers of the Reserve Bank to issue directions. That being so, Ext. R2(a) has been issued in exercise of a statutory function, of the Reserve Bank of India, which itself is statutory in nature. In exercise of that statutory function only, the 2nd respondent-Bank is obliged to or empowered to classify and forward to the Reserve Bank of India, the names of borrowers of wilful defaulters. The 2nd respondent-Bank has, under no provision of law, has a right or power to do the same on their own. Therefore, in the matter of classification of a customer as a wilful defaulter, the 2nd respondent-Bank is essentially exercising a statutory function as required by the Reserve Bank of India in exercise of their statutory function under Section 35A of the Banking Regulation Act. I am, therefore, satisfied that the 2nd respondent, though a private body, was discharging a public duty or positive obligation of public nature and discharging a statutory function as W.P.C. No. 32370/07 -: 12 :- directed by the Reserve Bank of India, challenging which certainly a writ petition under Article 226 of the Constitution of India would lie, going by the abovesaid