FEDERAL BANK LTD. versus SAGAR THOMAS AND OTHERS

Citation: [2003] SUPP. 4 S.C.R. 121 · Decided: 26-09-2003 · Supreme Court of India · Bench: BRIJESH KUMAR · Disposal: Appeal(s) allowed

Judgment (excerpt)

FEDERAL BANK LTD. 
A 
V. 
SAGAR THOMAS AND OTHERS 
SEPTEMBER 26, 2003 
[BRIJESH KUMAR AND ARUN KUMAR, JJ.] 
B 
Constitution of India-Articles 12, 226-Whether writ petition 
maintainable against Federal Bank by dismissed employee-Held, no; 
private company canying on banking business as scheduled bank is not 
an institution discharging statutory or public duty-Hence not a state or C 
its agency or instrumentality. 
Constitution of India-Articles 12 and 226-Banking Regulation Act 
1951, ss.5 (c)(a), 22, 35, 35A, 36, 36AA, 36AB, 36 AE, 45-Reserve Bank 
of lndia Act, 1934, ss.2(e), 42(6), 46 A-Maintainability of writ petiton by D 
employee of Federal Bank challenging dismissal-Whether amenability to 
regulation by Reserve Bank of India tan/amounts to Federal Bank 
discharging public function or duty-Held; no; mere regulatory provisions 
to ensure that activity of private bodies is within a discipline does not 
subject company to an ob/;gation which may be enforced by issuance of E 
a writ under Article 226 of the Constitution-Companies Act 1956, ss.58A, 
227, 233A, 235, 250, 255, 267, 3888-Industrial (Development and 
Regulation) Act, 1951, ss.15, /5A, /8A and /BAA. 
The first respondent working as Branch Manager in the appellant 
Bank was found guilty of certain charges and awarded punishment of F 
dismissal. He challenged the dismissal by filing a writ petition in the 
High Court. The Bank raised a preliminary objection about the 
maintainability of the writ petition contending that it was a private 
bank and not a State or its agency or instrumentality, within the 
meaning of Article 12 of the Constitution of India. The Single Judge G 
and the Division . Bench of the High Court held that the Bank 
performed a public duty and therefore the writ petition was 
maintainable. The Bank appealed to this court. 
Allowing the appeal, the Court 
121 
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122 
SUPREME COURT REPORTS [2003] SUPP. 4 S.C.R. 
A 
HELD: I.I. The writ petition against the appellant bank was not 
maintainable. A private company carrying on banking business as a 
scheduled bank, cannot be termed as an institution or compa~y 
carrying on any statutory or public duty. [153-C-El 
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1.2. The share capital of t_he appellant bank is not held by. the 
B Governor nor any financial assistance is pro~ided by· the State. The 
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appellant bank does not enjoy any monopoly status nor it can be said 
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to be an institution having State protection. The affairs oft~e appellant . 
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bank are managed by the Board otD.~r~~~?rrs' el~ct~d by its.s~are~.old,ers.id' 
No Governmental agency or officer'ts connected with its affairs nor 
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C anyone of them is a member of the'Board of Directors. In the normal 
functioning of the private banking com_p.any ther~'is no participation ' 
or interference of the State or its authorities. It works like any other 
private company in the banking busi~ess having no monopoly status 
at all. (150-F-H, 151-A] 
D 
1.3. Any business or commercial activity, may be banking, 
manufacturing units or related to any other kind of business generating 
resources, employment, production. and resulting in circulation of 
money are no doubt, are such which do have impact on the economy 
of the country in general. But such activities cannot be public nature. 
E 
{152-A-BJ 
Ajay Hasia v. Khalid Mujib Sehravardi, [1981] f SCC 722 and 
Pradeep Kumar Biswas v. Indian Institute of Chemical Biology, (20021 5 
sec 111, followed. 
F 
U.P. State Co-operative Land Development Bank Ltd v. Chandra 
Bhan Dubey, AIR (1999) SC 753, explained and distinguished. 
Sukhdev Singh v. Bhagatram 
1
Sarda; Si~gh Raghuvanshi, [1975) 1 
SCC 421; Romana Dayaram Shetty v. Jnternational Airport Authority of 
India, (1979] 3 SCC 489; Bank of Baroda Ltd v. Jeewan Lal Mehrotra, 
G (1970) 3 sec 677; All India B~nk Employees' Association v. National 
Industrial Tribunal, [1962) 3 SCR 265; Air India Statut01y Corporation 
v. United Labour Union, 11997) 9 SCC 377; Andi Mukta Sadguru Shree 
Muktajee ·vandas Swami Suvarna Jayanti Mahotsav Smarak Trust v. VR. 
Rudani, ( 1989] 2 SCC 69 t; Unnikrishnan, J.P. v. State of Andhra Pradesh, 
H [1993) 1 SCC 645; Life Insurance Corporatio11 of India "· Consumer 
FEDERAL BANK LTD. v. SAGAR THOMAS [BRJ.JESH KUMAR, J.] 123 
Education & Research Centre, (19951 5 SCC 482; Kumari Shrilekha

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