Private Financial institutions performing public duties can’t be considered categorized as “State”: Allahabad HC dismisses petition against HDFC Bank [Read Order]

The Allahabad High Court while dismissing the petition against the HDFC Bank held that the Private financial institutions performing public duties can not be considered categorized as “State” under Article 12 of the Constitution of India.

The petitioner, Kailashi Devi has filed the writ petition seeking direction in the nature of mandamus commanding the respondent bank, HDFC Bank to accept the balance loan amount in accordance with the circular issued by the Reserve Bank of India due to COVID-19 and extend the due date of installment for 6 months exempting interest for this period and not to adopt any coercive action against the petitioner.

The petitioner has taken a commercial loan from the private bank and has defaulted in payment of installments.

The counsel for the respondent bank has raised a preliminary objection that the present writ petition is not maintainable as HDFC Bank is a private bank not covered within the meaning ‘State’ under Article 12 of the Constitution of India.

The division bench of Justice Naheed Ara Moonis and Justice Vivek Varma while following the law laid down by the Hon’ble Supreme Court held that the private financial institutions, carrying of business or commercial activity, maybe performing public duties, but cannot be considered to be covered under the definition of “State” under Article 12 of the Constitution of India, the writ petition against such entity is not maintainable before the High Court.

“Hence, in view of the settled principle of law, the present writ petition is not maintainable. That apart, since disputed questions of facts are involved, we decline to exercise our extraordinary jurisdiction under Article 226 of the Constitution of India on this ground also. Accordingly, the writ petition is hereby dismissed,” the court said.