Bom HC | ICICI Bank Ltd. — Petition challenging Chanda Kochhar’s termination order not maintainable; A Writ would not lie to enforce purely private law rights

Bombay High Court: A Division Bench of M.S. Karnik and Nitin Jamdar, JJ., addressed the petition filed by ex-MD of ICICI Bank Limited — Chanda Kochhar regarding the challenge towards her termination order.

The present petition was by the Ex- Managing Director of ICICI Bank who was terminated from her service. The same was approved by the Reserve Bank of India (RBI), which has been challenged by the petitioner in the present petition.

Complaints against the petitioner were received,

ICICI, in its meeting held on 29 May 2018, constituted an enquiry by a retired Judge of the Supreme Court of India. In June 2018 the Petitioner informed ICICI that Petitioner would go on leave till the enquiry is completed. By letter dated 3 October 2018, the Petitioner sought early retirement. ICICI, by the communication dated 4 October 2018 accepted the request for early retirement subject to certain conditions. On 27 January 2019, the report of the enquiry was submitted. The report was adverse to the Petitioner. In the meeting held on 30 January 2019, the Board of the ICICI treated the separation of the Petitioner’s service as a Termination for Cause. A communication to that effect was issued to the Petitioner. By further communication dated 1 February 2019, ICICI revoked the retirement benefits of the Petitioner. Correspondence ensued between the parties. The Petitioner called upon the ICICI to restore to the Petitioner the existing and future entitlements, including unpaid amounts, stock options, medical benefits. ICICI refused the request.

Petitioner along with the challenged to her termination order also sought to refrain ICICI from recovering and/or cancelling the benefits granted to her for early retirement.

Preliminary objection of ICICI was that the said bank id not an authority under Article 12 of the Constitution of India and performs no public duty. It is only a private bank having a purely private character. Services of the Petitioner are not governed by any statute, but it is a purely contractual relationship with ICICI.

Thus, the dispute raised by the petitioner was purely private in nature and would not be subject to writ jurisdiction.

RBI did not enter into an employer-employee dispute while the approval of the termination of the petitioner.

Section 35(1)(b) of the Act is a regulatory provision only to oversee that the action of the bank does not have an adverse impact on the depositors or the banking system. Scrutinizing the rights of MD as against the employer is not a matter of focus

Analysis

Writs can be issued to the State; an authority; a statutory body; an instrumentality or agency of the State; acompany 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; and 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 would normally not be amenable to the writ jurisdiction under Article 226 of the Constitution.

A Writ would not lie to enforce purely private law rights.

Contractual duties are enforceable as matters of private law by ordinary contractual remedies such as damages, injunction, specific performance and declaration. Before issuing any writ, particularly writ of mandamus, the Court has to satisfy that action of such authority, is in the domain of public law as distinguished from private law.

Further, it was observed that, if the private body is discharging a public function and the denial of any right is in connection with public duty imposed on such body, the public law remedy can be enforced.

ICICI Bank is a private bank administered by the Board of Directors and it is not established under any statutory instrument. It also doesn’t receive funds from the government.

Section 35(B)(1) shows that appointment, reappointment and termination of Chairman, Managing Director, will not have effect unless it is with the previous approval of the Reserve Bank

Also noted that, Courts exercise writ jurisdiction when a public law element involved if the services are governed by a statute

Banking companies such as ICICI have the freedom to conduct their affairs; however, Reserve bank ensures that their activities will not affect the economy in general. The supervision by the Reserve Bank is in the realm of larger policy.

Bench stated that

Reserve Bank does not uphold or, adjudicate or decide the rights of the parties inter se, but only focuses on the consequences of the proposed action. The grant of approval by Reserve Bank does not mean that the action of termination is valid in terms of the service dispute. The approval is based on the opinion that no impact on the banking system is discernible.

Thus, in the present case, the service conditions of the petitioner are not governed by any statute. Termination of the petitioner is in the realm of contractual relationships. Since Section 35(1)(B) does not regulated service conditions, approval for termination under it does not adjudicate the rights of the petitioner as an employee.

Hence,

Legal implications of the grant of approval, non-grant of approval or post-facto approval, as the case may be, would be grounds and arguments in the contractual dispute.

Thus merely because the approval under Section 35B(1)(b) is questioned, that cannot infuse a public law element in this dispute, which remains a contractual dispute. For the contractual remedies, the Petitioner will have to approach the appropriate forum and not writ jurisdiction. Preliminary objection upheld on the above perusal. [Chanda Deepak Kochhar v. ICICI Bank Ltd., 2020 SCC OnLine Bom 374, decided on 05-03-2020]

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