Case BriefsHigh Courts

Kerala High Court: P.V. Asha, J. allowed the writ petition questioning status of IDBI Bank as “State” under Article 12 of the Constitution and further stated that the acts of public sector undertakings arising out of contractual transactions between the parties will not fall under the term “public duty” to attract the Court’s jurisdiction.

Brief facts of the case are such that the petitioner challenged the demand of Rs 11,00,000 as a processing fee of a credit facility and retaining of original property documents as security against such facility as arbitrary and illegal, hence, being violative of his fundamental rights. The petitioner, while relying on R.D.Shetty v. International Airport Authority, (1979) 3 SCC 489, contended that as per the order passed by the RBI, IDBI would be treated as a private bank only for regulatory purposes and it would continue to be a public sector bank for all other purposes. It was further argued that IDBI is controlled by the Central Government and it is always under the watch of Central Vigilance Commission.

Counsel for the respondent challenged the maintainability of Petition stating that respondent bank does not perform any public or statutory or sovereign function and it does not enjoy any monopoly in the banking. It was argued that its function is confined to commercial activities and the Central Government does not have any deep or pervasive control over its functioning.

The court dismissed the petition, holding that providing of credit facility or loan on the strength of title deeds given against security cannot be said to be done in discharge of any public function. Hence, even when the bank is a public sector bank, demand for a processing fee or withholding of title deeds towards security cannot be said to be one involving any element of public duty. Therefore, IDBI is not amenable to writ jurisdiction. [Unimoni Financial Services Ltd. v. IDBI Bank Ltd., 2020 SCC OnLine Ker 7347, decided on 16-12-2020]

Case BriefsCOVID 19High Courts

Bombay High Court: K.K. Tated, J., granted ad interim relief to Rural Fairprice Wholesale Ltd. from selling the pledged equity shares as the share market has collapsed due to COVID-19 and would have resulted in huge loss to the plaintiffs.

In the present matter, applicant’s sought injunction against respondent’s notice dated 17-03-2020 and sale deed notice dated 18-03-2020 with regard to shares pledged by them with defendant 1 by Debenture Trust Deed.

Senior Counsel for the plaintiffs submitted that outstanding loan payable to defendant 2 of about Rupees 610 crores.

It has been stated that, as per the debenture trust deed as stated above 8% of equity shares was pledged. On the date of debenture trust deed, market value of share was Rs 350 per share.

Due to COVID-19, the market value per share quoted in share market had gone down to below Rs 303.

Relying on clause 6 of the said trust deed, the defendants are secured.

Further it has been stated that if shares are sold in the present situation, it would cause an irreparable loss to the plaintiffs. Therefore Court be pleased to restrain defendant 2 from selling these shares in the market.

Counsel for the defendant vehemently opposed the grant of ad interim relief.

Decision of the Court

Bench noted that as the market has collapsed due to COVID-19, per share value has come below Rs 100.

Thus looking at the present situation, ad interim relief till next date is to be granted to the plaintiffs.

Matter to be listed on 04-05-2020. [Rural Fairprice Wholesale Ltd. v. IDBI Trusteeship Services Ltd., Commercial Suit (L( 307 of 2020, decided on 30-03-2020]