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2020 (3) TMI 301

..... xercise the benefits of stock options - whether the Section 35B(1)(b) of the Act can be said to govern the service conditions of the Petitioner so as to impose a statutory duty on the ICICI bank and whether the petitioner can challenge exercise under writ jurisdiction? HELD THAT:- When employments in a private entity is regulated by contracts, the courts do not to exercise the writ jurisdiction. Courts exercise writ jurisdiction when a public law element involved, if the services are governed by a statute. For that purpose the nature of the concerned enactment and its purpose and scope has to be ascertained - The Banking Regulation Act is enacted to supervise and regulate commercial banking. The Act empowers the Reserve Bank to issue directions to the banks, regulate the shareholding and the operations of banks in the interest of banking policy. Part II of the Act deals with banking companies. The Reserve Bank, constituted under the Reserve Bank of India Act, is a Central Bank exercising supervisory and regulatory powers. The Reserve Bank, exercises power under the Act to grant approvals. It issues directions to the banks under the Act in furtherance of economic and banking policy. .....

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..... B(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. The Writ Petition is dismissed as not maintainable. - WRIT PETITION (Lodg.) NO. 3315 OF 2019 - 5-3-2020 - NITIN JAMDAR & M.S. KARNIK, JJ. Mr. Vikram Nankani, Senior Advocate a/w. Karan K. Vyas, S.K. Saxena, Mitul Shah i/b. Sajal Yadav for the Petitioner. Mr. Darius Khambata, Senior Advocate, Mr. Mustafa Doctor, Senior Advocate a/w. Mr. Aditya Mehta, Mr. Abhijit Joshi, Ms. Silpa Nair, Ms. Prachi Bhanani, Ms. Vyoma Mehta i/b. Veritas Legal for Respondent No.1 Mr. Venkatesh Dhond, Senior Advocate a/w. Mr. Prasad Shenoy and Ms. Aditi Phatak i/b. Udwadia & Co. for Respondent No.2 Judgment (Nitin Jamdar, J) :- The Petitioner was working as a Managing Director with the ICICI Bank. The Petitioner was terminated from service. The Reserve Bank India communicated its approval to the termination. The Petitioner has challenged the termination order and has prayed for consequential reliefs. The Petitioner has also challenged the communication issued by the Re .....

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..... itioner for early retirement. Petitioner sought a declaration to exercise the benefits of stock options. 5. The Petition came up on board on 28 November 2019 when it was adjourned to 2 December 2019. On 30 November 2019, ICICI filed a reply, and raised a challenge to the maintainability of the Writ Petition. In this reply, ICICI annexed a communication dated 5 February 2019 addressed to Reserve Bank regarding the termination of the Petitioner s services. So also the communication of the Reserve Bank dated 13 March 2019 referring to Section 35B(1)(b) of Banking Regulation Act, 1949. When the Petition came up on board on 2 December 2019, the Petitioner sought leave to amend the Petition and challenged the communication of the Reserve Bank dated 13 March 2019. The amendment was allowed by the Division Bench. The objections of the Respondents, including that of the maintainability of the Petition were kept open. By amendment, the Petitioner challenged the approval dated 13 March 2019 of the Reserve Bank. On 9 December 2019, the Division Bench issued notice to the Reserve Bank of India. On 18 December 2019, the Division Bench adjourned the Petition for filing of further replies. Thereaf .....

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..... hority under Article 12 of Constitution of India; however, that does not mean that the writ jurisdiction cannot be invoked against ICICI. The scope of Article 226 is wide and it s exercise would depend on facts and circumstances. No decision of any Court on Section 35B(1)(b) is shown by the Respondents. Since the Petitioners services are regulated by the statute, it casts the statutory duty on the ICICI which can be enforced by the issuance of a writ of mandamus. As for the Reserve Bank of India, it cannot be disputed that the writ is maintainable to challenge the action. The preliminary objection to the maintainability be overruled and the Petition be heard on merits. 9. The Reserve Bank joined the ICICI in raising the issue of maintainability as follows. While approving termination of a Managing Director, the Reserve Bank of India does not enter into employer-employee dispute. Section 35B(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 the managing director as against the employer is not a matter of focus. 10. At the outset we will deal with t .....

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..... ished from private law. For a function to be of a public character, the function must be closely related to functions performed by the State in its sovereign capacity. A writ of mandamus or the remedy under Article 226 is a public law remedy and is not generally available as a remedy against private wrongs. Mandamus is limited to enforcement of public duty. If the private body is discharging a public function and the denial of any right is in connection with the public duty imposed on such body, the public law remedy can be enforced. The duty cast on the public body may be statutory or otherwise, and the source of such power is immaterial, but there must be the public law element in such action. 13. ICICI is a private bank. It is administered by its Board of Directors. ICICI is not established under any statutory instrument. ICICI receives no funds from the Government. Division Bench of this Court in the case of M/s. Ruchi Soya Industries Ltd. & Ors. v/s. IDFC Bank Ltd. & Ors. (2017) SCC OnLine Bom. 4252, in case of another private bank, Standard Chartered Bank, has held that it is not amenable to writ jurisdiction. ICICI is not an Authority under Article 12 of the Constitu .....

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..... al of the Reserve Bank.- (1) In the case of a banking company - ... (b) no appointment or re-appointment or termination of appointment of a chairman, a managing or whole-time director, manager or chief executive officer by whatever name called, shall have effect unless such appointment, re-appointment or termination of appointment is made with the previous approval of the Reserve Bank.] ……… Section 35B(1)(b) extracted above shows that the appointment, reappointment and termination of Chairman, Managing Director, will not have effect unless it is with the previous approval of the Reserve Bank. In the further discussion we refer to chairman, managing or whole-time director, manager or chief executive officer as: employees. 17. The question therefore is whether the Section 35B(1)(b) of the Act can be said to govern the service conditions of the Petitioner so as to impose a statutory duty on the ICICI bank and whether the petitioner can challenge exercise under writ jurisdiction. 18. When employments in a private entity is regulated by contracts, the courts do not to exercise the writ jurisdiction. Courts exercise writ jurisdiction when a public law element involve .....

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..... lis between the employer and employee before it to determine. If that would be so, the employees may demand pre-decisional hearing and copy of the decision. They may demand a reasoned order as to how the termination is approved. The order could be challenged and stay would be asked on the ground that the termination is likely to effected. Reserve Bank will be forced to justify its approval in the context of the service contract. For this purpose, Reserve Bank would be obliged to enter into the factual disputes, examine and construe the contract terms, and comment on the rights and obligations of the employer and employee, their breach and justifications. All this is not clearly not contemplated under by the legislature. Section 35B(1)(b) enacted to examine the situation post termination, that is, its impact on the larger banking interest. The focus of scrutiny under this provision is not the rights of the employee. Section 35B(1)(b) is not a provision enacted to regulate the service conditions between the employer and employee. 21. The Petitioner has relied upon certain decisions of the Supreme Court in support. The decision of Supreme Court in Andi Mukta Sadguru Shree Muktajee Van .....

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..... they are structured by statutory provisions. (2019) SCC OnLine SC 501. 23. ICICI is a private body. It is not an instrumentality of the State. It receives no public funding. Service conditions of the Petitioner are not governed by any statute. The dispute raised in this Petition arises from a contract of personal service. The termination of the Petitioner is in the realm of contractual relationship. Since Section 35B(1)(b) does not regulate service conditions , approval for termination under it does not adjudicate the rights of the Petitioner as an employee. Though Section 35B(1)(b) postulates that the termination would not come into effect if there is no prior approval of the Reserve Bank, the cause of action for the Petitioner is the termination by ICICI. For the Petitioner, the 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 .....

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