Non-Maintainability of Writ Petitions Against Private Scheduled Banks Absent Public Duty: A Commentary on The Authorised Officer v. Sheela Francis Parakkal

1. Introduction

The Division Bench of the Kerala High Court, in The Authorised Officer v. Sheela Francis Parakkal, WA No.1498 of 2025 (decided on 22 August 2025), has once again drawn a clear line around the limits of the High Court’s writ jurisdiction under Article 226 of the Constitution in relation to private scheduled commercial banks.

The case arose from a dispute between borrowers and a private bank (South Indian Bank) concerning the bank’s alleged failure to return the original title deeds deposited as security after the closure of a loan account. A learned Single Judge had entertained a writ petition, issued a declaration about the bank’s lack of authority to retain the deeds after closure of the loan, and imposed costs on the bank. In the intra-court appeal under Section 5 of the Kerala High Court Act, 1958, a Division Bench set aside that judgment, holding that the writ petition itself was not maintainable against a private commercial bank in the absence of any public duty.

The decision is important not because it creates an entirely new doctrine, but because it reaffirms and consolidates existing jurisprudence—particularly of the Supreme Court in Federal Bank Ltd. v. Sagar Thomas and S. Shobha v. Muthoot Finance Ltd.—and applies it to a recurring type of dispute: retention or non‑return of title deeds by private banks after loan closure. It emphasizes that such disputes are essentially matters of private law for which the appropriate remedies lie outside the writ jurisdiction, unless some distinct element of public duty or statutory obligation is demonstrably involved.

2. Factual and Procedural Background

2.1 Parties

• Appellants (Respondents 1 & 2 in the writ petition):
  • The Authorised Officer, South Indian Bank, Aluva.
  • The Branch Manager, South Indian Bank, Aluva Branch.
• Respondents 1–3 (Petitioners in the writ petition):
  • Smt. Sheela Francis Parakkal (widow of late Francis Parakkal).
  • Shri Deepak Francis Parakkal (son of late Francis Parakkal).
  • Shri Rupak Francis Parakkal (son of late Francis Parakkal).
• Respondents 4 & 5 (Respondents 3 & 4 in the writ petition):
  • The General Manager, Reserve Bank of India, Thiruvananthapuram.
  • HDB Financial Services Ltd., Kochi.

2.2 The Writ Petition Before the Single Judge

Respondents 1–3 (the borrowers) approached the High Court under Article 226, alleging that the loan granted by the South Indian Bank had been closed, yet the bank continued to retain their original title deeds furnished as security. They sought:

• A direction to the bank to release and return the title deeds; and
• A declaration that the second respondent (Branch Manager) had no authority to retain the original title deeds after closure of the loan account.

The learned Single Judge, by judgment dated 08.04.2025 in W.P.(C) No.11247 of 2024, disposed of the writ petition with, inter alia, the following significant directions:

(i) Declaration that the second respondent had no authority to retain the original title deeds of the petitioners after closure of the loan account;
(ii) Direction to release the documents was declined only because the documents were stated to be not available;
(iii) Claim for compensation was declined, with liberty to approach another appropriate forum; and
(iv) Imposition of costs of Rs.50,000/- on the second respondent, of which Rs.25,000/- was to be paid to the petitioners and Rs.25,000/- to the Kerala Legal Services Authority, within 15 days.

Thus, while the Single Judge did not grant all the reliefs, the core finding was that the bank had no authority to keep the title deeds after closure of the loan, and the court imposed punitive costs on the bank.

2.3 The Writ Appeal

Aggrieved, the Authorised Officer and the Branch Manager filed WA No.1498 of 2025. Their principal contention was jurisdictional: they argued that the writ petition was not maintainable at all against a private scheduled bank, particularly where only private contractual rights and obligations were in issue, with no element of public duty. They stressed that the learned Single Judge failed to consider the threshold issue of maintainability, and instead proceeded straight to decide the matter on merits and impose heavy costs.

They relied on:

• Federal Bank Ltd. v. Sagar Thomas & Ors., (2003) 10 SCC 733;
• Mathew Ignitious C. v. Catholic Syrian Bank Ltd., 2019 (5) KHC 835 (DB); and
• S. Shobha v. Muthoot Finance Ltd., 2025 (2) KHC 229.

Respondents 1–3, on the other hand, contended that private banks also discharge public functions in view of their role in the financial system and regulation under the Reserve Bank of India (RBI). They argued that the prolonged retention of title deeds for nine years even after closure of the loan constituted a violation of their fundamental rights, thereby attracting the writ jurisdiction.

3. Summary of the Division Bench Judgment

The Division Bench (Sushrut Arvind Dharmadhikari J. and Syam Kumar V.M. J.) allowed the writ appeal and set aside the judgment of the learned Single Judge. The key holdings may be summarised as follows:

1. Non-amenability of Private Banks to Writ Jurisdiction: The South Indian Bank, being a private commercial bank, registered as a company under the Companies Act and carrying on commercial banking business, is not “State” or an “authority” under Article 12 of the Constitution and is therefore not amenable to writ jurisdiction under Article 226 in disputes of a purely private nature.
2. Application of Precedents: Relying on the Supreme Court’s decisions in Federal Bank Ltd. v. Sagar Thomas and S. Shobha v. Muthoot Finance Ltd., and the Division Bench judgment in Mathew Ignitious C. v. Catholic Syrian Bank Ltd., the Court reaffirmed that:
   • Private banks do not become public authorities merely because they are regulated by the RBI; and
   • Writs against private entities are permissible only where they are discharging a public duty or a duty under a statute, and the relief sought is in relation to that public duty.
3. Error of the Single Judge: The learned Single Judge erred in:
   • entertaining the writ petition against a private bank without deciding maintainability; and
   • granting declaratory relief and imposing costs, despite the bank not being amenable to writ jurisdiction in the circumstances of the case.
4. Result:
   • The writ petition (W.P.(C) No.11247 of 2024) was dismissed as not maintainable;
   • The directions and the costs imposed by the Single Judge were set aside; and
   • Respondents 1–3 (borrowers) were expressly granted liberty to pursue remedies “in accordance with law” before appropriate alternative fora.

4. Precedents and Authorities Cited

4.1 Federal Bank Ltd. v. Sagar Thomas & Ors., (2003) 10 SCC 733

In Federal Bank, the Supreme Court laid down the foundational proposition that private banks are generally not subject to writ jurisdiction. Some crucial features of that decision:

• Federal Bank was a private bank incorporated under the Companies Act, not a nationalized bank or a statutory corporation.
• The issue concerned an employee’s termination and whether a writ could be maintained against the bank.
• The Court held that:
  • Mere regulation by the RBI and the presence of policy guidelines do not convert a private commercial bank into an “authority” or “instrumentality of the State” under Article 12.
  • Such a bank’s functions remain essentially commercial, not governmental, even if subject to detailed regulation.
  • Private banks, therefore, do not discharge public functions as such by reason of engaging in banking business.

The Division Bench in Authorised Officer v. Sheela Francis expressly refers to this principle, highlighting that even extensive regulation in the public interest (for example, to protect depositors, ensure monetary stability, etc.) does not convert private commercial activity into public duty for purposes of Article 226.

4.2 Mathew Ignitious C. v. Catholic Syrian Bank Ltd., 2019 (5) KHC 835 (DB)

This earlier Division Bench decision of the Kerala High Court dealt directly with the maintainability of writ petitions against a private scheduled bank (Catholic Syrian Bank Ltd.).

The Court held that:

• A scheduled bank registered under the Companies Act does not fall within the expression “State” or “other authorities” under Article 12 of the Constitution.
• Consequently, such a bank is not amenable to writ jurisdiction under Article 226 in relation to disputes having a purely private law character, such as contractual disputes with its customers.

In the present case, the Division Bench cites Mathew Ignitious as reaffirming the position that private scheduled banks are not “State” under Article 12. The dispute about retention of title deeds post‑closure of loan is treated as one more example of a private dispute between a banker and a borrower, squarely within the ratio of Mathew Ignitious.

4.3 S. Shobha v. Muthoot Finance Ltd., 2025 (2) KHC 229

Shobha is a Supreme Court decision concerning maintainability of a writ petition against a non-banking finance company (NBFC), Muthoot Finance Ltd. The judgment, as quoted in the present case (paras 7–9), distils legal principles on when a writ may be issued against a private body. Key points from that extract include:

• The primary test is the “function” test:

  “A body, public or private, should not be categorized as 'amenable' or 'not amenable' to writ jurisdiction. The most important and vital consideration should be the 'function' test... If a public duty or public function is involved, any body, public or private, concerned or connected with that duty or function ... would be subject to judicial scrutiny…”

• The Court summarised (in para 9) several propositions, notably:
  • Writs may lie against:
    • State Government;
    • statutory authorities;
    • instrumentalities/ agencies of the State;
    • state-owned or substantially state-financed companies;
    • private bodies discharging public duty or statutory obligations.
  • A private company carrying on banking business as a scheduled bank is not to be considered as carrying on public functions or public duties merely by virtue of conducting banking business.
  • Merely being subject to statutory or regulatory requirements does not make a body “statutory” or transform all its acts into public functions.
  • Writs in the nature of mandamus may issue to private parties only where there is:
    • a clear public duty imposed by statute or otherwise; and
    • the relief sought is to compel performance of that public duty.

The Division Bench, by reproducing these paragraphs, makes it clear that its reasoning is anchored in the Supreme Court’s updated restatement of the law regarding private entities and writ jurisdiction. The Court quotes, and then applies, the specific proposition:

“A private company carrying on banking business as a Scheduled bank cannot be termed as a company carrying on any public function or public duty.”

This proposition is decisive in the context of a private scheduled bank like South Indian Bank.

5. Court’s Legal Reasoning

5.1 Central Issue: Maintainability vs. Merits

The core legal issue was whether the writ petition under Article 226, challenging the conduct of a private bank in relation to a loan transaction, was maintainable at all.

The Division Bench considered this a threshold question: before examining whether the bank was justified in retaining or failing to return the title deeds, the Court had to determine whether the High Court’s extraordinary writ jurisdiction could be invoked in such a matter. It found that the learned Single Judge:

• “did not consider the maintainability of the writ petition”; and
• “went on to decide the writ petition on merits as also imposed heavy cost of Rs.50,000/-”.

The Division Bench held this to be a serious error, because if the respondent is not amenable to writ jurisdiction in the given context, the High Court should not embark on an adjudication of merits at all.

5.2 Character of the Bank and Its Functions

The Court emphasized that:

• The appellant bank is a private commercial bank, incorporated under the Companies Act;
• It is not a statutory corporation or government-owned company; and
• Its activities—though regulated by the RBI—are commercial banking activities conducted for profit.

Drawing from Federal Bank and S. Shobha, the Court reiterated that:

• Private banks do not fall within “State” or “other authorities” in Article 12;
• They do not inherently discharge “public duties” merely by carrying on banking business; and
• RBI guidelines and regulatory supervision are designed to regulate private activity in the public interest, but do not convert those private actors into public authorities or make all their actions subject to public law remedies.

5.3 Function Test and Public Law Element

The Division Bench implicitly applies the “function” test summarized in S. Shobha:

• The crucial inquiry is whether the relief sought against the private body relates to:
  • a public duty or a duty of a public nature; or
  • a statutory obligation imposed on that body.
• If there is no public element in the duty alleged to have been breached, the dispute remains within the realm of private law, and writ jurisdiction is generally not available.

In this case:

• The dispute concerned the bank’s failure to return title deeds allegedly after closure of a loan account.
• This arises from a contractual relationship between banker and borrower, i.e., a private law obligation.
• No specific statutory mandate or public duty of the bank was shown to have been violated.

Therefore, the public law element was absent, and the writ petition was held to be not maintainable.

5.4 Effect of RBI Regulation

Respondents 1–3 attempted to argue that because private banks are heavily regulated by the RBI and perform critical roles in the economy, their functions should be regarded as public functions.

The Court, following Federal Bank and S. Shobha, rejected this line of reasoning by observing, in substance, that:

• RBI’s regulation aims at ensuring soundness and stability in the banking system, protection of depositors, and macroeconomic stability; but
• Such regulation is regulatory and supervisory, not “participatory dominance” or “deep and pervasive control” transforming the private bank into an instrumentality of the State; and
• Thus, compliance with RBI guidelines does not make the bank a statutory authority for all purposes, nor does it convert its private dealings with borrowers into public law transactions.

5.5 Consequences: Setting Aside the Single Judge’s Judgment

Once the Division Bench held that the writ petition was not maintainable, it logically followed that:

• The declaration that the Branch Manager had no authority to retain the title deeds after closure of the loan could not survive, as the Court lacked jurisdiction in the first place to grant such relief in writ proceedings against this respondent.
• The costs of Rs.50,000/- imposed on the bank were unsustainable, as they were predicated on a merits determination in a proceeding that was not maintainable.

The Court therefore:

• Set aside the Single Judge’s judgment “in toto”; and
• Dismissed the writ petition as not maintainable.

At the same time, the Court took care to preserve the borrowers’ substantive rights by clarifying that respondents 1–3 were at liberty to “work out the remedies in accordance with law, if so advised”. In other words, the dismissal was on a jurisdictional ground, not on the merits of their underlying grievance.

6. Impact and Implications

6.1 For Borrowers and Bank Customers

This judgment sends a clear signal to borrowers and customers of private scheduled banks:

• Disputes regarding:
  • non-return or loss of title deeds,
  • alleged wrongful debits or charges,
  • interest calculations, foreclosure, etc.,
  will ordinarily be treated as private law disputes.
• Such disputes should be pursued through:
  • Civil suits for recovery of documents and damages;
  • Proceedings before appropriate consumer fora (if the borrower qualifies as a “consumer” under consumer protection laws);
  • Complaints to the Banking Ombudsman / RBI Integrated Ombudsman, where available; or
  • Other statutory mechanisms (e.g., under the SARFAESI Act, if relevant).
• Invoking the writ jurisdiction of the High Court against private banks will usually fail, unless a specific public or statutory duty is at stake.

In practical terms, this may mean:

• Longer timelines, given that civil and consumer proceedings often take more time than writ petitions; but
• Also, potentially more appropriate procedural tools, such as:
  • detailed evidence-taking,
  • cross-examination of bank officers,
  • full consideration of contractual documents,
  which are more suited to resolving fact-intensive private disputes.

6.2 For Private Banks and NBFCs

For private banks and NBFCs, the judgment provides a measure of procedural insulation from writ proceedings in routine customer disputes. Key implications:

• They are less likely to face expedited writ scrutiny in matters relating to the ordinary incidents of lending and banking contracts.
• However, they remain fully vulnerable to:
  • Civil suits for breach of contract or negligence;
  • Consumer complaints alleging deficiency in service;
  • Regulatory action by RBI for breach of guidelines or regulations;
  • Criminal prosecution in cases of fraud, embezzlement, or criminal breach of trust, where facts support it.
• The judgment thus does not give substantive immunity from liability; it only delineates the proper procedural route for redressal of grievances.

6.3 For Article 226 Jurisprudence

This decision strengthens a consistent line of constitutional jurisprudence:

• Article 226 is a potent, but exceptional, public law remedy primarily directed against:
  • State, statutory authorities, and public bodies; and
  • Private parties only where they perform public functions or statutory duties.
• The judgment:
  • Reaffirms that regulation by the State does not automatically convert a private entity into an instrumentality of the State;
  • Reiterates the function test, as clarified in S. Shobha, rather than a simplistic “label-based” approach; and
  • Encourages High Courts to address maintainability at the outset rather than plunging into merits prematurely.

6.4 On the Specific Issue of Retention of Title Deeds

One interesting aspect is that the learned Single Judge had, on merits, declared that a bank has no authority to retain title deeds after closure of a loan and had imposed costs for such conduct. However, because the Division Bench set aside that entire judgment on the ground of non-maintainability, that declaration and reasoning:

• no longer have binding force as precedent; and
• cannot be cited as an authoritative judicial pronouncement on the rights and duties of banks regarding title deeds in such circumstances.

That said, the underlying commercial law principle—that a secured creditor is ordinarily obliged to return original title deeds within a reasonable time after the discharge of the secured debt—is well-recognised under contract law, property law, and banking practice. What the present judgment does is to:

• Clarify that such obligations are to be enforced through private law mechanisms (civil/consumer remedies), not by invoking the public law remedy of writ jurisdiction, at least in the absence of some added public duty dimension.

6.5 Institutional Discipline: Threshold Scrutiny of Writ Petitions

Another institutional impact of this judgment is on judicial discipline and procedural rigor:

• The Division Bench implicitly reminds Single Judges (and, by extension, all courts exercising writ jurisdiction) that:
  • They must first ask: Is the respondent amenable to writ jurisdiction?
  • If not, the matter usually must be declined at that stage, leaving the aggrieved party to other remedies.
• This helps prevent:
  • “Back-door” expansion of writ jurisdiction into arenas properly governed by private law; and
  • Unwarranted imposition of costs or directions against entities over whom the writ court has, in principle, no jurisdiction in the given context.

7. Complex Concepts Simplified

7.1 “State” and “Other Authorities” under Article 12

Article 12 of the Constitution defines “State” for the purpose of Part III (Fundamental Rights). It includes:

• Government and Parliament of India;
• Government and Legislature of each State; and
• All “local or other authorities” within the territory of India or under the control of the Government of India.

Courts have interpreted “other authorities” to include statutory corporations, government-owned companies, and instrumentalities of the State. The test looks at:

• Ownership and financial control by the State;
• Nature of functions (are they governmental or of public importance?);
• Extent of deep and pervasive State control; and
• Whether the body performs functions fundamental to the life of the people that are essentially public in nature.

Private companies (including private banks) generally do not qualify as “State” unless they meet these stringent tests.

7.2 Article 226 Writ Jurisdiction

Article 226 empowers High Courts to issue writs for:

• Enforcement of fundamental rights; and
• “For any other purpose” (i.e., enforcement of other legal rights).

Common writs include:

• Mandamus: Commanding a public authority to perform a public duty;
• Certiorari: Quashing orders of inferior courts/tribunals for jurisdictional error;
• Prohibition: Preventing an inferior court/tribunal from proceeding beyond its jurisdiction;
• Habeas corpus: Protection against unlawful detention; and
• Quo warranto: Questioning the legality of a person’s claim to a public office.

Though Article 226 is broader than Article 32 and can, in some circumstances, be invoked even against private bodies, courts have consistently held that this happens only where:

• the private body is discharging a public function; or
• it has a statutory duty or obligation that is being enforced.

7.3 Public Duty vs. Private Duty

A public duty is one that:

• is owed to the public at large or a sufficiently large section of the public;
• is often rooted in a statute or delegated legislation; and
• affects public rights or interests when breached.

A private duty arises from:

• contracts (like loan agreements, mortgages);
• torts (private wrongs); or
• property relations between individuals or private entities.

In the present case, the bank’s obligation to return the title deeds arises from a private contract of loan and security. Its breach, while serious for the borrowers, does not in itself transform the obligation into a public duty enforceable via a writ of mandamus.

7.4 The “Function Test”

The “function test” asks:

What is the nature of the function being performed, in relation to which the writ is sought?

Under this test:

• If the function is public (e.g., running a public utility under statutory monopoly, managing public education, etc.), even a private entity can be subject to writs in relation to that function.
• If the function is purely private and commercial, and not underpinned by statute or public duty, writ jurisdiction is generally not available.

In Authorised Officer v. Sheela Francis, the relevant function—retention and return of title deeds in a private loan transaction—was held to be a private, contractual function, not a public one.

7.5 Intra-Court Appeal under Section 5 of the Kerala High Court Act

Section 5 of the Kerala High Court Act, 1958, permits an intra-court appeal (often called a “writ appeal”) from a judgment of a Single Judge to a Division Bench of the same High Court in certain categories of cases (including writ petitions), subject to limitations.

The present matter is one such writ appeal, where the Division Bench reviewed and overturned the Single Judge’s order on questions both of law and jurisdiction.

8. Conclusion and Key Takeaways

The Authorised Officer v. Sheela Francis Parakkal is a significant reiteration—particularly within the Kerala High Court’s jurisdiction—of the principle that private scheduled banks are ordinarily not amenable to writ jurisdiction under Article 226 for disputes arising purely from their private, commercial relationships with customers.

The key takeaways may be distilled as follows:

1. Non-Maintainability Against Private Banks in Purely Private Disputes
   A writ petition under Article 226 will not generally lie against a private scheduled bank in matters concerning loan accounts, return of title deeds, or similar contractual issues, unless there is a demonstrable public duty or statutory obligation at stake.
2. Function Test Governs, Not Mere Regulation
   The fact that banks (and NBFCs) are heavily regulated by the RBI does not, by itself, convert all their actions into public functions. The nature of the specific function in question and the presence (or absence) of a public law element remain the decisive factors.
3. Importance of Threshold Scrutiny
   Courts exercising writ jurisdiction must first address maintainability and amenability to writ jurisdiction, before adjudicating merits or awarding costs. Failure to do so can result in entire judgments being set aside, as occurred here.
4. Borrowers’ Remedies Remain Intact, But in Other Fora
   While the writ petition was dismissed, the borrowers retain full liberty to seek redress before civil courts, consumer fora, or other competent bodies. The dismissal is procedural (jurisdictional), not a denial of substantive rights.
5. Alignment with Supreme Court Precedent
   The judgment harmonizes the High Court’s approach with the Supreme Court’s decisions in Federal Bank and S. Shobha, as well as earlier Kerala precedent in Mathew Ignitious, thereby lending further clarity and stability to this branch of constitutional and banking law.

In the broader legal context, the decision underscores an important structural feature of Indian public law: not every legal wrong is remediable by writ. The constitutional writ jurisdiction is reserved primarily for enforcement of public duties and constitutional rights, while the resolution of private disputes—even when they involve serious economic and property interests— belongs predominantly to the domain of private law remedies.