Writ Jurisdiction Can Be Invoked For Commercial Transactions Between Private Person & Public Body Involving Element Of Public Law: Calcutta HC

The Calcutta High Court has held that writ jurisdiction of High Courts under Article 226 of the Constitution is invocable even for cases involving ordinary commercial transactions between private persons and public bodies as long as some element of public law is involved in the said commercial transactions. Deciding in favour of the petitioner on the maintainability of the writ petition which challenged one such commercial transaction with UCO Bank, a Division Bench of Justices I.P. Mukherji and Biswaroop Chowdhury held: "Even in an ordinary commercial transaction between a private person and a public body where some element of public law is involved, the jurisdiction of the writ court can be invoked. In this case, there is the question of legality, arbitrariness, unfairness or unreasonableness of the action of the respondent bank in charging interest or lowering it. In my opinion, the writ court can make an enquiry into this conduct of the respondent bank. This writ application is perfectly maintainable." The Court however clarified that such invocation of writ jurisdiction is constrained only to cases involving disputed questions of fact which are not very intricate or complex and are capable of being established through evidence affidavits. Distinguishing the two categories of disputed questions of fact, the Court held that an exercise of writ jurisdiction is to be avoided when adjudication of matter requires enquiry into disputed questions of fact by sifting through heavy and voluminous evidence, in respect whereof proceedings before a civil forum would be more appropriate for establishment of facts by trial on evidence. It held: "If the facts constituting the disputes are not very intricate or complex and can be established on affidavit evidence the court should not relinquish its jurisdiction on the above ground but proceed to resolve them and thereafter decide the writ application. But if enquiry into the facts require heavy and voluminous evidence to be sifted and evaluated by the court then such an exercise should be avoided by it and the parties relegated to a civil forum to establish those facts by trial on evidence and to obtain relief. If at all a writ petitioner has to be relegated to a civil forum it is done at the time of admission of the writ. After admission and exchange of affidavits it is harsh on a party to be turned out of the court with an observation that he should seek remedy in a civil forum." The dispute involved in the instant writ petition arose out of loans availed by the petitioner from the bank wherein differential interest rates were charged across different periods. The principal relief preferred pertained to refund of excess interest charged upon the petitioner's cash credit account. The petitioner contended that the bank had agreed to not charge any rate of interest higher than the lead member bank of the consortium, but the same was not given effect to. The Petitioner claimed a sum of Rs. 98,74,477.77 on account of over charged interest. The bank however contended that no such consortium was ever constituted and consequently there was no occasion for it to have reduced its interest rates, and that the total amount to be refunded on account of differential rates of interest for different periods was Rs. 19,14,372.83. After hearing the rival contentions of parties and on deciding the issues on merits, the Court came to the conclusion that the conduct of the bank was arbitrary and unfair insofar as it failed to justify before the Court the basis of charging rates of interest higher than any consortium bank at different periods of time. Deeming such conduct to be a fit ground for intervention of the Court in exercise of its writ jurisdiction, the Court held: "The respondent bank was obliged to act fairly and reasonably and according to the set and uniform standards as far as charging interest from borrowers is concerned. The decision of the respondent bank in this regard ought to have been transparent, clear cut and reasoned. It is not. This makes it a fit ground for intervention of the court in its writ jurisdiction." The opinion of Justice I.P. Mukerji directed the Chairman of the bank or any officer not below the rank of Chief General Manager to reconsider the decision pertaining to the rate of interest to be charged on the petitioner in respect of the subject loan for the specified duration, upon giving opportunity of hearing and publishing a reasoned decision within three months. In arriving at such a decision, the Court relied on the ruling of the Supreme Court in Comptroller and Auditor-General of India, Gian Prakash, New Delhi and Anr. reported in (1986) 2 SCC 679 on the authority of High Courts in exercise of writ jurisdiction under Article 226 of the Constitution to issue writ of mandamus for the prevention of injustice and for compelling performance of functions of government or...

Writ Jurisdiction Can Be Invoked For Commercial Transactions Between Private Person & Public Body Involving Element Of Public Law: Calcutta HC

SAMRIDDHA SEN

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