HC says it can act against private banks if public money is involved, orders 25L payment to NGO
Kolkata: Orders can be issued by the high court against a private bank dealing with public money if it fails to discharge its statutory obligations, the
Calcutta High Court
held while directing a private bank to pay Rs 25 lakh within 30 days to a society for the harassment caused in pursuing the legal case.
The RBI was also directed to form a high-level committee of at least three members within seven days to conduct a thorough enquiry regarding the non-compliance and violation of its circulars and Act by the bank.
The committee was directed to hear both sides before coming to a decision, which should include the assessment of the loss suffered by the society.The Society for Welfare of the Handicapped Persons claimed a fake account was created in their name at Axis Bank, Prince Anwar Shah Road branch, where a huge amount of transactions took place. They filed a complaint in 2011, claiming fraudulent activity after they found a large portion of donations was not being credited to their four existing accounts. It was allegedly credited to the fake account and then siphoned.The counsel representing the society, Pradip Kumar Dutta, told HC the organisation's activities were managed through donations and govt grants. Justice Partha Sarathi Sen held, "It very much appears to this court that the bank cannot deny its obligation to an affected person who is its constituent, especially when the said constituent suffered substantially on account of failure on the part of the said respondent to perform its duties and obligations which it is bound to perform in terms of provisions of section 35 A of the said Act of 1949 vis-a-vis the different circulars/direction of the RBI which are basically meant either for the public interest or for the purpose of preventing the affairs of the said respondents in a manner detrimental to the interest of the depositors."The judge noted the claims made by the bank that the president of the society was "actively involved" in the opening of the account fell flat as his involvement was not found in the probe. Instead, a charge sheet was submitted against Rajesh Karmakar, the branch sales manager, and Bikash Roy. The counsel representing RBI submitted that RBI found sufficient lapses while opening the account in gross violation of its guidelines.The bank's lawyer questioned the maintainability of the case, stating that the society failed to prove that Axis Bank, being a private company, is discharging any statutory or public duty. It was argued that the dispute comes under the periphery of a private dispute between the bank and one of its constituents, for which remedy lies elsewhere but not before a writ court."This court is of the considered view that on account of failure on the part of the respondent nos. 11 to 13 to discharge positive statutory obligation, there cannot be any embargo in issuing a writ of mandamus as prayed for," it was held.
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