Goa State Cooperative Bank Ltd. Not A 'State' Under Art. 12, Does Not Discharge Any Public Functions: Full Bench Of Bombay High Court

Full Bench of the Bombay High Court, Goa Bench on Friday held that the Goa State Cooperative Bank Ltd. is not a 'State' nor does it fall within the ambit of 'any other authority' for the purposes of Art. 12 of the Constitution of India. The bench also went ahead to observe that the said Bank does not discharge any public functions which would warrant issuance of a writ in the nature of mandamus.

The bench comprising of Justice M.S. Sonak, Justice Dama Seshadri Naidu and Justice Bharati H. Dangre was dealing with a reference order adjudicating 2 major issues:

1. Whether Goa State Cooperative Bank Ltd. is a 'State' or any instrumentality thereof, for the purposes of Article 12 of the Constitution of India?

2. In case GSCB is not a 'State' within the meaning of Article 12, whether it performs any public functions, which would warrant issuance of writ in the nature of mandamus in discharge of its performance of the public functions?

Background of Reference

Two division benches of the High Court in the cases of Ganesh Morto Naik v. Goa State Co-operative Bank Ltd. (1991) SCC OnLine Bom 211 and Surendra J. Kalangutkar v. Goa State Cooperative Bank Ltd. (2016) SCC OnLine Bom 2587 held that the Goa State Cooperative Bank Ltd. is a 'State' for the purpose of Art,12 and that since it is discharging public functions, it is amenable to writ jurisdiction under Art. 226 of the Constitution of India.

However, in another judgment delivered by the Aurangabad Bench in case of Shri Suresh Bhanudas Shinde & Anr v. State of Maharashtra & Ors W.P. No.334 of 2018, the Court took a contrary view and held that the District Cooperative Bank Ltd. is not a State within the meaning of Art. 12 and did not perform any public functions.

Furthermore, in another decision by the Full Bench of the HC in Shamrao Vithal Co-operative Bank Limited v/s. Padubidri Pattabhiram Bhat, it was held that Multi State Co-operative Bank registered under the Maharashtra State Cooperative Societies Act, 1984 is not a 'State' within the meaning of Article 12, though it is governed by the Banking Regulations Act, 1949 and it performs public functions.

The present writ petition was thereafter filed wherein the division bench comprising of Justice M. S. Sonak and Justice Bharati Dangre deemed it appropriate to resolve the contradicting views by referring it to a larger bench relating not only to the Goa State Co-operative Bank Ltd. but also other Cooperative banks in the State of Goa.

While referring to a plethora of judgments, the Court analyzed the provisions of sec. 2 (u) and (v) of the National Bank for Agriculture and Rural Development Act, 1981 (NABARD) and observed that merely because GSCB has received recognition under the Act, it cannot be said that it enjoy complete monopoly in the field.

Moreover, by applying various tests as developed by the Courts under Art. 12, the Court observed that a writ in the nature of mandamus would also lie against a private body, but only when such body performs any public function. Therefore, a commercial business of banking, though is a function of public importance is not a public function.

"Merely because the Reserved Bank of India prescribe the banking policy for the sound economic growth and any particular bank function under the Banking Regulation Act, a private company carrying on business or commercial activity of banking do not conclusively establish that it discharge any public function or public duty." The Court held.

The Bench concluded thus:

"The Regulations are to be ranked not more than regulatory measures and if there is a failure to adhere to the said regulations, certain consequences are visited, is also not an indication to categorize the functioning as public duty. Similarly, merely because an organisation carries on function of public importance which are akin to or closely related to government functions, it would be no reason to hold that it discharge public functions."

Answers given by the Bench for the reference;

1) The Goa State Cooperative Bank Ltd is not a 'State' or an instrumentality thereof nor does it fall within the ambit of 'Any other authority' for the purposes of Article 12 of Constitution of India.

2) The GSCB does not discharge any public functions, which would warrant issuance of writ in the nature of mandamus in discharge of its performance of public functions

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