Karnataka HC Dismisses Borrower’s SARFAESI Writ Against Karnataka Bank, Finding No Public Duty By Private Bank

The petitioner challenged an order dated 15 December 2023 by which the Principal Senior Civil Judge and CJM, Mangaluru, allowed the respondent-Bank’s application under Section 14 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (“SARFAESI Act”).

This Court had granted an interim stay subject to the petitioner depositing 30% of the amount due within nine weeks; the petitioner’s counsel admitted that the condition had not been complied with.

The Bank objected that the writ petition was not maintainable against it as a private bank.

Under Article 226, a writ may issue against a private body where, among other recognised grounds, it discharges a public duty or public function, or is legally obliged to perform a statutory function; the presence of a public-law element is essential.

In Federal Bank Ltd. v. Sagar Thomas, (2003) 10 SCC 733, and Gowtham v. Karnataka Bank Ltd., W.P. No. 11869/2017 connected with W.P. No. 27352/2016 (Karnataka High Court, 4 March 2020), the courts held that a private bank’s ordinary commercial activity does not, by itself, make it amenable to writ jurisdiction.

The Supreme Court’s summary in S. Shobha v. Muthoot Finance Limited, 2025 INSC 117, similarly states that a private company carrying on banking business as a scheduled bank is not, merely for that reason, performing a public function or public duty; a writ against a private body requires a public-law duty or obligation.

The Court applied the above principles to the petitioner’s challenge to an order allowing the Bank’s Section 14 SARFAESI application.

It considered itself bound by the principles in S. Shobha and the Karnataka High Court’s decision in Gowtham, and concluded that the respondent-Bank’s status as a private bank did not make it amenable to writ jurisdiction in this case.

The Court therefore did not examine the merits of the challenge to the Section 14 order.

It also recorded the petitioner’s failure to comply with the interim deposit condition.

It directed that the time spent prosecuting the writ petition be available to the petitioner under Section 14 of the Limitation Act, 1963.