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2025 DIGILAW 1827 (GAU)

Sayed Suhel Enterprise v. State of Assam

2025-11-12

MANISH CHOUDHURY

body2025
JUDGMENT & ORDER : MANISH CHOUDHURY, J. 1. Heard Mr. S.S. Ahmed, learned counsel for the petitioner. 2. The case projected by the petitioner, in brief, is that the petitioner, a proprietorship firm, has been running and operating an export-import business of limestone with Bangladesh from Karimganj [presently, Sribhumi] since the year 2020. 3. It is stated that in the months of October/November, 2023, the respondent no. 3 offered an unsecured business loan to the petitioner for an amount of Rs. 21,99,400/- and the same was sanctioned on 29.12.2023 vide Loan no. PO45PHF10313818. After sanctioning of the loan, the petitioner paid 15 nos. of Equated Monthly Installments [EMIs] regularly amounting to Rs. 4,11,939/-. Thereafter, on 05.08.2024, the Government in Bangladesh was overthrown. The petitioner has further stated that one supplier of the petitioner had also defrauded it for an amount of Rs. 25,00,000/-. As a result, its entire export business got halted and the business operation of the petitioner was severely affected. Yet, the petitioner continued to pay the EMIs to the respondent nos. 2 & 3. The petitioner communicated the difficulties faced by it to the respondent nos. 2 & 3 in a Representation dated 03.05.2025 while seeking amicable settlement of the matter. But, the respondent nos. 2 & 3 did not pay any heed to them. 3.1. Subsequently, a Notice dated 15.09.2025 was issued by the respondent no. 4 and the same was received by the petitioner on 25.09.2025. The Notice dated 25.09.2025 was for commencement of Arbitration proceedings as the respondent no. 2 made a proposal to the Arbitration, Mediation & Resolution Council for appointment of an Arbitrator. The Notice further asked the petitioner to submit its response within 10 [ten] days. The petitioner thereafter, on 30.09.2025, submitted its objection against the Notice dated 25.09.2025 objecting to the decision in appointing an Arbitrator beyond the territorial jurisdiction. The petitioner also sought for opportunity to amicably settle the matter. The respondent no. 4 did not consider the objection of the petitioner as an Arbitrator came to be unilaterally appointed in Pune on 27.09.2025. 3.2. The Arbitrator so appointed, issued a notice to the petitioner for hearing annexing a copy of the claim petition dated 29.09.2025 with it and the petitioner received the notice digitally. As per the notice, the first hearing was scheduled on 06.10.2025. The petitioner again submitted an objection before the Arbitrator [the respondent no. 3.2. The Arbitrator so appointed, issued a notice to the petitioner for hearing annexing a copy of the claim petition dated 29.09.2025 with it and the petitioner received the notice digitally. As per the notice, the first hearing was scheduled on 06.10.2025. The petitioner again submitted an objection before the Arbitrator [the respondent no. 5] with a copy to the respondent no. 2 on 01.10.2025 against the appointment of the Arbitrator in Pune and unilateral commencement of the arbitration proceeding vide Arbitration Case no. DRBA- 51980. The petitioner later on, also submitted Representations to the respondent nos. 2 & 3 for amicable settlement of the matter. 3.3. As the petitioner has not received any response or communications from any of the respondents, the petitioner has instituted the instant writ petition under Article 226 of the Constitution seeking setting aside of the impugned Notices, dated 15.09.2025 & dated 29.09.2025, issued in connection with Arbitration Case no. DRBA-51980. The petitioner has also sought for a direction to the respondent authorities to allow the petitioner to amicably settle the dispute within the State of Assam and to restrain the respondent authorities including the Arbitrator [respondent no. 5], from passing or executing any Award against the petitioner. 4. The learned counsel for the petitioner has submitted that the jurisdiction under Article 226 of the Constitution of India can be exercised in a matter where there is perceived illegality and high-handedness on the part of the respondent authorities and its agents/representatives/officials, etc. It is the contention that the respondent authorities are duty bound to follow due procedure of law. In support of his submissions, the learned counsel for the petitioner has placed reliance to the decision of the Hon’ble Supreme Court of India in Binny Ltd. and another vs. V. Sadasivan and others , 2005 6 SCC 657 , more particularly, paragraph 11 and 29 thereof :- 11. Judicial review is designed to prevent the cases of abuse of power and neglect of duty by public authorities. However, under our Constitution, Article 226 is couched in such a way that a writ of mandamus could be issued even against a private authority. However, such private authority must be discharging a public function and the decision sought to be corrected or enforced must be in discharge of a public function. However, under our Constitution, Article 226 is couched in such a way that a writ of mandamus could be issued even against a private authority. However, such private authority must be discharging a public function and the decision sought to be corrected or enforced must be in discharge of a public function. The role of the State expanded enormously and attempts have been made to create various agencies to perform the governmental functions. Several corporations and companies have also been formed by the Government to run industries and to carry on trading activities. These have come to be known as public sector undertakings. However, in the interpretation given to Article 12 of the Constitution, this Court took the view that many of these companies and corporations could come within the sweep of Article 12 of the Constitution. At the same time, there are private bodies also which may be discharging public functions. It is difficult to draw a line between public functions and private functions when they are being discharged by a purely private authority. A body is performing a ‘public function’ when it seeks to achieve some collective benefit for the public or a section of the public and is accepted by the public or that section of the public as having authority to do so. Bodies therefore exercise public functions when they intervene or participate in social or economic affairs in the public interest. In a book on Judicial Review of Administrative Action (5th Edn.) by de Smith, Woolf & Jowell in Chapter 3, para 0.24, it is stated thus: ‘A body is performing a ‘public function’ when it seeks to achieve some collective benefit for the public or a section of the public and is accepted by the public or that section of the public as having authority to do so. Bodies therefore exercise public functions when they intervene or participate in social or economic affairs in the public interest. This may happen in a wide variety of ways. For instance, a body is performing a public function when it provides ‘public goods’ or other collective services, such as health care, education and personal social services, from funds raised by taxation. A body may perform public functions in the form of adjudicatory services (such as those of the criminal and civil courts and tribunal system). For instance, a body is performing a public function when it provides ‘public goods’ or other collective services, such as health care, education and personal social services, from funds raised by taxation. A body may perform public functions in the form of adjudicatory services (such as those of the criminal and civil courts and tribunal system). They also do so if they regulate commercial and professional activities to ensure compliance with proper standards. For all these purposes, a range of legal and administrative techniques may be deployed, including rule making, adjudication (and other forms of dispute resolution); inspection; and licensing. Public functions need not be the exclusive domain of the State. Charities, self- regulatory organisations and other nominally private institutions (such as universities, the Stock Exchange, Lloyd's of London, churches) may in reality also perform some types of public function. As Sir John Donaldson, M.R. urged, it is important for the courts to ‘recognise the realities of executive power’ and not allow ‘their vision to be clouded by the subtlety and sometimes complexity of the way in which it can be exerted’. Non-governmental bodies such as these are just as capable of abusing their powers as is Government.’ * * * * * * 29. Thus, it can be seen that a writ of mandamus or the remedy under Article 226 is pre-eminently a public law remedy and is not generally available as a remedy against private wrongs. It is used for enforcement of various rights of the public or to compel public/statutory authorities to discharge their duties and to act within their bounds. It may be used to do justice when there is wrongful exercise of power or a refusal to perform duties. This writ is admirably equipped to serve as a judicial control over administrative actions. This writ could also be issued against any private body or person, specially in view of the words used in Article 226 of the Constitution. However, the scope of mandamus is limited to enforcement of public duty. The scope of mandamus is determined by the nature of the duty to be enforced, rather than the identity of the authority against whom it is sought. If the private body is discharging a public function and the denial of any right is in connection with the public duty imposed on such body, the public law remedy can be enforced. The scope of mandamus is determined by the nature of the duty to be enforced, rather than the identity of the authority against whom it is sought. If the private body is discharging a public function and the denial of any right is in connection with the public duty imposed on such body, the public law remedy can be enforced. The duty cast on the public body may be either statutory or otherwise and the source of such power is immaterial, but, nevertheless, there must be the public law element in such action. Sometimes, it is difficult to distinguish between public law and private law remedies. According to Halsbury's Laws of England, 3rd Edn., Vol. 30, p. 682, “1317. A public authority is a body, not necessarily a county council, municipal corporation or other local authority, which has public or statutory duties to perform and which perform those duties and carries out its transactions for the benefit of the public and not for private profit.” There cannot be any general definition of public authority or public action. The facts of each case decide the point. 5. An issue of similar kind, as raised in this writ petition, has been dealt by this Court in Jamal Uddin vs. State of Assam and others , [2022] 6 GLT 423, wherein a writ in the nature of mandamus and/or certiorari were sought for against the respondents, M/s Tata Capital Financial Service Limited and its agents and appointed Arbitrator. 6. An incorporated company does not owe its existence to the Companies Act, 1956 and/or the Companies Act, 2013 [‘the Companies Act’, for short]. An incorporated company may be formed for any lawful purpose by seven or more persons, where the company to be formed is a public limited company, and two or more persons, where the company to be formed is a private limited company. The persons forming the company have to subscribe their names to a memorandum of association and by complying with the requirements of the Companies Act in respect of registration. Therefore, a company is incorporated under the Companies Act and not established under the Companies Act. A public limited company or a private limited company incorporated and registered under the Companies Act cannot be equated with a Corporation established by or under an Act. Therefore, a company is incorporated under the Companies Act and not established under the Companies Act. A public limited company or a private limited company incorporated and registered under the Companies Act cannot be equated with a Corporation established by or under an Act. A public limited company or a private limited company, when it comes into the existence, is governed in accordance with the provisions of the Companies Act. 7. M/s Bajaj Finance Ltd. from the petitioner had availed the financial facility in the form of a loan is a company incorporated under the provisions of the Companies Act. 8. Article 226 of the Constitution of India, which deals with powers of the High Courts to issue certain writs inter alia stipulates that every High Court has the power to issue directions, orders or writs to any person or authority, including, in appropriate cases, any Government, for enforcement of any of the rights conferred by Part III of the Constitution of India and for any other purpose. If an authority/body is ‘State’ within the meaning of Article 12 of the Constitution of India, a writ petition under Article 226 of the Constitution of India is maintainable against such an authority/body for the aforesaid purposes. The definition contained in Article 12 is for the purpose of application of the provisions contained in Part III. The provisions of Article 12 of the Constitution of India have provided that ‘the State’ includes the Government and Parliament of India and the Government and the Legislature of each of the States as well as all local or other authorities within the territory of India or under the control of the Government of India. If an authority/body falling within the purview of ‘other authority’ as per Article 12 of the Constitution of India violates the fundamental rights of any person or citizen, a writ petition can be filed under Article 226 of the Constitution of India invoking the extra-ordinary jurisdiction of the High Court seeking appropriate direction, order or writ. Thus, under Article 226 of the Constitution of India the power of the High Court is not limited to the Government or authority which qualifies to be ‘the State’ under Article 12 of the Constitution of India but is extended for issuing directions, orders or writs ‘to any person or authority’ also. Thus, under Article 226 of the Constitution of India the power of the High Court is not limited to the Government or authority which qualifies to be ‘the State’ under Article 12 of the Constitution of India but is extended for issuing directions, orders or writs ‘to any person or authority’ also. Again, this power of issuing directions, orders or writs is not limited to enforcement of fundamental rights conferred by Part III, but also ‘for any other purpose’. Therefore, the power of the High Court takes within its sweep more authorities than stipulated in Article 12 of the Constitution of India and the subject-matter which can be dealt with under Article 226 of the Constitution of India is also wider in scope. The words ‘any person or authority’ used in Article 226 of the Constitution of India are not to be confined only to statutory authorities and instrumentalities of the State. They may cover any other person or authority/body performing public duty and it is the nature of duty imposed on the authority/body which is relevant. The guiding factor is the nature of duty imposed on such an authority/body, namely, public duty to make it covered under the ambit of Article 226 of the Constitution of India. The term ‘authority’ used in Article 226 of the Constitution of India has to receive wider meaning within the very term used in Article 12 of the Constitution of India. 9. If a person or authority is ‘the State’ within the meaning of Article 12 of the Constitution of India, admittedly a writ petition under Article 226 of the Constitution of India would lie against such a person or an authority. But even in such cases writ would not lie to enforce private law rights. It is the basic principle of judicial review of an action under the administrative law. The reason is private law is that part of the legal system which is part of common law that involves relationships between individuals, such as law of contract. Thus, even if a writ petition is maintainable against an authority, which is ‘the State’ under Article 12 of the Constitution of India, before issuing the writ, particularly writ of mandamus, the Court has to satisfy that the action of such an authority, which is challenged, is in the domain of public law as distinguished from private law. Thus, even if a writ petition is maintainable against an authority, which is ‘the State’ under Article 12 of the Constitution of India, before issuing the writ, particularly writ of mandamus, the Court has to satisfy that the action of such an authority, which is challenged, is in the domain of public law as distinguished from private law. Ordinary private law remedies are not enforceable through extra-ordinary writ jurisdiction. More particularly, contractual and commercial obligations are enforceable only by ordinary action and not by judicial review. It is also settled that even if a person or an authority does not come within the sweep of Article 12 of the Constitution of India, but is performing public duty, a writ petition can lie and a writ of mandamus or appropriate writ can be issued. Such a private body should either run substantially on State funding or discharge public duty/positive obligation of public nature or is under liability to discharge any function under any statute, to compel it to perform such a statutory function. 10. The principle of judicial review prima facie governs the activities of bodies performing public functions. The only functions which are similar or closely related to those that are performed by the State in its sovereign capacity qualify as public functions or a public duty. A writ under Article 226 of the Constitution of India can lie against a person if it is a statutory body or performs a public function or discharges a public or statutory duty. It can be said that such functions which are similar to or closely related to those performable by the State in its sovereign capacity, can be defined as public functions or public duties. The scope of mandamus is limited to enforcement of public duty. 11. Contracts of a purely private nature would not be subject to writ jurisdiction. Disputes or alleged breaches arising out of the terms of such contracts have to be settled by the ordinary principles of law of contract. The disputes about the meaning of a covenant or its enforceability have to be determined according to the usual principles of the Contract Act. The disputes relating to interpretation of the terms and conditions of a non-statutory contract or private contract cannot be agitated in a writ petition under Article 226 of the Constitution of India. The disputes about the meaning of a covenant or its enforceability have to be determined according to the usual principles of the Contract Act. The disputes relating to interpretation of the terms and conditions of a non-statutory contract or private contract cannot be agitated in a writ petition under Article 226 of the Constitution of India. Such kind of matter is to be adjudicated by a civil court or in arbitration, if provided in the contract. 12. After two parties enter into the field of ordinary contract, the relations are not governed by the Constitutional provisions but by the legally valid contract which determines the rights, obligations and liabilities of the parties inter se. They can only claim rights conferred upon them by contract and are bound by the terms of the contract only. Where the contract entered into between two parties is a purely private contract then the rights, liabilities and obligations of the parties are governed by the terms of the contract and if one of the two parties complains about breaches of such contract by the other party no writ or order can be issued under Article 226 of the Constitution of India in such cases to compel the other private party to remedy a breach of contract pure and simple. 13. From the reliefs sought by the petitioner in this writ petition, it is evident that the petitioner is seeking enforcement of the private contract, that is, the loan agreement in a manner which is favourable to it. The enforcement of the terms and condition of a contract which are in the realm of private law is not to be permitted in the extra-ordinary writ jurisdiction of this Court under Article 226 of the Constitution of India. The Court in its writ jurisdiction does not create or modify a private contract between two private entities or one private entity and a private individual or two private individuals. The decision in Binny Ltd. [supra] on which the petitioner has placed reliance is found to be of no assistance to his case. 14. The subject-matter of this writ petition is a loan agreement executed with the respondent nos. 2 & 3. The respondent nos. The decision in Binny Ltd. [supra] on which the petitioner has placed reliance is found to be of no assistance to his case. 14. The subject-matter of this writ petition is a loan agreement executed with the respondent nos. 2 & 3. The respondent nos. 2 & 3, M/s Bajaj Finance Ltd, is neither an entity which can be brought within the ambit and scope of Article 226 of the Constitution of India nor it has discharged any public function while extending the loan agreement with the petitioner who had the option not to enter into such an agreement. 15. In the above view of the matter, this writ petition under Article 226 of the Constitution of India is found to be not maintainable. As a consequence, it is liable to be dismissed. Accordingly, the writ petition is dismissed. There shall be no order as to cost.