Lal Chand Morani, S/O Late Shri. N R … vs Hdfc Bank Limited on 23 April, 2026

July 6, 2026

Rajasthan High Court – Jaipur

Lal Chand Morani, S/O Late Shri. N R … vs Hdfc Bank Limited on 23 April, 2026

[2026:RJ-JP:17870]

HIGH COURT OF JUDICATURE FOR RAJASTHAN
BENCH AT JAIPUR

S.B. Civil Writ Petition No. 4928/2026

1. Lal Chand Morani, S/o Late Shri. N R Morani, Aged About
65 Years, R/o 14 Bajaj Nagar Enclave Jaipur-302015 And
Suspended Director Of Morani Motors Private Limited
(Undergoing Corporate Insolvency Resolution Process),
Registered Office At 5, Opposite Sitabari, Tonk Road,
Jaipur, Rajasthan - 302011.
2. Morani Motocorp Private Limited, Through Its Director
And Authorized Signatory Mr. Lal Chand Morani,
Registered Office At 6, Opposite Sitabari, Tonk Road,
Jaipur, Rajasthan - 302011.
3. Morani Cars Private Limited, Through Its Director And
Authorized Signatory Mr. Lal Chand Morani, Registered
Office At 4, Opposite Sitabari, Tonk Road, Jaipur,
Rajasthan - 302011.
4. Morani Motoparts Private Limited, Through Its Director
And Authorized Signatory Mr. Lal Chand Morani,
Registered Office At F-2152, Ramchandpura Industrial
Area, Sitapura, Jaipur, Rajasthan - 302022.
----Petitioners
Versus
1. HDFC Bank Limited, Through Its Authorized Officer,
Department For Special Operations, 414-417, Hawa Mahal
Road, Subhash Chowk, Jaipur-302002
2. Morani Motors Private Limited, Through Its Resolution
Professional Mr. Satyendra Prasad Khorania, Insolvency
Professional Addressed At 402, 4Th Floor, OK Plus DP
Metro, Opp. Pillar No. 94, New Sanganer Road, Jaipur-
302019
----Respondents

For Petitioner(s) : Mr. Kamlakar Sharma, Sr. Adv.
assisted by Mr. Yogesh Kalla,
Mr. Ankit Sareen,
Mr. Aman Yadav,
Ms. Shradha Sareen and
Mr. Nitesh Shrivastava
For Respondent(s) : Mr. Alok Garg with
Ms. Sonal Singh

(D.B. SAW/361/2026 has been filed in this matter. Please refer the same for further orders)
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Mr. Amol Vyas with
Mr. Pulkit Arora,
Mr. Abhishek Purohit,
Mr. Bajrang Singh and
Mr. Kshitiz Tiwari

HON'BLE MR. JUSTICE ANUROOP SINGHI

Order

Reportable
23/04/2026

1. The present writ petition has been filed by the petitioners

with the following prayers:-

"Therefore, in view of the facts and circumstances
stated hereinabove, it is most respectfully prayed that this
Hon'ble Court may graciously be pleased to:
a. Issue an appropriate writ, order or direction
including a writ in the nature of Certiorari thereby
quashing and setting aside the Impugned Newspaper
Publication dated 07.03.2026 issued by Respondent No.1
inviting counter bids for sale of the financial assets of the
Petitioners;
b. Issue an appropriate writ, order or direction
directing Respondent No.1 Bank to consider the
Petitioners' proposal to deposit a sum of
Rs.25,25,00,000/- (Rupees Twenty-Five Crores and
Twenty-Five Lakhs only) towards settlement of the
outstanding dues, particularly in light of the fact that the
Respondent Bank itself has identified an anchor bid of
Rs.25 Crores for the proposed assignment of the financial
assets;
c. Issue an appropriate writ, order or direction
directing Respondent No.1 to take a fair, reasoned and
objective decision on the Petitioner's proposal within such
time as may be deemed fit by this Hon'ble Court.
d. Issue an appropriate writ, order or direction
directing Respondent No.2 through its Resolution
Professional to extend necessary cooperation and not to
obstruct or take any steps adverse to the Petitioners in
relation to the proposed settlement of the dues of
Respondent No.1 Bank, and to take all consequential
steps as may be required to facilitate the implementation
of any settlement or arrangement that may be considered

or approved pursuant to the directions of this Hon'ble
Court.
e. Pass any other or further order(s) which this
Hon'ble Court may deem fit, proper and just in the facts
and circumstances of the present case."

2. A bare perusal of the prayers made in the writ petition

reveals that the challenge made by the petitioners is to a

newspaper publication dated 07.03.2026 (Annexure-2), issued by

respondent No.1 - HDFC Bank Ltd., vide which it has invited

counter bids for assignment/sale of the financial assets of the

petitioners No.2 to 4 and respondent No.2, who are its borrowers,

under the Swiss Challenge Method and with a further prayer that

the One Time Settlement (OTS) Proposal made by the petitioners

of an amount of Rs.25,25,00,000/- be considered towards

settlement of the entire outstanding dues instead of assigning the

same to a third party.

Another prayer has also been made seeking certain

directions to be issued to the Interim Resolution Professional

(IRP) of respondent No.2 and to also direct him to not to take any

adverse steps against the petitioners.

3. Thus, the present petition invites this Court to adjudicate

upon the action of HDFC Bank Ltd. in assigning/selling the

financial assets of the petitioners and respondent No.2 by

adopting the Swiss Challenge Method.

FACTS:-

4. The facts leading to filing of the present writ petition are that

respondent No.2 - Morani Motors Private Limited, petitioner No.2

- Morani Motocorp Private Limited, petitioner No.3 - Morani Cars

Private Limited and petitioner No.4 - Morani Motoparts Private

Limited had availed various credit facilities from HDFC Bank Ltd.

Petitioner No.1 - Lal Chand Morani, who is the Director of

petitioners No.2 to 4 and suspended Director of respondent No.2 -

Company is also a co-borrower/guarantor in respect of the said

credit facilities. It is relevant to note that respondent No.2 -

Morani Motors Private Limited is presently undergoing Corporate

Insolvency Resolution Process (CIRP) under the provisions of the

Insolvency and Bankruptcy Code, 2016 (hereinafter referred to as

"IBC, 2016") (for the sake of convenience, petitioners and

respondent No.2 are collectively referred to as "the borrowers").

5. Owing to financial constraints, the borrowers defaulted in

repayment of the outstanding dues resulting into initiation of

recovery proceedings by HDFC Bank Ltd.

6. It is not in dispute that proceedings under Section 7 of the

IBC, 2016, were also initiated against respondent No.2 at the

instance of one of its financial creditor viz., Kotak Mahindra Bank

and vide order dated 04.02.2025 (Annexure-R/2/1) passed by

National Company Law Tribunal (NCLT), Jaipur in CP No. (IB)-

35/7/JPR/2024, the application was admitted and CIRP was

initiated against respondent No.2 and Mr. Satyendra Prasad

Khorania was appointed as the Interim Resolution Professional.

Consequently, moratorium as envisaged under Section 14 of IBC,

2016, was invoked and the IRP was directed to take over the

affairs of respondent No.2 and the Board of Directors of the

company stood suspended.

7. The said order dated 04.02.2025 was assailed by petitioner

No.1 before the National Company Law Appellate Tribunal

(NCLAT), Principal Bench, New Delhi, by filing Company Appeal

(AT) (Insolvency) No.301/2025, wherein respondent No.1 -

HDFC Bank Ltd. also sought intervention by filing IA No.1871 of

2024, which was allowed vide order dated 24.03.2025

(Annexure-R/2/3). However, subsequently, vide order dated

02.07.2025 (Annexure-R/2/5), the said appeal came to be

dismissed, though granting liberty to the appellant therein

(petitioner No.1 herein) to file appropriate application seeking

settlement under Section 12A of IBC, 2016, before NCLT, Jaipur.

8. In the interregnum, after the initiation of CIRP vide order

dated 04.02.2025, the petitioners submitted an OTS proposal to

HDFC Bank Ltd. on 21.03.2025 (Annexure-3) offering an amount

of Rs.18,00,00,000/- towards full and final settlement of the loan

facilities availed by the borrowers from HDFC Bank Ltd. However,

the said OTS proposal was rejected by HDFC Bank Ltd. vide

communication dated 11.04.2025 (Annexure-4). Thereafter,

repeated OTS proposals were submitted by the petitioners, though

they met the same fate. A chart depicting the OTS proposals made

by the petitioners, along with their respective date, amount

offered and date of rejection by HDFC Bank Ltd., is as under:-

Sr. Date of OTS Amount offered Date of Rejection
No. proposal with with Annexure
Annexure
1. 21.03.2025 Rs.18,00,00,000/- 11.04.2025
(Annexure-3) (Annexure-4)
2. 30.04.2025 Rs.18,50,00,000/- 29.05.2025
(Annexure-5) (Annexure-6)
3. 29.05.2025 Rs.19,02,00,000/- 30.05.2025
(Annexure-7) (Annexure-8)
4. 01.07.2025 Rs.19,11,00,000/- 02.07.2025
(Annexure-9) (Annexure-10)

5. 10.08.2025 Rs.21,00,00,000/- --
6. 18.12.2025 Rs.23,00,00,000/- (Annexure-R/2)
(Annexure- 11)

9. Thereafter, HDFC Bank Ltd. proceeded to issue the impugned

newspaper publication dated 07.03.2026 inviting counter bids for

assignment/sale of the financial assets of the borrowers under the

Swiss Challenge Method in terms of the Reserve Bank of India

(Commercial Banks - Transfer and Distribution of Credit Risk)

Directions, 2025 dated 28.11.2025. As per the impugned

publication, the Anchor Bid received by HDFC Bank Ltd. for

assignment of the financial assets of the borrowers was

Rs.25,00,00,000/-.

10. As per the averments made in the writ petition, the

petitioners are ready and willing to offer a sum of

Rs.25,25,00,000/- and thus, the present writ petition has been

filed with the prayer that once the petitioners are offering an

amount higher than the Anchor Bid received by HDFC Bank Ltd.,

the entire exercise being conducted by HDFC Bank Ltd. with

respect to assignment/sale of financial assets of the borrowers

deserves to be quashed and HDFC Bank Ltd. be directed to accept

the proposal of Rs.25,25,00,000/-.

SUBMISSIONS ON BEHALF OF THE PETITIONERS:-

11. Mr. Kamlakar Sharma, learned Senior counsel assisted by Mr.

Ankit Sareen, Advocate, appearing on behalf of the petitioners,

submits that once the amount towards OTS proposal by the

petitioners is higher than the Anchor Bid received by HDFC Bank

Ltd. for assignment/sale of the financial assets, there is no

justification whatsoever for HDFC Bank Ltd. to not to consider

their higher offer and to proceed ahead with the assignment/sale

of the financial assets of the borrowers.

12. Learned Senior counsel submits that such exercise of

assignment of the financial assets at a lower price than the

amount offered vide the OTS proposal by the petitioners is grossly

arbitrary, unwarranted, illogical, contrary to commercial prudence

and reflects complete non-application of mind on behalf of HDFC

Bank Ltd.

13. Learned Senior counsel submits that petitioner No.1 is the

suspended Director of respondent No.2, a co-borrower/guarantor

and also Director of petitioners No.2 to 4 and thus, he has all the

right and authority to make offer on behalf of the borrowers.

14. Learned Senior counsel submits that the intent of the

borrowers is to ensure that the entire outstanding amount of

HDFC Bank Ltd. is duly settled and non-consideration of the OTS

proposal would not only result into prolonged recovery of the

outstanding amount but even continuation of unwarranted

litigation without any justification.

15. Learned Senior counsel submits that such an action of HDFC

Bank Ltd. to not to accept the OTS proposal made by the

petitioners defeats the very intent and object of IBC, 2016, which

is to revive a Corporate Debtor and any such offer made, deserves

to be accorded priority so as to bring quietus to the disputes.

16. Learned Senior counsel submits that the very fact that the

petitioners have made repeated OTS proposals reflect their bona

fide intent to settle the amount and all such offers have been

rejected by HDFC Bank Ltd. in a mechanical manner which reflects

the biased approach of HDFC Bank Ltd.

17. Learned Senior counsel further submits that even as of

today, not only the petitioners are ready and willing to match the

amount already offered by the entity to whom the financial assets

have been assigned by HDFC Bank Ltd., but is even prepared to

offer an amount higher than the same, however, no heed

whatsoever has been paid to the said request.

18. Learned Senior counsel further submits that bona fides of the

petitioners are further reflected from the fact that they are not

even seeking return of their secured assets from HDFC Bank Ltd.

and Mr. Satyendra Prasad Khorania, IRP, may continue to hold the

same.

19. Learned Senior counsel further placed reliance upon

Regulation 12A of the Insolvency and Bankruptcy Board of India

(Insolvency Resolution Process for Corporate Persons)

Regulations, 2016, which was inserted w.e.f. 15.03.2021, which

requires a creditor to update its claim, as and when the claim is

satisfied, either partly or fully, from any source, in any manner,

even after the commencement of insolvency proceedings, to

substantiate that the offer made by the petitioners should be duly

considered by HDFC Bank Ltd. and any such non-consideration

would defeat the object of insertion of the said regulation.

20. Upon a specific query being posed to learned Senior counsel

with respect to maintainability of the writ petition against a private

bank, it was submitted that as the action of HDFC Bank Ltd. is

arbitrary and devoid of any reasonable justification and further

also as HDFC Bank Ltd. is performing a public function, the

present writ petition is maintainable even against a private bank,

which is a scheduled bank and is expected to act in a fair,

reasonable and justified manner.

In support of his submissions with respect to the

maintainability of the petition against a private bank, learned

Senior counsel has placed reliance upon the judgment of the

Hon'ble Punjab and Haryana High Court in the case of Amrik

Singh Vs. DCB Bank Ltd. and Others, reported in 2022 (2)

RCR (Civil) 791 and the judgment of the Hon'ble Andhra Pradesh

High Court in the case of Koneru Venu Madhav and Ors. Vs.

Kotak Mahindra Bank Private Ltd., reported in 2022 : APHC :

35086.

21. Learned Senior counsel also submits that the option of filing

an application under Section 12A of the IBC, 2016, is not open to

borrowers as the same requires settlement of the claims of all the

creditors as well as prior approval of 90% of the members of

Committee of Creditors (CoC). Accordingly, he submits that as no

application under Section 12A of the IBC, 2016 could have been

filed by the petitioner, the order dated 04.02.2025 passed by

NCLT, Jaipur, and so also the order dated 02.07.2025 passed by

NCLAT, New Delhi, are neither relevant nor material and non-filing

of the same would not under any circumstance amount to

suppression or concealment by the borrowers.

22. Learned Senior counsel also submits that challenge in the

present writ petition is not for seeking any direction to be issued

to HDFC Bank Ltd. for accepting the OTS proposal made by the

petitioners, but against the arbitrary action of HDFC Bank Ltd. in

completely ignoring the higher offer for settlement made by them

and proceeding with the assignment/sale of financial assets of the

borrowers.

23. Learned Senior counsel finally submits that any action taken

by HDFC Bank Ltd. during the pendency of the present writ

petition, including the execution of assignment deed dated

30.03.2026 in favour of the India SME Asset Reconstruction

Company Limited (Assignee) and all consequential proceedings

arising therefrom also deserves to be quashed, more so in light of

the interim order dated 10.04.2026 passed by this Court, vide

which the impleadment application filed by the said assignee -

India SME Asset Reconstruction Company Limited, was dismissed.

24. Thus, learned Senior counsel prays that the writ petition be

allowed and the impugned newspaper publication dated

07.03.2026 be quashed and the settlement proposal of the

borrowers be considered and accepted by HDFC Bank Ltd.

SUBMISSIONS ON BEHALF OF RESPONDENT NO.1 - HDFC

BANK LTD.:-

25. In repudiation, Mr. Alok Garg with Ms. Sonal Singh, learned

counsel appearing on behalf of HDFC Bank Ltd., submits that the

present writ petition deserves to be dismissed, at the very outset,

for being not maintainable as the same has been filed against a

private bank.

26. Learned counsel submits that HDFC Bank Ltd., though is a

scheduled bank, however, the banking operations carried out by it,

more particularly the actions/in-actions relevant for consideration

of the present writ petition do not fall in the category of a public

function and thus, the present writ petition does not deserves to

be entertained.

27. Learned counsel submits that there is no failure to perform a

statutory function by HDFC Bank Ltd. and thus, the relief as

prayed for in the writ petition cannot be granted.

In support of the said submission, reliance has been placed

upon the judgments of the Hon'ble Supreme Court in the case of

Federal Bank Vs. Sagar Thomas reported in (2003) 10 SCC

733 and S. Shobha Vs. Muthoot Finance Limited reported in

2025 INSC 117, decided on 24.01.2025.

28. Learned counsel further submits that the writ petition also

deserves to be dismissed on account of concealment and

suppression made by the petitioners as despite having full

knowledge of the order dated 02.07.2025 passed by the NCLAT,

New Delhi, in the appeal filed by petitioner No.1, no reference of

the same has been given in the writ petition.

29. Learned counsel submits that in the said appellate

proceedings, HDFC Bank Ltd. was also permitted as intervener and

the issue with respect to the settlement of dues qua HDFC Bank

Ltd. was duly considered therein as is evident from a bare perusal

of the order dated 02.07.2025 and thus, as the petitioners have

not approached the Court with clean hands and with complete

disclosure, the writ petition deserves to be dismissed.

30. Learned counsel submits that even if the non-filing of the

order dated 02.07.2025 is not construed as suppression or

concealment, it nevertheless cannot be said that the same was not

a conscious act of non-disclosure by the petitioners of an act done

by them and thus, the petitioners are guilty of not-approaching

the Court with clean hands.

31. Learned counsel further submits that the sum and substance

of the submissions made on behalf of the petitioners as well as the

relief sought in the present writ petition, essentially boils down to

seeking acceptance of the OTS proposals made by the petitioners

and it is more than settled that a financial institution/bank cannot

be compelled to accept a settlement proposal offered to it.

In support of the aforesaid submission, reliance has been

placed upon the judgment of the Hon'ble Supreme Court in the

case of Bijnor Urban Cooperative Bank Limited & Ors. Vs.

Meenal Agarwal & Ors., reported in (2023) 2 SCC 805.

32. Learned counsel further submits that it is absolutely incorrect

on the part of the petitioners to state that any OTS proposal of

Rs.25,25,00,000/- was ever made by the petitioners to HDFC

Bank Ltd. and directly approaching to the Court with any such

offer is merely an exercise to hamper the proceedings initiated by

it by issuing the publication dated 07.03.2026.

33. Learned counsel also submits that the OTS proposals made

by the borrowers earlier were rightly rejected by the bank by

taking a conscious decision in the interest of the bank and its

commercial wisdom.

34. Learned counsel also submits that the assignment

proceedings as initiated by HDFC Bank Ltd. by adopting Swiss

Challenge Method are very much permissible in view of the

applicable provisions of Securitisation and Reconstruction of

Financial Assets and Enforcement of Security Interest

(SARFAESI) Act, 2002, as well as the Regulation 28 of the

Insolvency and Bankruptcy Board of India (Insolvency Resolution

Process for Corporate Persons), Regulations 2016.

35. Learned counsel also submits that the borrowers are chronic

defaulters as is evident from the fact that they have created an

artificial tenancy so as to prevent the recovery of dues against

them and several other litigations are already pending against

them.

36. Learned counsel finally submits that in furtherance to the

publication dated 07.03.2026, the Assignment Agreement has

been duly executed on 30.03.2026 by HDFC Bank Ltd. with India

SME Asset Reconstruction Company Limited, vide which the loans

advanced by HDFC Bank Ltd. to the borrowers together with all its

rights, title and interest and any underline security interest and/or

guarantees in respect of such loans have been duly assigned and

thus, the cause of action to maintain the present writ petition does

not survive any more. Accordingly, learned counsel prays that the

writ petition deserves to be dismissed.

SUBMISSIONS ON BEHALF OF RESPONDENT NO.2 -

MORANI MOTORS PRIVATE LTD. THROUGH ITS INTERIM

RESOLUTION PROFESSIONAL :-

37. Mr. Amol Vyas, learned counsel, representing Mr. Satyendra

Prasad Khorania, IRP of respondent No.2 - Morani Motors Pvt.

Ltd., vehemently opposed the very maintainability of the present

writ petition on the ground that in terms of Section 17 of the IBC,

2016 read with order dated 04.02.2025 passed by NCLT, Jaipur,

once the CIRP proceedings stood commenced after the admission

of insolvency application against respondent No.2, the petitioner

No.1 had no authority whatsoever to take any decision qua

respondent No.2 as he stood suspended and the management of

respondent No.2 vested in IRP.

38. Learned counsel submits that the first offer of OTS proposal

was given by the borrowers on 21.03.2025, which included an

offer on behalf of respondent No.2 as well, whereas they had no

authority whatsoever to make any such OTS proposal after

passing of the admission order dated 04.02.2025, which is in

teeth of the provisions of Section 17 of the IBC, 2016.

39. Thus, the OTS proposal by the borrowers on 21.03.2025 and

so also all the subsequent OTS proposals in respect of seeking

settlement of dues against respondent No.2 are per se illegal.

40. Learned counsel also submits that though the application

under Section 7 of the IBC,2016 was filed before NCLT, Jaipur, by

Kotak Mahindra Bank against respondent No.2, however, in the

appellate proceedings before NCLAT, New Delhi, HDFC Bank Ltd.

sought liberty to file an IA seeking intervention, which came to be

allowed on 24.03.2025 and as the borrowers failed to settle the

dues, not only the interim relief was vacated vide order dated

02.05.2025, even the appeal was dismissed on 02.07.2025.

41. Learned counsel also submits that as no settlement was

done by the suspended management, the CoC was constituted,

which is very much in effect and operation as on date and after

execution of the assignment deed dated 30.03.2026, the name of

India SME Asset Reconstruction Company Ltd. has been

substituted in place of HDFC Bank Ltd.. Accordingly, learned

counsel prays that the writ petition deserves to be dismissed with

costs.

42. Heard learned counsel for the parties and perused the

material available on record.

DISCUSSION AND FINDINGS:-

43. As the present writ petition has been filed against two

respondents, one being a private bank, though a scheduled bank

and another being a private limited company, which is undergoing

CIRP and the primary relief sought is against respondent No.1 -

HDFC Bank Ltd., it is imperative that the issue of maintainability of

the writ petition against private persons be adjudicated at the very

outset. It is more so, when the objection with respect to the

maintainability of the writ petition has been vociferously raised by

learned counsel for the respondents.

44. The maintainability of the writ petition has been challenged

by learned counsel for the respondents on the following grounds:-

SPONSORED

a. The writ petition being filed against a private bank and

a private limited company;

b. Suppression and concealment of material facts;

c. Availability of remedy of approaching NCLT, Jaipur, in

view of the earlier orders passed by NCLT, Jaipur and NCLAT,

New Delhi, considering the fact that IBC, 2016, is a complete

code in itself; and

d. Sum and substance of the relief prayed for is issuance

of directions to respondent No.1 – HDFC Bank Ltd. to

consider the OTS proposal made by the petitioners.

45. The occasion to deal with and adjudicate upon the various

grounds raised by the petitioners on merits of the proceedings

initiated by HDFC Bank Ltd. would arise in the eventuality of this

Court arriving at a conscious decision that the writ petition is

maintainable and thus, the objections raised qua the

maintainability of the writ petition are being adjudicated first.

Whether a writ petition is maintainable against a private

scheduled bank?

46. The Hon’ble Supreme Court in the case of Federal Bank

(supra) has considered the said issue at length, the relevant

extract of which reads as under:-

“18. From the decisions referred to above, the
position that emerges is that a writ petition under Article
226 of the Constitution of India may be maintainable
against (i) the State (Government); (ii) an authority; (iii)
a statutory body; (iv) an instrumentality or agency of the
State; (v) a company which is financed and owned by the
State; (vi) a private body run substantially on State
funding; (vii) a private body discharging public duty or
positive obligation of public nature; and (viii) a person or
a body under liability to discharge any function under any
statute, to compel it to perform such a statutory function.
…

26. A company registered under the Companies Act
for the purposes of carrying on any trade or business is a
private enterprise to earn livelihood and to make profits
out of such activities. Banking is also a kind of
profession and a commercial activity, the primary
motive behind it can well be said to earn returns
and profits. Since time immemorial, such activities have
been carried on by individuals generally. It is a private
affair of the company though the case of nationalized
banks stands on a different footing. There may well be
companies, in which majority of the share capital may be
contributed out of the State funds and in that view of the
matter there may be more participation or dominant
participation of the State in managing the affairs of the

(D.B. SAW/361/2026 has been filed in this matter. Please refer the same for further orders)
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company. But in the present case we are concerned with
a banking company which has its own resources to raise
its funds without any contribution or shareholding by the
State. It has its own Board of Directors elected by its
shareholders. It works like any other private company in
the banking business having no monopoly status at all.

Any company carrying on banking business with a capital
of five lakhs will become a scheduled bank. All the same,
banking activity as a whole carried on by various banks
undoubtedly has an impact and effect on the economy of
the country in general. Money of the shareholders and the
depositors is with such companies, carrying on banking
activity. The banks finance the borrowers on any given
rate of interest at a particular time. They advance loans
as against securities. Therefore, it is obviously necessary
to have regulatory check over such activities in the
interest of the company itself, the shareholders, the
depositors as well as to maintain the proper financial
equilibrium of the national economy. The banking
companies have not been set up for the purposes of
building the economy of the State; on the other hand
such private companies have been voluntarily established
for their own purposes and interest but their activities are
kept under check so that their activities may not go
wayward and harm the economy in general. A private
banking company with all freedom that it has, has to act
in a manner that it may not be in conflict with or against
the fiscal policies of the State and for such purposes,
guidelines are provided by Reserve Bank so that a proper
fiscal discipline, to conduct its affairs in carrying on its
business, is maintained. So as to ensure adherence to
such fiscal discipline, if need be, at times even the
management of the company can be taken over.
Nonetheless, as observed earlier, these are all regulatory
measures to keep a check and provide guidelines and not
a participatory dominance or control over the affairs of
the company. …

27. Such private companies would normally not be
amenable to the writ jurisdiction under Article 226 of the

Constitution. But in certain circumstances a writ may
issue to such private bodies or persons as there may be
statutes which need to be complied with by all concerned
including the private companies. For example, there are
certain legislations like the Industrial Disputes Act, the
Minimum Wages Act, the Factories Act or for maintaining
proper environment, say the Air (Prevention and Control
of Pollution) Act, 1981 or the Water (Prevention and
Control of Pollution) Act, 1974 etc. or statutes of the like
nature which fasten certain duties and responsibilities
statutorily upon such private bodies which they are bound
to comply with. If they violate such a statutory provision
a writ would certainly be issued for compliance with those
provisions. …

28. The six factors which have been
enumerated in the case of Ajay Hasia [Ajay Hasia v.
Khalid Mujib Sehravardi, (1981) 1 SCC 722 : 1981
SCC (L&S) 258] and approved in the later decisions
in the case of Ramana [Ramana Dayaram Shetty v.
International Airport Authority of India, (1979) 3
SCC 489] and the seven-Judge Bench in the case of
Pradeep Kumar Biswas [(2002) 5 SCC 111 : 2002
SCC (L&S) 633] may be applied to the facts of the
present case and see whether those tests apply to
the appellant Bank or not. As indicated earlier,
share capital of the appellant Bank is not held at all
by the Government nor is any financial assistance
provided by the State, nothing to say which may
meet almost the entire expenditure of the company.
The third factor is also not answered since the
appellant Bank does not enjoy any monopoly status
nor can it be said to be an institution having State
protection. So far as control over the affairs of the
appellant Bank is concerned, they are managed by
the Board of Directors elected by its shareholders.
No governmental agency or officer is connected
with the affairs of the appellant Bank nor is any one
of them a member of the Board of Directors. In the
normal functioning of the private banking company

there is no participation or interference of the State
or its authorities. The statutes have been framed
regulating the financial and commercial activities
so that fiscal equilibrium may be kept maintained
and not get disturbed by the malfunctioning of such
companies or institutions involved in the business
of banking. These are regulatory measures for the
purpose of maintaining a healthy economic atmosphere in
the country. Such regulatory measures are provided for
other companies also as well as industries manufacturing
goods of importance. Otherwise these are purely private
commercial activities. It deserves to be noted that it
hardly makes any difference that such supervisory
vigilance is kept by Reserve Bank of India under a statute
or the Central Government. Even if it was with the
Central Government in place of Reserve Bank of India it
would not have made any difference, therefore, the
argument based on the decision of All India Bank
Employees’ Assn. [AIR 1962 SC 171 : (1962) 3 SCR 269]
does not advance the case of the respondent. …

29. There are a number of such companies carrying
on the profession of banking. There is nothing which can
be said to be close to the governmental functions. It is an
old profession in one form or the other carried on by
individuals or by a group of them. Losses incurred in the
business are theirs as well as the profits. Any business
or commercial activity, may be banking,
manufacturing units or related to any other kind of
business generating resources, employment,
production and resulting in circulation of money are
no doubt, such which do have impact on the
economy of the country in general. But such
activities cannot be classified as one falling in the
category of discharging duties or functions of a
public nature. Thus the case does not fall in the
fifth category of cases enumerated in the case of
Ajay Hasia [Ajay Hasia v. Khalid Mujib Sehravardi,
(1981) 1 SCC 722 : 1981 SCC (L&S) 258]. …
…

32. Merely because Reserve Bank of India lays
the banking policy in the interest of the banking
system or in the interest of monetary stability or
sound economic growth having due regard to the
interests of the depositors etc. as provided under
Section 5(c)(a) of the Banking Regulation Act does
not mean that the private companies carrying on
the business or commercial activity of banking,
discharge any public function or public duty. These
are all regulatory measures applicable to those
carrying on commercial activity in banking and
these companies are to act according to these
provisions failing which certain consequences
follow as indicated in the Act itself. …

33. For the discussion held above, in our view,
a private company carrying on banking business as
a scheduled bank, cannot be termed as an
institution or a company carrying on any statutory
or public duty. A private body or a person may be
amenable to writ jurisdiction only where it may
become necessary to compel such body or
association to enforce any statutory obligations or
such obligations of public nature casting positive
obligation upon it. We don’t find such conditions
are fulfilled in respect of a private company
carrying on a commercial activity of banking.
Merely regulatory provisions to ensure such activity
carried on by private bodies work within a
discipline, do not confer any such status upon the
company nor put any such obligation upon it which
may be enforced through issue of a writ under
Article 226 of the Constitution. Present is a case of
disciplinary action being taken against its employee by
the appellant Bank. The respondent’s service with the
Bank stands terminated. The action of the Bank was
challenged by the respondent by filing a writ petition
under Article 226 of the Constitution of India. The
respondent is not trying to enforce any statutory duty on

the part of the Bank. That being the position, the appeal
deserves to be allowed.”

(emphasis supplied)

47. Further, the Hon’ble Supreme Court in the case of Rajbir

Surajbhan Singh Vs. Chairman, Institute of Banking

Personnel Selection, Mumbai reported in (2019) 14 SCC 189

has observed as under:-

“21. In K.K. Saksena [K.K. Saksena v. International
Commission on Irrigation & Drainage, (2015) 4 SCC 670 :

(2015) 2 SCC (Civ) 654 : (2015) 2 SCC (L&S) 119] , this
Court observed that the respondent therein would not be
amenable to writ jurisdiction under Article 226 of the
Constitution of India, as the activities were voluntarily
undertaken by the respondents and there was no
obligation to discharge certain activities which were
statutory or of public character. Reference was made to
Federal Bank [Federal Bank Ltd. v. Sagar Thomas, (2003)
10 SCC 733] case wherein it was held that the writ
petition was not maintainable under Article 226 of the
Constitution of India in spite of the regulatory regime of
the Banking Regulation Act and the other statutes being
in operation.

22. The relevant questions, according to this Court
in K.K. Saksena [K.K. Saksena v. International
Commission on Irrigation & Drainage, (2015) 4 SCC 670 :

(2015) 2 SCC (Civ) 654 : (2015) 2 SCC (L&S) 119] , to
be answered for the purpose of deciding whether a writ
petition is maintainable under Article 226 are:

(a) Whether a private body which is a non-

governmental organisation partakes the nature of
public duty or State action?

(b) Whether there is any public element in the
discharge of its functions?

(d) Whether the activities undertaken by the body are
voluntary, which many a non-governmental
organisation perform?

…

24. This Court in Federal Bank [Federal Bank
Ltd. v. Sagar Thomas, (2003) 10 SCC 733] case held
that a writ petition under Article 226 of the
Constitution is not maintainable against a
scheduled bank on the ground that the business of
banking does not fall within the expression “public
duty”. …”

(emphasis supplied)

48. Judgment in the case of Federal Bank (supra) was also

relied upon by the Hon’ble Supreme Court in the case of St.

Mary’s Education Society & Another Vs. Rajendra Prasad

Bhargava reported in (2023) 4 SCC 498, wherein it was

reiterated that the power of judicial review under Article 226 of

the Constitution of India can be exercised by the High Court even

against a private body only if the action complained of involves a

public element.

49. Also, the Hon’ble Supreme Court in the case of S. Shobha

(supra) has held as under:-

“8. A body, public or private, should not be
categorized as “amenable” or “not amenable” to
writ jurisdiction. The most important and vital
consideration should be the “function” test as
regards the maintainability of a writ application. If
a public duty or public function is involved, any
body, public or private, concerned or connection
with that duty or function, and limited to that,
would be subject to judicial scrutiny under the
extraordinary writ jurisdiction of Article 226 of the
Constitution of India.

(D.B. SAW/361/2026 has been filed in this matter. Please refer the same for further orders)
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[2026:RJ-JP:17870] (23 of 29) [CW-4928/2026]

9. We may sum up thus:

(1) For issuing writ against a legal entity, it would have
to be an instrumentality or agency of a State or should
have been entrusted with such functions as are
Governmental or closely associated therewith by being
of public importance or being fundamental to the life of
the people and hence Governmental.

(2) A writ petition under Article 226 of the Constitution
of India may be maintainable against (i) the State
Government; (ii) Authority; (iii) a statutory body; (iv)
an instrumentality or agency of the State; (v) a
company which is financed and owned by the State;

(vi) a private body run substantially on State funding;

(vii) a private body discharging public duty or positive
obligation of public nature; and (viii) a person or a
body under liability to discharge any function under any
Statute, to compel it to perform such a statutory
function.

(3) Although a non-banking finance company like the
Muthoot Finance Ltd. with which we are concerned is
duty bound to follow and abide by the guidelines
provided by the Reserve Bank of India for smooth
conduct of its affairs in carrying on its business, yet
those are of regulatory measures to keep a check and
provide guideline and not a participatory dominance or
control over the affairs of the company.
(4) A private company carrying on banking
business as a Scheduled bank cannot be termed
as a company carrying on any public function or
public duty.

(5) Normally, mandamus is issued to a public
body or authority to compel it to perform some
public duty cast upon it by some statute or
statutory rule. In exceptional cases a writ of
mandamus or a writ in the nature of mandamus
may issue to a private body, but only where a
public duty is cast upon such private body by a
statute or statutory rule and only to compel such
body to perform its public duty.

(6) Merely because a statue or a rule having the force
of a statute requires a company or some other body to
do a particular thing, it does not possess the attribute
of a statutory body.

(7) If a private body is discharging a public function
and the denial of any rights 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.
(8) According to Halsbury’s Laws of England, 3rd Ed.
Vol.30, p.682, “a public authority is a body not
necessarily a county council, municipal corporation or
other local authority which has public statutory duties
to perform, and which perform the 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.”

(emphasis supplied)

50. A collective reading of the above referred judgments and

taking due guidance from the principles laid down therein, it is

more than certain that for maintaining any writ petition against a

private scheduled bank, it is sine qua non that the action

complained of must necessarily involve a public element. In the

event of failure to pass the said ‘Function test’, the writ petition

must fail.

51. Hon’ble Supreme Court in the case of Federal Bank

(supra) unequivocally and in no uncertain terms has held that

business or commercial activity of banking does not amount to

discharge of any public function or public duty.

52. Thus, as the action complained of by the petitioners fails to

involve any public element and being a purely banking

transaction, the present writ petition fails to pass the ‘Function

test’.

53. Also, the petitioners have miserably failed to make out a

case that the action of HDFC Bank Ltd. of proceeding ahead with

assignment/sale of financial assets involves an iota of public

element. The said decision of HDFC Bank Ltd. is purely a business

decision arrived by it by applying commercial wisdom and

prudence.

54. The submission of learned Senior counsel for the petitioners

that the said action of HDFC Bank Ltd. is arbitrary and without due

application of mind would also not bring the said decision of HDFC

Bank Ltd. within the domain and contour of public function.

55. The two judgments relied upon by the petitioners render no

assistance to them, as in the case of Amrik Singh (supra), the

judgment of the Hon’ble Supreme Court in the case of Federal

Bank (supra) laying down the guidelines with respect to

maintainability of the writ petition against a private scheduled

bank was not considered and the writ petition was held to be

maintainable on the ground that the respondent therein was a

scheduled bank governed by the Banking Regulation Act, 1949,

and the guidelines issued by the Reserve Bank of India. However,

in view of the ratio decidendi laid down in the case of Federal

Bank (supra), the said findings cannot make a writ maintainable.

The judgment relied upon by the petitioners in the case of

Koneru Venu Madhav (supra), wherein also, the writ petition

has been held to be maintainable after referring to the fact that

the respondent therein was a scheduled bank governed by the

provisions of the Banking Regulation Act, 1949 and the guidelines

issued by the Reserve Bank of India, will also not render any

assistance to the petitioners.

56. Thus, it is not open for the petitioners to challenge the said

decision of HDFC Bank Ltd. of issuance of impugned newspaper

publication dated 07.03.2026 with respect to the assignment/sale

of financial assets.

57. In view of the same, this Court is of the considered opinion

that the writ petition deserves to be dismissed on the ground of

being non-maintainable against a private scheduled bank.

58. However, while this Court is consciously not giving any

finding on the other issues involved, it is pertinent to mention

about the approach adopted by the petitioners in filing the present

writ petition.

59. One of the most settled and fundamental principles for

approaching the Writ Court by invoking the extraordinary

jurisdiction under Article 226 of the Constitution of India is that a

person approaching the Court must approach with clean hands

after disclosing all the material facts. While applying the said

fundamental principle, it is also relevant that the suppressed fact

must be a material one, in the sense that had it not been

suppressed, it would have an effect on the merits of the matter.

60. Hon’ble Supreme Court in the case of Arunima Baruah Vs.

Union of India and Others reported in (2007) 6 SCC 120 has

held that what would be a material fact, suppression whereof

would disentitle the petitioner to obtain a discretionary relief,

would depend upon the facts and circumstances of each case.

61. Material fact would mean material for the purpose of

determination of the lis, the logical corollary whereof would be

that whether the same was material for the grant or denial of

relief.

62. In the present case, it is an admitted fact that in the appeal

filed by petitioner No.1 before NCLAT, New Delhi, HDFC Bank Ltd.

filed an application seeking intervention which came to be allowed

vide order dated 24.03.2025. The said order also records the

factum of OTS proposal sent by petitioner No.1 to HDFC Bank Ltd.

Thereafter, vide order dated 02.05.2025 as the petitioner No.1

failed to arrive at a settlement, the interim order was vacated and

finally, vide order dated 02.07.2025 after recording the fact that

HDFC Bank Ltd. has rejected the OTS proposal and petitioner No.1

has a liberty to file an application under Section 12A of the IBC,

2016, if any settlement is arrived at, the appeal was dismissed.

63. Taking note of the above order, it can very safely be held

that while the non-disclosure of the said appellate proceedings

may not have solely sealed the fate of the present writ petition,

however, it would have certainly impacted the final decision with

respect to grant or denial of the relief sought. Thus, it is certainly

a case where the petitioners have chosen to not to approach this

Court with clean hands and with complete disclosure, more so

when petitioner No.1 himself was the appellant before NCLAT, New

Delhi.

64. Hon’ble Supreme Court in the case of Raj Kumar Soni and

Another Vs. State of U.P. and Another reported in (2007) 10

SCC 635 has held that the parties are not entitled to choose their

own facts to put forward before the Court and the foundational

facts are required to be pleaded enabling the Court to scrutinize

the nature and content of the rights alleged to have been violated

by the authority.

65. Also, the Court proceedings are in every manner pious and

sacred in nature and every such petition is required to be affirmed

by an affidavit. Permitting a petitioner to approach the Court by

filing documents of his choice and waiting for the respondents to

counter the same by revealing the facts not disclosed by the

petitioner is not something which the judicial process has been

conceptualised with. While the petitioner has all the right and

authority to agree or disagree with a document or a finding

arrived at by the respondents, he cannot be permitted to approach

the Court by picking and choosing the documents which suits his

interest. Even, the petitioners herein have chosen to not to file

any rejoinder so as to put forward any justification for the non-

disclosure and non-filing of the order dated 02.07.2025

(Annexure-R/2/5). Thus, taking note of the fact that the

petitioners have failed to approach this Court with clean hands

and complete disclosure, this Court is of the considered opinion

that present writ petition deserves to fail on this count as well.

CONCLUSION:-

66. Thus, considering the fact that:-

(i) the present writ petition has been filed against a

private scheduled bank;

(ii) the action complained of fails to give rise to any

public element;

(iii) there is no non-compliance of any statutory

duty/obligation by the private scheduled bank;

(iv) the petitioners having failed to approach the

Court with complete disclosure and clean hands,

the writ petition deserves to be dismissed as not

maintainable and is accordingly, so dismissed. Pending

application(s), if any, also stands disposed of.

67. However, it is clarified that as the writ petition is being

dismissed on the ground of being not maintainable, the issues

raised and submissions advanced on the merits of the matter have

not been gone into by this Court. Hence, it would always be open

for the parties to avail appropriate remedies as available to them

under law.

(ANUROOP SINGHI),J

JAYANT KUMAR /28

(D.B. SAW/361/2026 has been filed in this matter. Please refer the same for further orders)
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Lal Chand Morani, S/O Late Shri. N R … vs Hdfc Bank Limited on 23 April, 2026

Rajasthan High Court – Jaipur