The Madras High Court dismissed two intra-court appeals, holding that writ petitions under Article 226 of the Constitution cannot be entertained against private sector banks for pension disputes, thereby reaffirming the narrow scope of the public function test.
Background & Facts
The Dispute
- The appellants were former clerks of private banks seeking pension benefits after retirement.
- Both filed writ petitions under Article 226, alleging that the banks, by virtue of their pension schemes, performed a public function.
Key Facts - WA No. 3735 (ICICI Bank)
- Joined Bank of Madura as Clerk on 13.07.1981.
- Applied for Early Retirement Option (ERO) on 19.07.2012 due to severe health issues.
- Relieved from service on 20.03.2013 with retrospective effect from 02.08.2012.
- Pension claim denied on 15.02.2013 on the ground of resignation, as the bank’s online system lacked an ERO option.
Key Facts - WA No. 110 (Lakshmi Vilas Bank)
- Joined the bank as Clerk on 07.11.1990.
- Pension Scheme introduced on 01.07.1994, effective from 01.11.1993, adopted by the Board on 21.06.1994.
- Opted for the scheme on 23.02.2011, paid 2.8 times basic pay on 29.03.2011, and repaid PF contribution on 31.03.2011.
- Submitted voluntary retirement application after completing 20 years of service, giving three months’ notice.
- Bank refused to entertain the voluntary retirement and forced a resignation on 24.05.2012 with three months’ salary in lieu of notice.
- Relieved from service on 24.07.2012 with retrospective effect from 31.05.2012.
- Pension request rejected as the resignation was treated as a disqualifying act under Regulation 22, not as voluntary retirement under Regulation 29.
Procedural History
- 31.01.2024: W.P. No. 38804 of 2015 dismissed (ICICI Bank case).
- 19.06.2024: W.P. No. 40701 of 2015 dismissed (Lakshmi Vilas Bank case).
- 2025: Intra-court appeals filed as WA No. 3735 and WA No. 110 of 2025.
- 29.07.2026: Madras High Court delivered the common judgment.
Relief Sought
- The appellants sought a declaration that the writs were maintainable and that the banks were liable to grant pension benefits under the respective schemes.
The Legal Issue
The central question was whether Article 226 of the Constitution of India permits a writ of mandamus against a private sector bank when the dispute concerns pension benefits, i.e., whether the bank can be said to perform a public function that attracts writ jurisdiction.
Arguments Presented
For the Appellants
- Contended that the banks, by administering pension schemes regulated by the Reserve Bank of India and the Banking Regulation Act, discharge a public duty, invoking the public function doctrine as articulated in Andi Mukta S.M.V.S.S.J.M. S Trust v. V.R. Rudani.
- Relied on Supreme Court pronouncements that a writ may lie against any person or body performing a public duty, irrespective of its private character.
For the Respondents
- Relied on the Division Bench decision in ICICI Bank Ltd. v. Lakshminarayanan and the Praga Tools Corp. v. C.V. Immanuel judgment, emphasizing that private banks do not bear statutory or public duties that can be enforced by mandamus.
- Cited Federal Bank Ltd. v. Sagar Thomas and Chanda Deepak Kochhar v. ICICI Bank to argue that regulatory oversight by the RBI does not convert a private banking entity into a public functionary.
- Asserted that pension disputes are contractual matters best resolved in a civil forum, not through writ jurisdiction.
The Court's Analysis
The Court began by reiterating the settled principle that no writ lies against a private company unless it performs a public function. It examined whether the banks’ pension schemes imposed a statutory or public duty.
"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 may be amenable to writ jurisdiction only where it may become necessary to compel such body to enforce any statutory obligations or such obligations of public nature casting positive obligation upon it."
The Court distinguished the Andi Mukta case, noting that the Supreme Court’s observation applied where a statutory or public duty was expressly imposed, which was absent here. The pension schemes, though regulated, were contractual arrangements between employer and employee, not statutory mandates.
Reference was made to Lakshminarayanan where the Madras High Court held that mere provision of pension under a private scheme does not convert the bank into a public functionary. The Court further examined Federal Bank and Chanda Deepak Kochhar, concluding that regulatory guidelines under the Banking Regulation Act are procedural controls, not duties that create a public law relationship.
The analysis emphasized that the public function test requires a positive statutory obligation of public nature, not merely the existence of regulation. Since the banks’ actions were rooted in private employment contracts, the writ petitions were not maintainable. The Court also cautioned against adjudicating the merits of the pension claims in a writ proceeding, directing the appellants to approach the appropriate civil forum.
The Verdict
Both writ appeals were dismissed. The Court held that writ petitions under Article 226 are not maintainable against ICICI Bank Ltd. and Lakshmi Vilas Bank Ltd. No costs were awarded. The appellants are free to pursue their pension claims before the competent civil court.
What This Means For Similar Cases
Writ Jurisdiction Is Limited to Public Duties
- Practitioners must assess whether the respondent performs a statutory or public duty before filing a writ under Article 226.
- Private employers, including banks, cannot be subjected to mandamus for contractual disputes.
Pension and Service Disputes Must Be Litigated in Civil Courts
- Employees should file suit under service law or labour statutes rather than resort to writ jurisdiction.
- Courts will likely dismiss writ petitions that seek to enforce private employment contracts.
Public Function Test Remains the Gatekeeper
- The presence of regulatory oversight (e.g., RBI guidelines) does not satisfy the public function test.
- Lawyers must identify a positive statutory obligation that the private entity is mandated to perform before invoking writ jurisdiction.
Actionable Takeaways
- Conduct a preliminary public function analysis before drafting writ petitions against private entities.
- Advise clients to file service-related claims in labour courts or civil courts.
- Cite Lakshminarayanan and Federal Bank as precedents when arguing non-maintainability.
