Srinagar, July 23: The High Court of Jammu & Kashmir and Ladakh has ruled that cooperative banks performing public functions can be subjected to writ jurisdiction under Article 226 of the Constitution, even if they are not classified as the “State” or an “instrumentality of the State” under Article 12.
The significant observation was made by Justice Shahzad Azeem while deciding a writ petition filed by the former General Manager and Chief Executive Officer (CEO) of the Urban Cooperative Bank, Anantnag.
In its judgment, the High Court clarified that the jurisdiction under Article 226 extends beyond government bodies and statutory authorities. The Court held that the determining factor is whether an institution performs public functions, exercises statutory powers, and affects legally protected rights of citizens.
The Court observed that the expression “any person or authority” used in Article 226 has been interpreted broadly by constitutional courts and is not confined only to entities covered under Article 12.
Justice Azeem noted that the Urban Cooperative Bank, Anantnag, undertakes banking activities involving public deposits, financial inclusion, depositor protection, and maintenance of financial stability, all of which carry significant public responsibilities.
The Court further held that acceptance of deposits from the public creates statutory obligations towards depositors, while regulatory supervision by the Reserve Bank of India (RBI) reinforces the public character of cooperative banks.
Distinguishing the present matter from earlier rulings involving private service disputes in cooperative institutions, the Court observed that the instant case involved statutory service conditions governed by SRO-233 of 1988, thereby introducing an element of public law.
However, while affirming the maintainability of the writ petition, the High Court dismissed the plea on merits. It held that the petitioner had no enforceable legal right to continue in service beyond the prescribed retirement age of 58 years, observing that the extension granted by the Bank’s Board of Management was beyond its legal authority and competence.
The judgment reiterates that while cooperative banks are generally not considered State entities under Article 12, they may still be brought under the writ jurisdiction of the High Court whenever their actions involve the discharge of public duties or affect statutory rights. (KNC)
