Prashant Mara & Pranav Wahi
It is well settled law that remedies under writ jurisdiction, intended to secure the performance of public or statutory duty, are generally only available against the State, as defined in Article 12 of the Constitution of India.
However, there are some extensions that enable writ jurisdiction to apply to private persons and most of these extensions have been via judicial pronouncements and mainly on the ground that the private person is performing a statutory or quasi-statutory duty or role.
The latest case to reiterate this principle was Jasmine Ebenezer Arthur v HDFC ERGO General Insurance Company Limited and Ors., [2021 (1) CTC 246] in which the petitioner sought a writ of mandamus directing the respondent insurance company to honour a claim under the insurance policy. The respondent contended that the writ petition was not maintainable as the company did not fall within the meaning of ‘State’ and was therefore excluded from the Court’s writ jurisdiction.
The Madras High Court held that if a private body is carrying out a public duty (in this case it was held that insurance services are “public duty”), it falls within the purview of judicial review and the Court has the jurisdiction to entertain a writ petition.
What is ‘Public Duty’?
In Suo Moto vs. State of Gujarat and Ors. [High Court of Gujarat, WP (PIL) No. 42 of 2020], the Court issued directions to private clinics, hospitals and nursing homes to supplement health facilities available to non-COVID patients in order to enable the State to administer its public resources for the benefit of COVID patients.
The Court held that private bodies that seek to achieve a collective benefit for the public or a section of the public and have been accepted by such public as having the authority to do so, exercise public functions when they intervene or participate in social or economic affairs that affect public interest. As a result, they fall within the meaning of State as described under Article 12 of the Constitution.
A corporation, therefore, exercises public functions when it intervenes or participates in social or economic affairs ordinarily administered by the State. This decision pushes the boundary of the definition of public duty. The logical extension that has to apply is any private person who is working for public interest (substantially) is then under writ jurisdiction. Interesting questions of whether - not for profit entities, NGOs, private banks/financial intermediaries, systemically important companies such as those in defence, infrastructure, transport, telecom, energy and significant social media enterprises - will slowly start coming under the ambit of writ jurisdiction will need to be considered carefully.
In fact, in M/S Pearson Drums & Barrels Pvt. Ltd. v The General Manager, Consumer Education & Protection Cell of Reserve Bank of India and Ors. [WPA No. 21710 of 2017], the Calcutta High Court found that private banks fundamentally perform public duties and may hence be called State actors.
Given the growing expectations that private corporations will fulfil their larger ESG obligations to the society, it is not completely out of sync to consider whether such obligations (and failure to meet them) combined with the enlarged definition of public duty will bolster the expansive reach of writs in the future in India.
This conclusion is supported by the decision of the Supreme Court in Binny Ltd. and Ors. v V. Sadasivan and Ors., [2005 SCC (LS) 881], wherein the Court examined the applicability of the writ of mandamus and asserted that 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. A public law remedy can be enforce If the private body is discharging a public function and any right in connection with the public duty imposed on such body is violated. The duty cast on the public body may be either statutory or otherwise; the source of such power is immaterial. This has been used to the benefit of private contracting parties, when challenging decisions (especially in government procurement or infrastructure/energy projects etc.) by quasi-state actors or private corporations with delegated public duty.
What is the impact?
With these new judicial precedents, some of our clients, especially in the defence, aerospace, transport, energy, social media and other systemically important sectors have to carefully analyse their roles and keep a close watch on how courts are interpreting their functions. In addition to the sectoral regulators who are the first line of check to ensure that corporations balance societal needs in their business, courts seem to be taking an approach that increasingly links the services/products being provided to public good with consequent oversight using writs – and this is independent of the ESG requirements that are also growing.
As the Indian economy pivots towards disinvestment, to bridge the fiscal burden, create employment, and foster investment, courts may take the view that consumers bear the risk of abuse by private players. The judiciary’s initiative to foster, and to some extent, impose statutory duties and constitutional limitations over companies that perform socio-economic functions of the welfare State, safeguard the interests and rights of people contracting with such companies is a balancing act, which will need to be closely followed to see the extent to which the boundaries will be pushed.