The Allahabad High Court has ruled in favor of Proview Constructions Limited, directing Kotak Mahindra Bank to unfreeze the company’s bank account, which was blocked following a request by the wife of one of the company’s directors.
Bank Had No Legal Authority to Freeze Account
A bench comprising Justice Ashwani Kumar Mishra and Justice Arun Kumar Singh Deshwal held that the bank had no legal authority to freeze the account, as no court or investigative agency had issued any such order.
“There is no order from any competent court or investigating agency to freeze the bank account. The bank cannot act on private disputes between individuals and deny withdrawals,” the court stated.
Director’s Wife Filed Complaint Leading to Freeze
The case arose after Rajeev Kumar Arora, Director of Proview Constructions, filed a petition challenging the bank’s May 28, 2024 decision to freeze the company’s account at its Ghaziabad Branch. The freeze was imposed after Arora’s wife lodged a criminal case against him and requested the bank to block access to funds.
Arora, who owns 41.15% of the company, argued that his wife, who holds only 0.75%, had no authority to interfere in the firm’s financial operations. The freeze, he claimed, had crippled essential business functions.
Bank’s Responsibility to Maintain Public Trust
The court also addressed whether a writ petition was applicable in the matter. It ruled that private banks, despite their corporate status, perform a public function and must adhere to banking laws.
“A scheduled private bank cannot claim immunity from judicial scrutiny simply because it is privately owned. It has a legal obligation to ensure that depositor confidence is maintained,” the court noted, citing Reserve Bank of India (RBI) regulations.
Court Directs Wife to Seek Legal Recourse Elsewhere
The court clarified that Arora’s wife could pursue her grievance through appropriate legal forums, such as a civil court or the National Company Law Tribunal (NCLT), but not through the bank.
“If the third respondent (Arora’s wife) has any claims, she should approach the competent court or NCLT, where proceedings are already pending,” the bench stated.
Final Verdict: Account to Be Unfrozen
After reviewing the arguments, the court quashed the bank’s decision and directed it to immediately restore access to Proview Constructions’ bank account.
The petitioner was represented by Advocates Anil Kumar Mehrotra and Srijan Mehrotra, while Kotak Mahindra Bank was represented by Advocate Sushant Chandra. The private respondent was represented by Advocates Gaurav Dwivedi and Mohd. Areeb Masood.
