Neutral Citation No.

- 2025:AHC:20822-DB

Court No. - 29

Case :- WRIT - C No. - 28679 of 2024

Petitioner :- Proview Constructions Limited

Respondent :- Union Of India And 3 Others
Counsel for Petitioner :- Anil Kumar Mehrotra,Anuj
Kumar,Srijan Mehrotra
Counsel for Respondent :- Sushant,A.S.G.I.,Gaurav Dwivedi

Hon'ble Ashwani Kumar Mishra,J.

Hon'ble Arun Kumar Singh Deshwal,J.

1. Petitioner before this Court is a Company registered

under the provisions of the Indian Companies Act, 1956. One
Rajeev Kumar Arora is its Authorized Signatory and Director.
He (Rajeev Kumar Arora) has an ongoing matrimonial dispute
with respondent no. 3, who claims herself to be his wife. A first
information report is also lodged by third respondent, against
Rajeev Kumar Arora, being Case Crime No. 476 of 2023, Police
Station Link Road, Trans Hindon Commissionerate, Ghaziabad
pursuant to a direction issued by the concerned Magistrate,
under Section 156(3) Cr.P.C.

2. On account of matrimonial dispute, third respondent

made an application to the respondent No. 2 Kotak Mahindra
Bank (hereinafter referred to as the “Bank”) for freezing the
current account of the petitioner company, maintained in its
Ghaziabad Branch, till the pending matrimonial dispute is
resolved. Respondent No. 3 admittedly has a share of 0.75% in
the petitioner Company; whereas shareholding of Rajeev
Kumar Arora is 41.15% in the Company.

3. The Bank has acted upon the representation of third

respondent and has freezed petitioner’s bank account no.
3649007591, vide its order dated 28.5.2024. By this
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communication the petitioner has been advised by the Bank to

get their internal dispute resolved. Reliance is placed upon the
lodging of the FIR against Rajeev Kumar Arora as well as the
request of third respondent for its action. Third respondent has
also instituted other proceedings against Rajeev Kumar Arora
including filing of a Original Suit before the Civil Court to
restrain the bank from defreezing the Bank Account of the
petitioner company. In this suit, however, no injunction has
been granted and only notices are issued in the matter.

4. It is at this stage that the petitioner is before this Court

for a direction to the respondent Bank to defreeze its bank
account and to allow it to operate its Bank Account. Prayer is
also made to quash the communication issued by the
respondent Bank, contained in Annexure 1, dated 28.5.2024.
This communication of the respondent Bank acknowledges that
a sum of Rs. 10,57,00000/- is lying in the Current Account of
the petitioner company but in view of the request made by
third respondent as also the lodging of the FIR, the withdrawal
of amount is not being processed.

5. At the outset, Sri Anil Kumar Mehrotra, Advocate assisted

by Sri Srijan Mehrotra appearing for the petitioner submits that
there is neither any order passed by the competent court
directing the respondent bank to freeze bank account of the
petitioner company, nor there is any direction issued by the
Investigating Officer of the criminal case, for freezing
petitioner’s bank account. No action against petitioner Company
is taken by any competent authority for such purposes, either.
It is, therefore, submitted that unilateral act on part of the
respondent bank in denying withdrawal of amount from the
Current Account of the petitioner company is wholly arbitrary
and is not referable to any provision of law. It is urged that the
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right of petitioner Company to run its business is infringed. The

petitioner also asserts that holding its money in the bank
account of respondent bank amounts to property, and its
deprivation without an authority of law violates the
constitutional rights of petitioner’s authorized signatory under
Article 300-A of the Constitution of India. Sri Mehrotra also
submits that essential functions of petitioner Company and its
sister concerns are virtually crippled as the petitioner is not
able to carry out its financial obligations including payment of
salary to its employees, etc. Submission is that unless this
Court intervenes and protects the rights of the petitioner and
its Director’s, shareholders and employees, the petitioner
company itself may collapse.

6. When the matter is taken up, learned counsel

representing the second respondent Bank, Sri Sushant
Chandra, raises an objection to the maintainability of the writ
petition on the ground that respondent Kotak Mahindra Bank is
a private bank and in discharge of its banking operations it is
not performing any public duty. It is submitted that the Bank
although is a Scheduled Bank, yet the decision at its level to
freeze the Bank Account on the request of third respondent is a
bona-fide exercise of jurisdiction by the Bank which merits no
interference by this Court in exercise of its extraordinary
jurisdiction.

7. Sri Mohd. Areeb Masood holding brief of Sri Gaurav

Dwivedi, learned counsel appearing for the respondent no. 3,
has substantially adopted the stand taken by the respondent
Bank. He places reliance upon the recent judgment of the
Supreme Court in S. Shobha Vs. Muthoot Finance Ltd., 2025
INSC 117, decided on 24th January, 2025, to urge that the writ
petition would not be maintainable for the relief claimed by the
 4

petitioner. Reliance is also placed upon the judgment of the

Supreme Court in the case of Federal Bank Ltd. Vs. Sagar
Thomas and others, (2003) 10 SCC 733.

8. We have heard learned counsel for the parties and

perused the materials on record. The judgments relied upon on
behalf of the respective parties shall be referred to, later, while
considering the respective submissions of the parties.

9. Before the Court proceeds to examine the petitioner’s

prayer in the writ petition, it would be necessary to examine
the nature and character of the respondent bank as also the
obligation imposed upon it to allow its depositor to withdraw its
amount from the Bank. As a necessary corollary it has to be
seen as to whether the respondent bank, being a private entity,
has the right to refuse withdrawal of amount by the depositor
only because the Director of the account holder company is
facing a matrimonial dispute with his wife?

10. Banking operations in the country are governed by the

provisions of the Reserve Bank of India Act, 1934 (hereinafter
referred to as ‘the Act of 1934) as well as the Banking
Regulation Act, 1949 (hereinafter referred to as ‘the Act of
1949’). The Act of 1934, has been promulgated with the intent
to constitute a Reserve Bank of India for the purposes of
regulating the issue of bank notes and keeping of reserves with
a view to securing monetary stability in India. Section 2 of the
Act of 1934 contains the definition clause. Our attention has
been invited by Sri Mehrotra to Section 2(e) of the Act, which
defines a scheduled bank in following terms:-

“(e) “scheduled bank” means a bank included in the

Second Schedule;”

11. It is admitted between the parties that the respondent

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bank is a Scheduled Bank. The scheduled banks are regulated

by the Act of 1949. Section 5 of the Act of 1949 contains
interpretation clause. It would be relevant to refer to sub-
section (b) & (ca) of Section 5, which reads as under:-

“(b) “banking” means the accepting, for the purpose of

lending or investment, of deposits of money from the
public, repayable on demand or otherwise, and
withdrawable by cheque, draft, order or otherwise;
(ca) “banking policy” means any policy which is specified
from time to time by the Reserve Bank 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, the volume of deposits and
other resources of the bank and the need for equitable
allocation and the efficient use of these deposits and
resources.”

12. Section 5A of the Act of 1949, provides for an overriding

effect to the provisions of the Act. Section 22 of the Act of 1949
contains an embargo that no company shall carry on banking
business in India unless it holds a licence issued in that behalf
by the Reserve Bank of India subject to such conditions as are
imposed by the Reserve Bank of India. Sub-section (3) of
Section 22, provides that before granting any licence the
Reserve Bank may require it to be satisfied by an inspection of
the books of the company or otherwise that conditions specified
therein are made. Some of such conditions as are specified in
sub-section (3) are reproduced hereinafter:—

“(a) that the company is or will be in a position to pay its

present or future depositors in full as their claims accrue;
(e) that the public interest will be served by the grant of
a licence to the company to carry on banking business in
India;
(g) any other condition, the fulfillment of which would, in
the opinion of the Reserve Bank, be necessary to ensure
that the carrying on of banking business in India by the
company will not be prejudicial to the public interest or
the interests of the depositors.”
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13. Our attention has been invited to Section 36AD of the Act
of 1949, providing for punishment for certain activities in
relation to banking companies. Sub-section (1) of Section
36AD, is reproduced hereinafter:-

“(1) No person shall— (a) obstruct any person from

lawfully entering or leaving any office or place of business
of a banking company or from carrying on any business
there, or
(b) hold, within the office or place of business of any
banking company, any demonstration which is violent or
which prevents, or is calculated to prevent, the transaction
of normal business by the banking company, or
(c) act in any manner calculated to undermine the
confidence of the depositors in the banking company.”

14. Broad framework for regulation of a scheduled bank,

which is privately managed, as are noticed above are not in
issue. The respondent bank, however, claims absolute immunity
in running of the bank and asserts right to deny permission to
withdraw the amount even in the absence of any authorization
by a competent authority or the court. The bank, for such
purposes, relies upon the terms and conditions to which the
account holder has undertaken to comply. The clause dealing
with Account Closure/Service Discontinued is relied upon by the
counsel for the Bank, which reads as under:-

“Bank may at its absolute discretion, close any Account

or terminate any of the services by giving such days
notice to the Customer as it may deem fit with/without
assigning any reason. Notwithstanding the above, the
Customer acknowledges and agrees that Bank may at
any time without notice as the circumstances in the
Bank's absolute discretion may require,
discontinue/modify/cancel/terminate the services, if the
Bank is of the opinion that continuation of services is
prejudicial to Bank's interests. Bank shall not be made
liable for any consequences arising out of such closure of
Account or termination of Services.
Bank may its discretion, and without prejudice to the
above and in addition thereto close the Account of a
person having a Current, Saving or Overdraft Account if
 7

such person's cheques valuing Rupees One Crore and

above have been dishonoured on four or more occasions
in a financial year for want of sufficient funds in that
Account. Bank will however issue a notice to such person
whose account it may close, after dishonour of the third
cheque.
The Bank shall also be entitled to freeze operations in the
account of a customer with or without notice, if the Bank
suspects any fraud/mischief/im-personification etc., for
such period as it may deemed fit until it has received full
clarification sought from the customer and/or until it is
convinced that operations in the account can be re-
permitted. The customer shall provide all clarifications if
any sought by the Bank and the Bank shall not be held
responsible or liable for any losses, expenses, cost etc.
suffered or incurred by the customer by reason of
freezing of the account. The Bank pursuant to any notice
received from any statutory authority including Income
Tax/PF/Excise etc. is entitled to mark a freeze in the
account/remit the amount standing to the credit of the
account(s) whether jointly or singly as the case may be
to the concerned authority without any notice to the
customer.
Customer may close his Account or discontinue availing of
any Service at any time. Bank shall be entitled to refuse
the closing of the Account till such time that all Charges
payable by the Customer to the Bank have been paid in
full. The Bank may notify the Customer the date on which
his Account would be closed and the Service would be
discontinued. Upon closure of any Account, the Services
associated with such an Account would be automatically
terminated. At the time of closing of the Account, the
Customer shall return to the Bank and/or confirm
destruction of all unused cheque leaves / Card / Demat
instruction slip, as applicable, to the Bank.”

15. Learned counsel for the bank, therefore, submits that the
bank being a privately managed scheduled bank has the
absolute discretion to refuse withdrawal of amount once it
comes to the conclusion that the affairs of the company are
disputed and respondent no. 3 has made a request not to allow
withdrawal of amount from the current account of the company.
For such purposes learned counsel for the respondent Bank has
heavily relied upon the judgment of the Supreme Court in the
case of Federal Bank Ltd. (supra), wherein the issue relating to
 8

maintainability of the writ petition against private bank fell for

consideration before the Supreme Court. After noticing the
statutory scheme, the Supreme Court observed as under:-

“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 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
 9

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. For other companies in
general carrying on other business activities, maybe
manufacturing, other industries or any business, such
checks are provided under the provisions of the
Companies Act, as indicated earlier. There also, the main
consideration is that the company itself may not sink
because of its own mismanagement or the interest of the
shareholders or people generally may not be jeopardized
for that reason. Besides taking care of such interest as
indicated above, there is no other interest of the State, to
control the affairs and management of the private
companies. Care is taken in regard to the industries
covered under the Industries (Development and
Regulation) Act, 1951 that their production, which is
important for the economy, may not go down, yet the
business activity is carried on by such companies or
corporations which only remains a private activity of the
entrepreneurs/companies.
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. For instance, if a private employer dispenses
with the service of its employee in violation of the
provisions contained under the Industrial Disputes Act, in
innumerable cases the High Court interfered and has
issued the writ to the private bodies and the companies in
that regard. But the difficulty in issuing a writ may arise
where there may not be any non-compliance with or
violation of any statutory provision by the private body.
In that event a writ may not be issued at all. Other
remedies, as may be available, may have to be resorted
to.”

16. The Court in Federal Bank Ltd. (supra) also observed as

under in para 28 of the report, which is reproduced
 10

hereinafter:-

“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. It is only in
case of malfunctioning of the company that occasion to
exercise such powers arises to protect the interest of the
depositors, shareholders or the company itself or to help
the company to be out of the woods. In times of normal
functioning such occasions do not arise except for routine
inspections etc. with a view to see that things are moved
 11

smoothly in keeping with fiscal policies in general.”

17. So far as the judgment in Federal Bank Ltd. (supra) is

concerned, the issue arose in respect of a dispute between the
bank and its employee. It was in that context that the Supreme
Court examined the nature of the Federal Bank Ltd. and came
to the conclusion that being a private entity the bank is not
amenable to writ jurisdiction in a dispute raised by its
employee.

18. Law is settled that contract of personal service is

ordinarily not enforceable. Three exceptions to it are well
recognized, none of which arose in the case of Federal Bank i.e.
firstly, where a public servant is sought to be removed from
service in contravention of the provisions of Article 311 of the
Constitution of India; secondly, where a worker is sought to be
reinstated on being dismissed under the Industrial Law; and
third, where a statutory body acts in breach or violation of the
mandatory provisions of the statute (See: Sirsi Municipality Vs.
Kom Francis, (1973) 1 SCC 409, followed in the case of
Executive Committee of Vaish Degree College Shamli and
others Vs. Lakshmi Narain and others, (1976) 2 SCC 58).
However, an exception was carved out in a case of
malfunctioning of the company for protecting the interest of the
depositors, etc.

19. Coming to the recent judgment of the Supreme Court in

the case of S. Shobha (supra), the issue relating to
maintainability of writ was examined with respect to a private
company running a Non-Banking Finance Company. The Court
held that 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
 12

as regards the maintainability of a writ petition.

20. The Court has clearly observed in S. Shobha (supra) that,

if a public duty or public function is involved, any body, public
or private, concerned or in 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. Para 8 & 9 of the judgment in S.
Shobha (supra) is reproduced hereinafter:-

“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.
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.
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(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.”

21. The judgment of the Hon’ble Supreme Court in S. Shobha

(supra) related to a Non-Banking Finance Company which was
carrying on function as a scheduled bank. The Non-Banking
Finance Company in S. Shobha was Muthoot Finance Ltd. which
is not a scheduled bank. Various restrictions and obligations
imposed on a scheduled bank were not applicable in the case of
S. Shobha, unlike the facts of this case (scheduled bank).

22. The important and vital consideration to determine the

function test, as laid down by the Supreme Court in S. Shobha,
would be the nature of obligation imposed upon the scheduled
 14

bank while considering the request of a depositor to withdraw

amount from its account.

23. Before we proceed further, it would be worth noticing that

a private scheduled bank may engage itself in various functions
and activities. Its not that all facets of its activity are of one
kind. In a case of service dispute with its employee a writ
petition under Article 226 of the Constitution of India may not
be maintainable. Similarly, when such private scheduled bank
indulges in any commercial transaction of providing loan or
accepting term deposits, etc., a writ ordinarily may not lie in
case of a dispute, unless any statutory violation is shown.
However, such is not the case here.

24. In the facts of the present case, the petitioner company

has deposited more than 10 crores in its current account
maintained with the respondent bank. There is no dispute
between the parties either with regard to quantum of deposit or
with regard to interests, etc., over such deposit.

25. The withdrawal of amount belonging to petitioner from its

current account is withheld by the respondent bank on account
of its unilateral decision to freeze the petitioner’s bank account
on the request of third respondent and lodging of an FIR by her
regarding a matrimonial dispute.

26. Admittedly, there is no order passed by any competent

court to freeze the petitioner’s bank account. There is no action
or order of the investigating authority in any criminal case to
freeze such bank account, either. No provision exists in law
conferring authority upon the respondent bank to adjudicate
private claims of the Director regarding their matrimonial
dispute. It is in this factual context that the functional test
 15

needs to be applied in this case to determine the question as to

whether a writ would lie or not?

27. The statutory scheme to regulate private scheduled bank

has already been extracted above which obligates it to obtain a
licence before it embarks upon such banking activity. The
requirement of licence from the Reserve Bank of India by the
banking company is essential. The conditions of such licence
include the ability of the bank to pay its present or future
depositors in full as and when their claims accrue. The general
character of the company also cannot be prejudicial to the
public interest or interest of its depositors. Clause (e) of Section
22(3) clearly mandates that issuance of banking licence must
subserve public interest and banking business in India.

28. Element of public interest involved in ensuring faith of

depositor is thus an important aspect. The scheduled private
bank acts as a trustee when it accepts deposit from an account
holder and it cannot be allowed the autonomy of a village
money lender who may accept the deposit and refuse its return
to the depositor. The bank can be allowed to freeze the account
only for legitimate purposes and in accordance with law. The
bank cannot arrogate to itself an adjudicatory role in a
matrimonial dispute of account holder. The depositor may lose
interest in the banking company if its amount lying in deposit
with the scheduled private bank is unauthorizedly withheld. It
may lead to the depositor losing interest and confidence in the
banking company itself. This would clearly be in derogation of
the professed objective of the banking activity itself.

29. It is, therefore, necessary that in so far as withdrawal of

amount by the depositor from its account is concerned the
banking company must adhere to the conditions of licence
 16

which are sine-qua-non for its registration. Sub-section (4) of

Section 22 also provides that if there is a violation of the
conditions of licence the Reserve Bank of India has the
authority to cancel licence of the bank itself. In such
circumstances, there is a positive legal obligation on the
respondent scheduled bank to ensure that the faith of the
depositor is not lost in the banking company by its activity. This
part of the function of the scheduled private bank, in our
considered view, lies in the realm of public function, and a writ
would lie to address the wrong. Scheduled Private Bank,
therefore, cannot claim immunity from judicial scrutiny, by writ
court, only on the ground that its status remains that of a
private bank. The objection of the respondents with regard to
maintainability of the writ petition for the nature of relief
sought in this writ petition, therefore, must fail.

30. Coming to the action of the respondent bank, it is

undisputed that petitioner company has a Current Account
maintained in the respondent bank and there are sufficient
funds available with the petitioner company for withdrawal from
its Current Account. Petitioner Company admittedly is a
depositor and in terms of the banking practices it is clearly
entitled to withdraw the amount lying in its Account. The Bank
can deny withdrawal of such amount only in exigencies which
are permissible in law. Such exigencies do not arise in the facts
of this case, as is noticed above. In its absence the action of
the respondent bank in refusing to allow withdrawal of amount
from the account of the petitioner company cannot be
sustained.

31. So far as the grievance of the third respondent in respect

of a private dispute between her and Director of the petitioner
company is concerned, her remedy would be to pursue her
 17

grievance either before the competent Civil Court or before the

NCLT where such proceedings are admittedly pending. There
are otherwise no request for stopping withdrawal of the amount
in criminal proceedings. The third respondent, therefore, would
be well advised to seek appropriate direction from the
competent forum in accordance with law. Making request to the
bank for freezing the account of petitioner company would not
be the proper remedy. We also hold that respondent bank has
no jurisdiction to entertain the request of the third respondent
and thereby freeze petitioner’s account and deny withdrawal of
amount from the bank account of the petitioner.

32. In view of the deliberations and discussions held above,

this writ petition succeeds and is allowed. The order passed by
the respondent bank, dated 28.5.2024, is quashed. The
respondent bank is directed to allow the petitioner to operate
its current account no. 3649007591, maintained in its Raj
Nagar, Bhowapur Branch, District Ghaziabad, unless there is
any legal hindrance created by a competent forum, in terms of
the above direction.

Order Date:- 13.2.2025

Ranjeet Sahu

(Arun Kumar Singh Deshwal, J.) (Ashwani Kumar Mishra, J.)

Digitally signed by :-
RANJEET SAHU
High Court of Judicature at Allahabad