School Book Company Vs Canara Bank — Writ and Judicial Review | Karnataka HC (2025)

School Book Company Vs Canara Bank — Writ and Judicial Review | Karnataka HC (2025)

What the court decided

AI extract

Outcome

Direction to the respondent bank to defreeze Current Account No. 55,94,882.49 of petitioner No.1 firm within 48 hours after the petitioners furnish all partner records and comply with Know Your Customer norms (two weeks granted for furnishing, or within 48 hours of earlier furnishing); damages of Rs. 25 lakhs and costs not granted.

Issue for consideration

Whether the respondent bank's freezing of petitioner No.1 firm's current account was illegal and arbitrary, and whether the Court should direct the bank to de-freeze Current Account No. 55,94,882.49. +1 more

Court's answer

The Court recorded the respondent bank's submission that if the petitioners produce before the bank all records of the partners, alive or expired, and comply with the Know Your Customer norms in accordance with law, the bank would permit operation of the account as it was operated prior to the freeze.

Ratio / Principle

Two weeks' time was granted to the petitioners to furnish all necessary details to the respondent bank and comply with Know Your Customer norms, whereupon the bank shall defreeze the account within 48 hours thereafter.

Key takeaways

If the petitioners furnish the required details earlier than the two weeks granted, the bank shall defreeze the account within 48 hours therefrom.ratio¶55
With the aforesaid observations, the petition stands disposed; the damages and costs prayers were not specifically dealt with in the order.ratio¶56

Detailed headnote1 paragraphs

Karnataka High Court (M.Nagaprasanna, J.) - W.P.No.7916/2025 (GM-RES) under Articles 226 and 227 of the Constitution of India. School Book Company, a partnership firm (with 10 partners on its Canara Bank account, 4 said to have expired, 5 before the Court), and its partners sought mandamus to defreeze the firm's Current Account No. 55,94,882.49, frozen by Canara Bank, Mission Street Branch, Mangalore, for non-compliance with Know Your Customer (KYC) norms, and Rs. 25 lakhs damages. An identical earlier freeze by Union Bank of India had been resolved by a co-ordinate bench order dated 10.02.2025 in W.P.No.3423/2022 (there, the freeze followed a newspaper public notice dated 21.01.2021 about dissolution though only one partner had retired). The respondent bank submitted that on production of all partners' records (alive or expired) and compliance with KYC norms in accordance with law, it would permit operation of the account as before. Held: two weeks granted to the petitioners to furnish details and comply with KYC norms; the bank to defreeze the account within 48 hours thereafter, or within 48 hours of earlier furnishing. Petition disposed; damages and costs not awarded.

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NC: 2025:KHC:17074 WP No. 7916 of 2025

IN THE HIGH COURT OF KARNATAKA AT BENGALURU

DATED THIS THE 25^TH DAY OF APRIL, 2025

BEFORE

THE HON'BLE MR JUSTICE M.NAGAPRASANNA WRIT PETITION NO. 7916 OF 2025 (GM-RES)

BETWEEN:

SCHOOL BOOK COMPANY A PARTNERSHIP FIRM HAVING ITS OFFICE AT CAR STREET MANGALORE - 575 001 REPRESENTED BY ITS MANAGING PARTNER SRI P.SUNIL BHANDARI S/O P.PADMANABHA BHANDARY AGED ABOUT 59 YEARS.

SRI P.GANESH BHANDARI S/O KAMALAKSHA BHANDARY AGED ABOUT 60 YEARS

Digitally signed by NAGAVENI Location: High Court of Karnataka

PARTNER OF THE FIRM SCHOOL BOOK COMPANY R/AT SANGAM, GANDHINAGAR 5^TH CROSS, GANDHINAGAR MANGALORE - 575 003.

SRI P.SURAJ BHANDARI S/O R.PADMANABHA BHANDARY AGED ABOUT 60 YEARS PARTNER OF THE FIRM SCHOOL BOOK COMPANY R/AT PADMANABH URUVA

2 - NC: 2025:KHC:17074 WP No. 7916 of 2025

MARIGUDI ROAD CROSS

ASHOKNAGAR, MANGALORE - 575 006.

SRI P.SUNIL BHANDARI S/O P.PADMANABHA BHANDARY AGED ABOUT 59 YEARS PARTNER OF THE FIRM SCHOOL BOOK COMPANY R/AT NIKUNJ URUVA MARIGUDI ROAD CROSS ASHOKNAGAR, MANGALORE - 575 006.

SRI P.RAMACHANDRA BHANDARY S/O MOHANDAS BHANDARY AGED ABOUT 44 YEARS PARTNER OF THE FIRM SCHOOL BOOK COMPANY R/AT LAKSHMINARASIMHA GANDHINAGAR, MANGALORE - 575 006.

…PETITIONERS

(BY SRI CYRIL PRASAD PAIS, ADVOCATE)

AND:

CANARA BANK MISSION STREET BRANCH MANGALORE - 575 001 REPRESENTED BY ITS BANK MANAGER/AUTHORIZED SIGNATORY.

…RESPONDENT

(BY SRI VIGNESH SHETTY, ADVOCATE)

THIS WP IS FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA PRAYING TO DIRECT THE RESPONDENT BANK TO DE-FREEZE THE ACCOUNT OF THE 1ST PETITIONER FIRM VIDE CURRENT ACCOUNT NO. 55, 94, 882,

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NC: 2025:KHC:17074 WP No. 7916 of 2025

49 AND HOLD THAT THE ACTION OF THE RESPONDENT BANK IS ILLEGAL, ARBITRARY AND AGAINST LAW.

THIS PETITION, COMING ON FOR PRELIMINARY HEARING, THIS DAY, ORDER WAS MADE THEREIN AS UNDER:

CORAM: HON'BLE MR JUSTICE M.NAGAPRASANNA

ORAL ORDER

The petitioner is before this Court seeking the following

prayer:

“(a) Issue a Writ or Mandamus directing the Respondent bank to de-freeze the account of the 1st Petitioner firm vide Current Account No. 55,94,882.49 and hold that the action of the Respondent bank is illegal, arbitrary and against law;

(b) Direct the Respondent bank to pay damages of Rs. 25 lakhs to the Petitioner firm for their illegal and unethical acts.

(c) Grant such other and further reliefs based on the nature and circumstances of the case as this Hon'ble Court deems fit and proper in the facts and circumstances of the above case.

(d) Grant cost of the above writ petition, in the interest of justice and equity.”

Heard Sri Cyril Prasad Pais, learned counsel for

petitioners and Sri Vignesh Shetty, learned counsel for respondent.

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NC: 2025:KHC:17074 WP No. 7916 of 2025

Petitioner Nos.2 to 5 are the partners of petitioner No.1 - partnership firm – School Book Company. These petitioners were before a co-ordinate bench of this Court in W.P.No.3423/2022, which comes to be disposed on 10.02.2025. The order reads as follows:

“The first petitioner which is a partnership firm doing business in the name and style of ‘School Book Company’, and has an existence of more than a century, is aggrieved by the defreezing of its account at the hands of the respondent-Bank.

It is contended that the petitioner-firm has assets worth more than Rs.15.5 crores mortgaged to the respondent-Bank. The petitioner-firm has discharged its liability to the tune of Rs.2.98 crores and there was no reason for the respondent-Bank to have taken the drastic step of freezing the accounts.

On the previous occasion, this Court had directed the learned counsel for the respondent-Bank to seek instructions regarding the submissions made by the learned counsel for petitioners. Today, learned Counsel for the respondent-Bank submits on instructions that the petitioner-firm has discharged its loan liability. It is also submitted that the statutory dues payable by the petitioner-partnership firm is being paid through the Current Account. Learned Counsel submits that the action was taken pursuant to a public notice appearing in the newspaper on 21.01.2021 that all the partners have decided to dissolve the partnership firm.

Learned Counsel submits that only one of the partners has retired and he appears to have given such a public notice. However, the partnership firm has been continued at the hands of the other partners and they have been doing business and they are also transacting business in other banks.

5 - NC: 2025:KHC:17074 WP No. 7916 of 2025

Having regard to the grievances raised by the petitioners, this Court is of the considered opinion that if the present partners who are running the business, come before the respondent-Bank and present their credentials seeking to continue the partnership firm, the respondentBank shall consider the same and defreeze the account and permit them to continue their business with the respondent-Bank. The action could not have been taken on a piece of information that was published in the newspaper.

The writ petition is accordingly disposed of.”

The afore-quoted order was concerning Union Bank of India. An identical issue is now cropped up with the respondent

Canara Bank. Petitioner No.1 – firm had an account in Canara Bank as well with 10 partners; 4 of the partners is said to have expired and 5 of them are before this Court. The bank has frozen the account of the firm on the score that there is no compliance of Know Your Customer norms.

Learned counsel for the respondent - bank submits that if the petitioners would produce before the bank all the records of the partners, who are alive or expired, and comply with the Know Your Customer norms, in accordance with law, the bank would permit operation of the account as it was being operated prior to the freezement of the account. The submission is placed on record.

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NC: 2025:KHC:17074 WP No. 7916 of 2025

In the light of the aforesaid submission, two weeks time is granted to the petitioners to furnish all the necessary details to the respondent – bank and comply with Know Your Customer norms, and the bank shall within 48 hours thereafter, defreeze the account of the petitioners.

In the event, the petitioners would furnish all the required details earlier to two weeks as granted hereinabove, the bank shall defreeze the account within 48 hours, therefrom.

With the aforesaid observations, the petition stands disposed.

Ordered accordingly.

Sd/(M.NAGAPRASANNA) JUDGE

NVJ

List No.: 1 Sl No.: 23 CT:SS