Allowed

M/s. Venumadhav Industries v. The Union of India

Telangana HC16 Dec 2024WP/34238/2024

Case brief

AI extract

What is this about?

A writ petition challenged a bank's unilateral debit-freeze of the petitioner's account made solely at the request of a private respondent alleging a partnership dispute. Citing precedent that freezes require an adjudicating forum or RBI instruction, the court set aside the impugned communication, allowed account operation, and awarded costs unless the complainant secured an interim forum order.

What did the court decide?

Impugned freezing communication set aside; account to be operable from 27.12.2024; costs Rs.20,000 payable if complainant fails to obtain interim forum order.

M/s. Venumadhav Industries Vs The Union of India — Banking and Recovery | Telangana HC (2024)

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[^34os ]

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HIGH COU;TT^{FOR THESTATE OF TELANGANA} AT HYDERABAD (SPecial Original Jurisdiction)

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MONDAY.THE^{SIXTEENTHDAY OF DECEI\iIBER} TWO THOUSAND^{ANDTWENTY FOUR}

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PRESENT

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THE HONOURABLE^{JUSTICE MOUSHUMI BHATTACHARYA}

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WRIT PETI TION^{NO:34238 oF 2024}

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Between:

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M/s. Venumadhav^{lndustries,At Sy No' 226260 and 261' Ryakaldevpalli} vilaoe of Etiqtad^{Mand?,'F;'d;;p;iiiDistrict,Rep. by rts ManagingPartner,} Sri. Annaman-eni^DevenderRao'

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...PETITIONER

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AND

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1 The Union of^{lndia, Departmentof Financeand Planning' Rep- by its} Secretary,^{New Delhi.}

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2 The Union^{Bank of lndia,Sulthanabad Branch' Peddapalli'Peddapalli District} Rep. by its^{Branchfvlanager,}

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3 Smt.AnnamaneniLaxmi,W/o-KiranKumar,gedggyeSr:OccBusiness Hi;: i[li'ft. 31r,^{Sii u,iistti aloci-s,Bottarlm'opp Bollaram Railwav} Stition,^{HyderaUad, Telangana-500010'}

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...RESPONDENTS

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Petition under^{Article 226 of the Constitution of lndia praying that in the} circumstances^{statedin tne afiJavit filedtherewith'the High Court may.be} pleased to issue appropriate^{Vfit,-Orderor Direction.more particularlyone in the} I"1ri" "t Writ of^{lviandamus, to declarethe impugned proceedingsno'} 1227 1t5312o24-25t25^{daled ii-Og-Zozlfreezingthe account of petitioners .bank} bearing^{Accou nt no. lzzt l3r ooor olsa as iiiegal'arbitrary'unconstitutional'} violation of^{principlesot naturli Justice, in violatioriof} .provisions^{of Reservebank} of lndia Act^{and its guiOetine-s,'anJ-viotati'eof Article14' 21 of Constitution of} lndia and against^{all ."ttf} "J'ptin"ipt"s^{of law. and set aside the same and} consequently^{direct the zni-r.Jtpon'a"nt to de{reeze the accountbearing No'} lzizl liloorirczs4^{and permit the petitioner to run the said account}

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IANO:1OF²⁰²⁴

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Petition under Section^{1 51 CPC prayingthat in the circumstances statedin} the affidavit filed^{in support ot the writ ietition,the High Court may be pleased} -to direct 2nd respondent^{to O"-ti""t"tne accountbeaiingNo 122713100016354}

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and permit the pertitioner to run the said account, pending disposal of the main writ petition

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Counsel for the Petitioner: SRl. AKKAM ESHWAR

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Counsel forthe Respondent No.1: SRI cADl PRAVEEN KUMAR Dy. SOLICITOR GENERAL OF INDIA

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Counsel for the Respondent NO.2: SRI ALKA THAKUR FOR MS.V. DYUMAN|

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Counsel for the Respondent NO.3: SRI GUMMALA BHASKER REDDY

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The Court made the following: ORDER

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THE HON'BLE JUSTICE MOUSHUMI BHATTACHARYA

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WRIT PETITION No.34238 of 2o24

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Mr. Akkam Eshwar, learned counsel for the^petitioner.

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Mr. Alka Thakur, learned counsel representing^{MsV Dyumani,lcarned} counsel for the respondent^No.2.

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Mr. Gummala Bhasker lieddy,^{learned counscl for thc respondentNo.3.}

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ORDER:

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Learned counsel appearing for the^{respondentNo.2Union} Bank of India and the^{private respondentNo.3 do not have} instructions or any submissions to^{makewith regard to l-he ir} objections to the writ petition.

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The writ petition has bcen filed^{against the impugned} action of thc respondent No.2^{taken on 27.O9.2O24freezing the} Betitioner's^{Bankaccounton acomplaint receivedby thc} respondent No.2 from the^{respondentNo-3. This would be clear} from the impugned communication^{daled 27 .O9.2O24iLself} wherein it has been stated^{on behalf of the respondent No 2 that} the petitioner's account has^{been frozen on a lettcr reccived} from the respondent No.3 to^{frceze tl:re petitioner's Bank} account

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The translated copy of the complaint^{dated 30'05 2023} from the respondent No.3 is^{on record.The letter statesthaL} the respondent No.3 owns look^{share inVenumadhav}

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lndustries i.e. the partnership firm belonging to the^petitioner and thc^pg..pondent No.3.^'l'he rcspondent No.3 requests^the Bank to u'ithhold the transactions of the petitionc,r's Bank account urltil the details of the transactions of thc Mi1l are disclosecl to lhe respondcr-rt No.3.

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The l:lank or the respondent No.3 has not t:ome forward with any fltrther material in support of the impuglred letter lrcczing, Ltre petitioner's Bank account.

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.5. The la*. with regard to a unilateral debit-frer:ze of a Bank account u''as discussed in F.M.A.No.74 of 2O2O (Rina. Habiba u. 'l'he Bank L';J' India and othersl. The Division Benc:h of the Caloutta l{igh Court in that case laid dorvn the circumstances in which an aocount may be debit-freezed by a Bank including on instruction,. received from the Reserve Bank of lndia (R.B.I.) or a iien u,hich lhe Bank proposes to exercise on the funds lying to thc credit o[ thc constituent. Rina Habiba (supra) further held that a freez;ing order can only be obtained from an appropriate lorum and not at the instance o[ a constituenl of the Bank or on a complaint to the Bank. Rina Habiba was lollowed in M/ s.ModeLl:t Ventures LLP u. The Indian Ouerseos Bank (W.P.A.No.8C.41 of 2023, dated 17.05.2O23), where the Court held that a debit-freeze to constituent's account cannot be done

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on a stray complaint ^atd ir-, th" absence of an order of Court or an instruction from the RBI.

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In the present case, the respondent Bank^{has proceeded} to debit-freeze the account of the^{petitioner, as recorded in the} impugned letter dated 27.O9.2O24,^{only by reason of the lettcr} from the respondent No.3^{requcstingthc Ilank lo cause tho} debit-freeze. As stated above, the^{respondent-Bankhasalso not} been able to show existence of any^{othertriggers which} prompted the Bank to take the impugned^stcp.

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7 . There is evidently a dispute between the^{petitionerand} the respondent No.3 which^{wouldbe apparent from the letter} sent by the latter to the Bank^{on 30.O5-2023Thc respondent} No.3 must however approach the^{appropriate forum for an} injunction on the petitioner. lt^{is clear that the petitioner's} Bank account cannot be^{freczedon the complaint madeby thc} respondent No.3 simplicitcr and^{thal too without an order} passed by an adjudicating forum.^{The petitioner was also not} put on notice before the impugned^{action was taken by the} Bank.

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None of the respondents^{havcquestionedthc} maintainability of the writ^petltion

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W.P.No,34238 of 2024 is accordingly alkrwed and disposed c,i oy settirig aside the impugned communic:Ltion dated 27 .()9.2021. Th<: rcspondent,Ilank shall allorv the pc:titioner to operatc tt: Bank account frorn 27.12.2024. The rcspondent No.3 sha1l bc at liberty to obtain an order from .he competent lorum in t 1(-. meantime, i.e. till 27.12.2024. If the respondent No.3 rs ur tltlc Lo do ttris, the lcspondent,Bank shall allow the pctitioner to operate the Bank account on and from 27.12.2024 as directecl above. The respondent-Bank shall pay costs of Rs.20,OO0^I to Lhe petitioner in the absence of any order brought to its notice by the respondent No.3. The amount shall bc paid to the petitioner by 3 1 .\2.2024 . it is m;rde clear that there shall be no lelLer on lhe peLitioner to deposit arnounts in the Ilank a,tcounI in the meantime.

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1O. Interrm orders, if any, shall stand vacate<i and all connccted applications are disposed of. There shall t.,e no order

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:rs [o costs

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SD/. L. VIJAYA LAKSHMI ASSISTANT REGISTRAR //TRUE COPY// a/

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To,

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sEcIoN <iFrrcen

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