When a Private Bank Illegally Freezes an Account, the Court Can Intervene: Allahabad High Court
- Case Name: Proview Constructions Limited v. Union of India & Ors.
The Allahabad High Court allowed the writ petition and directed Kotak Mahindra Bank to defreeze the petitioner’s account.
Kotak Mahindra Bank froze the petitioner’s account after a director’s wife requested it during a marital dispute.
The Court held that such action violated Section 22(3) & Section 22(4) of the Banking Regulation Act, 1949 and RBI regulations.
The Court referred to Federal Bank Ltd. v. Sagar Thomas and S. Shobha v. Muthoot Finance Ltd. and decided that private banks serve a public function and can be challenged through a writ petition under Article 226.
Hence, the Court decided that a private bank cannot freeze an account on its own without legal permission.
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