Summary
In a landmark judgment (Neutral Citation No. 2025:AHC:20822-DB), the Allahabad High Court has ruled that writ petitions under Article 226 of the Constitution are maintainable against private scheduled banks when they perform public duties, specifically regarding the protection of depositors’ rights. The case involved Proview Constructions Limited, whose current account containing over ₹10.57 Crores was frozen by Kotak Mahindra Bank. The freeze was initiated solely based on a request from a minor shareholder (0.75% stake) involved in a matrimonial dispute with the company’s director, despite the absence of any court order or police directive.
The Division Bench, comprising Justice Ashwani Kumar Mishra and Justice Arun Kumar Singh Deshwal, applied the “function test”. The Court held that when a scheduled bank accepts deposits, it acts as a trustee and is under a positive legal obligation to allow withdrawals as per its license conditions. The Court quashed the bank’s freezing order dated May 28, 2024, labeling it arbitrary and a violation of the constitutional right to property under Article 300-A. The ruling establishes that private banks cannot arrogate to themselves an adjudicatory role in private or matrimonial disputes.
Key Case Details
- Petitioner: Proview Constructions Limited
- Respondents: Union of India, Kotak Mahindra Bank, and others
- Court: Allahabad High Court
- Order Date: February 13, 2025
- Account Number: 3649007591 (Kotak Mahindra Bank, Ghaziabad)
- Amount Involved: Over ₹10.57 Crores
- Legal Principle: Function Test for Writ Maintainability against Private Entities