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IN THE HIGH COURT AT CALCUTTA
T.S. SIVAGNANAM, C.J., HIRANMAY BHATTACHARYYA, J.
Cardiological Society of India & Anr. – Appellants
Versus
Dr. Sunip Banerjee being the Secretary of Cardiological Society of India, West Bengal Branch & Ors. – Respondent
M.A.T. 932 of 2024 With I.A. No. CAN 1 of 2024
Decided on : 21-06-2024
Banking - Writ Petition - Societies Registration Act XXI of 1961 - Sections 1, 2, 3 - The court interpreted the provisions of the Societies Registration Act and the constitution of the society, emphasizing the autonomy of branches while recognizing the parent body's supervisory role, leading to the decision to allow defreezing of accounts but restrict operation by suspended members.
Fact of the Case:
The Cardiological Society of India (CSI) suspended members of its West Bengal Branch, leading to the freezing of their bank accounts by the bank. The first respondent challenged this action in a writ petition, which was initially allowed by a Single Judge, prompting an appeal by CSI.
Finding of the Court:
The court found that the bank's action to freeze the accounts lacked proper legal basis, as there was no court order or lien justifying such action. However, it ruled that suspended members should not operate the accounts until a final decision on their suspension was made.
Issues: Whether the bank's freezing of the West Bengal Branch's accounts was justified and whether the suspended secretary should be allowed to operate those accounts.
Ratio Decidendi: The court held that a bank cannot freeze an account without a valid order from an adjudicatory forum and that suspended members should not operate the accounts until their suspension is resolved.
Result: The appeal is allowed in part; the order permitting the first respondent to operate the accounts is quashed, but the decision to defreeze the accounts is upheld.
JUDGMENT :
Hiranmay Bhattacharyya, J.
1. This intra Court appeal is at the instance of the Cardiological Society of India (for short “CSI”) and its Secretary and is directed against an order dated 10.05.2024 passed by a learned Single Judge in WPA 11057 of 2024.
2. By the order impugned, the writ petition was allowed on contest and the respondent bank was directed to immediately defreeze the accounts in question and the writ petitioners/first respondent herein was permitted to operate the accounts fully.
3. The facts giving rise to this appeal in a nut shell are as follows.
The petitioner claims to be the Secretary of Cardiological Society of India – West Bengal Branch (for short “West Bengal Branch”). One general member filed a suit for declaration and injunction against the West Bengal Branch before the learned Civil Judge (Senior Division), Sealdah being Title Suit no. 120 of 2023. In connection with the said suit an application for temporary injunction was filed and an order dated 13.04.2023, which was subsequently modified on 18.04.2023, was passed thereby restraining the West Bengal Branch from holding Special General Body Meeting on 22.04.2023. The said orders dated 13.04.2023 and 18.04.2023 were set aside by the Hon’ble Division Bench of this Court by an order dated 06.03.2024 in FMA 564 of 2023. Thereafter, a letter dated 05.03.2024 was issued by the second appellant herein intimating the 5th respondent herein about the suspension of the members of the executive committee of the West Bengal Branch with a direction upon the 5th respondent herein to stop the operation of the accounts of the West Bengal Branch. The respondent bank restrained the writ petitioner from operating the accounts of the West Bengal Branch maintained at their branches. Challenging the action of the respondent bank of freezing the bank accounts of the West Bengal Branch, the 1st respondent herein filed the writ petition.
4. In connection with the said writ petitions an application being CAN 1 of 2024 was filed by the first respondent praying for an order to allow him to operate the accounts maintained at the MCC branch of the State Bank of India till the disposal of the writ petition.
5. The said application along with the writ petition were taken up for hearing and the learned Single Judge by an order dated 10.05.2024 allowed the writ petition, thereby quashing the decision of the bank to freeze the accounts in question with a direction upon the bank to immediately defreeze the said accounts and permitted the first respondent herein to operate the accounts fully.
6. Being aggrieved by the said order, CSI and its secretary has approached this Court.
7. The appellants have filed an application for stay of the order passed by the learned Single Judge which is impugned in this appeal. The case made out by the appellants in the stay application is summarised hereunder as follows.
8. The West Bengal Branch applied for holding the 75th annual conference in December, 2023 in Kolkata. The executive committee of the Central CSI accepted and placed the names of the Organising Secretary and the Organising Chairman proposed by the West Bengal Branch to host the 75th Annual Conference in the year 2023 at Kolkata before the general body. At a meeting held by the general body of the CSI, Organising Secretary and Chairman of the Organising Committee of the 75th annual conference were appointed. An organising committee was formed under the leadership of the Organising Secretary and Organising Chairman from the members of the West Bengal Branch which was ratified in the General Body Meeting of the West Bengal Branch on December 18, 2021. Thereafter, the office bearers of the West Bengal Branch appointed an Organising Secretary and a Joint Organising Secretary for the purpose of 75th Annual Conference. Alleging that such purported appointments of Organising Secretary and a Joint Secretary by the West Bengal Branch to be wrongful and illegal and contrary to the articles of the
AI
A bank cannot freeze a company's account without a valid order from an adjudicatory forum, even amid management disputes.
The Investigating Officer lacks authority under Section 91 of Cr.P.C. to freeze a bank account absent compliance with Section 102, violating procedural requirements and the petitioner's rights.
The court emphasized that the freezing of bank accounts requires a clear determination of ownership and authority, which was not established in the pending civil suit.
The court held that an appeal against an interim order of suspension is not maintainable under the provisions of the relevant Act.
The freezing of a business account requires identification of the tainted amount to ensure proportionality, and blanket freezes violate constitutional protections against arbitrary state action.
Suspension - Powers of Registrar - If Registrar, on completion of inquiry finds that there is major defect in the constitution or working or financial condition of society, he may initiate action in ....
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