Banks lack authority to alter account operations based on partner disputes without court direction, reaffirming that such issues fall under civil jurisdiction.

JUDGMENT

Petitioners in these cases have approached this Court seeking selfsame reliefs against the respective respondent Banks.

2. The first petitioner is a partnership engaged in the distribution of LPG cylinders of Indian Oil Corporation Ltd. The second petitioner is its Managing Partner. The party respondent is another partner. To put the facts succinctly, there is a dispute between the second petitioner and the party respondent, consequent to which the party respondent approached the banks to disable the username and password relating to the accounts of the partnership and to change the mode of operation of the account. On the basis of the request, the respondent bank in W.P.(C) No.193/2025, State Bank of India, disabled the exclusive transaction rights enjoyed by the second petitioner and changed the mode of operation to joint operation by the partners. The respondent bank in W.P.(C) No.45093/2024, the South Indian Bank, imposed a freeze on the account of the petitioners. Challenging the actions taken by the banks, the petitioners approached this Court.

3. Respondents entered appearance in both cases. In W.P.(C)No.193/2025, counter affidavits have been filed by the respondent Bank as well as the 2^nd respondent. In W.P. (C)No.45093/2024 also the 2^nd respondent filed a separate counter affidavit.

4. Heard the learned counsel appearing for the petitioners, respective Standing Counsel for the respondent banks as well as the Reserve Bank of India and also the learned counsel appearing for the party respondent.

5. The learned counsel for the petitioners submitted that the actions taken by the respondent banks are per se illegal, arbitrary and bad in law. He submitted that the party respondent has no right to approach the banks for disabling the second petitioner from operating the account and to demand that the accounts be permitted to be operated jointly. He further submitted that, as per the terms of the deed of partnership, the accounts of the firm shall be operated exclusively by the Managing Partner. That being so, the banks were not at all justified in entertaining the request from the party respondent. He also contended that the 2^nd petitioner holds 51% of the stakes of the partnership and admittedly she is the managing partner. He pointed out that incapacitating of the 2^nd petitioner from operating the accounts of the 1^st petitioner firm has resulted in paralysing the financial operations. The learned counsel submitted that the banks have no authority to take such actions on the basis of the request from one among the partners. He asserted that by conceding to the request from the party respondent the banks have virtually ventured to adjudicate the dispute between the 2^nd petitioner and the party respondent. He submitted that the impugned actions cannot be sustained in any view of the matter. He relied on two judgments of the Calcutta High Court as also the following judgments of the Hon’ble Supreme Court :-

1) State Bank of India and Ors. v. Rajesh Agarwal and Ors. [ (2023) 6 SCC 1 ]

2) Opto Circuit India Ltd. v. Axis Bank and Ors. [ (2021) 6 SCC 707 ].

6. The learned Standing Counsel for SBI submitted that his bank had acted only in accordance with the normal operating process followed by the bank. The party respondent is a partner and he made a request to disable the username and password relating to the current account of the 1^st petitioner to prevent the unauthorized access. The bank promptly communicated the same to the 2^nd respondent and thereafter took the impugned actions. The learned counsel referred to clause 15 of the deed of pa