Bank can’t freeze account of educational society by assuming role of adjudicating authority over disputes: Karnataka High Court
The Karnataka High Court ruled that a bank cannot freeze the accounts of an educational society based on internal disputes among its members. The court emphasized that such actions require legal authority and cannot be taken unilaterally. The ruling mandates the bank to defreeze the accounts of the Sri Venkataramana Swamy Vidyavardhaka Sangha, allowing it to resume operations while the dispute is resolved.
- ▪The Karnataka High Court stated that banks cannot act as adjudicating authorities in internal disputes.
- ▪The court found that the freezing of accounts was based on a complaint from a rival faction without legal backing.
- ▪The ruling requires the bank to defreeze the accounts of the educational society pending an inquiry.
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| Publication time | Sat, 16 May 2026 18:26:17 +0530 |
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A bank, being a custodian of funds, cannot assume the role of an adjudicating authority and proceed to freeze accounts of an educational society merely on the basis of internal disputes between rival factions of the society, said the High Court Karnataka.“Ordinarily, debit freezing of accounts can be justified only when it is backed by authority of law, either at the instance of an investigating agency in connection with a cognisable offence or pursuant to an order passed by a competent court of law,” the court observed.In the present case, the court pointed out that eight savings bank accounts and five fixed deposit accounts of Sri Venkataramana Swamy Vidyavardhaka Sangha, Bantwal, in Dakshina Kannada district, were frozen.
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