2026 (1) TMI 340 - HC - Companies Law

Company bank account freeze tied to ROC 'management dispute' marking-defreezing upheld; former directors and bank lacked standing.

The dominant issue was whether continued freezing of the company's bank accounts could be sustained and whether former directors and the bank had locus to ... Oppression and MIsmanagement - Freezing of bank accounts of the appellant no.2-Company - material facts were suppressed by the writ petitioners while obtaining the order under recall or not - locus standi of Bank to seek any further clarification - removal/non-reappointment of respondent no.5 to 6 - HELD THAT:- It is found from the relevant annexure to the stay application in the present appeal that by a communication dated July 15, 2021, the ROC itself wrote to the appellant no. 2- Company intimating it about the decision of the MCA dated July 9, 2021, as intimated to the ROC, for unmarking of the management dispute in respect of the appellant no.2-Company, also directing all consequential steps to be taken to remove such marking as management dispute in respect of the appellant no.2-Company - the Bank, going beyond its charter as the banker to the appellant no.2-company, still persisted in retaining the freeze of the accounts. Since the marking of the company with “management dispute” has since been unmarked by the ROC on the specific directive of the MCA, there cannot be any further fetter in operation of the account. Even otherwise, the marking by the ROC as management dispute operates in an entirely different sphere of Company Law, having nothing to do with the banking business of the Axis Bank vis-à-vis appellant no.2-Company. At the worst, such marking of management dispute might have an impact of statutory compliances on the part of the company insofar as the ROC is concerned, which is entirely within the domain of Company Law and has nothing to do with the transactions of the company with its banker, the Axis Bank. Also, the challenge to the removal of respondent nos. 5 to 7 as Directors before the NCLT, in the garb of oppression and mismanagement disputes under Section 241 and 242 of the Companies Act, 2013, was dismissed by the NCLT. Although an appeal is pending before the NCLAT against such dismissal, in the absence of any stay order passed by the Appellate Authority, the order of the NCLT is still operative and binding on the parties. Thus, as on date, the removal/non-reappointment of respondent nos. 5 to 7 as Directors of the appellant no.2-Company subsists, thereby denuding them of any locus standi to raise any objection with regard to the affairs of the appellant no.2-company or the operation of its bank accounts. The other ground on which the said respondents seek to be impleaded in the writ petition as necessary parties is that on their complaint, the freezure of the accounts-in-question took place. However, such plea is ex-facie a sham, since the bank itself, in its communication dated June 9, 2021 cited a letter dated May 18, 2021 on the letter-head of VTL, a 100% shareholding company of the appellant no.2 August Agents Limited, as the trigger for freezing the accounts - the respondent nos. 5 to 7, prima facie, do not have any locus standi whatsoever to be impleaded in the original writ petition and/or to file a recall application of the original order passed by the writ court directing defreezing of the accounts, nor does the bank any subsisting justification not to comply with the parent order of the writ court and defreeze the accounts-in-dispute. No prima facie case having been made out for the order impugned before this Court being passed. The learned Single Judge, while passing the impugned order dated June 19, 2025, merely recorded that after hearing the submissions of the parties it appeared to the court that the matter was required to be heard, unfortunately, without recording any reason or adverting to any prima facie case made out for so observing. Thus, putting the parent order dated April 9, 2025 in suspension by directing the parties not to act upon the same for the time being, as well as keeping the contempt application in abeyance consequentially, are not substantiated by any reasoning and, accordingly, cannot be sustained. Appeal disposed off. Issues: Whether the impugned interim order dated June 19, 2025 suspending the earlier writ-court direction to defreeze bank and demat accounts and directing impleadment of the recall applicants as parties in a disposed writ petition was sustainable in law.Analysis: The impugned order involved (i) suspending a prior dispositional order and keeping a contempt application in abeyance, and (ii) directing formal addition of parties to a writ petition already disposed of. The legal framework includes principles on locus standi, the limited scope for reopening a disposed writ petition, the remedy under Order XLVII CPC, and the distinction between internal company disputes (Sections 241/242, Companies Act, 2013) and a bank's obligations to its customer. The reasoning addressed (a) absence of a prima facie case to justify suspension of the earlier order, (b) lack of justification for impleading parties in a writ petition after final disposal without reopening the disposal on proper grounds, (c) that erstwhile directors who stand removed by an operative NCLT order lack locus standi to obstruct account operation, (d) the bank's duty to follow instructions of its customer subject to competent orders, and (e) that a third-party communication on a shareholder's letterhead could not sustain the freeze when the shareholder later indemnified and supported defreezing. The court treated the recall and clarification applications as not maintainable prima facie and found the suspension and addition of parties unsupported by reasons.Conclusion: The impugned interim order dated June 19, 2025 is set aside and the appeals are allowed; the matter is remitted for the learned Single Judge to take up and decide the recall and clarification applications and thereafter the contempt application.