Summary:
In Proview Constructions Ltd. vs Union of India & Others [Writ – C No. 28679 of 2024], the Allahabad High Court ruled that a writ petition is maintainable against a private scheduled bank when it performs public functions like handling public deposits. The petitioner, a construction company, challenged Kotak Mahindra Bank’s decision to freeze its current account containing over Rs. 10.57 crores based solely on a matrimonial dispute involving its Director, Rajeev Kumar Arora, and his estranged wife (respondent no. 3), who held only 0.75% shares in the company.

The bank froze the account without any court order or police direction, acting on the wife’s request and citing an FIR filed under Section 156(3) CrPC. The petitioner argued that such action was arbitrary, not backed by law, and violated Article 300-A (right to property).

The High Court distinguished this case from Federal Bank Ltd. v. Sagar Thomas (2003) and S. Shobha v. Muthoot Finance Ltd. (2025) by applying the “function test.” It held that accepting public deposits and allowing withdrawals is a public function, even if performed by a private entity. The Court concluded that the bank cannot act as a quasi-judicial body to adjudicate matrimonial disputes and has no legal authority to freeze accounts without statutory backing.

The Court quashed the bank’s freeze order dated 28.05.2024 and directed Kotak Mahindra Bank to allow operation of the petitioner’s account unless stayed by a competent authority.