Bank Can't Freeze Company's Accounts Solely Over ROC's 'Management Dispute' Tag: Calcutta High Court

The Calcutta High Court has held that a bank cannot freeze a company's accounts merely on the basis of a “management dispute” marking by the Registrar of Companies (ROC), particularly after such marking has been removed on the directions of the Ministry of Corporate Affairs (MCA).Justices Sabyasachi Bhattacharyya and Supratim Bhattacharya made the observation on January 5 while hearing appeals filed by Ravindra Pratap Singh, director of August Agents Limited, challenging the freezing of the company's bank and demat accounts by Axis Bank in June 2021. “Moreover, 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. 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.”, the court observed. The accounts were frozen after Axis Bank received conflicting communications from rival factions claiming control over August Agents Limited and noticed that the company had been marked as having a “pending management dispute” on the ROC portal. Ravindra argued that the ROC subsequently removed the “management dispute” tag pursuant to a specific directive issued by the MCA on July 9, 2021, which was communicated by the ROC on July 15, 2021. Axis Bank was informed of the demarking on July 22, 2021, but continued to retain the freeze. The court noted that once the ROC unmarked the company from the management dispute category, there could be no continuing fetter on the operation of its accounts. It further held the concept of a management dispute operates entirely within the sphere of company law and statutory compliances before the ROC, which has no bearing on the banking relationship between a company and its banker. Setting aside an earlier order that had stalled implementation of directions to defreeze the accounts, the court held that Axis Bank must act in accordance with banking norms and company resolutions. It directed that internal management disputes should be resolved before appropriate company law forums. Case Title: Ravindra Pratap and another vs Reserve Bank of India and others Case Citation: 2026 LLBiz HC (CAL) 4 Case Number: MAT No. 989 of 2025, IA No: CAN 1 of 2025 For Appellants: Senior Advocates Abhrajit Mitra, Jishnu Chowdhury with Advocates Chayan Gupta, Satadeep Bhattacharya, Pourush Banerjee, Abhijit Sarkar For RBI: Suchismita Ghosh For Respondents: Senior Advocates Debnath Ghosh, Anirban Roy, Aniruddha Chakraborty, Ranjan Bachawat with Advocates Nishi Bhankharia, Kaazvin Kapadia, Suryaneel Das, Siddharth Ranade, Suddhasatva Banerjee, Sankarsan Sarkar, Debartha Chakraborty, Shayak Mitra, Siddhi Agarwal, Subhankar Nag, Sanjiv Kr. Trivedi, Sayan Bandyopadhyay, Soumya Roy Chowdhury, Sanket Sarawgi, Satyaki Mukherjee, Yukti Agarwal, Bhavesh Garodia Click Here To Read/Download Order

Bank Can't Freeze Company's Accounts Solely Over ROC's 'Management Dispute' Tag: Calcutta High Court

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