Since there were only 2 partners on demise of one partner the firm stands dissolved 

2) The Supreme Court observed that when there are only two partners in a firm, on the death of one the firm is deemed to be dissolved despite the existence of any clause which says otherwise. Therefore, if in a firm comprised of only two persons as partners one dies, the contract comes to an end.

3) as such bank has done nothing wrong on freezing account of firm on demise of partner 

4) don’t file any suit for damages 

What was reply received from ombudsman. 

firm stands dissolved on demise of partner 

Hi 

In a partnership comprising of just 2 partners, the partnership stands dissolved in the event of death of 1 partner. 

However, in a partnership comprising of more than 2 partners, survival clause prevails and the firm shall continue to operate with remainder of partners. 

It appears that your case , your 2 daughters hold 51% share. so , in your case, your partnership firm shall continue to operate (regardless of their name not being in form b or in license) as oral partnerships/unregistered partnerships are valid as per indian contract act and indian partnership act. 

It is illegal on part of SBI to freeze the account . The remedy lies in applying to District court under section 44 of Indian partnership account and obtain orders for 

1) continuation of bank operations. 

2) continuation of operations of indian oil outlet.

3) Settlement of accounts of deceased partner

4) claiming damages from SBI 

Thanks

Rajgopal

Advocate practicing in High Courts of Telangana and Andhra Pradesh

This is clear case of deficiency of service.  Issue a lawyer's notice  seeking immediate activation of freezed account and damages for loss suffer due to unauthorized freezing of account. Band has not right to freeze your account on just intimation by daughters that without hearing your side. It violation banking law and general law. After that file a complaint in District Consumer Forum  under new Consumer Protection Act, 2019 under which  proceeding are very fast seeking direction to lender for the above said intimation. Under the new Act the Forum has power to issue such directions. Forum will issue direction to bank to de-freeze you account and impose penalty, you will get compensation for mental harassment, cost of complaint and lawyer’s fee. Ombudsman will not pass any order against bank. This is commercial dispute between customer and bank rbi will not interfere.

You can issue a legal notice to the bank asking explanation tht how could they stop or freeze the account ion the basis of a notification issued by a third person.

Since one of the partners died, you may have to take action to continuance the partnership business as per the clauses in the partnership[ deed. 

Even though the firm can continue after the death of one of the partners, you should have consulted the legal heirs of the deceased partner for continuing the business on the mutually agreed terms and should have taken effort or steps for this to enable the smooth conduct of the running business.

You can issue a legal notice to the bank now and can approach court with a suit seeking direction to the bank to defreeze the account and permit you to continue the business in your name for all transactions purpose till such time the issues are settled amicably or through court.

The banking ombudsman may not interfere in this legal issue becasue the bank has acted as per the banking regulations in this regard.

Thus you have an option to compromise with the party about all such future issues or conduct of the business or to approach court for a solution. 

Upon the death of one of the partners, the balance in the current account becomes payable jointly to the surviving partner along with the legal heirs of the deceased partner. The bank is, therefore, well within its rights to stop operations in the partnership account. There is no scope for your claiming any damages here. 

Approach civil or consumer court for seeking remedies