• Can a single partner can freeze the firm bank account and FDR

Subject: Legal Implications of a Debit Freeze on Firm's Bank Account by One Partner

Dear Forum Members,

I am seeking legal advice regarding a dispute within our firm. We are three partners, all family members, with equal shareholding in the firm. One of our partners has a dispute with the other two partners and has written a letter to our bank requesting a debit freeze on our current account and Fixed Deposit Receipts (FDR) in the name of the firm, citing the internal dispute.

This partner is currently unwilling to resolve the dispute and is preventing us from operating the bank account and accessing the FDR.

My questions are as follows:

Is it legally permissible for a single partner to request a freeze on the firm's bank account with a simple letter, given the equal shareholding among partners?
What steps can we take to regain access to the bank account and continue the operations of the firm?
I would appreciate any guidance or suggestions on how to proceed in this situation.

Thank you.

Asked 13 days ago in Civil Law

3 answers received in 30 minutes.

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8 Answers

what is mode of operation of bank accounts as per partnership deed?

2) if mode of operation is any 2 partners can sign the cheques bank would not on request of single partner freeze the accounts

3)you would need court orders to freeze the accounts

4) if your bank accounts are frozen approach court for necessary reliefs to decrease your bank accounts 

Ajay Sethi
Advocate, Mumbai
95222 Answers
7612 Consultations

5.0 on 5.0

One partner cannot sabotage the firm in this manner 

He has to approach the court for any direction to the bank to debit freeze the firm's account 

You have to write a letter to the bank to ignore the diktat of the disputing partner and not to debit freeze the account unless there is a court order 

Nothing prevents that partner from approaching the court for seeking directions 


Yusuf Rampurawala
Advocate, Mumbai
7559 Answers
79 Consultations

5.0 on 5.0

You along with the remaining partner can send a letter to the bank to de-freeze the bank account as it belong to the whole firm and a single partner can not solely operate it. 

If the bank fails to defreeze the account on the request made by you along with the remaining partner, than you can file a civil suit before the juridical district court seeking temporary and mandatory injuction.

Vishek Vats
Advocate, Delhi
48 Answers

5.0 on 5.0

Dear CLient,

A partner cannot afford to risk sending a letter asking that the account of the firm be frozen without prior clearance, which, in view of the equal shareholding, is unlawful.

To regain access to the bank account and continue firm operations, you and the other partner can take the following steps:
1. Contact the bank and inform them of the situation and ask them to unfreeze the accounts. Submit a proof of equal shareholding and that one partner had asked to freeze it improperly.
2. It could be useful to set up a meeting of the partners where they could discuss the problem and possibly solve it with the help of a mediator if needed.
3. If the partner continues to resist having the account and FDR frozen, the issue should go to court and get an order from the court to unfreeze the account and FDR.

However, seeking individual legal advice and assistance from an advocate for assistance and consultation may be advisable to undertake this efficiently.

Anik Miu
Advocate, Bangalore
9206 Answers
111 Consultations

4.7 on 5.0

A single partner cannot initiate any action on his own to freeze the bank account of the company without a resolution in a meeting of the company or violating the conditions stipulated in the AOA or MOA.

Bank will not entertain any such request by an individual partner 

T Kalaiselvan
Advocate, Vellore
85424 Answers
2239 Consultations

5.0 on 5.0

1. Yes, if he is one of the account holders and partners of the firm which holds the bank a/c then he can apply for debit freeze.

2. File a suit in civil court and seek permission from court. Except that without consent of the said partner the Bank will not de freeze the a/c. 

Devajyoti Barman
Advocate, Kolkata
22921 Answers
498 Consultations

5.0 on 5.0

Legally, a partnership is nothing but a collection of individuals. Every partner has a right to ask the bank to stop operations in a running account and 'freeze' the deposits. The bank is not concerned with the 'share holding' character of the partnership in carrying out such mandates. The aggrieved partners have to take the matter to court for a resolution.

Swaminathan Neelakantan
Advocate, Coimbatore
2839 Answers
20 Consultations

4.9 on 5.0

- As per the banking rule , On receipt of intimation from one (or more) of the partners to the effect that bank should not allow operations on the firm's account by the other partner(s), all operations on the account must be stopped.

- Further, a joint letter must be addressed and sent to the firm and all partners, stating that having regard to the objection by one (or more) of them, the bank is compelled to stop all operations on the account until all the partners jointly agree to a particular mode of operation.

- Further, if after receipt of such a letter, if any partner issues some legal contentions, then the Branch Manager should make a reference to the Head Office giving all the relevant facts and the copies of the relevant correspondence.

- Hence, it is mandatory to issue a letter by the bank to all partners before freezing the account on the request of one partner, and if bank not complied then a complaint by the partners can be given to the RBI and also a complaint before the consumer forum maintainable on the ground of deficiency of services. 

- Further, the said conduct of the said partner also against the rule of partnership , and the remaining partner can dissolve the partnership firm on this ground and even can take legal action against him. 

- Further , as per Supreme Court, partner has no authority to approach the bank for freezing the account without a valid reason , such as misappropriation or dissolution of the firm.

Mohammed Shahzad
Advocate, Delhi
13543 Answers
201 Consultations

5.0 on 5.0

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