• Can single partner freeze bank account

Hello Sir,

I am a partner of 20% and 26% in 2 separate partnership firms which are having separate bank accounts in SBI. Recently i came to know that other 5 partners did embezzlement absent my knowledge. These 2 bank accounts are having CC Limit of more than 5 crores and i am of the fear that other 5 partners might transfer funds from these 2 joint bank accounts to their individual bank accounts. So my queries are:

1. Can i as a single partner freeze bank accounts so that no withdrawal is permitted to any of the parties until the dispute is resolved. 
2. What are the checklist prior to freeze bank accounts. Somewhere i read that one partner has to avail court stay prior to freeze bank account. Is it true?
3. Can you please share the link or quote from partnership act specifying the section explicitly that single partner has full authority to freeze all bank debit transactions.
Please enlighten with me what other necessary steps should i take as precautionary measures.
Asked 1 year ago in Business Law from New Delhi, Delhi
1. Yes, you can do so if there is clause in the partnership deed or they are defalcating fund otherwise.In both the cases you have to be signatory in banking transactions.
2.The bank can also freeze the a/c on complaint of one of the partners who are co-operators of the bank a/c.
3. This is general rights of the aprtners and no link is required to know this.
You can also file suit for dissolution of firm, rendition of a/c and injunction in bank transactions in the meantime.
You can seek these reliefs from arbitrators as well if there is arbitration clause in the partnership deed.
Devajyoti Barman
Advocate, Kolkata
13122 Answers
174 Consultations

5.0 on 5.0

1. What is the mode of operation of bank accounts spelled out in the partnership deed?

2. Ordinarily, one partner cannot, in the absence of a clause to the contrary in the partnership deed, freeze the bank accounts. A suit for mandatory injunction will have to be filed in the civil court by the partner to freeze the said account.

3. There is no specific section in the Partnership Act which states that single partner has absolute authority to freeze the bank account. As I said before, the rights in this regard flow out of the partnership deed.
Ashish Davessar
Advocate, Jaipur
23092 Answers
639 Consultations

5.0 on 5.0

1) 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) contact a local lawyer 
Ajay Sethi
Advocate, Mumbai
46662 Answers
2759 Consultations

5.0 on 5.0


2. You shall have to lodge a police complaint for the said fraud and embezzlement seeking appropriate action against the culprits. You as a partner of the firm can certainly ask the Bank not to allow the bank operation of the said firm till the matter is disposed off by the Court.

2. After lodging the complaint file a money suit claiming refund of the money taken away from the business and also file an application praying for a direction up on the Bank to freeze the said accounts till the matter is disposed off by the Court.

3. Law relating to partnership firm will not mention anything about entitlement of one partner to stay bank operation.All the partners of the firm have equal right on the affairs of the Company for which any partner, with valid reason shown, can ask the Bank to stop operation of the account of the said firm. 
Krishna Kishore Ganguly
Advocate, Kolkata
18741 Answers
452 Consultations

5.0 on 5.0

Dear Concerned, 

As there are other 5 partners and certainly you would be having a partnership certificate and possibly going by the terms of the partnership agreement these guys can transfer money to their bank accounts   they might also sideline you by getting hand in glove with each other . 

It is suggested to inform the Bank where the account is held that no Bank Transaction should be allowed without your information and take the same (receiving of application) from the bank. 

Also you should apply for a stay seeking instructions for the bank to not allow any transactions.till the matter is sorted. (please note if the court does not stay - it would issue notice to all the other 5 partners to mention their side of story and hence you need to be prepared and file your case accordingly) 

For free consultation on your subject please feel free to contact. 

Best of Luck 
Atulay Nehra
Advocate, Noida
1029 Answers
35 Consultations

4.7 on 5.0

1.  You cannot issue directions to bank to freeze the bank account in your individual capacity but can be done through a resolution by the company in a meeting in this regard.

2. Yes you can aproach court with a suit for permanent injunction against all the partners who have been alleged to have embezzled the company's funds restraining them from operating the bank account until the disposal of the suit and also can seek a direction to the bank to freeze the account till a decision is arrived by court in this regard. 

3.  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.
T Kalaiselvan
Advocate, Vellore
36790 Answers
403 Consultations

5.0 on 5.0

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