GANESH COTTON TRADERS Vs. GENERAL MANAGER UCO BANK

JUDGEMENT

(1.) This writ petition is filed, seeking directions by way of Mandamus, declaring the action of respondents in freezing the account of the petitioner, as illegal and violative of Articles 19 and 21 of the Constitution of India.

(2.) The petitioner, a proprietary concern, is engaged in cotton business. Petitioner is having business dealings with M/s.Lakshmi Ganesh Textiles (P) Ltd., Coimbatore in Tamilnadu. In the course of business transactions, M/s.Lakshmi Ganesh Textiles (P) Ltd. has issued a cheque bearing No.726190, dated 05.04.2012, for an amount of Rs.24,15,365/-, towards part payment for the purchases made by the said Firm from the petitioner. The petitioner is an account holder in the 2nd respondent-Bank with account No.022302210002513. It is the case of the petitioner that when he presented the cheque issued by M/s.Lakshmi Ganesh Textiles (P) Ltd., Coimbatore, the said cheque was honoured and an amount of Rs.24,15,365/- was transferred to his account, and subsequently, he issued cheques to third parties towards the amounts payable by him, but, when the cheque bearing No.577858, dated 05.05.2012, for Rs.11,40,200/-, issued by the petitioner came for scrutiny, it was dishonoured stating that the account was freezed. In this writ petition, it is the case of the petitioner that when the cheque issued by M/s.Lakshmi Ganesh Textiles (P) Ltd. was already honoured and such amount was credited to his account by the 2nd respondent-Bank, there is no reason or justification for freezing his account. It is stated that the account of the petitioner is illegally freezed, without issuing any notice to him and also without conducting any inquiry.

(3.) The 3rd respondent-Chief Manager of UCO Bank, Coimbatore has filed counter affidavit. In the counter affidavit, it is stated that after issuance of a post-dated cheque bearing No.721690 to the petitioner for an amount of Rs.24,15,365/-, mentioning the date as 05.04.2012, M/s.Lakshmi Ganesh Textiles (P) Ltd., through its Managing Director, has issued stop-payment letter dated 02.04.2012, which was received on 03.04.2012 by the 3rd respondent-bank. The stop-payment letter was acknowledged by the bank staff on 03.04.2012, but by mistake, it was not uploaded in the system for stop-payment alert, and due to oversight, when the petitioner presented the cheque for collection at Coimbatore, inadvertently, the bank passed the cheque and credited an amount of Rs.24,15,365/- to the account of the petitioner on 19.04.2012, and when the said issue came to light on 23.04.2012, immediately, he has contacted the Manager of UCO bank branch at Guntur, where the petitioner is maintaining the account, and requested the branch to freeze the account lying to the credit of the petitioner, by issuing a letter dated 23.04.2012 to that effect. It is further stated in the counter that M/s.Lakshmi Ganesh Textiles (P) Ltd., which has issued instructions for stopping the payment, objected to the action of respondent-bank in passing the cheque issued in favour of petitioner and filed a complaint before the Banking Ombudsman, Chennai, before whom, he has explained about crediting of amount in the petitioner's account by mistake and oversight, upon which, the Banking Ombudsman passed an award, dated 07.09.2012. In the counter, it is further stated that in view of the mistaken entry of transfer in favour of petitioner contrary to the instructions given by M/s.Lakshmi Ganesh Textiles (P) Ltd., Coimbatore, and in view of the award of the Banking Ombudsman, the account of the petitioner was frozen. It is stated that by the time the account of the petitioner was frozen, petitioner had already withdrew certain amounts and only an amount of Rs.11,70,102/- was lying to the credit of the petitioner at Guntur branch. In the counter, it is further stated that the grievance of the petitioner, if any, should be only against M/s.Lakshmi Ganesh Textiles (P) Ltd., Coimbatore, which has issued stop-payment instructions, but not against the respondent-bank.