Calcutta High Court on CSI Bank Accounts: Defreezing Permitted, But Suspended Officials Barred from Operations

Calcutta High Court reaffirms financial autonomy but mandates oversight by non-suspended office bearers amid internal disputes.

The Calcutta High Court has partially upheld a Single Judge’s order directing the defreezing of the bank accounts of the Cardiological Society of India (CSI) West Bengal Branch, amid internal disputes and suspension of office bearers. The Division Bench, led by Chief Justice T.S. Sivagnanam and Justice Hiranmay Bhattacharyya, affirmed the defreezing order but restricted account operations to non-suspended office bearers, emphasizing the need for responsible financial management.

The dispute arose when the CSI’s Central Executive Committee suspended several office bearers of its West Bengal Branch for allegedly violating an injunction order. This led to the freezing of the branch’s bank accounts by the State Bank of India based on complaints from the CSI’s central body. The West Bengal Branch, however, challenged this action, leading to a Single Judge’s order to defreeze the accounts and allow the suspended office bearers to operate them. CSI’s central body appealed this decision, prompting the current judgment.

Credibility of Financial Autonomy:

The court recognized the financial autonomy of the CSI West Bengal Branch but highlighted the oversight role of the parent body. “Branches enjoy financial autonomy but must comply with certain controls imposed by the parent body to ensure transparency and accountability,” the bench noted.

Scope of Bank Freezing Orders:

The court elaborated on the legal framework governing the freezing of bank accounts. “Banks can only freeze accounts under specific circumstances such as court orders, Central Bank instructions, or legitimate claims against the account holder,” stated Justice Bhattacharyya, referencing previous case law to support this position.

Issue of Suspended Office Bearers:

The court addressed the legitimacy of suspended officials operating the accounts, stating, “Permitting suspended officials to operate the bank accounts would effectively nullify the suspension orders, which are currently in effect.” The bench allowed temporary operation under strict conditions until new signatories are nominated from non-suspended office bearers.

The judgment detailed the balance between the financial autonomy of branches and the supervisory role of the parent body. “While the West Bengal Branch has financial independence, significant expenditures and financial activities must be subject to oversight by the parent body to maintain integrity and avoid misuse,” the court explained.

Chief Justice Sivagnanam remarked, “The decision to defreeze accounts is upheld to ensure operational continuity, but the suspended officials are barred from account operations to maintain financial discipline and uphold the suspension’s intent.”

The Calcutta High Court’s ruling strikes a balance between maintaining financial autonomy and ensuring responsible oversight within the Cardiological Society of India. By affirming the defreezing of bank accounts while restricting access for suspended office bearers, the judgment underscores the importance of transparency and accountability in managing financial affairs within registered societies. This decision sets a precedent for handling similar disputes in other organizations.

Date of Decision: 21^st June 2024

Cardiological Society of India & Anr. Vs. Dr. Sunip Banerjee being the Secretary of Cardiological Society of India, West Bengal Branch & Ors