Recently, the Andhra Pradesh High Court, while dismissing a writ petition filed against the freezing of a salary account, held that a party cannot bypass the efficacious remedy available under the Arbitration and Conciliation Act, 1996 by invoking the writ jurisdiction under Article 226 of the Constitution, especially when the freezing action was pursuant to a lawful order passed by an arbitral tribunal and when the financial institution involved was not made a party.
Brief Facts:
The petitioner, Pampana Kalyani, a government teacher, filed a writ petition challenging the action of the respondent-bank (State Bank of India) in freezing her salary account from May 2024 onwards. The freezing was carried out pursuant to an interim order passed by the Arbitral Tribunal under Section 17 of the Arbitration and Conciliation Act, 1996. The petitioner had availed a loan from Piramal Capital & Housing Finance Limited and, due to alleged default, her account was frozen. The petitioner contended that no notice was issued before freezing and that the action was violative of Articles 14, 21, and 300A of the Constitution.
Contentions of the Petitioner:
The learned counsel appearing on behalf of petitioner contended that the freezing of the bank account without notice violated the principles of natural justice and constitutional rights guaranteed under Articles 14, 19, and 21. It was submitted that the salary account constituted the petitioner’s sole means of livelihood and that the respondent-bank’s action was arbitrary, illegal, and without jurisdiction, particularly in absence of any prior intimation or hearing.
Contentions of the Respondent:
The learned counsel appearing on behalf of the respondent submitted that the freezing of the petitioner’s account was in strict compliance with the interim order passed by the Arbitral Tribunal. It was argued that the petitioner had an efficacious alternative remedy under the Arbitration and Conciliation Act, 1996 and ought to have challenged the tribunal’s order instead of filing a writ petition. It was further contended that the financial institution which obtained the interim order was a necessary party to the proceedings and had not been impleaded, rendering the writ petition not maintainable.
Observations of the Court:
The Court, after hearing both sides and examining the material available on record, observed that the freezing of the petitioner’s salary account was a direct consequence of an interim order passed by a competent Arbitral Tribunal under Section 17 of the Arbitration and Conciliation Act, 1996. It was categorically noted that the petitioner is aware of the order passed by the Arbitral Tribunal, and despite this knowledge, chose not to array M/s Piramal Capital & Housing Finance Limited, the creditor institution, as a party respondent. The Court emphasized that whether the writ petition is maintainable or not, the financial institution is a necessary and proper party for a proper and better adjudication of the lis. The writ petition was thus found to be fundamentally defective for non-impleadment of the necessary party.
On the question of maintainability, the Court relied on Bhaven Construction v. Sardar Sarovar Narmada Nigam Ltd.(2022), reiterating that when a statutory forum is created by law for redressal of grievances, a writ petition should not be entertained ignoring the statutory dispensation. It stressed that the extraordinary jurisdiction under Article 226 should be exercised only in exceptional cases where no alternate remedy is available or clear bad faith is established.
Responding to the petitioner’s grievance regarding fundamental rights, the Court observed that the respondent-bank merely acted in compliance with a judicial order and that being a judicial order, the respondent-bank should implement the order, in its letter and spirit, thereby dismissing any allegation of arbitrariness or violation of natural justice. The Court also rejected the contention that prior notice from the bank was required, noting that where the action is in pursuance of a valid tribunal order, no independent notice is necessary. The petitioner, having been aware of the arbitral proceedings and the interim order, failed to avail of the appropriate remedies available under the Arbitration and Conciliation Act, 1996. Thus, the Court concluded that the writ petition was liable to be dismissed both for procedural defects and for the availability of an alternative and efficacious statutory remedy.
The decision of the Court:
The writ petition was dismissed. The Court held that there was no infringement of the petitioner’s constitutional rights and that the writ petition was not maintainable due to non-impleadment of necessary party and non-exhaustion of alternative remedy under the Arbitration and Conciliation Act.
Case Title: Pampana Kalyani vs. State Bank of India
Coram: Hon’ble Mr. Justice Subba Reddy Satti
Case No: W.P. No. 5351 of 2025
Advocate for the Applicant: Mr. K.K. Durga Prasad
Advocate for the Respondent: Sri Sreedhar Valiveti
