One of my clients recently had a case which I am explaining below and if you are stuck in such similar situation, here is what to do.
Note: Due to attorney-client privilege, I cannot disclose complete case details or identify the actual parties involved. However, I am sharing the essential facts and legal approach so that if you find yourself in a similar situation, you can understand the available solutions and legal remedies.
TL;DR: A former lessee withholding funds that belong to your business has no legal right to them merely because he opened the account during his tenancy. You can sue for recovery and an injunction, get the account frozen through a court order or a police freeze during investigation, and in serious cases pursue criminal breach of trust and cheating charges. Move fast, because the bank will not act on your letter alone.
The TPA's payment cleared into the old account again, and the man who used to run the nursing home did not pick up his phone. Third time that month.
Dr. Anjali Nair and her brother own Sai Krupa Nursing Home, a small facility in Nashik. In 2013 they leased the building and the running of the business to Rakesh Deshpande for ten years. He ran it, kept the staff, billed the insurers, and at some point opened a current account in the nursing home's trade name. The lease ran out in early 2023. The family took the facility back, repainted the board, re-hired most of the old staff.
The account stayed open. So did the standing instructions with four insurers and two payment agents. Money kept arriving, and Deshpande kept it. His explanation was that the account carried a running loan the bank
His explanation was that the account carried a running loan the bank was recovering from it, so the deposits weren't really his to hand over. The statements that would have proved it never arrived. Neither did the balance.
For four months her brother sent messages. Most were firm and reasonable. One, sent late at night, was neither, and that screenshot is now in the file along with everything else. It does not help us. It does not sink us either. People who have been ignored for four months say things they would not say in a courtroom, and judges know that.
The bank was polite and immovable. The account is in his name, the mandate is in his name, and a letter from the family is just paper as far as the branch is concerned. Diverting the standing instructions at the insurer end was easier, but it took signed mandates from the current proprietors and several weeks of follow-up before two of the payers moved. She came to the chamber with a plastic folder: the lease deed, the bank's replies, a bundle of deposit printouts.
Key facts
- A running nursing home in Nashik was leased out to a manager for ten years from 2013, along with the business itself.
- During the lease, the lessee opened a current account in the nursing home's trade name.
- The lease expired in early 2023. The owners took the facility back, kept most of the staff, changed the board.
- Standing instructions with four insurers and two payment agents were never updated.
- Payments continued to land in that account, and the former lessee kept them.
- His stated reason: the bank was adjusting the deposits against a loan on the account.
- The bank has declined to do anything on the owners' letters alone.
Whose money is it, legally?
Money paid by an insurer or a payment agent is paid to whoever the payer's records show as the payee. From the payer's side, the debt is discharged the moment the funds hit that account. From the business owner's side, the person who received it holds it for the owner's benefit if he had no right to it. It is the retention without a legal basis that turns an annoyance into a claim.
There are two very different situations hiding inside a question like this, and which one you are in decides almost everything.
If the account stands in the trade name of the business you now own — a proprietorship or firm that is yours — then the funds in it are yours, and the fight is about control of the account: who is authorised to operate it, and how that authorisation ends. Banks are strict about mandate changes precisely because they get sued by both sides, so they will usually want either the signatory's consent or an order.
If the account stands in his own name, the money is still recoverable, but as a personal claim against him. There is no account control to fight over. You are suing a man for money he received and did not pass on.
I should be straight that we have one side of this. What the account opening form, the mandate and the lease actually say will move the answer, and the claim that the bank adjusted deposits against a loan is testable — a statement of account from the branch will either show those adjustments or it will not. If it shows them, the claim does not disappear; it changes shape.
Can a former lessee keep business money just because he opened the account?
No. Opening an account is an administrative act. It gives him control of the account, not ownership of every rupee that passes through it. Money received on behalf of a business he no longer runs is money received for your use, and holding on to it after a demand is what makes it actionable.
That said, there is a genuine fork on the criminal side. Criminal breach of trust under Section 316 of the Bharatiya Nyaya Sanhita, 2023 requires entrustment in the first place, and cheating under Section 318 requires a dishonest inducement at the beginning, not merely a refusal at the end. Where a lease simply ended and payments kept arriving by inertia, some courts read the dispute as civil. Where there is a written demand, an admitted receipt and a false explanation, the criminal case gets stronger. Which side of that line your facts fall on is not something anyone can tell you without reading the lease and the bank record.
What you can do, and in what order
1. Stop the inflow
This is the only step that does not need a court and it is the one people delay. Write to every payer — insurers, TPAs, payment gateways, corporate clients — asking them to change the payout account. Send it by email and by registered post. Ask for written confirmation. Until the tap is closed, the amount in dispute grows and so does the argument about how much of it he can plausibly explain.
2. Send a demand notice
A proper notice states the amount with a statement of credits attached, gives a fixed deadline, and reserves your rights. It fixes the date from which interest is usually claimed and it is the first document a court asks to see. Do not let a family member draft it in anger — an intemperate notice becomes an exhibit against you.
3. Civil suit for recovery
A suit for recovery of money is the workhorse. Where there is a written contract — a lease deed, a settlement, an admitted account — a summary suit under Order XXXVII of the Code of Civil Procedure, 1908 may be available, which shifts the burden onto the defendant to seek leave to defend. Alongside it, two interim applications are worth considering: attachment before judgment under Order XXXVIII Rule 5 CPC, if you can show he is moving assets out of reach, and a temporary injunction under Order XXXIX Rules 1 and 2 restraining further operation of the account. Appointing a receiver over a bank account is technically open to a court under Order XL CPC, but courts are cautious about it and it is not a quick fix.
4. Criminal complaint, if the facts support it
A written complaint to the police, and if they refuse to register it, an application to the Magistrate asking for a direction to investigate. An FIR is possible for criminal breach of trust or cheating. Be realistic: police frequently treat a dispute between a landlord and a tenant, or a business and its former manager, as civil, whatever the label on the complaint. The complaint itself is often useful pressure even when the FIR is slow to come.
5. The bank
The bank will not freeze or hand over funds on your letter. It owes a duty of confidentiality to its own account holder. It will act on a court order, or on a police freeze during an investigation. Any strategy that assumes the branch will do the decent thing is a strategy that loses months.
Limitation and how long this takes
A suit for recovery of money is generally governed by a three-year limitation period, counted from when the money became payable or the contract was breached. How you frame the claim — money had and received, breach of contract, or a claim on an account — can shift the starting point, so this is worth checking on your specific dates before filing rather than after. An interim injunction can come within weeks if the urgency is documented. A contested recovery suit in a district court realistically runs into years, and summary suits are faster only if the defendant cannot show a triable defence, which a bank-loan adjustment claim just might.
Frequently Asked Questions
Can I ask the bank directly to freeze the account?
You can ask. It will refuse, and it is entitled to. Banks release funds or freeze accounts on a court order or a police requisition, not on a third party's letter. Keep the bank's refusal in writing — it is useful later.
Is this a police case or a civil case?
Often both, and sometimes only civil. If he was entrusted with the business's money and kept it after a clear demand, a criminal complaint under Section 316 BNS is arguable. If the payments arrived by mistake after the lease ended and he simply held on, courts may see it as a recovery matter. The strength of your paper — lease, demand notice, bank record — decides which way it reads.
He says a bank loan consumed the deposits. Does that end my claim?
Not by itself. Ask for the statement of account. If the deposits were genuinely adjusted against a loan that the business owed, that is a defence worth examining. If the loan was his own and the account was the business's, the adjustment is his problem, not yours. Either way, demand the record rather than arguing about it.
How do I stop insurers from paying into his account?
Send each payer a fresh mandate signed by the current proprietors, a copy of the lease showing it has ended, and a written request to redirect. Follow up by phone and get an acknowledgement. Payers move faster than courts, but only if you give them a paper trail.
What should I bring to a first consultation?
The lease or agreement, the expiry or termination record, the notice if one was sent, a statement of the credits that went into the disputed account, the payer's remittance advices, and the bank's replies. If the account is in the trade name, the account opening form and the mandate matter a great deal — get them from the branch if you can. If you have made an angry phone call or sent a message you regret, bring that too. Better that we read it now than that the other side produces it later.
If the account is in your trade name and there is a running loan against it, do not assume the money is gone. Get the statement first. The claim may be smaller than you think, or larger.
Next step
Send a two-line note describing the dispute, the date your lease or agreement ended, and the total sitting in the disputed account, with the documents listed above. Use the contact page or book a consultation.
This is general information about Indian law and is not legal advice on your own situation. Every case turns on its documents.
Advocate Sudhir Rao, Supreme Court of India