Summary of this article
Court barred banks from deducting pension-linked joint funds.
SBI withdrew Rs 5 lakh without prior notice.
Pension accounts protected even after crediting into banks.
The Orissa High Court ruled that a bank cannot unilaterally withdraw funds from a joint account to realise a loan due from one of the account holders. The court ruled in a case where the State Bank of India (SBI) had withdrawn Rs 5 lakh from a joint account of a retired railway official and his wife without notice.
The bench under Justice Sanjeeb K Panigrahi made this remark while hearing a petition by a retired Rail Coach Factory employee at Mancheswar, Bharat Chandra Mallick. Mallick had objected to SBI debiting Rs 5 lakh from his joint account, which he had with his wife, Susila Mallick. The Rs 5 lakh was deducted in February 2024 towards repayment of two transport vehicle loans taken by his wife in 2015.
Background Of The Case
The couple's joint savings account was largely used to credit Mallick's monthly pension of Rs 35,000. The petitioner was a guarantor for his wife's loans of Rs 5.9 lakh and Rs 8 lakh, both of which became non-performing assets in 2018. In February 2024, the bank deducted Rs 2.3 lakh and Rs 2.7 lakh from the joint account to settle the loans without informing Mallick.
Mallick informed the court that the amount withdrawn comprised his entire pension savings, which constituted his only means of living after retirement. He contended that the bank's action was a breach of the statutory protection accorded to pension funds. He further asserted that the loans had already been paid under a government guarantee scheme, and the recovery left him in serious financial distress.
Bank's Argument On Liability
SBI in its reply upheld that Mallick was equally liable as a guarantor and that since the account was in joint name with his wife, the bank had the right to recover dues from the same. The bank also stated that the petition was filed with a delay of one year from the debit date, rendering it not maintainable.
Justice Panigrahi dismissed the bank's defence and held that pensionary benefits continue to have the protected character even after having been credited into a bank account. According to the court, a bank cannot resort to indirect means of recovering dues which are otherwise prohibited by law.
Court also stated that what the law prohibits by way of formal attachment cannot be achieved indirectly by the bank unilaterally altering or deducting pension fund.
Court's Direction To The Bank
Although deciding in Mallick's favour, the court made it clear that banks can still recover dues through legal means, for instance, after following due notice and due process. It only made it clear that no interference should be done with pension accounts or pensionary benefits credited to them.
The bench instructed SBI not to deduct any amount from the petitioner's account in the future without strictly adhering to the legal procedure. It also reminded that funds in a pension account are statutorily protected under banking and pension legislation and cannot be subjected to attachment or adjustment or unilateral recovery.
The ruling upholds the legal safeguards for pensioners and joint account holders against debtors in a situation where one of them has a debt. It also observed that even if there is a guarantor, a bank cannot circumvent due process or directly debit money from accounts holding pension funds.
