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2025 Supreme(Ori) 689
IN THE HIGH COURT OF ORISSA AT CUTTACK
SANJEEB K. PANIGRAHI, J.
Bharat Chandra Mallick – Appellant
Versus
Branch Manager, State Bank of India – Respondent
W.P. (C) No. 19648 of 2025
Decided On : 17-10-2025
Important Points
Subject
Banking Law - Pension Rights
Act Referred
Headnote
(B) Guarantor Liability - The distinction between a borrower and guarantor's rights must be respected in recovery actions. The unilateral debit from the joint account, containing pension funds, was deemed improper as it disregards the protections afforded to pensioners under law. (Paras 11, 13, 16)
Facts of the case:
The petitioner, a retired employee, contested the bank's withdrawal of Rs. 5,00,000 from his pension account for loans taken by his wife. He argued that as a guarantor, he should not be liable for the entire amount and that the loans had already been settled. The bank claimed the right to debit funds from a joint account.
Findings of Court:
The court ruled that the bank's action was illegal and violated statutory protections for pension funds, ordering the return of the deducted amount.
Issues: The main issues were the legality of the bank's unilateral deduction from the pension account and the status of the petitioner's liability as a guarantor.
Ratio Decidendi: The court highlighted that pension funds cannot be attached or debited without judicial sanction. It ruled the bank's unilateral recovery as arbitrary and not in line with the due process principles.
Result: Writ Petition allowed.
For the Appellant : Braja Mohan Sarangi
For the Respondent: Manoj Kumar Mohapatra-1
| Table of Content |
|---|
| 1. petitioner's financial background and loan obligations. (Para 2) |
| 2. allegation of illegal deduction affecting livelihood. (Para 3) |
| 3. bank's position on loan recovery process. (Para 4) |
| 4. court's observations on unlawful deduction and jurisdiction. (Para 5 , 7 , 8 , 11 , 13 , 15 , 16) |
| 5. legal protection of pension funds from attachment. (Para 6 , 10 , 12 , 14) |
| 6. judicial intervention against arbitrary actions. (Para 17) |
| 7. reversal of illegal deduction and future protections. (Para 19 , 20) |
| 8. conclusion: writ petition allowed. (Para 21 , 22) |
JUDGMENT :
SANJEEB K. PANIGRAHI, J.
1. In this Writ Petition, the Petitioner seeks a direction from this Court to declare the Bank’s unilateral debit of Rs. 5,00,000/- from his pension account as illegal and arbitrary and to direct refund of the said amount with consequential reliefs and protection of his pensionary dues.
I. FACTUAL MATRIX OF THE CASE
2. The brief facts of the case are as follows:
(i) The petitioner, Bharat Chandra Mallick, is a retired employee of the Rail Coach Factory, Mancheswar, and presently a pension holder maintaining Account No. 10368202110 with the State Bank of India (SBI). His monthly pension is approximately Rs. 35,000, which constitutes his primary source of livelihood.
(ii) The petitioner’s wife, Smt. Susila Mallick, had availed several loan facilities from the Opposite Party-Bank. These included two transport vehicle loans, Loan Account No. 61275175315 for Rs. 5,90,000 sanctioned on 12.06.2015, and Loan Account No. 61299626102 for Rs. 8,00,000 sanctioned on 07.12.2015, amounting to Rs. 13,90,000 in total, as well as a car loan of Rs. 7,45,000 under Loan Account No. 37268579099 sanctioned on 31.10.2017.
(iii) The petitioner stood as guarantor for the transport vehicle loans taken by his wife and executed Guarantee Agreements to that effect. Both borrower and guarantor were jointly and severally liable for repayment.
(iv) Due to default in repayment of the said loans, the two transport vehicle loan accounts were classified as Non-Performing Assets (NPA) on 07.11.2018. The Bank states that, despite repeated demands, neither the borrower nor the guarantor cleared the dues.
(v) On 17.02.2024, a sum of Rs. 2,30,000, and on 19.02.2024, a further sum of Rs. 2,70,000 were debited from Account No. 10368202110 held jointly by the petitioner and his wife, totalling Rs. 5,00,000. The Bank claims this amount was utilized to close the two transport vehicle loan accounts.
(vi) The petitioner contends that he is not a borrower, only a guarantor, and that the said loans were already closed under the CGTMSE scheme in 2023. He alleges that the Bank’s deduction of Rs. 5,00,000 from his account, without notice or due process, is illegal, arbitrary, and violative of Article 21 of the Constitution of India.
(vii) The Bank, on the other hand, asserts that the car loan account (No. 37268579099) still remains outstanding and continues as an NPA with dues of Rs. 6,02,650.50 as of 01.07.2024, along with further interest.
(viii) The petitioner made a representation dated 07.01.2025 to the Bank seeking release of the withheld amount, stating that it was required for his daughter’s marriage, but no response was received from the Bank.
(ix) The petitioner relies upon judicial precedents, D.S. Nakara v. Union of India, judgment dated 04.03.2025 passed in W.P. (C) No. 35266/2024 wherein Karnataka High Court has observed that even if a pensioner is indebted, at least 50% of pension must remain untouched, and in his case, being a guarantor, the entire recovery is impermissible.
(x) The Bank maintains that the joint account from which recovery was made is not an exclusive pension account, and that the petitioner continues to withdraw his monthly pension regularly since March 2024, implying that his pension has not been attached or withheld.
(xi) The Bank further submits that the debit transactions were made lawfully from a jointly operated account between husband and wife, both being liable for
