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2026 Supreme(Jhk) 540

IN THE HIGH COURT OF JHARKHAND AT RANCHI
DEEPAK ROSHAN, J.
Ajay Kumar Singh, S/o. Late Sri Nandlal Singh - Petitioner
Versus
Punjab National Bank, through its Branch Manager & Ors. - Respondents
W.P. (S) No. 4730 of 2025
Decided On : 09-04-2026

Advocates Appeared:
For the Petitioner: Mr. Shailesh Poddar.
For the Respondents: Mr. P.A.S. Pati.

An employee may contractually authorize their employer to appropriate terminal benefits towards the settlement of outstanding debts. Such authorization is legally enforceable, particularly when the projected retirement income is insufficient to sustain the original loan repayment schedule.

Headnote:(A) Service Law - Terminal payments - Recovery of outstanding liability - Authorization - An employee, upon retirement, is bound by the terms of a prior written agreement authorizing the employer to adjust outstanding loan balances against receivable terminal benefits such as gratuity and commuted pension. (Paras 8, 10, 11)

(B) Service Law - Recovery - Justification - Where a contract authorizes the appropriation of terminal proceeds to satisfy an outstanding obligation, and the retirement income is insufficient to cover required monthly installments, the employer's action to adjust such dues against the loan account is permissible and valid. (Paras 7, 11, 12)

Facts of the case:
Upon retirement, the employee sought to reverse the debit of terminal benefits against an outstanding loan. The employer had appropriated the gratuity and commuted pension to satisfy a portion of the significant loan balance, citing written authorizations and undertakings executed by the employee at the time of loan sanction. The employee alleged that the recovery was illegal and initiated without a demand notice.

Findings of Court:
The court observed that the employee had explicitly authorized the deduction of terminal proceeds for debt settlement. Furthermore, the court noted that the monthly loan obligation exceeded the employee's retirement income, validating the employer's decision to ensure debt recovery through existing contractual agreements.

Issues: Whether the appropriation of gratuity and pension commutation towards an outstanding loan account based on prior authorization is permissible, and whether such recovery mandates a prior demand notice notwithstanding the existence of an agreement.

Ratio Decidendi: An explicit written authorization provided at the inception of a financial arrangement empowers the employer to adjust terminal benefits against liability. When contractual obligations and financial realities leave no capacity for installment-based repayment, the adjustment of terminal proceeds is a lawful exercise of the employer's rights under the agreement.

Result: Writ application dismissed.

Table of Content
1. petitioner challenges bank's appropriation of retirement dues for loan repayment. (Para 2 , 3 , 4)
2. bank's authority to adjust loan outstanding against retirement dues per prior undertaking. (Para 5 , 6 , 7 , 9 , 10)
3. contractual authorization overrides personal nature of benefits when repayment capacity is insufficient. (Para 8 , 11 , 12)
4. dismissal of writ due to justification of bank's actions under contractual agreement. (Para 13)

JUDGMENT :

Heard learned counsel for the parties.

2. The instant writ application has been preferred by the petitioner for the following reliefs:

a. Issue a Writ of Mandamus or any other appropriate Writ and/or Order directing the Respondent to reverse the debit of pension amount of Rs. 15,69,561/- from the savings bank account of the Petitioner, bearing number 3046000200200849, that was appropriated towards the settlement of outstanding housing loan of the Petitioner, along with 18% interest from the date of such debit i.e., 25.01.2024 till the date of actual payment.

b. Issue appropriate writ of mandamus, or order, direction to the respondent granting a compensation of amount Rs. 5,00,000/-(Rupees Five Lakh Only) to the Petitioner for causing mental agony.

3. The grievance of the petitioner is that he was working in the office of Punjab National Bank, Adityapur Branch and had taken a housing loan of Rs. 58,50,000/- in the year 2022 after executing several documents, wherein there was one clause that the Bank before recovering the amount will issue a demand letter.

4. Learned counsel for the petitioner submits that the moment petitioner retired in the year 2023, the Bank on the basis of an undertaking recovered Rs. 35 Lakhs and odd from total balance amount which directly affected the petitioner in view of the fact that the said Rs. 35 Lakhs and odd were from his pension and gratuity.

Learned counsel further submits that there is a settled proposition of law that pension and gratuity cannot be attached as it is the personal property of the employee and also the basic object of gratuity and pension is that the employee will take the fruits after his retirement; as such, the action of the Bank in recovering Rs. 35 Lakhs and odd is bad in law.

5. Learned counsel for the respondents relies upon its counter affidavit dated 16.10.2025 and also upon Annexures 4,5 & 6 of the writ application.

6. Having regard to the aforesaid facts and circumstances of the case, it transpires that the petitioner was an Ex-Manager, who retired from the Bank's service on 31.12.2023. His retirement dues with Bank was Rs. 35,69,561.00 (Gratuity Rs.20,00,000.00 + Pension Commutation amount-Rs.15,69,561.00); whereas his outstanding housing loan dues towards Bank was more than Rs. 93 Lakhs as on 15.01.2024: For brevity, the same is extracted from the Counter Affidavit of the Bank.

LOAN/DUES TYPE	ACCOUNT NO.	AMOUNT DUE	INTEREST DEBIT UPTO	REMARKS
HOUSING	067010LH00000011	303421.00	31/12/2023	Principal Rs. 255361.00 & Interest Rs. 48060.00
HOUSING	067010LH00000039	5666884.00	31/12/2023	Principal Rs. 5353057.00 & Interest Rs.313827.00
HOUSING	067010LH00000048	1473258.00	31/12/2023	Principal Rs. 1435710.00 & Interest Rs.37548.00
HOUSING	022500LH00000557	1574344.00	31/12/2023	Principal Rs. 747786.00 & Interest Rs.826558.00
HOUSING	022500LH00000618	290328.00	31/12/2023	Principal Rs. 172339.00 & Interest Rs.117989.00
Total		93,08,235.00

7. From the Counter Affidavit of the Respondent Bank, it appears that pension of the petitioner has been calculated as Re.45,000.00 approx. per month and his loan instalments deduction from salary was Rs. 61,474.00 as per his monthly salary slip at the time of his retirement. As such, the pension calculated was less than his loan deduction from salary.

8. Further, in terms of Sanction Letter dated 28-06-2023 of his housing loan duly acknowledged by petitioner and his spouse, he has given letter of authority dated 28-06-2023 (Annexures-2 & 3 of the writ petition) authorizing the Bank to utilize the amount of Provident Fund,

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2026 Supreme(Jhk) 540

IN THE HIGH COURT OF JHARKHAND AT RANCHI DEEPAK ROSHAN, J.Ajay Kumar Singh, S/o. Late Sri Nandlal Singh - PetitionerVersusPunjab National Bank, through its Branch Manager & Ors. - RespondentsW.P. (S) No. 4730 of 2025Decided On : 09-04-2026

An employee may contractually authorize their employer to appropriate terminal benefits towards the settlement of outstanding debts. Such authorization is legally enforceable, particularly when the projected retirement income is insufficient to sustain the original loan repayment schedule.

IN THE HIGH COURT OF JHARKHAND AT RANCHI
DEEPAK ROSHAN, J.
Ajay Kumar Singh, S/o. Late Sri Nandlal Singh - Petitioner
Versus
Punjab National Bank, through its Branch Manager & Ors. - Respondents
W.P. (S) No. 4730 of 2025
Decided On : 09-04-2026