Bank’s Debit From Litigant’s Pension Account Without Notice Is Violative Of Fundamental Right To Livelihood Under Article 21: Orissa High Court
The Orissa High Court was considering a Writ Petition where the Petitioner sought a direction from the Court to declare the Bank’s unilateral debit of Rs 5 lakh from his pension account as illegal and arbitrary
Justice SK Panigrahi, Orissa High Court
While asking the State Bank Of India to reverse an amount of Rs 5 lakh to a litigant, the Orissa High Court held that the Bank’s debit of such amount from the account, which contained pension, was done without any court order or prior notice thereby violating the principle that pension cannot be taken except by due process. The Bench also held that the same was violative of the aggrieved party’s fundamental right to livelihood under Article 21.
The High Court was considering a Writ Petition where the Petitioner sought a direction from the Court to declare the Bank’s unilateral debit of Rs 5 lakh 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.
The Single Bench of Justice Sanjeeb K Panigrahi held, “Here, the Bank’s debit of ₹5,00,000 from the petitioner’s account, which contained his pension, was done without any court order or prior notice, and thus prima facie violates the principle that pension cannot be taken except by due process.”
“In view of the foregoing discussion, the impugned action of the Opposite Party-Bank in debiting a sum of ₹5,00,000 from the petitioner’s joint account is held to be illegal and unsustainable in law. It violated the statutory protections petitioner’s fundamental right to livelihood under Article 21”, it added.
Advocate Braja Mohan Sarangi represented the Petitioner, while Advocate Manoj Kumar Mohapatra-1 represented the Respondent.
Factual Background
The petitioner, a retired employee of the Rail Coach Factory and presently a pension holder maintained his Account with the State Bank of India (SBI). His monthly pension is approximately ₹35,000, which constitutes his primary source of livelihood. The petitioner’s wife had availed several loan facilities from the Opposite Party-Bank, including two transport vehicle loans. 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.
Due to default in repayment of the said loans, the two transport vehicle loan accounts were classified as Non-Performing Assets (NPA). As per the Bank, despite repeated demands, neither the borrower nor the guarantor cleared the dues. The Bank claimed that a further amount of Rs 5 Lakh was utilized to close the two transport vehicle loan accounts. It was the petitioner’s case that he was not a borrower, only a guarantor, and the said loans were already closed under the CGTMSE scheme in 2023. He alleged that the Bank’s deduction of Rs 5 lakh from his account, without notice or due process, was illegal, arbitrary, and violative of Article 21 of the Constitution. The Bank further claimed that the debit transactions were made lawfully from a jointly operated account between husband and wife, both being liable for the loan, and that the petitioner was aware of the recovery since February 2024.
Reasoning
The Bench, at the outset, explained that pensionary benefits are accorded special protection. Section 60(1)(g) of the Code of Civil Procedure, 1908 exempts government pensions from attachment in execution of a decree. “In other words, what the law forbids by way of formal attachment cannot be indirectly accomplished by the bank unilaterally adjusting or debiting pension funds”, it added. The Bench further noted, “Pension is not a matter of charity or a bounty from the State, but rather a hard-earned benefit which accrues to an employee, reflecting the right to live with dignity in old age.”
Coming to the facts of the case, the Bench noticed that the manner in which the recovery was effected failed basic norms of natural justice. The Bank did not issue any prior notice or obtain consent from the petitioner before debiting the amounts. “A unilateral debit from a customer’s account, especially when it consists of pension money, is an extreme step. The petitioner was entitled to at least a notice or demand, and an opportunity to be heard on why the sum was being taken”, it stated while also adding, “By bypassing any dialog or process, the Bank’s action was arbitrary. The proper course for a bank in case of loan default is to resort to lawful recovery channels, such as invoking security, filing a suit or approaching a tribunal, rather than self-help by dipping into a pension account.”
The Bench found that the petitioner had shown that he made a representation to the Bank in January 2025, within eleven months of the disputed debit, seeking restitution of the amount, yet received no response. He approached the Court only after realizing that the Bank would not rectify the matter. “As for the existence of alternative remedies, while monetary disputes ordinarily fall within the realm of civil courts or tribunals, that does not curtail writ jurisdiction where a public sector bank acts with manifest illegality infringing constitutional guarantees”, the Bench stated.
Allowing the Petition, the Bench directed the Bank to reverse the sum of Rs 5 lakh to the petitioner’s account within four weeks. “The petitioner shall be permitted to operate his account freely, and the Bank shall not de futuro recover any amount from his pension without adhering to due process of law”, it concluded.
Cause Title: Bharat Chandra Mallick v. Branch Manager, State Bank of India (Case No.: W.P.(C) No. 19648 of 2025)