Banks cannot attach pension account to recover loan dues: HC

A Savings Bank account maintained primarily for the purpose of depositing monthly pension amount could not be attached by a bank just because the account holder had defaulted repayment of a loan availed from the same institution, the Madras High Court Bench here has held.

Justice K. Ravichandra Baabu passed the order while allowing a writ petition filed by A. Muthuiruvakkal of Nagercoil in Kanyakumari district. She had challenged an order passed by a nationalised bank on August 13 preventing her from operating the pension account for recovering the outstanding loan amount.

“If there is any outstanding due payable by the petitioner, it is for the respondent bank to work out its remedy in the manner known to and permissible by law before the appropriate forum. Without doing so, resorting to attach the pension amount by way of passing the impugned order is impermissible,” he said.

The judge set aside the bank’s order and directed it to permit the petitioner to operate the account without any hindrance. He relied upon a judgement passed by the Supreme Court in 2009 to hold that pension and gratuity amount could not be attached for recovery of dues.

In that judgement, the apex court had criticised the Rajasthan High Court for ordering attachment of even Fixed Deposits without giving attention to the fact that the loan defaulter in that case had actually converted his pension and gratuity amount into fixed deposits.

In the present case, Ms. Muthuiruvakkal had claimed that the bank had deducted about Rs.14,681 from her pension account after preventing her from operating the account. On its part, the bank stated that it had no other option but to pass the order under challenge to recover the dues.

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Printable version | Sep 17, 2021 9:34:10 PM |

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