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Banks cannot attach pension account to recover loan dues: Madras HC

While allowing a Writ Petition filed by Mrs. A. Muthuiruvakkal of Nagercoil in Kanyakumari district the Madras High Court Madurai Bench of Justice K. Ravichandrabaabu held that 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 them. The petitioner had challenged an order passed by the State Bank of India on August 13 preventing her from operating the pension account for recovering the outstanding loan amount.

The counsel for the petitioner Mr.P.Thirumahilmaran submitted that the bank had deducted about Rs.14,681 from the petitioner’s pension account after preventing her from operating the account. It was argued on behalf of the petitioner that putting an S.B. account on hold by passing such an order was impermissible in law as pension amount cannot be attached or recovered for the purpose of recovery of any outstanding amount payable by the petitioner. In support of such contention, the petitioner relied on a decision of the Supreme Court reported in Radhey Shyam Gupta Vs. Punjab National Bank and another wherein the Apex Court had criticized 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. The bank on its part submitted that as there is outstanding dues to the tune of Rs. 2,18,09,971/- and that they were left with no other option except to pass the impugned order. After hearing the rival submissions the court concurred with arguments of the counsel for the petitioner and observed that “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.” The judge set aside the bank’s order and directed it to permit the petitioner to operate the account without any hindrance.

Read the order here.

BEFORE THE MADURAI BENCH OF MADRAS HIGH COURT

DATED: 27.11.2015

C O R A M

THE HONOURABLE MR.JUSTICE K.RAVICHANDRABAABU

W.P.(MD) No.l7838 of 2015

and

M.P.(MD).No.l of 2015

A.Muthuiruvakkal ... Petitioner
Vs.

1. The State Bank of India,
Stressed Assets Recovery Branch (SARB),
No.8, Dr.Ambedkar Road,
Vinayaganagar Branch (Upstairs),
Madurai-625 O20,
rep.by its Assistant General Manager

2.The Branch Manager,
State Bank of India
Kariapatti Taluk,
Virudhungar District.

3.The Branch Manager,
State Bank of India,
Nagercoil Branch,
Nagercoil ... Respondents

Writ Petition filed under Article 226 of the Constitution of India to issue a Writ of Certiorarified Mandamus ix) call for tine records of the first respondent impugned order dated 13.08.2015 and. quash the same insofar as put on hold in SB A/c.No.113198l0470 for an amount CHE Rs.25 Iakhs on account of recovery' of the dues to the bank and consequently direct the second respondent to credit the amount of Rs. l4,68l/- if any in future with interest which was already deducted in the SB Account of the petitioner.

For Petitioner : Mr.P.Thirumahilmaran

For R.l : Mr.S.Sethuraman

For R.2 to 5 : No appearance

ORDER

The petitioner is aggrieved against the order of the first respondent dated 13.08.2015 whereby, her Saving Bank Account No.11319810470 dealing only in respect of her pension amount was put

on hold for the purpose of recovery of an outstanding of loan amount.

2. Heard the learned Counsel appearing for the petitioner and the learned Standing Counsel appearing for the respondents and perused the materials placed before this Court.

3. It is the contention of the learned Counsel appearing for the petitioner that the present impugned order passed is in effect attaching the pension amount of the petitioner lying in S.B.Account No.11319810470 by putting such an account on hold, which is impermissible in limb as pension amount cannot be attached or recovered for the purpose of recovery of any outstanding amount payable by time petitioner. In support of such contention, the learned Counsel relied on a decision of the Supreme Court reported in (2009) 1 SCC 376', Radhey Shyam Gupta vs. Punjab National Bank and another.

4. The learned Counsel for the respondents though. admitted. that time said. Saving' Bank .Account

which was put on hold in the impugned order is in respect of the amount only dealing with the pension of the petitioner, has however submitted that as there is a outstanding dues to the tune of Rs.

2,18,09,97l/- as on 03.08.2015, the respondents bank has left ‘with no other option. except to pass the

present impugned order.

5. The question now that arises for consideration before this Court is as to whether the respondent bank is justified in attaching the pension amount of the petitioner by passing the present impugned order for realization of the outstanding dues, as claimed by the respondent bank.

6. It is well settled that attachment of pension amount cannot be made for realization of any outstanding. In this aspect, the above decision of the Apex Court relied on by the learned Counsel

appearing for the petitioner can be usefully quoted, wherein, in paragraph. No.33, time Supreme Court has observed that the pension and gratuity amount should not attached under the provision of the Code of Civil Procedure. Paragraph No.33 reads as follows:-

“33. However, we are also of the ‘view that having regard to proviso (g) to Section 60(1) of the Code, the High Court committed a jurisdictional error in directing that a portion. of time decretal amount; be satisfied frmn the fixed deposit receipts of the appellant held fur the Bank. The High. Court also erred in placing the onus on the appellant to produce time Matador in question for being auctioned for recovery of the decretal dues. In other words, the High Court erred in altering the decree of the trial Court in it revisional jurisdiction, particularly, when the pension and gratuity of the appellant, which had been converted into fixed deposits, could not be attached. under the provisions of the Code of Civil Procedure. The decision inJyothi Chit Fund case has been considerably watered down by later decision which have been indicated in para 22 hereinbefore and it ‘has been held that gratuity payable would not be liable to attachment for satisfaction of a court decree in view of proviso (g) to Section 60(1) of the Code.”

7. Therefore, if there is any outstanding due payable by the petitioner, it is for the respondents bank to work out their remedy to recover the said amount, in the manner known to and permissible by law, before the appropriate forum. Without doing so, resorting' to attach time pension amount by way of passing the impugned order is impermissible.

8. Accordingly, this wait petition is allowed and time impugned order is set aside. Consequently, the respondent bank is directed to permit the petitioner to operate the said Saving Bank Account referred. to above, without any hindrance. No costs. Consequently, connected miscellaneous petition is closed.

27.11.2015

Index :Yes/No

Internet : Yes/No

ssm

K. RAVICHANDRABAABU, J

ssm

1.The State Bank of India,

Stressed Assets Recovery Branch (SARB),

No.8, Dr.Ambedkar Road,

Vinayaganagar Branch (Upstairs),

Madurai-625 020,

rep.by its Assistant General Manager