Retired Guarantor’s Pension Was His Family’s Sole Income; J&K HC Bars Bank From Recovering Borrower’s Loan From His Account

The appellant, a retired government employee, had guaranteed a loan obtained by a borrower.

After the borrower defaulted, the Bank deducted instalments from the appellant’s bank account, which he said received his pension and was his principal source of support.

The appellant sought recovery and injunctive relief in a civil suit. The trial court refused interim relief, relying on the guarantor’s liability for the borrower’s debt. The appellant appealed that order.

The Court relied principally on Radhey Shyam Gupta v. Punjab National Bank, AIR 2009 SC 930, and the decisions in Farooq Ahmad Khan v. Mehbooba Khan and J&K Bank Limited v. Chander Udey Singh, treating pension and other retiral benefits as protected from attachment and coercive recovery measures.

It applied the principle that pension is a welfare benefit intended to support a retired employee and should not be subjected to coercive recovery for a borrower’s default.

The Bank relied on the guarantor’s co-extensive liability and cited Union of India v. Jyoti Chit Fund and Finance, AIR 1976 SC 1163; however, the judgment did not adopt that authority as a basis for allowing deductions from the pension account.

No statutory provision was identified in the judgment.

The Court considered the trial court’s reasoning—that the appellant’s guarantee made him liable upon the borrower’s default—but held that it did not adequately account for the protected character of pensionary benefits.

The appellant was a retired employee and senior citizen who relied on his pension for his and his family’s sustenance; in the Court’s view, the pension account could not be subjected to coercive recovery merely because he had guaranteed the borrower’s loan.

The Bank remained free to pursue the principal borrower through legally permissible means.

The Bank was restrained from recovering any amount from the appellant’s pension bank account toward repayment of the borrower’s financial assistance.

The appellant was left to pursue his claim for refund before the trial court, which was directed to decide it on its merits without being influenced by the High Court’s observations.

The appeal and connected applications were disposed of accordingly.