Srinagar: The High Court of J&K and Ladakh has restrained Jammu and Kashmir Bank from deducting loan dues from the pension account of a retired government employee who had stood as guarantor for a borrower who later defaulted on repayment.
Allowing an appeal filed by Nazir Ahmad Kuchay, a retired police personnel and senior citizen, Justice Moksha Khajuria Kazmi set aside an order of the 3rd Additional District Judge, Srinagar, which had refused to grant interim protection against deductions from his pension account.
Kuchay had approached the court after the bank allegedly began deducting loan installments from his pension following the principal borrower’s failure to repay the loan. He maintained that his pension was his only source of livelihood and that the bank had initially assured him that deductions would stop after he informed it of his retirement.
Despite the assurance, the deductions allegedly continued, prompting him to approach the civil court seeking a refund of the amounts deducted and an injunction against further recoveries.
Opposing his plea, the bank argued that Kuchay, having signed as a guarantor, was jointly and severally liable for repayment of the loan under the applicable law governing guarantees and banking transactions.
The High Court, however, found that the trial court had failed to properly consider the legal protection available to pensionary benefits while declining interim relief.
Referring to judgments of the Supreme Court and earlier rulings of the J&K High Court, the bench reiterated that pension and other retiral benefits enjoy protection against attachment and coercive recovery proceedings.
The court emphasised that pension is not merely a financial entitlement but a welfare measure intended to ensure dignity and economic security for retired government employees and their families in old age.
“A pension is a regular payment made to a government employee upon his superannuation as a financial assistance so that the said government employee does not feel dependent on someone else and he/she is protected from vagrancy and destitution in his olden days,” the court observed.
The bench held that a retired employee’s pension could not be subjected to coercive recovery simply because a borrower, for whom he had stood as guarantor during his service, had subsequently defaulted on the loan repayment.
The court, however, clarified that its order would not prevent the bank from pursuing lawful recovery proceedings against the principal borrower.
Accordingly, the appeal was allowed and Jammu and Kashmir Bank was restrained from recovering any amount from Kuchay’s pension account towards repayment of the loan obtained by the principal borrower.
On Kuchay’s claim for the refund of amounts already deducted, the High Court left the issue to be decided by the trial court after examining the evidence. He was granted liberty to pursue the claim before the lower court.
The trial court was further directed to adjudicate the matter independently on its merits, without being influenced by the observations made by the High Court.
