Neha Mishra Vs Reserve Bank of India (Allahabad High Court)
Bank Cannot Recover Husband’s Loan from Wife’s Fixed Deposit: Allahabad High Court Orders Refund with Interest and ₹1 Lakh Compensation
The Allahabad High Court has strongly deprecated the action of the State Bank of India in appropriating a widow’s independently held fixed deposit towards repayment of a personal loan taken by her deceased husband. The Court held that, in the absence of any contractual relationship between the wife and the bank concerning the loan, the bank could not unilaterally debit her personal account merely because she happened to be the borrower’s widow and maintained her fixed deposit with the same bank.
The petitioner’s husband was working as an Assistant Professor and had obtained an Xpress Credit personal loan of ₹15 lakh from the State Bank of India on 3 November 2020. The petitioner-wife was admittedly neither a co-applicant nor a co-borrower, guarantor, surety, indemnifier or nominee in relation to the loan. Thus, there was no privity of contract between the petitioner and the bank regarding the borrowing.
The personal loan was also stated to have been secured through an insurance cover arranged with SBI General Insurance, for which a premium of ₹8,803 had allegedly been paid by the deceased borrower. While taking the loan, the husband had given an irrevocable standing instruction authorising SBI to collect amounts payable to him towards provident fund, gratuity, pension or similar dues in the event of his retirement, resignation, termination or discontinuation of service. He had also undertaken not to close or shift his salary account until the loan was fully discharged.
