BENGALURU: The Karnataka High Court directed a nationalised bank not to recover over 50% of an employee’s pension towards his loan account. The court, however, said it is open for the bank to resort to any other method within law to recover the balance amount with interest.
Justice SG Pandit passed the order while partly allowing a petition filed by Murugan OK, a retired employee from Kerala, questioning Canara Bank’s action of deducting the entire pension amount towards loan instalments.
“It is not that the bank would be remediless for recovery. For recovery of loan dues, the bank could enforce security obtained. The pension is paid to an employee to sustain himself after retirement. Normally, recovery should not exceed 50 percent of the take-home salary, if an employee is in service.
The same principle should apply in the instant case also. If the entire pension is permitted to be recovered towards loan dues, it would be violative of Article 21 of the Constitution. A pensioner would not be in a position to get reemployment and if the pensioner is depending only on the pension, then his family would be in financial distress,” the court observed.
Murugan moved the high court through his advocate R Ganesh Rao to direct Canara Bank to stop Canara Bank from recovering the entire loan amount from his pension. He also requested that charging penal interest on educational loan should be stopped immediately. He prayed for the recovery of bank dues as per the instalments fixed by the bank.
Murugan retired in 2014 after superannuation. While in service, he obtained educational and housing loans from the bank. In July 2024, the bank started recovering the entire pension and adjusting the balance amount towards his loan accounts. Though he requested the bank to collect only the instalment amount, the bank did not consider it. That was when he moved the high court.
The bank contended that the petitioner was a co-obligant for the educational loan availed by his daughter. The petitioner availed two housing loans. The bank is entitled to recover dues from the commutation value of the pension or or family pension, as per Regulation 49 of 1995 Regulations of the Bank, it contended. The court, however, said that none of the regulations would permit the Bank to recover the entire pension without an inquiry. That would defeat the very object of payment of the pension, it stated.