Lucknow, Sep 17 (PTI) The Allahabad High Court on Thursday directed the State Bank of India (SBI) to immediately refund Rs 19.90 lakh that it debited from a widow’s fixed deposit to recover a personal loan taken by her deceased husband, holding that the bank’s action was an “abominable” breach of banking practice.
A Lucknow bench of Justices Shekhar B Saraf and Abdhesh Kumar Chaudhary also directed the SBI to pay the woman Rs 1 lakh as exemplary and punitive compensation for the manner in which it recovered the dues.
The court passed the order while allowing a writ petition filed by Neha Mishra, whose husband, an assistant professor at Medicine Hospital, Ring Road, Lucknow, had taken a Rs 15 lakh personal loan from the SBI in November 2020.
The court noted that the woman was neither a co-borrower nor guarantor, surety, indemnifier or nominee in the loan transaction, and there was no privity of contract between her and the bank.
The loan was covered by an insurance policy for which the deceased, it was claimed, had paid a premium of Rs 8,803.
After her husband died during the COVID-19 period in May 2021, the SBI issued her a legal notice in September 2025 demanding payment of the outstanding loan of Rs 13.87 lakh.
The bank later put her salary account on hold, which was removed only after intervention by the RBI ombudsman.
While negotiations were underway, the SBI encashed her fixed deposit (FD) and debited Rs 19.90 lakh.
The court noted that the FD, opened by the woman in 2025 at the SBI’s Ashiyana branch, was transferred to the Jankipuram branch, where her husband had obtained the loan.
The amount was then debited and the account subsequently transferred back to Ashiyana.
Describing the procedure as surreptitious, the bench said the SBI had failed to show any legal provision permitting it to directly debit the wife’s account for dues owed by her husband. The court observed that banks are custodians of customers’ money and hold it in trust.
The bench said the SBI could proceed against the woman as the legal heir of the deceased, if legally entitled, but such recovery had to be made through due process of law and not in an arbitrary, capricious and whimsical manner.
It directed the SBI to refund the entire debited amount with interest at the FD rate within four weeks and pay Rs 1 lakh compensation within the same period. PTI COR ABN KSS KSS KSS
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