This judgment decides an appeal against the trial court's refusal of interim relief. It restrains further deductions from the pension account while the suit is pending; it does not decide the merits of the civil suit, including whether the sums already deducted must be refunded — that is left to the trial court on the evidence.
- Case
- Nazir Ahmad Kuchay v. Jammu and Kashmir Bank Ltd.
- Court
- High Court of Jammu and Kashmir and Ladakh
- Decision
- Bench
- Moksha Khajuria Kazmi
- Judgment by
- Moksha Khajuria Kazmi
- Case numbers
- FAO No. 10/2020
- Outcome
- First appeal from order allowed; the trial court's 2 November 2020 refusal of interim relief is set aside and the Bank is restrained from deducting from the appellant's pension account. The underlying civil suit remains pending before the trial court.
Bank restrained from touching the pension account
The High Court of Jammu and Kashmir and Ladakh has restrained Jammu and Kashmir Bank from recovering any amount from the pension account of a retired policeman who stood guarantor for a borrower's loan, holding that pension and other retiral benefits are protected from attachment and coercive recovery.
Allowing first appeal from order (FAO) No. 10 of 2020, Ms Justice Moksha Khajuria Kazmi set aside the 3rd Additional District Judge, Srinagar's order of 2 November 2020, which had refused the appellant interim relief, and restrained the Bank from deducting instalments from his pension account towards the financial assistance obtained by the borrower, identified in the judgment only as respondent No. 4.
The Court added that the Bank remains free to proceed against the principal borrower by legally permissible means, and that the question of the sums already deducted from the pension account is left to the civil suit still pending before the trial court.
Guarantor, default, and deductions from the pension account
The appellant, Nazir Ahmad Kuchay, is a retired police personnel. He stood as guarantor to respondent No. 4, who obtained financial assistance — a loan — from Jammu and Kashmir Bank, the respondent No. 2 in the appeal. When the borrower failed to repay the required instalments, the Bank began deducting them from the appellant's bank account, by which time he had retired from active government service and was living on his pensionary benefits.
On learning of the deductions, the appellant told the Bank that he had superannuated and depended on the pension amount. The Bank assured him that no further amount would be deducted from his pension account — but the deductions continued. The judgment describes that assurance as having turned out to be a mere eye wash.
The appellant then filed a civil suit before the trial court for recovery of money and an injunction, with an application for interim injunction. The trial court heard both sides and refused interim relief by its order of 2 November 2020, passed in file No. 52/M. The appellant challenged that refusal in the present appeal, seeking both the setting aside of the order and a restraint on further recovery from his pension account.
Can the Bank recover from a retired guarantor's pension?
The question before the High Court was whether the Bank could recover the borrower's loan by deducting instalments from the pension account of a retired government employee who had stood guarantor — or whether pension, as the appellant's sole source of sustenance for himself and his family, was insulated from such recovery.
The appellant's counsel argued that the Bank was not justified in law in making recoveries from the account of a retired government employee. In support, he relied on the Supreme Court's decision in Radhey Sham Gupta v. Punjab National Bank (AIR 2009 SC 930), on two decisions of the same High Court — Farooq Ahmad Khan v. Mehbooba Khan (CRM(M) No. 210 of 2020, decided on 11 May 2022) and J&K Bank Ltd. v. Chander Udey Singh (CM(M) No. 156 of 2022, decided on 1 August 2025) — and on a decision of the High Court of Orissa at Cuttack in Bharat Chandra Mallick v. Branch Manager, State Bank of India.
The Bank contended that a guarantor is liable along with the borrower under the principle of joint and several liability recognised in contract law and banking practice, and that it had done nothing illegal. It relied on the Supreme Court's decision in Union of India v. Jyoti Chit Fund and Finance (AIR 1976 SC 1163).
The trial court had taken the Bank's side. In the operative part of its order, reproduced by the High Court, it held that a guarantor incurs a liability to repay the loan that is co-extensive with the borrower's, and that he cannot but perform that contract on the default committed by the borrower. On that reasoning it dismissed the interim-relief application.
Pension is a welfare measure, insulated from coercive recovery
The High Court disagreed. Although the trial court had passed a detailed order and made an exhaustive analysis, the High Court held that it did not appear to be based on sound reasoning and the true spirit of law.
The Court held that guidance in such matters must be sought from Radhey Sham Gupta, in which the Supreme Court laid down that pension and other retiral benefits are protected from attachment and coercive recovery measures. The same position, it noted, had been affirmed by the Jammu and Kashmir and Ladakh High Court itself in Farooq Ahmad Khan and in Chander Udey Singh, which held that the amount received as pension by a retired government employee is insulated and protected from coercive recovery measures.
Applying that principle, the Court observed that the appellant is admittedly a senior citizen and retired government employee managing his and his family's sustenance on the sole income of pension. Pension, it said, is a regular payment made to a government employee on superannuation so that he does not feel dependent on someone else and is protected from vagrancy and destitution in old age — a welfare measure that cannot be subjected to coercive recovery measures on the borrower's failure to repay.
The Court also noted the timing: the guarantee had been given while the appellant was still in active service, when he was maintaining a different bank account at a different branch. The judgment does not discuss the Bank's reliance on Jyoti Chit Fund and Finance, or the appellant's reliance on the Orissa decision in Bharat Chandra Mallick.
Appeal allowed; refund question left to the suit
The appeal was allowed and the impugned order set aside. The Bank was restrained from recovering any amount from the appellant's pension account as repayment of the financial assistance obtained by respondent No. 4.
For the sums already recovered, the Court gave the appellant liberty to pursue the relief in the pending civil suit, which the trial court is to proceed with and decide. The trial court must decide the matter exclusively on its merits, without being influenced by any of the observations made by the High Court in this judgment.
The appeal was disposed of on those lines along with all connected applications, and the Registry was directed to convey the order to the trial court and to respondents 1 and 2 for compliance.
BANTHRY ANALYSISFor law students: the rule meets a protected fund
This judgment shows how a general rule meets a protected fund. The trial court's starting point was orthodox: a guarantor's liability is co-extensive with the borrower's, so the Bank could look to the guarantor on default. The High Court did not reject that proposition — it held that the recovery route matters: even where the liability exists, pension cannot be the source from which it is coercively recovered.
Note the authorities the Court actually relied on. Radhey Sham Gupta (2009) supplies the pension-protection principle; Farooq Ahmad Khan and Chander Udey Singh show the same High Court applying it. The Bank's authority, Jyoti Chit Fund and Finance (1976), was cited but not discussed — a reminder that a cited case only carries weight if the court engages with it.
Finally, note what the judgment does not do. It does not cancel the guarantee, does not order refund of the sums already deducted, and does not decide the civil suit. Those questions stay with the trial court. The interim protection is the holding; the refund is the next case.
READING PROMPTSQuestions for a closer reading
- Why did the High Court hold that the Bank could not recover the borrower's loan from the appellant's pension account, even though a guarantor's liability is ordinarily co-extensive with the borrower's?
- What did the Court direct about the sums the Bank had already deducted, and why did it leave that question to the trial court?
- What remedy against the defaulting borrower did the Court expressly leave open to the Bank?
