Once Pension Is Credited To Bank Account, It Loses Statutory Protection & Can Be Recovered For Guarantor's Liability: J&K&L High Court
LIVELAW NEWS NETWORK
26 Feb 2026 8:40 PM IST
Explaining that the statutory protection over pensionary benefits does not extend beyond the stage of actual payment, the High Court of Jammu & Kashmir and Ladakh has held that once pensionary benefits are credited to a pensioner's bank account, they lose the protection under Section 11 of the Pensions Act, 1871 and can be subjected to recovery towards enforceable contractual liabilities, including liability arising as a guarantor.
This exposition of law was made by Justice M A Chowdhary while dismissing a writ petition filed by a retired Forest Department officer who had challenged the deduction of loan amounts from his pension account by Jammu & Kashmir Bank.
The petitioner, a retired Range Officer from the Jammu and Kashmir Forest Department, superannuated in 2018 and was receiving a monthly pension being credited to his pension account maintained with J&K Bank. The grievance arose when the bank, without prior notice, deducted amounts from his pension account towards recovery of a housing loan availed by two borrowers, for whom the petitioner had stood as a guarantor in 2019.
The loan, amounting to ₹15 lakh, was secured by a registered mortgage, but upon default by the principal borrowers, the bank proceeded against the guarantor and recovered a total sum of ₹4,64,900 from his pension account.
Aggrieved, the petitioner approached the High Court through Advocate Abdul Qadar Khan contending that pensionary benefits are immune from attachment and recovery under Section 11 of the Pensions Act, even after being credited to a bank account. It was further urged that the deductions were effected without notice, in violation of principles of natural justice, and amounted to illegal deprivation of property.
On the other hand, Advocate Vipin Gandotra, appearing for Jammu & Kashmir Bank, opposed the petition on both maintainability and merits. He submitted that the petitioner's liability as a guarantor was co-extensive with that of the principal borrower and flowed from a voluntary contractual obligation. It was argued that statutory protection under the Pensions Act ceases once pension is credited to the pensioner's account, and thereafter the amount becomes attachable like any other asset. It was also contended that the writ petition was not maintainable, as the dispute arose purely out of a private contractual relationship.
After examining the rival submissions, the Court undertook an elaborate analysis of Supreme Court precedents dealing with attachment of pension and provident fund dues. The Court referred to the three-Judge Bench decision in Union of India v. Radha Kissen Agarwalla and the subsequent ruling in Union of India v. Jyoti Chit Fund & Finance, wherein it was consistently held that pension and provident fund amounts retain statutory protection only till they are actually paid to the employee, and that once received, they can be subjected to attachment.
The Court noted that although a contrary view was taken in Radhey Shyam Gupta, the said judgment, being rendered by a coordinate bench and running contrary to earlier binding precedents, could not prevail. Relying upon the three-Judge Bench ruling in Sandeep Kumar Bafna v. State of Maharashtra, the Court held that judicial discipline mandates adherence to earlier decisions, and later conflicting judgments of equal strength must be treated as per incuriam insofar as the ratio decidendi is concerned.
In a significant observation, the Court held,
“Once the pensionary amount is credited to the account of the pensioner, it is deemed to have been received by him and thereafter loses the statutory protection under Section 11 of the Pensions Act.”
The Court further observed that the petitioner, having voluntarily stood as a guarantor, could not avoid his contractual liability merely because the recovery was effected from an account where pension was credited. It remarked,
“The liability of a guarantor is co-extensive with that of the principal borrower, and upon default, the bank is well within its rights to recover the dues from the guarantor in terms of the deed of guarantee.”
On the issue of maintainability, the Court held that recovery of loan dues from a guarantor arises purely out of a non-statutory contract and does not involve any public law element. Placing reliance on Kerala State Electricity Board v. Kurien E. Kalathil and State of Gujarat v. Meghji Pethraj Shah Charitable Trust, the Court reiterated that writ jurisdiction under Article 226 cannot be invoked to enforce or negate contractual obligations, even where the opposite party is an authority under Article 12 of the Constitution.
The Court categorically observed,
“Disputes arising out of contractual obligations are matters of private law and cannot be agitated in writ jurisdiction under Article 226.”
Concluding that there was no illegality in the bank's action of recovering the loan amount from the petitioner's pension account after the pension had been credited, and further holding that the writ petition itself was not maintainable, the Court dismissed the petition along with all connected applications.
Case Title: Chuni Lal Vs J&K Bank
Citation: 2026 (JKL)