J&K High Court bars J&K Bank from deducting loan recovery instalments from pension account of retired guarantor

STC NEWS DESK
SRINAGAR, NOVEMBER 14 (STC): Government pensioners receiving their pension through J&K Bank branches and standing as guarantors in a loan accounts have a reason to feel relaxed. The High Court of Jammu & Kashmir and Ladakh has barred Jammu and Kashmir Bank from deducting loan recovery instalments from the pension account of a retired guarantor.
The ruling was issued through a judgment by the High Court on Friday, November 13, 2026.
The key details of the ruling reveal that a retired police personnel and senior citizen, N. A. Kuchay, challenged the bank after it began deducting loan instalments directly from his pension account. He had stood as a guarantor for a borrower who defaulted on loan repayments.
A bench of Justice Moksha Khajuria Kazmi allowed Kuchay’s appeal and restrained J&K Bank from recovering loan dues from his retirement benefits. The High Court also set aside an earlier order from the 3rd Additional District Judge that had denied him interim relief.
The Court observed that a pension is a welfare measure meant to protect the financial security of retired employees and their families. It ruled that retirement benefits cannot be subjected to coercive recovery measures when a principal borrower defaults.
It’s worth mentioning that in a similar August 2025 ruling involving J&K Bank, the High Court affirmed that pension funds retain their statutory immunity under Section 11 of the Pensions Act, 1871, and Section 60 of the Code of Civil Procedure even after being credited to a bank account.
Notably, courts have repeatedly held that banks cannot unilaterally attach or deduct funds from a retired guarantor’s pension account, even if the retiree signed a contractual deed of guarantee.
(Straight Talk Communications)