Karnataka High Court stops bank from cutting retired employee's entire pension for loan recovery, gives this direction

He said that the financial stability of the pensioner is essential, and forcing him to give up his entire pension to repay the loan would violate Article 21 of the Indian Constitution, which guarantees the right to life and personal liberty. The case was brought before the court by 70-year-old Murugan Oke, a retired employee of Canara Bank and currently residing in Thrissur, Kerala.

Murugan retired on November 30, 2014, and was consistently paying his loan EMIs from a part of his pension. However, from July 2024, Canara Bank started deducting his entire pension to repay the dues, forcing him to seek legal intervention. He also requested the court to restrain the bank from charging penal interest on the educational loan for which he was a co-borrower along with his daughter.

Canara Bank argued that Murugan owed Rs 8.5 lakh and insisted that it was within its rights to recover the dues. However, the court ruled that the bank could deduct only 50 percent of his pension for loan recovery and suggested that it explore other legally acceptable avenues. Justice Pandit highlighted that even for employees who are still serving, loan recovery usually does not exceed 50 per cent of their in-hand salary. He said the same principle should be applied to pensioners as well to ensure their financial well-being.