Allahabad High Court Delivers Landmark Verdict

The Allahabad High Court has directed the State Bank of India to refund ₹19,90,693 that was debited from a widow’s fixed deposit to recover her late husband’s personal loan. The court noted that the woman had no direct contractual role in the loan and was neither a borrower, co-borrower, guarantor, surety, indemnifier nor nominee.

The bank had also placed her salary account on hold, which was later removed following intervention by the Reserve Bank of India. While discussions over the loan were continuing, SBI encashed her fixed deposit and debited ₹19,90,693. The court said the bank could pursue any lawful claim against her as a legal heir, but only by following due process of law. SBI was ordered to refund the amount with interest at the applicable fixed-deposit rate within four weeks and pay ₹1 lakh as compensation.