The Delhi High Court has dismissed a review petition filed by the State Bank of India against its earlier order holding that the terms governing a retired officer’s loans did not empower the bank to prematurely close the loan accounts merely because he had attained the age of superannuation. A Division Bench of Justice Vivek Chaudhary and Justice Tejas Karia held that the bank’s plea only sought reconsideration on merits and disclosed no error apparent on the face of the record.
Background
During his service, the respondent, Suresh Puri, had taken a vehicle loan of ₹2.5 lakh, an education loan of ₹7.5 lakh and a housing loan of ₹20 lakh from the bank. The education and housing loans were secured by a lien on his Provident Fund.
The bank initiated disciplinary proceedings against him on 11.09.2015 for unauthorised absence and alleged lapses concerning the housing loan. By order dated 16.03.2017, the disciplinary authority imposed the penalty of censure under Regulation 67(a) of the State Bank of Travancore (Officers’) Service Regulations, 1979, and directed repayment of the housing loan until retirement, with the balance to be adjusted against his terminal benefits. On 30.06.2017, the education loan account was classified as a Non-Performing Asset with ₹9.05 lakh outstanding.
He retired on 30.11.2017. His PF was credited to his overdraft account on 22.12.2017 and his gratuity to his pension account on 01.01.2018. By appropriating these terminal benefits, the bank closed the education loan account on 15.02.2018 and the housing and vehicle loan accounts on 23.02.2018.
A Single Judge, on 05.01.2023, held the appropriation unsustainable, observing that the bank could have continued the lien on the PF balance until the loan tenure expired. The bank’s appeal was dismissed on 23.07.2026, following which it sought review.
Arguments
Standing Counsel Rajiv Kapur, along with Advocates Akshit Kapur and Riya Sood, appeared for the bank. It was submitted that the order failed to consider Clauses 3(c), 3(f), 3(h) and 3(j) of the Housing Loan Agreement, which provided for immediate repayment upon retirement and authorised set-off from PF, gratuity and account balances. The bank also relied on Clause 9(a) of the Educational Loan Agreement, Regulation 49 of the State Bank of Travancore Employees’ Pension Regulations, 1995, and its banker’s lien under Section 171 of the Indian Contract Act, 1872. Reliance was placed on Secretary, ONGC Limited v. V.U. Warrier and Mahanadi Coal Fields Limited v. Rabindranath Choubey.
Advocates Madhavi Khare and Apoorva Bhumesh, appearing for the respondent, argued that the petition was not maintainable as it sought to reargue matters already considered. Relying on Kamlesh Verma v. Mayawati and Sunil Gupta v. Punjab National Bank, they contended that review extends only to an evident error. They submitted that Regulation 49 permits recovery only from the commuted value of pension, not PF or gratuity, and that the education loan was wrongly classified as an NPA since repayment stood deferred while the respondent’s daughter pursued a postgraduate course.
Court’s Findings
Explaining the limited scope of review, the Bench observed, “It is settled law that an error apparent on the face of record must be such an error which may strike one on a mere looking at the Order.”
The Court noted that the earlier order had examined the loan terms and held that “the terms governing the loan facilities did not empower the Appellant-Bank to prematurely close the loan accounts merely on account of the Respondent having attained the age of superannuation.” On Clause 9(a), it recorded that the Single Judge had found the recovery of ₹9,68,027 was made from the overdraft account without any agreement, rule or regulation authorising it, while the loan tenure ran until 2021.
The Bench held, “The Appellant’s contention that the contractual provisions governing the loan facilities were not considered proceeds on an incomplete reading of the Order.” On Regulation 49, it added, “The plea that Regulation 49 was not considered merely seeks reconsideration on merits and discloses no error apparent on the face of the record.”
The Court found ONGC inapplicable, as the deduction there was upheld under a regulation expressly authorising recovery before payment, whereas here the bank appropriated sums already credited to the respondent’s accounts. Mahanadi was held distinguishable on facts, as the disciplinary proceedings in this case had concluded with the censure order before retirement.
Outcome
The Court clarified that the bank’s liberty to pursue remedies available in law remains preserved and its right to recover the outstanding dues subsists, as the order was confined to the manner in which the terminal benefits were appropriated. The review petition was dismissed without costs.
Case Title: State Bank of India and Ors. v. Suresh Puri
Case No.: Review Petition 489/2026 in LPA 217/2023
Bench: Justice Vivek Chaudhary and Justice Tejas Karia
Date: 16.10.2026
