State Bank of India & Ors. v. Suresh Puri, Review Petition 489/2026 in LPA 217/2023, Delhi High Court (Justices Tejas Karia and Vivek Chaudhary), decided on 16.10.2026
The Delhi High Court has dismissed a review petition by the State Bank of India, holding that the Bank cannot take an officer’s retirement benefits, such as his provident fund and gratuity, to repay his staff loans before the loan tenure ends unless a rule or the loan terms clearly allow it.
Suresh Puri, a former officer of the State Bank of Travancore, had taken a vehicle loan, an education loan and a housing loan of Rs 20 lakh, with the education and housing loans secured by a lien on his provident fund. In 2017, the Bank censured him in a disciplinary case and directed repayment of the housing loan. He retired on 30 November 2017, and in early 2018, the Bank used his provident fund, which had been credited to his overdraft account, and his gratuity, credited to his pension account, to close all three loans. A Single Judge held the appropriation unsustainable, and a Division Bench dismissed the Bank’s appeal in July 2026, saying that the censure order did not authorise it, no loss to the Bank had been found, the loans were sanctioned for fixed repayment tenures, and the loan terms did not allow premature closure on retirement. In the review, Justices Tejas Karia and Vivek Chaudhary held that the Bank was only re-arguing the case. The Bank said that the Court had not considered the loan agreements, Regulation 49 of the pension regulations and Clause 9(a) of the education loan agreement. But the Court found that the earlier order had examined these. It was held that the Bank’s claim of an immediate right on retirement to appropriate the money depended on a “long-drawn process of reasoning”, which is not an error apparent on the face of the record, and that Regulation 49 only allows recovery from the commuted value of pension, which the Bank had no lien on here. The Court distinguished the ONGC and Mahanadi Coal Fields rulings, in which the rules expressly allowed such deductions or disciplinary proceedings were pending. It clarified that the Bank’s right to recover the outstanding loan dues continues, and that the ruling only concerns the manner in which the retirement benefits were taken.
A review is not a rehearing, and is allowed only for an error apparent on the face of the record, not for one needing a long process of reasoning where two views are possible. An employer cannot appropriate an employee’s retirement benefits, such as provident fund and gratuity, to adjust loans before the loan tenure ends, unless the rules or the loan terms clearly authorise it, and a mere lien on the provident fund or a loan default does not permit closing the account prematurely. The employer’s right to recover the outstanding loan through lawful means is not lost.
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