The Karnataka High Court has intervened to protect the rights of a retired bank employee, Murugan O K, who was facing difficulties in settling his loan dues. The court has directed Canara Bank to refrain from debiting more than 50% of Murugan’s pension to settle his Equated Monthly Installments (EMIs). The court’s decision is based on the principle that a pension is meant to sustain an individual after retirement, and recovery of loan dues should not exceed 50% of the take-home salary.
The court’s ruling is significant, as it clarifies that even in cases where an employee has borrowed money, the entire pension amount cannot be recovered. The court noted that the recovery of the entire pension amount would be a violation of Article 21 of the Constitution, which guarantees the right to protection of life and personal liberty.
Murugan, a 70-year-old resident of Thrissur, Kerala, had approached the high court last year, seeking a directive to stop the recovery of his full pension towards his loan dues and to also stop penal interest on an educational loan for which he was a co-obligant with his daughter. Until June 2024, Murugan was paying the EMIs from a part of his pension amount, but from July 2024, the bank started debiting his entire monthly pension against EMIs.
The court has allowed Canara Bank to resort to any other mode available within law to recover the loan, along with interest. The bank can also enforce the security obtained against the loan, such as the bank’s security, to recover the loan.
The court’s decision is seen as a victory for Murugan, who was facing difficulties in settling his loan dues. The court’s intervention has ensured that Murugan’s pension is protected, and he can maintain a decent standard of living in his post-retirement life.