The Allahabad High Court has directed the State Bank of India (SBI) to refund ₹19,90,693 that was debited from a widow’s fixed deposit towards the outstanding personal loan of her deceased husband. The Court also directed the Bank to pay interest at the fixed-deposit rate and ₹1 lakh as compensation.
A Division Bench comprising Justice Shekhar B. Saraf and Justice Abdhesh Kumar Chaudhary delivered the judgment on September 10, 2026.
Background
The petition was filed by Neha Mishra. Her husband, an Assistant Professor at Medicine Hospital, Ring Road, Lucknow, had obtained a ₹15 lakh Xpress Credit Loan from the State Bank of India on November 3, 2020.
The Court noted that Mishra was neither a co-applicant, co-borrower, guarantor, surety, indemnifier nor nominee in the loan transaction. The Bench recorded that there was no privity of contract between her and SBI. The loan was secured through an insurance cover arranged from SBI General Insurance, for which the judgment records that the deceased borrower had allegedly paid a premium of ₹8,803.
The petitioner's husband died on May 6, 2021, due to Covid-19. In September 2025, SBI issued a legal notice to Mishra seeking payment of the outstanding loan amount of ₹13,87,382 along with interest. The notice warned of possible legal proceedings if the amount was not paid.
The Bank subsequently placed Mishra's salaried account on hold on September 12, 2025. She approached the Reserve Bank of India Ombudsman, following which the hold was removed. During the subsequent proceedings between the parties, SBI appropriated money from a fixed deposit held in Mishra's name and debited ₹19,90,693 from her account.
Court’s Observation
The Bench examined the manner in which the fixed deposit was dealt with. The FD had been opened by Mishra at SBI’s Ashiyana Branch in 2025. It was transferred to the Jankipuram Branch, where her husband’s loan had originated, after which the amount was debited. The account was then transferred back to Ashiyana Branch.
The Court observed that SBI could have legal remedies to recover dues from a deceased borrower’s legal heir, but such recovery had to follow the law.
The Bench stated,
"The Bank may very well have a legal right to proceed against the petitioner as the legal heir of the deceased and recover the amount of dues with regard to the personal loan taken by the deceased, but the same has to be done as per the due process of law."
The Court criticised the manner in which the fixed deposit was transferred between branches before and after the debit, observing that the process was “abominable” and “clearly an anathema to banking practice.”
Decision
Allowing the writ petition, the Allahabad High Court directed SBI to immediately refund ₹19,90,693 to Neha Mishra along with interest at the fixed-deposit rate she was receiving. The refund was ordered to be made within four weeks.
The Court also directed the Bank to pay ₹1 lakh as exemplary and punitive compensation. The writ petition was accordingly allowed.
Case Title: Neha Mishra v. Reserve Bank of India Through Governor, Central Office Building, Mumbai & 5 Others
Case Number: Writ-C No. 6722 of 2026
Judge: Justice Shekhar B. Saraf and Justice Abdhesh Kumar Chaudhary
Decision Date: September 10, 2026
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