Rajasthan High Court Slams Axis Bank for Encashing FD in Fraud Case, Orders Rs.8 Crore Refund
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In a strong message to banks and financial institutions, the Rajasthan High Court has rejected a plea filed by Axis Bank and upheld a trial court’s order directing the bank to refund more than ₹8 crore in a criminal fraud case linked to farmers.
The case relates to a loan fraud where accused persons allegedly used forged bills of agricultural produce to take a loan of nearly ₹9 crore from Axis Bank. The farm produce was kept in godowns and later seized by Kota Police in 2011.
In 2012, a trial court ordered that the seized goods be auctioned and the money be kept as a fixed deposit (FD) in the name of the court with Axis Bank. However, despite clear court orders, the bank later encashed the FD without taking permission from the trial court.
Axis Bank defended its action before the High Court, saying it had done so based on an order from the Debt Recovery Tribunal (DRT). But Justice Anoop Kumar Dhand found that the bank had failed to inform the DRT about important court orders when it sought permission.
The High Court clearly stated that the bank’s action was “in utter violation of law.” It also noted that the trial court had rightly issued notices to the CEO, Managing Director, and the concerned Branch Manager of Axis Bank to refund the amount with interest within seven days, failing which strict action could be taken.
The court observed that no one is above the law, not even large banks. It said that disobeying court orders strikes at the very foundation of the rule of law and democracy. Although the court said strict action could be taken against the officials, it initially chose to take a lenient view.
Here’s how the dispute continued over the years:
- In 2013, Axis Bank first tried to get the FD amount released, but the trial court rejected the plea.
- The bank then moved the High Court but later withdrew the case to start recovery proceedings separately.
- In 2018, the DRT gave relief to the bank.
- After this, Axis Bank took over ₹8 crore from the FD and deposited only about ₹1 crore back.
- On October 16, the trial court ordered the bank to refund the full amount or face legal action.
- This order has now been fully upheld by the Rajasthan High Court.
The ruling has sent a clear warning that banks must strictly follow court orders, even while recovering their dues. The case also highlights how legal shortcuts, even by big institutions, can lead to serious consequences.
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