Axis Bank Must Refund ₹8.20 Crores Withdrawn in Violation of Trial Court Orders: Rajasthan High Court Reasserts Judicial Supremacy

"No One Is Above the Law, Not Even Banks" — In a stern and precedent-setting ruling Rajasthan High Court (Jaipur Bench), per Justice Anoop Kumar Dhand, dismissed Axis Bank’s petition, upholding a Trial Court's order that directed the bank to redeposit ₹8.20 crores appropriated from a Fixed Deposit held under judicial custody. The Court held that Axis Bank had “grossly violated binding judicial orders” and had no legal authority to withdraw the funds, despite an interim direction from the Debt Recovery Tribunal (DRT).

“Whosoever he may be, howsoever high, is not above the rule of law.”

With this emphatic declaration, the High Court denounced Axis Bank’s actions as an affront to the authority of the courts and the very fabric of constitutional governance, adding that disobedience of court orders “attacks the very foundation of the rule of law, on which the entire democracy is based.”

Court Had Directed Bank to Hold Funds in Fixed Deposit – Bank Withdrew It Anyway

The dispute stemmed from the aftermath of a massive agricultural fraud, wherein accused individuals mortgaged produce worth ₹9 crores—actually belonging to over 600 farmers—to Axis Bank after forging documents and pledging the goods to secure loans. Following the registration of FIR No. 43/2011 at PS Bapawar, the Trial Court at Ramganj Mandi, exercising powers under Section 457 CrPC, had directed on 07.07.2012 that the proceeds from auctioning the perishable goods be deposited in a Fixed Deposit in Axis Bank in the name of the Court.

When Axis Bank later attempted to withdraw those funds for loan recovery purposes, its application was rejected by the Trial Court on 03.06.2013, and the bank's challenge before the High Court in Criminal Misc. Petition No. 3705/2013 was also withdrawn in 2014, after which it was granted liberty to pursue recovery through civil means.

DRT Allowed Temporary Appropriation in 2018 — But Bank Hid Crucial Facts

Despite this, in 2018, Axis Bank approached the Debt Recovery Tribunal (DRT), Jaipur, seeking temporary appropriation of the funds during the pendency of its recovery proceedings against the defaulting borrowers. The DRT granted this request on the assurance that the bank would refund the amount if its claim ultimately failed.

However, the High Court found that Axis Bank had never disclosed to the DRT the earlier judicial orders prohibiting such withdrawal. This omission, the Court held, vitiated the DRT's order, as it was rendered in complete ignorance of binding orders of the Criminal Court, the High Court, and even the Supreme Court (which had dismissed an SLP on the same issue in 2012).

“Had all these facts and orders been brought to the notice of the DRT, the order dated 20.04.2018 would not have been passed.”

Trial Court Rightly Ordered Refund With Interest — High Court Upholds It

The Trial Court, upon learning of the bank’s withdrawal of ₹8.20 crores, passed a detailed order on 16.10.2025, directing Axis Bank to redeposit the amount with interest within 7 days, and warned that if the bank failed to do so, action would be initiated against the Managing Director and concerned Branch Manager.

The High Court endorsed this direction entirely:

“The petitioner-Bank’s act is totally unwarranted... being a legal entity, it is also supposed to follow the law and the orders passed by the Courts.”

While the Court refrained from initiating contempt or criminal action against the bank in this instance, it cautioned that such disobedience would not be tolerated in the future, and warned of “appropriate proceedings” if the directions were not complied with.

Axis Bank’s Argument: DRT’s Order Overrides Magistrate’s Direction — Rejected

Axis Bank, represented by Mr. Shivangshu Naval and team, argued that the DRT had exclusive jurisdiction under Section 19(25) of the RDDBFI Act, 1993, and that civil court orders override criminal court directions, asserting that its appropriation of funds was “in the best interest of borrowers.”

The High Court decisively rejected this claim, stating that once the Trial Court’s orders were affirmed up to the Supreme Court, they had attained finality. The DRT’s interim order, passed in ignorance, could not override judicial custody established under Section 457 CrPC, nor could Axis Bank claim benefit from an order procured without candour.

Farmers Defrauded by Borrowers Who Pledged Stolen Goods

The criminal case involved a massive fraud by the Mittal family and associates, who took agricultural goods from over 600 farmers on trust, stored them in their godowns, and fraudulently mortgaged the stock to Axis Bank for obtaining loans through forged sale bills. Upon discovery, police seized the stock, auctioned it upon court direction, and the proceeds were placed in Axis Bank under court supervision.

The Trial Court rightly ensured that the auction amount would be available for restitution after trial, rejecting any claims by the bank to unilaterally recover loan dues from a pool of money potentially belonging to innocent farmers.

Court Reaffirms: Orders of Criminal Court, Once Final, Cannot Be Defied by Civil Proceedings

“Legal orders and judgments must be universally obeyed to maintain order, justice and accountability. No one can be allowed to defy the orders passed by the Courts.”

The Court highlighted that Axis Bank’s reliance on the DRT order, passed without full knowledge of the criminal proceedings, was not just misconceived but dangerous, as it attempted to bypass judicial authority and court-sanctioned protections for victims.

“When a Constitutional Court or any Court passes any order... every person or authority, regardless of rank, is duty bound to respect and comply with it.”

High Court Dismisses Axis Bank’s Petition — Upholds Order for Refund with Interest

In conclusion, Justice Anoop Kumar Dhand held that:

“The Trial Court has not committed any error in passing the impugned order. The petition is devoid of merit and is liable to be dismissed.”

The petition was dismissed, and all pending applications, including stay, were disposed of.

The ruling stands as a resounding affirmation of the supremacy of court orders, and a cautionary message to financial institutions that obedience to judicial directions is non-negotiable, regardless of corporate interests or procedural maneuvers in parallel forums.

Date of Decision: 9 December 2025