No Bank Can Override Court Orders: Rajasthan High Court Slams Axis Bank for Unauthorized Withdrawal from Court-Ordered FD"

“No one, howsoever high he may be, is above the law” – Rajasthan High Court, in a scathing judgment delivered by Justice Anoop Kumar Dhand, dismissed a criminal miscellaneous petition filed by Axis Bank Ltd. seeking to quash the Magistrate’s order directing it to refund a Fixed Deposit (FD) amount linked to seized agricultural goods. The High Court upheld the Trial Court’s finding that Axis Bank had illegally appropriated court-ordered FD funds despite clear prior judicial restraint, calling the bank's conduct a “serious affront to the authority of law.”

The Court made it unequivocally clear that even financial institutions are subject to the same legal discipline as any individual or authority. “Whosoever he may be, howsoever high, is not above the rule of law,” declared the Court, highlighting the constitutional imperative that court orders are non-negotiable and must be respected by all.

“Disobedience of Judicial Orders Undermines Democracy Itself” – Bank’s Justification Based on DRT Order Rejected as Misconceived

The controversy emerged from FIR No. 43/2011 registered at Police Station Bapawar, District Kota (Rural), involving a massive fraud where over 600 poor farmers were cheated of agricultural goods worth ₹9 crores by accused persons who, after taking grains on trust, allegedly converted the goods to obtain a fraudulent loan from Axis Bank by mortgaging them through forged documents.

During the investigation, nearly 58,000 quintals of agricultural produce were seized and stored in four godowns. Considering the perishable nature of the goods, the Trial Court, on 07.07.2012, under Section 457 CrPC, directed that the seized goods be auctioned and the proceeds be deposited in an FD in Axis Bank, in the name of the Court. This order attained finality after being upheld by the High Court in Neeraj Goyal v. State of Rajasthan, and later, the Supreme Court dismissed the Special Leave Petition as withdrawn on 09.11.2012.

Despite this, Axis Bank, in 2018, acting on an interim order of the Debt Recovery Tribunal (DRT), Jaipur, unilaterally appropriated ₹8.2 crore from the court’s FD account, retaining only ₹1.84 crore for return.

“DRT’s Order Passed in Ignorance of Trial Court’s Binding Restraint Cannot Authorize Disobedience” – Court Upholds Judicial Hierarchy

The bank’s defense was that the DRT's order dated 20.04.2018 allowed it to temporarily appropriate the FD amount pending adjudication of the Original Application filed against the defaulting borrowers. The DRT, it claimed, had exclusive jurisdiction under Section 19(25) of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993.

However, Justice Dhand rejected this argument outright, holding that Axis Bank failed to disclose to the DRT the prior binding orders of the Trial Court, dated 07.07.2012 and 03.06.2013, which had explicitly prohibited any withdrawal or appropriation of the FD amount without permission. The High Court emphasized that “orders dated 07.07.2012 and 03.06.2013 have attained finality” and that civil tribunal orders like those from DRT cannot override criminal court directions unless explicitly permitted.

"Had all these facts and orders been brought into the notice of the DRT, the order dated 20.04.2018 would not have been passed," the Court asserted. It termed the bank's omission inexcusable and its action as a direct violation of judicial authority.

Court Warns: Leniency Today Should Not Be Misconstrued as Precedent for Tomorrow

The High Court also took note of the petitioner’s earlier failed attempts to seek withdrawal of the FD amount:

• On 12.04.2013, Axis Bank had filed an application before the Trial Court seeking permission to appropriate ₹5.56 crore from the FD.

• This was rejected on 03.06.2013, and the bank’s challenge via Criminal Misc. Petition No. 3705/2013 was later withdrawn on 17.09.2014.

Despite this, the bank appropriated the funds five years later without any fresh permission. The Court held:

“The petitioner-bank is not entitled to withdraw the amount lying in FDR without seeking fresh permission of the Trial Court.”

Though the Court stopped short of initiating contempt proceedings, it stated emphatically:

“Disobedience of court orders attacks the very foundation of the rule of law, on which the entire democracy is based.”

It further observed: “Being a legal entity, Axis Bank is also supposed to follow the law and the orders passed by the Courts. The act of the petitioner amounts to disobedience... appropriate proceedings could have been initiated against the erring officials of the Bank.”

“The FD Belongs to the Court, Not to the Bank or the Borrowers” – Magistrate's Order to Refund Amount Upheld

Upholding the Trial Court’s order dated 16.10.2025, which had directed Axis Bank to refund the appropriated amount with interest, the High Court praised the lower court for acting in accordance with the law. The impugned order also contained a stern warning to the Bank’s Managing Director, CEO, and concerned Branch Manager, stating that failure to comply would invite appropriate legal action.

Justice Dhand concluded:“This Court finds no fault in the order of the learned Magistrate... The petitioner’s actions were done in utter violation of law.”

Accordingly, the Criminal Miscellaneous Petition was dismissed.

Banks Are Not Above the Law—Judicial Restraint Must Be Respected

This ruling serves as a landmark reaffirmation of the supremacy of court orders over administrative or quasi-judicial directions from civil tribunals. It sends a strong warning to financial institutions that no matter their stature, they are bound by the same laws and court orders as any other citizen.

Justice Dhand’s ruling is a resounding reminder that: “Court orders are not mere advisory directions but binding mandates—and violating them strikes at the heart of justice and democracy.”

Date of Decision: 09/12/2025