Rajasthan High Court pulls up Axis Bank for encashing FD in criminal case after hiding facts from DRT

The Rajasthan High Court on Tuesday rejected a plea moved by Axis Bank against a trial court order for refund of over ₹8 crore rupees appropriated by it in a criminal case related to a fraud on farmers [Axis Bank Ltd vs State Of Rajasthan]

The trial court had warned of action against the bank CEO and its managing directors in case of failure to refund the amount, which had been ordered to be kept in a fixed deposit (FD) with the bank.

However, the bank moved the High Court, justifying the decision to encash the FD on the basis of an order passed by the Debt Recovery Tribunal (DRT).

After examining the records, Justice Anoop Kumar Dhand found that the bank had not apprised the DRT about relevant court orders when it was granted the permission to appropriate the amount.

“The aforesaid amount was appropriated by the petitioner- Bank without seeking any prior permission from the Trial Court and against the order dated 03.06.2013. That is why, the Trial Court has passed the impugned order dated 16.10.2025 holding that such an act on the part of the petitioner-Bank is done in utter violation of law. Hence, notices have been rightly issued to the Manager Director/ C.E.O. of the Axis Bank and the concerned Branch Manager to return the amount received with interest within 7 days, failing which appropriate action was ordered to be taken against them,” the Court said.

It opined that the bank’s action was totally unwarranted since it was also supposed to follow the law and the orders passed by the courts. The Court went on to observe that there was “disobedience of the orders” of the court by the bank.

The Court warned that while appropriate proceedings can be initiated against the erring officials of the bank, it was taking a lenient view in the matter. But it emphasized that no one is above law.

“When a Constitutional Court or any Court for that matter passes any order or issues any   direction, every person or Authority, regardless of the rank, is duty bound to respect and comply with the said order. Disobedience of the orders passed by the Court attacks the very foundation of the rule of law, on which the entire democracy is based,” the Court underscored.

The controversy has its origins in a criminal case registered by Kota police in 2011 on a complaint that certain accused persons had prepared cash bills of purchase and sale of agricultural products and on the basis of such forged bills, taken a loan of about ₹9 crores from the Axis Bank. The entire stock of the agricultural products was kept in mortgage with the Axis Bank and remained in godowns. 

The agricultural products were then seized by the police, who subsequently moved the trial court for their auction. In 2012, the trial court instituted a committee to conduct a public auction of the seized agricultural products and ordered that the auction amount be kept as FD with the Axis Bank in the name of the court.

The bank in 2013 moved an application before the trial court for appropriation of the amount. The plea was dismissed. Though the bank later moved the High Court against the trial court decision, it withdrew the plea with a liberty to initiate the recovery proceedings against the defaulting borrower.

In 2018, the DRT granted relief to the bank.

The bank then appropriated an amount over ₹8 crore and deposited the balance amount of over ₹1 crore as demand draft. On October 16, the trial court asked the bank to refund the amount or face action. The decision has now been upheld  by the High Court.

Advocates Shivangshu Naval, Akansha Naval, Vineet Sharma and Neha Sharma represented the bank.

Senior Advocate VR Bajwa with advocates Peush Nag, Manu Agarwal,.Amar Kumar and.Savita Nathawat appeared for respondents along with Public Prosecutors Jitendra Singh Rathore and Vivek Choudhary.

[Read Judgment]