Rajasthan High Court Upholds Trial Court’s Direction to Restore FDR Funds: Axis Bank’s Petition Rejected
Case Title: Axis Bank Ltd. v. State of Rajasthan & Ors., S.B. Criminal Misc. (Petn.) No. 7763/2025.
Date of Judgment: 09/12/2025.
Bank appropriated funds from a Fixed Deposit Receipt (FDR) that had been ordered by the trial court to be kept in the name of the Court pending trial, and the present petition challenged the trial court’s direction (dated 16.10.2025) to refund/deposit the appropriated amount. The petitioning bank relied on an order of the Debt Recovery Tribunal (DRT), Jaipur dated 20.04.2018 which had permitted temporary appropriation of the sale proceeds deposited with the bank in an FDR, and contended that the DRT order entitled it to appropriate the funds without further permission from the trial court.
The criminal proceedings arose from FIR No. 43/2011 registered at Police Station Bapawar (Kota Rural) concerning alleged fraud, cheating and criminal breach of trust in relation to agricultural produce entrusted by hundreds of farmers. The trial court, exercising jurisdiction under Section 457 Cr.P.C., had on 07.07.2012 ordered auction of perishable seized produce and directed that the sale proceeds be deposited in an FDR in the name of the Court. The bank’s later application (12.04.2013) to appropriate the FDR proceeds was rejected by the trial court on 03.06.2013, and an S.B. petition filed by the bank was subsequently withdrawn with liberty to initiate recovery proceedings.
The bank thereafter filed Original Application No.241/2015 before the DRT and obtained I.A. No.142/2018. The DRT, while permitting temporary appropriation, recorded that such appropriation would be without prejudice to the rights and contentions of the defendants and subject to conditions the tribunal might impose. The Rajasthan High Court’s record shows, however, that the orders of the trial court (07.07.2012 and 03.06.2013) and earlier orders of this Court were not placed before the DRT during those proceedings.
On the basis of the DRT order, the petitioner-bank appropriated Rs.8,20,47,000/- from the FDR and deposited the balance. The trial court took the view that the appropriation was made in violation of its earlier orders and of orders of this Court, and therefore issued a direction dated 16.10.2025 requiring the bank to refund or re-deposit the appropriated amount with interest within seven days and issued notices to senior bank officials, including the Managing Director/CEO and the concerned Branch Manager, warning of appropriate action for non-compliance.
The High Court examined the sequence of orders and petitions, including the trial court’s reasoned order under Section 457 Cr.P.C., the rejection of the bank’s interim withdrawal application, the bank’s withdrawn criminal misc. petition, and the DRT order. The Court noted that the DRT’s order appears to have been passed in ignorance of the earlier trial-court and High Court orders which had directed that the sale proceeds remain in FDR in the name of the Court. Because those earlier orders were not brought to the notice of the DRT, the DRT allowed temporary appropriation without that crucial context.
Having considered the submissions of the parties and the record, the High Court held that the bank’s appropriation of the FDR amount without seeking fresh permission from the trial court was contrary to the orders dated 07.07.2012 and 03.06.2013. The Court emphasized that no one is above the law and that court orders must be obeyed. Applying these findings, the High Court found no error in the trial court’s impugned order and declined to interfere with it.
Consequently, the criminal miscellaneous petition filed by Axis Bank failed and was rejected. The High Court disposed of the stay application and other pending applications, while observing that appropriate proceedings could have been initiated against the erring bank officials and that the court was sending a clear message that orders of the court must be respected.
