Rajasthan High Court Upholds Rule of Law, Orders Axis Bank to Refund Wrongly Appropriated Funds

In a significant judgment, the Rajasthan High Court reaffirms the supremacy of court orders, directing Axis Bank to return funds appropriated from a fixed deposit without judicial consent.

In a landmark decision reinforcing the principles of the rule of law, the Rajasthan High Court's Jaipur Bench, under Justice Anoop Kumar Dhand, has directed Axis Bank Ltd. to refund an amount it appropriated from a fixed deposit without prior permission from the trial court. The court's decision was delivered on December 9, 2025, dismissing the bank's petition against the order of the Additional Chief Judicial Magistrate No.7, Kota, dated October 16, 2025.

The case, Axis Bank Ltd. v. State of Rajasthan, arose from a criminal matter involving allegations of fraud and breach of trust against several individuals who had allegedly mortgaged agricultural produce to secure loans. The trial court had earlier directed that the proceeds from the auction of these goods be deposited in a fixed deposit in the name of the court.

The bank, however, acted on an order from the Debt Recovery Tribunal (DRT) permitting temporary appropriation of the funds, without informing the DRT of the existing court orders. This led to Axis Bank appropriating Rs. 8.20 crore from the fixed deposit, a move the Rajasthan High Court has now deemed unlawful.

Justice Anoop Kumar Dhand emphasized the fundamental legal principle that "no one is above the law," highlighting that adherence to court orders is crucial for maintaining justice and accountability. The court noted that Axis Bank's actions violated specific orders issued by the trial court on July 7, 2012, and June 3, 2013, which had attained finality after being upheld by higher courts.

The judgment has significant implications for legal and financial entities, underscoring the necessity of complying with judicial directives. The court's decision mandates that Axis Bank return the appropriated funds with interest within seven days, failing which, further actions would be taken against the bank's senior officials.

In defense, Axis Bank argued that its actions were in line with the DRT's order, claiming no prejudice against the defendants. However, the court was not persuaded, pointing out that the bank failed to disclose prior court orders to the DRT, leading to a decision made in ignorance of crucial facts.

The judgment reiterates the judiciary's role in upholding the rule of law and serves as a stern reminder to all legal entities to respect and comply with judicial orders, regardless of any conflicting administrative or tribunal directives.

Bottom Line:

Rule of Law - No one is above the law, and disobedience of court orders undermines the foundation of democracy and the rule of law. Legal entities, including banks, must comply with court orders, and erring officials may face consequences for non-compliance.

Statutory provision(s):

• - Section 457 of the Criminal Procedure Code, 1973
• - Sections 420, 406, 120B of the Indian Penal Code
• - Section 173(8) of the Criminal Procedure Code, 1973
• - Section 482 of the Criminal Procedure Code, 1973

Axis Bank Ltd. v. State of Rajasthan, (Rajasthan)(Jaipur Bench) : Law Finder Doc Id # 2820402