Delhi High Court rules banks cannot unilaterally reduce interest on fixed deposits maintained under court orders without just cause, in NatWest vs Hero Exports.
Delhi HC Upholds Sanctity of Court-Linked Deposits
The Delhi High Court has ruled that banks cannot unilaterally reduce the interest rate on fixed deposits established pursuant to court orders without demonstrating valid justification. The bench of Justices Avneesh Jhingan and Shail Jain delivered the judgment while dismissing an appeal by NatWest Markets PLC against a prior directive to pay higher interest on a ₹5.89 crore fixed deposit.
The deposit was created during the pendency of an arbitration proceeding involving Hero Exports. NatWest had sought to realign the interest rate downward, citing internal policy and macroeconomic conditions. The Court rejected this argument, holding that once a deposit is placed under judicial or arbitral supervision, any alteration to its terms—especially interest rates—must be transparent, justified, and subject to agreement or court approval.
"A bank cannot act as a unilateral arbiter in matters governed by court orders or directions,"the bench observed. This decision reinforces the principle that financial institutions serve as custodians in litigation-adjacent arrangements and must operate in fidelity with court-mandated terms. The ruling is expected to influence banking conduct in litigation-supporting financial mechanisms.
Citations
- Natwest vs Hero Exports
