High Court Relief for Guarantor: HP High Court Stays Salary Attachment Order, Directs Fast-Track Appeal Disposal
SHIMLA — In a significant legal development for bank loan guarantors, the Himachal Pradesh High Court has intervened in a salary attachment dispute involving the Himachal Pradesh State Cooperative Bank.
Passing a judgment on November 5, 2026, Justice Sandeep Sharma stayed coercive recovery actions against the petitioner, Puneet Negi, who stood as a guarantor for a personal loan.
Background of the Case
The case stems from recovery proceedings initiated by the Collector (Recovery) of the H.P. State Cooperative Bank after a default was made by the principal borrower (respondent No. 7). On May 2, 2025, the Recovery Collector ordered the attachment of the guarantor's salary.
Challenging this move, Puneet Negi filed an arbitration petition under the H.P. Cooperative Societies Act, 1968, which was dismissed on March 31, 2026. The petitioner subsequently filed an appeal before the Additional Registrar (Monitoring), Cooperative Societies.
During the appellate proceedings, the lower authority ordered that the case be kept in abeyance pending another High Court writ (CWP No. 2821 of 2026), but simultaneously vacated the interim stay that had previously protected the May 2025 salary attachment order.
Capitalizing on this, the Collector (Recovery) issued a revised order on October 13, 2026, attaching 40,000 per month from the petitioner's salary, prompting the petitioner to rush to the High Court.
High Court Observations
Expressing strong reservations against the rapid execution of recovery while an appeal remains undecided, Justice Sandeep Sharma noted that the authorities ought to have exercised restraint.
"Taking advantage of order dated 05.08.2026, respondent-Bank succeeded in procuring order dated 13.10.2026, whereby order of attachment of salary... came to be revised and salary of the petitioner was ordered to be attached to the extent of ₹40,000/- per month, which act does not appear to be justifiable."
Court Directions
With the cooperative bank's counsel fairly agreeing to a time-bound resolution, the High Court disposed of the writ petition (CWP No. 20056 of 2026) with the following directives:
Expeditious Appeal Disposal: The Additional Registrar (Monitoring), Cooperative Societies, must decide the pending appeal filed by Puneet Negi within a preferred window of two months.
Interim Protection: Until the final disposal of the appeal, no coercive action or salary attachment pursuant to the October 13, 2026 and August 5, 2026 orders shall be enforced against the petitioner.
