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The Supreme Court docket on Tuesday (September 1) acquitted a former Indian Financial institution Department Supervisor in a 1991 mortgage fraud case, holding that the CBI failed miserably not solely in proving the allegations but additionally in correctly framing the case, which the Court docket described as “fabricated” and having “no legs to face.”
“The CBI has failed miserably in not solely proving its case but additionally in framing the case.”, the Court docket mentioned, whereas additionally calling for a report from the Indian Financial institution’s Anna Nagar Chennai Department Supervisor for preserving the surplus cash acquired by them in public sale after satisfying the mortgage account. The Court docket expressed concern over the truth that the financial institution had apparently retained the excess quantity as an alternative of disbursing it to the individuals legally entitled to it.
“…we’re involved as to how the Indian Financial institution stored the surplus cash in public sale acquired by them, with out disbursal to the authorized heirs, even when the predecessors-in-interest had been arrayed as accused on this case….”, noticed a bench of Justice J.B. Pardiwala and Justice Okay. Vinod Chandran.
“Having discovered the case to be totally fabricated, we name for a report from the Department Supervisor, Indian Financial institution, Anna Nagar Department, who’s impleaded herein as a respondent with regard to the mortgage accounts that are the subject material of this case booked by the CBI and the satisfaction of the identical as additionally utilisation of the cash acquired on public sale sale of the mortgaged properties.”, the court docket ordered.
The case associated to loans sanctioned in 1991 when the Appellant (A1) was serving as Department Supervisor on the Indian Financial institution’s Anna Nagar Department.
The CBI alleged that the Appellant had colluded with A2, a retired officer of Indian Abroad Financial institution, to sanction loans in favour of A4 and A5, who had been allegedly getting used as fronts for A2.
An FIR was registered towards the Appellant below Part 420 of the Indian Penal Code, 18601 learn with Part 120B and Part 13(2) learn with 13(1)(d) of the Prevention of Corruption Act, 1988.
Based on the prosecution, A4, who labored as a washerman at A2’s residence, was projected as an actual property businessman and was sanctioned a mortgage of ₹13.50 lakh. One other mortgage of ₹10 lakh was sanctioned to A5 for buying 21.39 acres of land.
The prosecution additional alleged that the loans had been illegally sanctioned and that the properties supplied as safety had been overvalued.
Aggrieved by the Excessive Court docket’s resolution to uphold the conviction rendered by the trial court docket, the Appellant moved to the Supreme Court docket.
Setting apart the conviction, the judgment authored by Justice Chandran mentioned that CBI didn’t carry on file convincing proof connecting Appellant with any alleged misappropriation or fraudulent exercise.
It noticed that allegations that A2 had bought properties or acted as a intermediary within the names of A4 and A5 didn’t set up the prosecution case towards Appellant.
The Court docket was significantly crucial of the style during which the CBI had constructed its case.
“A2 is claimed to have bought quite a few properties or acted as a intermediary, within the identify of A4 and A5 or by himself, however that doesn’t show the prosecution case as towards A1…A4 & A5 had been home helps of A2, that the loans sanctioned had been in truth appropriated by A2, that the mortgaged properties had been overvalued, that A1 sanctioned the loans illegally are all simply figments of creativeness. The CBI has failed miserably in not solely proving its case but additionally in framing the case,” the Court docket noticed.
One other key challenge was the alleged overvaluation of properties mortgaged towards the loans. The Court docket noticed that the prosecution had produced just one valuation certificates and had not produced contemporaneous sale deeds or government-fixed market values exhibiting what the properties had been truly price when the loans had been sanctioned in 1991-92. The properties had been auctioned almost twenty years later, in 2010.
Importantly, the Court docket famous that the financial institution had recovered the mortgage quantities by means of the public sale of the mortgaged properties. In some cases, the public sale proceeds considerably exceeded the quantities appropriated in the direction of the loans. The Court docket expressed concern that extra cash remained with the financial institution with out steps being taken to determine and pay the authorized heirs.
In consequence, the attraction was allowed.
“We discover completely no purpose to maintain the conviction of the accused and put aside each the orders of the Trial Court docket and the Excessive Court docket. The accused, if in custody, shall be launched forthwith, if not required in some other case and if the accused is already launched on bail, the bail bonds shall stand cancelled.”, the Court docket ordered.
The Court docket has however stored the matter alive for a restricted goal. It directed the Department Supervisor of Indian Financial institution’s Anna Nagar department to submit a report on the mortgage accounts, the restoration of the dues and the utilisation of the cash acquired from the public sale of the mortgaged properties. The financial institution has additionally been directed to provide the related title deeds.
The case will subsequent be listed on October 5, 2026, for the Court docket to look at the financial institution’s report and challenge additional instructions in regards to the extra public sale proceeds.
Trigger Title: V. Balakrishnan Versus State
Quotation : 2026 LiveLaw (SC) 882
Click here to download judgment
Look:
For Appellant(s) : Mr. S. Nagamuthu, Sr. Adv. Mr. M.P. Parthiban, AOR Ms. Priyaranjani Nagamuthu, Adv. Mr. Bilal Mansoor, Adv. Mr. Shreyas Kaushal, Adv. Mr. S. Geyolin Selvam, Adv. Mr. Alagiri Okay, Adv. Mr. Abhishek S, Adv.
For Respondent(s) : Mr. Davinder Pal Singh, A.S.G. Mr. Mukesh Kumar Maroria, AOR Mr. Shubham Prakash Mishra, Adv. Mr. Khushal Kolwar, Adv. Mr. Abhinav Mishra, Adv. Mr. S.N.Terdal, AOR
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