Bank Valuer Facing Allegation Of Facilitating Grant Of Huge Loan On The Mortgage Of A Non-Existent Property Gets Interim Relief From SC

The Supreme Court’s Vacation Bench of Justices D.Y.Chandrachud and Sanjay Kishan Kaul, on Monday, June 19, issued notice returnable in four weeks, on an appeal filed against the Punjab and Haryana High Court order dated June 2, directing the SHO, Police Station Kotwali, Bathinda, Punjab, to act against the valuers of a public sector bank, and attach their properties. The appeal was filed by the bank’s valuer, Mani Kant Garg.

The Supreme Court, while issuing notice on the appeal, also stayed the order of attachment of valuer’s properties, as directed by the Punjab and Haryana High Court, on June 2. The High Court had fixed July 6, within which its order of attachment was to be complied with.

In the instant case, the husband and wife proprietors of a firm dealing in cement, had applied for an overdraft credit loan facility with a public sector bank in Bathinda. They offered immovable property allegedly in their name by way of mortgage and the valuation of the property was stated to be Rs.5 crores. They obtained the loan in the sum of Rs.2.70 crores. The bank engaged the services of a valuer for certifying the title/ownership and valuation of the proposed mortgaged property.

Thereafter, the bank terminated the loan, asking the borrowers to repay the loan with due interest. Since the borrowers failed to repay the amount, the Bank proceeded to take possession of the property, and found that the Bank was cheated inasmuch as the property mortgaged was consisting of streets and drainage channels, which are hardly of any value. The bank also found that another person claimed to be the owner thereof on the basis of sale deed in 2007, and to have even received the compensation for the land acquired for the street-widening from the government.

The Punjab and Haryana High Court had granted anticipatory bail to the two borrowers in October 2015. The Bank and the State of Punjab, submitted that the borrowers and the valuers have systematically conspired to obtain huge amount of loan from the public sector bank by mortgaging the property fraudulently.

The High Court noted that the borrowers had deposited the amount of Rs.30 lakh after one year, although the High Court directed them to do so within one month from April 27, 2016. The High Court, therefore, recorded that it would monitor the entire payment of the bank, since the borrower have promised to pay back the amount within one year to the bank.

The High Court has found that the offence of cheating was clearly made out by the prosecution against the borrowers and the valuers, who had conspired together by overevaluating the mortgaged property. Therefore, the High Court rejected the argument that it is a routine bank transaction and a civil dispute.

The High Court observed: “It is seen that it has become an order of the day to siphon out money from the public sector banks, which is public money, by resorting to such type of acrobatics. The fraud and cheating has taken place by active connivance and deliberate actions of the petitioners in collusion with the valuers, namely, Manikant Garg of Garg & Associates and Kiran and Associates. This Court finds that it would not have been possible for the petitioners to siphon out the public funds had the valuers, namely Garg & Associates and Kiran & Associates not given the false, fictitious, misleading and bogus reports to the bank about the existence of property and the valuation thereof.”

The High Court continued: “The public money from the public sector banks cannot allowed to be siphoned off in the manner that has been done. It is strange that the police has not taken action against the valuers to proceed to attach all their properties for recovery of public money and for nominating them in the present FIR”.