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Hearing a case where the Indian Overseas Bank has granted credit facilities relying on forged documents, the Madras High Court remarked that the issue is ‘quite alarming', and directed the Chairman of the Indian Overseas Bank to file an affidavit indicating how the petitioner, an auction property purchaser, would be compensated in the matter.

The court said that the auction property purchaser had suffered for no fault of his own merely because the bank had granted credit on forged documents.

The division bench comprising Chief Justice Sanjib Banerjee and Justice P.D.Audikesavalu observed that the intransigence on the part of a nationalised bank requires to be appropriately dealt with.

The court said, “The petitioner had to suffer immeasurable misery for the Indian Overseas Bank having granted credit facilities by relying on forged documents, possibly with the connivance of its officers.”

Earlier, the Indian Overseas Bank had put up a property for sale which was purchased by the petitioner, A.Rammdas at the auction and sale certificate was obtained by him upon paying the full consideration.

However, later, the borrower, whose property was put for sale by the Bank, challenged steps taken by the Bank.

In course of the same, it was discovered that the security in question was furnished on forged or fabricated papers. The Debts Recovery Tribunal also held that no mortgage in respect of the property had been created at all.

Consequently, the sale made by the Indian Overseas Bank was annulled and the mutation in favour of the petitioner was undone. Accordingly, the relevant Sub-Registrar issued directions to record the property in the name of the original owner.

Noting that the affair is ‘quite alarmingly’ as the sale proceeds have not been refunded, Court held, “the conduct of the bank is so shocking that it needs to be dealt with at this level, rather than make the petitioner run from pillar to post before any other forum.”

Court slammed the Bank stating that apart from trying to wriggle out of its obligation to the petitioner, the Bank referred to the provision of the Civil Procedure Code before the court trying to make a constitutional court to abandon reason and common sense.

The court held, “Nationalised banks tend to indulge in such highhandedness because of the complete lack of accountability of its officers.”

The court also found it inconceivable that a nationalised bank would not refund the money otherwise compensate the petitioner upon the sale being annulled for no fault on his part.

Therefore, concluding that the petitioner had to suffer immeasurable misery for the Indian Overseas Bank having granted credit facilities by relying on forged documents, possibly with the connivance of its officers, Court directed the Chairman of the Indian Overseas Bank to file an affidavit to indicate how the petitioner will be compensated.

Case Title: A.Rammdass Vs. Indian Overseas Bank And Another