Hyderabad: SBI officials found guilty of property fraud

Officials auction Jubilee Hills asset without legal rights.

Hyderabad: The Supreme Court has found fault with officials of the State Bank of India’s Khairatabad branch for resorting to fraud, suppression of material facts in auctioning a property in Jubilee Hills without possessing legal mortgage rights.

A division bench headed by Justice L. Nageshwara Rao was dealing a special leave petition filed by SBI challenging the direction of the Telangana High Court, which had come to the rescue of the purchasers.

The High Court had directed the SBI Chairman and Managing Director to take disciplinary action against officials responsible for misconduct and fraudulent behaviour and persuading parities to buy the property while not holding mortgage rights.

A private limited company was the successful bidder at the auction and paid `4,40,25,000 as 25 per cent of the initial deposit. Before it could pay the balance, it came to know on its own verification that the mortgage of the bank on the property was subject to the order of status quo imposed by the City Civil Court, Hyderabad, in a suit filed by a third party against a borrower who had obtained a loan from the SBI.

Concealing this fact, the bank officials conducted the auction. Apart from that, the bank officials warned the successful bidder that if the balance 75 per cent of the bid amount was not paid, they will forfeit the money already deposited.

When the bidder approached the High Court, a division bench comprising Justice M.S. Ramachandra Rao and Justice K. Lakshman imposed costs on the bank and directed the SBI to return the deposited amount to the petitioner with an interest of nine per cent per year. The bench also directed the SBI chairman to take action against the bank officers responsible.

Challenging the directions, the SBI approached the Supreme Court. Mr Pogulakonda Pratap, counsel representing the bidder, submitted that the conduct of the bank officials was a clear act of playing fraud on the general public and therefore the officials responsible should be punished suitably.

The apex court did not intervene in the High Court directions and asked the bank authorities to submit details of the matter.

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