The Supreme Court has acquitted a former Indian Bank branch manager in a decades-old loan fraud case, sharply criticising the investigation and concluding that the allegations against him were unsupported by credible evidence.
While overturning the conviction, the Court said the case had not only failed on proof but had been poorly constructed from the outset. It described several allegations forming the foundation of the case as mere assumptions rather than facts established through evidence.
The matter arose from loans sanctioned in 1991 when the accused was serving as the Branch Manager of Indian Bank’s Anna Nagar branch in Chennai.
Investigators had alleged that the manager conspired with a retired officer of another bank to secure loans in the names of two individuals who were allegedly being used as fronts. One borrower, employed as a domestic worker, was projected as being involved in the real estate business and received a loan of ₹13.50 lakh. Another borrower was sanctioned ₹10 lakh for the purchase of more than 21 acres of land.
It was alleged that the loans had been sanctioned illegally and that the properties offered as security were overvalued.
The former manager was convicted by the trial court, and the conviction was later upheld by the High Court. He subsequently challenged the findings before the Supreme Court.
A Bench of Justice J.B. Pardiwala and Justice K. Vinod Chandran found no convincing material connecting the former manager to any fraudulent diversion of money or other wrongdoing.
The Court noted that even if another accused had purchased properties or acted as an intermediary in transactions involving the borrowers, those circumstances alone could not establish criminal involvement on the part of the bank manager.
The judgment found serious gaps in the case built around the allegation that the borrowers were merely fronts, that loan money had been appropriated by someone else, that the secured properties had been improperly valued and that the manager had deliberately sanctioned the loans unlawfully.
According to the Court, those allegations remained unproven.
The Bench was also unconvinced by the claim that the mortgaged properties had been overvalued. Only one valuation certificate had been produced, while the investigation had failed to place before the Court contemporaneous sale documents or official market values showing the actual worth of the properties at the time the loans were sanctioned in 1991 and 1992.
The properties were eventually auctioned in 2010, nearly two decades after the loans were granted.
The Court further noted that the bank had recovered the outstanding loan amounts through the auction of the mortgaged properties. In some cases, the auction proceeds were reportedly higher than the sums required to clear the loan accounts.
That aspect, however, raised a separate concern for the Bench.
The Court questioned why surplus money from the auction appeared to have remained with the bank after the loan dues were satisfied. It sought details regarding the excess amount and whether steps had been taken to identify and pay those legally entitled to receive it.
The Branch Manager of Indian Bank’s Anna Nagar branch has been directed to submit a report detailing the loan accounts, recovery of dues and the manner in which the money realised from the auction was utilised. The bank has also been asked to produce the relevant title documents.
Setting aside the decisions of both the trial court and the High Court, the Supreme Court held that there was no basis to sustain the former manager’s conviction.
The accused is to be released if still in custody and not required in any other case. If already on bail, the bail bonds will stand cancelled.
Although the acquittal brings the criminal case against the former manager to an end, the Court has retained the matter for examining the bank’s handling of the auction proceeds.
The case is scheduled to come up again on October 5, 2026, when the Court will consider the bank’s report and decide whether further directions are required regarding the surplus money.
