SC Acquits Bank Manager After 35 Years, Questions Indian Bank Over Surplus Auction Money
The Supreme Court has brought a 35-year-old criminal case involving Indian Bank to a significant conclusion by acquitting V. Balakrishnan, a former branch manager who had been prosecuted for allegedly causing a loss to the bank through irregularities in sanctioning loans.
The case arose from loans sanctioned in 1991–92. The prosecution alleged that Balakrishnan, then manager of Indian Bank’s Anna Nagar branch, had colluded with a retired Indian Bank overseas officer to sanction loans to two borrowers and facilitate the alleged misuse of loan proceeds.
A CBI court convicted Balakrishnan in 2016 and sentenced him to one year of rigorous imprisonment. The High Court subsequently upheld the conviction.
However, the Supreme Court found the prosecution evidence fundamentally deficient. The Court noted that the loans had actually been sanctioned by the competent Regional Office and that official witnesses had acknowledged the approvals. The bank also subsequently recovered the loan amounts by auctioning the mortgaged properties.
The Court further found that the prosecution failed to establish that Balakrishnan had signed the relevant cheques through which the alleged loan amounts were received. It also held that the prosecution had failed to establish that the properties were deliberately overvalued in 1991–92 merely because they fetched substantially higher prices when auctioned almost two decades later.
The Supreme Court therefore held that the prosecution case was fabricated and had no legs to stand, set aside the judgments of the trial court and High Court, and granted Balakrishnan a clean acquittal.
The Surplus Auction Money: A New Question
Interestingly, the Supreme Court did not stop with Balakrishnan’s acquittal. It took note of another important issue arising from the case—the substantial surplus money that remained with the bank after the mortgaged properties were auctioned.
The Court noted that one property was auctioned for ₹1.175 crore against loan dues of ₹16.42 lakh, while another fetched ₹2.42 crore against dues of only ₹5.35 lakh. A further property fetched ₹34.5 lakh, which was also appropriated towards the loan account.
According to the Court, although the loans had been fully recovered, the excess auction proceeds continued to remain with the bank. The Court expressed surprise that no attempt appeared to have been made to locate the legal heirs of the borrowers and pass on the surplus amount to them.
The Supreme Court has therefore impleaded the branch manager and directed him to submit a report regarding the loan accounts. Indian Bank has also been directed to produce the title deeds of the mortgaged properties.
The matter has been listed for October 5 to ascertain the status of the excess auction money and ensure its appropriate disbursal.
A Lesson in Accountability
The judgment highlights an important principle: criminal liability cannot be sustained merely on allegations when the prosecution fails to establish the essential ingredients of the offence through reliable evidence.
At the same time, the Court’s scrutiny of the surplus auction proceeds demonstrates that recovery of a bank’s dues does not automatically settle all legal consequences. Where property is sold for substantially more than the outstanding liability, the fate of the surplus amount may require separate examination.
The case is therefore significant not only for the acquittal after decades of prosecution but also for the Supreme Court’s decision to examine what happened to the money recovered beyond the bank’s actual dues.
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