Waiver to Fraudster a fraud on Investors: HC

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The Punjab and Haryana High Court has ruled that waiver of part or entire bank loan obtained by a fraudster is a fraud on the Constitution and investors. Describing it as impermissible, the High Court asked the police chiefs of Punjab, Haryana and Chandigarh to prepare and circulate within three months SOPs for probing such cases.

“There cannot be any charity or laxity by the banks at the expense of tax payers or investors. It is common experience that banks do not generally waive even a single penny, not to speak of any part of principal or interest, to an honest borrower who makes re-payment as per re-payment schedule, but waive substantial amounts under ‘one time settlement’ or ‘compromise’ in lok adalats in favour of the defaulters,” Justice Arun Kumar Tyagi asserted.

The Bench also directed Chief Secretaries of the two states and UT to examine the matter as a substantial number of bank frauds involved execution of mortgage deeds on the basis of forged revenue record or omission/deletion of relevant entries regarding earlier encumbrances.

Directions were also issued to the Chief Judicial Magistrates to monitor investigation in bank fraud cases where it was pending for more than a year before passing appropriate orders for proper probe. Such cases were to be tried by Additional Chief Judicial Magistrate as far as possible, Justice Tyagi ruled.

Punjab, Haryana and UT District and Sessions Judges were further directed to ensure subordinate judicial officers complied with statutory provisions, fundamental principles of criminal jurisprudence and constitutional morality.

Referring to affidavits by Punjab, Haryana and UT Directors-General of Police, Justice Tyagi observed the documents showed delay in bank fraud probe. Investigation was pending in 67 out of 151 cases for more than a year in Punjab.

DGPs directed to Prepare probe SOP

  • RBI’s 2019-20 annual report shows frauds involving a sum of Rs1 lakh and more by banks shot up by 28%
  • Public sector banks topped the list with 4,413 cases involving Rs1,48,400 cr
  • A fraudster is required to be vigilantly prosecuted and disqualified for future loans from other banks till re-payment
  • The delay in probe enabled offenders to tamper with/destroy evidence

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