SBI Chairman & other bank officials get firing and Contempt Notice from High Court Bombay in a Securitisation matter – scandal a

 SBI Chairman & other bank officials get firing and Contempt Notice from High Court Bombay in a Securitisation matter for not acting as per law and for deliberate auction of a flat at throwaway price despite party prepared to make full payment – scandal and corruption by bank officials by misuse of powers

The following news item was referred to us by Mr. Sanjay Jain, one of our clients from Nagpur. It appeared in the Times of India, 6th Feb, Mumbai Edition and is reproduced below:-

”MUMBAI: Nationalized banks are not supposed to act like " moneylenders" the Bombay high court has said in an order and issued contempt notices against State Bank of India chairman O P Bhatt and another bank official. The bank, violating HC orders, took possession of a disputed flat in Thane and put it up for auction. 

"The SBI being Government of India undertaking is expected to honour the rule of law," said a division bench of Justice V C Daga and Justice R G Ketkar. "It is not expected to act as a moneylender. The approach should not be to deprive citizens of their property in garb of executing powers under the Securitisation Act and make unlawful gain for its officers while disposing of property at a throwaway price. Rather the approach should be to recover monies by legal means." 

The HC has asked Bhatt and S Ramaswamy, of the SBI Wagle Estate, Thane branch to respond to the contempt notices by February 9. The court has issued a notice to deputy manager of the Wagle Estate branch Abhay Nimkar as to why he should not be prosecuted for perjury for making a false statement in court. 

In 2006, Mumbai resident Firdosh Mehta signed a deal with one Pandurang Hiwarkar to buy his flat in Neelkanth Tower in Thane for Rs 57 lakh. While Mehta paid a part of the amount, he found out that the flat was mortgaged with SBI and Hiwarkar had defaulted on the home loan. Mehta moved court as the deal with Hiwarkar fell through despite him paying part of the money. He asked the court to order Hiwarkar to carry out his part of the deal and sell him the flat. The court ruled in Mehta's favour in December 2009. 

Hiwarkar then approached the HC. Despite the fact that Mehta offered to pay off the liability, SBI refused to settle the case. He issued cheques of over Rs 34 lakh, but they bounced. On December 6, 2010, SBI took possession of the flat despite court orders that it should remain with Hiwarkar. The HC found that the bank took possession of the flat at 1.45 pm but Nimkar said they attached it at noon. The bank subsequently issued public notice to auction the flat, which they claimed had a clear title. The HC wondered why the bank was insistent on auctioning off the flat even though Mehta was willing to pay the outstanding amount. 

"The Bank was all along trying to protect the defaulting borrowers (Hiwarkar), and colluded with them to harm the interest of Mehta with the intention to make unlawful gain from disposal of the flat by allowing purchasers to form a cartel," the judges said. The court also held that Hiwarkar, by depositing the cheques which bounced and handing over the flat to SBI, was "prima facie" violating the undertaking given to the court.