Mumbai: In a ruling with far-reaching implications for borrower rights and banking accountability, a Mumbai sessions court has ordered registration of a First Information Report (FIR) and a full-fledged police investigation against Allahabad Bank and three of its senior officials for allegedly failing to return original property documents even after a borrower had repaid its loan in full more than a decade ago.
Setting aside an earlier order of a magistrate court, the additional sessions court directed Mumbai Police to register a criminal case and initiate investigation through the Andheri East police station. The FIR was registered on Saturday, paving the way for custodial inquiry, search and seizure of records, and examination of senior bank officials connected with the matter.
Loan Closed, Documents Still Missing
The case arises from a complaint filed by Shelter Makers (I) Private Limited, which had availed credit facilities from the bank in 2009. As security for the loan, the company deposited its original title deeds and related property documents with the lender under a registered mortgage arrangement executed the same year.
Court records show that the borrower repaid the loan in full and was issued a “No Dues Certificate” by the bank in April 2013. However, despite repeated written and oral demands over the years, the bank allegedly failed to return the original title deeds, effectively preventing the company from freely dealing with its own property.
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Sessions Court Faults Earlier Magistrate Order
In a sharply worded order, the sessions court observed that banks hold original property documents in a fiduciary capacity and are legally bound to return them immediately upon discharge of the loan. Continued refusal or unexplained failure to release such documents, the court said, may amount to criminal breach of trust and cannot be brushed aside as a mere civil dispute.
The court took strong exception to the magistrate court’s earlier decision, which had declined to order an FIR and instead advised the complainant to pursue a private complaint. According to the sessions court, that approach reduced the issue to a limited inquiry and effectively disabled investigating agencies from exercising essential statutory powers such as search, seizure and interrogation.
Fiduciary Duty and Criminal Breach of Trust
The order noted that original title deeds are sensitive documents capable of misuse and that prolonged non-return raises serious concerns about their safety and whereabouts. A police investigation, the court held, is necessary to trace the documents, secure them, and ascertain whether offences such as criminal breach of trust, cheating and criminal conspiracy are made out against the concerned officials.
Significantly, the court clarified that the existence of civil remedies — including recovery suits or injunction proceedings — does not bar criminal prosecution when the material on record prima facie discloses elements of a criminal offence. Where property papers are lawfully deposited with a bank and are later withheld despite full repayment and formal demand, the essential ingredients of criminal breach of trust may be attracted, the court observed.
At the present stage, the court said, it is not required to determine whether the evidence will ultimately result in conviction. Instead, while exercising powers under Section 156(3) of the Criminal Procedure Code, the court must assess whether the complaint discloses sufficient grounds to warrant police investigation. That provision empowers courts to direct registration of an FIR when law-enforcement agencies fail or decline to act on a cognisable offence.
The sessions court accordingly overturned the magistrate court’s June 2022 order, holding that forcing the complainant to independently lead evidence without police assistance would have made it practically impossible to locate the missing documents or fix responsibility on officials allegedly involved in retaining them.
Police Probe Ordered Under Criminal Procedure Code
The revision application was filed on behalf of Shelter Makers through advocate Filji Frederick. The company’s authorised representative stated before the court that the loans were sanctioned in September 2009 and secured by a registered mortgage deed executed later that month.
Despite full compliance with repayment obligations and issuance of formal loan-closure documentation, the complainant alleged that bank officials repeatedly declined to hand back the original property papers.
Legal observers say the ruling sends a clear signal to lenders that custody of borrowers’ documents carries a legal duty, and that prolonged non-return after loan closure can expose banks and their officials to criminal scrutiny.
Police have now been tasked with tracing the original documents, examining bank records and questioning concerned officials as part of the investigation.
