V. Balakrishnan vs State Rep by the Deputy Superintendent of Police

This case involves V. Balakrishnan, a retired Branch Manager of Indian Bank, who was convicted of criminal conspiracy, cheating, and corruption by a trial court and the High Court. The CBI alleged that in 1991-1992, Balakrishnan colluded with a retired officer to sanction loans to two domestic workers by overvaluing their mortgaged properties. The prosecution claimed that the money was actually pocketed by the retired officer. However, the Supreme Court completely overturned this conviction. The Court found that the CBI's case was entirely fabricated and lacked any legs to stand. Importantly, the bank had already recovered its entire loan amount plus huge profits by auctioning the mortgaged properties. For instance, against an outstanding of around sixteen lakh rupees, the bank sold one property for over one crore rupees, and similarly made a massive surplus on the other property. The Supreme Court pointed out that the prosecution could not produce any original property deeds or contemporaneous market valuation reports to prove that the lands were overvalued back in 1991. The Court also expressed deep concern that the bank had kept the excess auction money without returning it to the legal heirs of the borrowers. Critically, the regional office of the bank had approved the loans, not the branch manager alone. Finding no legal evidence of fraud, corruption, or cheating, the Supreme Court granted a clean acquittal to Balakrishnan and set aside his sentence, while directing the bank to submit a report regarding the surplus money from the property auctions.

In 1991, bank manager V. Balakrishnan was accused by the CBI of helping an acquaintance get bank loans for two domestic helpers using overvalued lands as mortgage. The lower courts believed the CBI and convicted Balakrishnan of cheating and corruption, leading to this appeal in the Supreme Court.

The Supreme Court allowed the appeal and granted a clean acquittal to V. Balakrishnan, setting aside his conviction. The Court also ordered the Indian Bank to explain why it illegally kept the excess money recovered from the property auctions instead of returning it to the owners' families.

This judgment protects honest bank officers from being wrongfully prosecuted based on assumptions and fabricated stories. It also establishes that banks cannot pocket excess money recovered from auctioning a borrower's property; any surplus must be returned to the borrower or their legal heirs.