The High Court of Karnataka imposed a cost of ₹2 lakh on a public sector bank for insisting that it would return documents of a mortgaged property only to the original borrower, who is dead, even after accepting the loan amount from the borrower’s 85-year-old father, who voluntarily came forward and repaid his deceased son’s debt.
Justice M. Nagaprasanna passed the order while allowing a petition filed by Embee Agro Food Industries Pvt. Ltd., represented by its director, M.B. Somashekhar Gowda, 85, of Hanagawadi Industrial Area in Harihar talk of Davangere.
“The original borrower, the son of the present petitioner, is no more. He died by suicide. The bank is aware of it. The bank offers a one-time settlement (OTS) scheme to the present petitioner [father of the original borrower] which is on account of the death of his son. However, the bank now wants to return the documents to the original borrower, who is no more. It is this action of the bank that shocks the conscience of the court,” the judge observed in the order.
This attitude of the bank, the court said, “Which is akin to the attitude of a cantankerous private lender cannot be countenanced, that too after receiving the entire amount.” The court described the bank’s action, “knowing fully well that the original borrower, the son, is no more” as “beyond comprehension and rather strange” and “preposterous”.
Background of case
Animesh Gowda M.S., who was the managing director of the company, had borrowed the loan from Canara Bank. However, he ended his life after being unable to repay the mounting debt.
Following this, the borrower’s father, who became the proprietor of the company, came forward to repay the loan after the death of his son, and the bank offered the father with the OTS scheme asking him to pay ₹19.75 crore within 90 days.
However, the father could repay only ₹9.35 core by February 2023, and in March 2023 sought an extension of time to repay the remaining amount. The father was compelled to knock on the doors of the courts as the bank, instead of extending time, initiated steps to take possession of the mortgaged property.
Court grants time
The court, taking note of petitioner-father’s bona fides, granted three more months to repay the remaining amount. The bank unsuccessfully challenged this order before a Division Bench, and by then he had repaid the entire amount and also offered to pay the interest amount and legal expenses for the delayed period.
The bank, after accepting the entire amount as demanded by it from the father, began to dodge his request to return the documents of the property even though he had cleared all dues by December 31, 2023. The bank’s counsel told the court in February 2024 that documents could be returned “only to the original owner”. However, after being pulled up by the court, the bank agreed to return the documents to the father.
Criticising this conduct of the bank, the court directed the bank to return the documents to the petitioner-father with ₹2 lakh as cost.
