Karnataka HC Gives SBI Six Weeks To Decide Flat Buyer’s Complaint Alleging Loans On Already-Encumbered Properties

In brief

The question

1. Whether the Court should direct State Bank of India to consider the petitioner’s representation alleging financial irregularities by its officials.

The court held

The writ petition was disposed of with a direction to State Bank of India to consider the petitioner’s representation dated 31 January 2025 through its competent authority and take an appropriate decision in accordance with law and applicable rules and procedures within six weeks.

It also directed

The Court expressed no opinion on the merits of the allegations and issued no direction against the CBI.

01Facts

The petitioner purchased Flat No. 102 from respondent No. 4, a property developer, under a registered sale deed dated 31 March 2023. He alleged that the developer had earlier agreed to transfer the same property to a third party and had engaged in multiple transactions involving encumbered properties. He further alleged that State Bank of India officials sanctioned and disbursed loans concerning such properties without proper verification, causing financial loss to the bank.

¶ 1–3

After submitting a representation to the bank on 31 January 2025 and receiving no action, he sought a writ directing the bank to act on it and report the action taken.

¶ 1–3

Respondent No. 4 was impleaded during the proceedings.

p. 2

02Issues

i.1. Whether the Court should direct State Bank of India to consider the petitioner’s representation alleging financial irregularities by its officials.

¶ 6–7

ii.2. Whether any direction should issue against the CBI, where the petition sought no specific relief for a CBI investigation.

¶ 8

03Law Applied

Under Article 226 of the Constitution, the Court may direct a competent authority to consider a representation in accordance with law, but disputed factual allegations are for examination by the competent authority, not determination by the Court in these proceedings.

¶ 6–7

Allegations alone do not warrant a direction to initiate disciplinary or criminal proceedings against officials.

¶ 6–7

The CBI relied on State of West Bengal v. Committee for Protection of Democratic Rights, West Bengal, (2010) 10 SCC 571, for the proposition that a direction for CBI investigation is exceptional and not routine; however, the Court noted that no such relief had been sought.

¶ 5, 8

04Reasoning

The Court treated the petitioner’s grievance as one of alleged inaction on his representation, while declining to examine the truth of the disputed allegations against the bank officials.

¶ 6

It considered that the limited relief sought was properly addressed by requiring the bank’s competent authority to examine the representation and decide it under applicable law and procedures; the allegations did not justify an automatic direction to commence disciplinary or criminal proceedings.

¶ 7

As the petition sought no specific CBI investigation, no direction against the CBI was warranted.

¶ 8