Madras High Court slams banks for offering crores in loans without security

Justice R Mahadevan made this observation while hearing a plea moved by State Bank of India in the debt recovery proceedings of Rs 820 crore against Kanishk Gold Private Limited. As part of SBI Stressed Assets Management Branch (SAM Branch) in Chennai, it sought the court to quash the attachment proceedings moved by the Enforcement Directorate (ED) under the Prevention of Money Laundering Act (PMLA) against the firm when the consortium had already taken symbolic possession of the properties.

Putting forth a volley of questions ranging from “Did the officers verify the documents before sanctioning the loan and what is the total amount of loan sanctioned?” Justice Mahadevan said the court will issue orders to arrest all the officials and individuals involved in the scam. “Do not try to safeguard the officials of the bank in this case since none can escape from The Securitisation and Reconstruction of Financial Assets and Enforcement of Securities Interest Act (SARFAESI). We will set an example to the whole country by passing a telling order in this case,” the judge said before directing the counsel for ED to collect details about the involvement of officials and file a detailed report on September 17, when the case would come up for further hearing.

As per the case, a consortium of banks, including SBI, had offered a loan to the tune of Rs 700 cr to Kanishk Gold Private Limited, which accumulated to Rs 820 cr with interest up to March 15, 2018. Owing to default, the banks acting under SARFAESI Act took symbolic possession of nine properties. Meanwhile, the ED attached the properties of Kanishk Gold under PMLA Act against which SBI moved the plea to stay further proceedings since its attachment order had scuttled the frantic efforts of the