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In a gargantuan blunder, Canara Bank attached the property of a wrong person leading to a major snub by the Delhi High Court.
A Bench of Acting Justice Gita Mittal and Justice Anil Kumar Chawla came down upon the Bank for failing to verify title documents before attaching the property and directed the Chairman of the Bank to inquire into the matter.
The directions were issued by the court in a petition filed by one VK Bhatnagar, a resident of Sainik Farm, New Delhi.
A branch of the Canara Bank situated at Lucknow, Uttar Pradesh had extended financial facilities to four persons including a VK Bhatnagar from Lucknow. When the debtors defaulted in repayment, the bank started recovery proceedings and sought to attach personal properties of the debtors.
Based on the representation of the Bank, the Recovery Officer, DRT, Lucknow issued a warrant of attachment attaching the petitioner’s property towards recovery of the debt.
The petitioner objected to the same contending that it was a case of mistaken identity and that he had never been involved in any transactions with the Canara Bank.
“In the objections, the petitioner disclosed the parentage and full details. He also disclosed that the name of his father was Dr.Chander Bhan Bhatnagar and that his wife’s was Mrs. Komal Bhatnagar. It was made clear that the petitioner had no connection with the judgment debtor Mr. V.K. Bhatnagar who was son of Sh.P.P. Bhatnagar and a resident of Gomti Nagar, Lucknow. The appellant also pointed out that the judgment debtor was married to Smt.Rekha Bhatnagar who was also JD No.IV.”
Despite the same, the Bank did not reply to the petitioner’s communication and the property was attached by the bank. Apart from affixation of the attachment, the bank effected proclamation and announcement of the attachment using loudspeakers causing consternation and humiliation to the petitioner and his family who were occupying the said property.
The petitioner, therefore, had to contest the same at DRT, Lucknow. With no sign of relief from DRT, the petitioner preferred to file a writ petition before the High Court.
Before the High Court, Bank accepts “mistake”
When the matter came up before the High Court, the court issued notice to the Bank. Eventually, it was admitted by the bank that it had made a mistake in attaching the petitioner’s property.
The bank also stated that it had attached the petitioner’s property based on a report by a private detective agency. Subsequently, it appointed another detective agency which confirmed that the petitioner and the judgment debtor in the proceedings before the Debt Recovery Tribunal, Lucknow are two different persons who had no association with each other.
The Bank also submitted the same before DRT, Lucknow which ordered discharge of the attached property. These facts were laid bare before the Court.
High Court order
The High Court, which was seized of the writ petition, was however, not ready to let off the Bank easily. It had some strong words for the Bank which had not gone into the title documents of the property instead choosing to rely on a Private Detective Agency’s report.
“We are absolutely appalled at the manner in which the respondent no.1 has proceeded in the matter. Even before us, the engagement of the private detective agency is being propounded as if this was ipso facto proof that the bank had taken sufficient care to ascertain the assets of its debtor or effected due diligence thereof. It is inconceivable as to how a financial institution could rely on a bald statement contained in a report without seeking copies of the title documents. Mere inspection of the records of the Registrar of Documents (freely available to the public) or the Municipal Authorities could have enabled verification of the correct ownership of the said property. These basic steps were admittedly not undertaken by the Canara Bank.
Bare perusal of the inspection of the title documents would have also disclosed parentage of the petitioner and would have established that the petitioner was not the ‘V.K. Bhatnagar’ who was owing money to the respondent no.1-Bank”
The Court also noted the callous conduct of the bank which acted in complete disregard of the petitioner’s objections.
“This is certainly a serious matter where the residential property of a senior citizen has been attached. Not only was the owner of the property which was attached a senior citizen, but he appears to have been ailing with serious medical ailments as well. The action of attachment of its property has had extremely drastic consequences. It is providential that despite his fragile health, he has been able to fight for his rights.
It was not as if the respondent-bank stopped at obtaining the warrant of attachment or its pasting at the premises. The petitioner has informed that the same was followed up by declaration of the proclamation and announcement of the attachment by use of loudspeaker in the colony. The petitioner and his family must have suffered extreme mortification and loss of face in the community.”
The Court, therefore, accepted the petitioner’s submission that the acts of the bank cannot be touted as a “mistake” but was “a deliberate act which they have stood by even after they were put to notice that they had illegally attached the petitioner’s property.”
The court therefore, ordered the Bank to pay a compensation of Rs. 2.6 lakh to the petitioner and also ordered the Chairman of the Bank to initiate an inquiry into the matter.
Read the judgment below.