New Delhi | June 10, 2025
The Supreme Court has reinstated a criminal case against a Bank of India branch manager for allegedly revaluing and attempting to auction gold ornaments pledged by a borrower even after the loan had been fully repaid. The top court observed that such action, post-settlement, raised serious legal concerns.
Background
Businessman Abhishek Singh had availed a gold loan of ₹7.70 lakh from the Motijheel Branch of Bank of India in Muzaffarpur, Bihar in 2020. The security for the loan was 254 grams of 22-carat gold, valued by the bank’s certified appraiser.
Singh claims he settled the loan in full, including interest, by March 31, 2023. However, rather than returning the pledged ornaments, the bank ordered a revaluation, alleged Singh claims he settled the loan in full, including interest, by March 31, 2023. However, rather than returning the pledged ornaments, the bank ordered a revaluation, allegedly without his consent. The new report claimed the jewellery was of lower purity than initially stated.
Following this, the bank deducted ₹1,500 from his account as revaluation fees and refused to return the gold, stating it was “not genuine.” Singh then filed a criminal complaint, alleging cheating and criminal breach of trust.
Legal Proceedings
The complaint was initially quashed by the Patna High Court, which questioned the borrower’s intentions and noted that the complaint lacked an affidavit. The court also accepted the bank’s version that there was an “attempt to cheat” by pledging inferior gold.
However, the Supreme Court bench of Justices Sanjay Karol and Manoj Misra reversed the High Court’s ruling, finding that the FIR could not be dismissed at such an early stage when disputed facts were involved.
“Once the loan was settled, it is difficult to understand why the pledged gold was revalued and auctioned,” the bench remarked, calling the High Court’s intervention “premature and improper” under Section 482 of the CrPC.
Key Observations
• The Supreme Court emphasized that questions about whether fraud occurred or whether the bank acted lawfully must be determined through investigation and trial, not summary dismissal.
• The bench also highlighted that borrowers retain a legal right over pledged security after settling a loan, and any subsequent action affecting that property must comply with the law.
The criminal case against the bank manager and other concerned officers will now proceed before the trial court in Muzaffarpur, where evidence and witness statements will determine whether criminal liability arises from the bank’s conduct.
