Court orders probe against Bank of India top officials

Hyderabad: A magistrate court at Tirupati in Andhra Pradesh has recently ordered the police to investigate the allegations of fraud and cheating against the top officials of Bank of India (BoI). Omkaram Venkata Ramana, Chairman of Nithin Group of Companies, has accused the bank’s senior officials of committing acts of fraud, cheating and misappropriation pertaining to a one-time settlement (OTS), marking a rare instance in Indian banking history.

The offences sought to be probed against the bank officials include Section 409 (criminal breach of trust), Section 420 (cheating and dishonestly inducing delivery of property) read with Section 120 (concealing design to commit an offence punishable with imprisonment) of India Penal Code.

Following the orders of the magistrate court, the Tirupati police have filed a first information report (FIR) against seven officials of the state-owned bank – three in the rank of General Managers and four in the rank of Chief Managers.

The founder of Tirupati-based company has accused the bankers of initially acting negligently in their duties of wrongly mortgaging the personal collaterals offered by the promoters in the name of Bank of Baroda instead of BoI, delaying the disbursal of loans that resulted in non-availability of working capital affecting the business.

He has also accused the BoI top officials of resorting to wilful negligence where the accounts of the group companies were declared as non-performing assets (NPA) in 2016, which was found unjustified by the Telangana High Court.

Further, Venkata Ramana accused the BoI top officials of luring him with an OTS proposal of around Rs 24 crore, believing which he paid an upfront sum of around Rs 1.59 crore under a No Lien Account. The bank did not approve the OTS but ‘illegally appropriated’ the amount of Rs 1.59 crore towards the debt dues, he submitted to the magistrate court. He accused the bank officials of acting with malafides and deliberately inducing him to deposit the upfront amount by making false promises and deliberate misrepresentations and played a fraud on him, wherein they illegally appropriated the amount he deposited towards the loan contrary to the purpose and intendment of the Non Lien Account.

Subsequently, BoI moved the National Company Law Tribunal against the outstanding loan dues of the Nithin Group of Companies in 2019 where the tribunal admitted the application and ordered a corporate insolvency resolution process. Here again, Venkata Ramana pointed out that the bank officials misled the tribunal on the OTS and that the committee of creditors (BoI) had turned down the advice of the resolution professional to revive the companies through a resolution plan and instead preferred going in for liquidation at lower than the resolution value.

Venkata Ramana later moved the National Company Law Appellate Tribunal (NCLAT) against the decision of the NCLT’s Amaravati bench and the appeal is pending disposal.The magistrate court at Tirupati, which has ordered the police to investigate into the allegations against the BoI top officials, has asked the police to submit its investigation findings by September 22.