The Supreme Court has restored criminal proceedings against a Bank of India official for alleged misuse of pledged gold as security for a loan, questioning the revaluation and auction of the gold even after loan settlement.
The apex court set aside the Patna High Court order quashing the FIR against the bank official, saying it was too early to conclude that there was no malafide intention involved.
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“It is true that the appellant repaid the amount, but with considerable delay. However, after the loan settlement, it is difficult to understand why the gold was revalued and auctioned,” the court observed.
Background of the case
The appellant had obtained a loan of ₹7.7 lakh from the Motijheel branch of Bank of India by pledging 254 grams of 22 carat gold jewellery. On making the payment, he claimed that the bank demanded ₹8,01,383.59 including interest. Despite the payment, the bank refused to return the pledged gold, saying the second valuer had found the jewellery to be fake.
As a result, the bank filed an FIR against the appellant under Sections 420 and 379 of the Indian Penal Code, alleging cheating. In response, the appellant filed an FIR against the bank's branch and credit manager under sections 420, 406 and 34 IPC, accusing them of embezzlement and wrongdoing.
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When the bank official approached the Patna High Court seeking quashing of the FIR, the High Court agreed, saying the FIR was filed to falsely implicate the bank.
Supreme Court's view:
A bench of Justices Sanjay Karol and Manoj Mishra found fault with the High Court's conclusion.
"We are unable to understand how such a conclusion was arrived at… evidence has to be taken into account to determine the intent," the bench said.
The Supreme Court criticised the High Court for arriving at a conclusion on the appellant's intent without any trial or evidence.
"Moreover, the discussion made by the High Court in quashing the FIR does not in any way address the possibility of possible involvement of the respondents in the misappropriation of the pledged gold," the court said.
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It also questioned the absence of third-party verification to support the second valuation of the gold, noting that it casts doubts on the transparency and procedures of the bank.
"In any event, the appellant did not have access to the gold, which was always kept in the safe custody of the bankers after its initial valuation," the judgment said.
The court concluded that the High Court acted improperly by quashing the FIR prematurely, without allowing a full investigation and hearing to establish the facts.
Case Details: ABHISHEK SINGH v. AJAY KUMAR & ORS| SLP (Crl.) No. 480/2025
