Supreme Court opens FIR Against Bank of India(BOI) in Gold Loan Case

A businessman obtained a loan from the Bank of India's Motijhil Branch in order to obtain the money he needed. On July 22, 2020, he was granted a loan of ₹7,70,000 after pledging 254 grams of 22 carat gold pieces as security. The payback of this loan is the point of contention. 

The appellant claims that after receiving a notification from the bank on October 7, 2022, requesting payment of ₹8,01,383.59, including interest, he paid the amount on March 31, 2023. He was unaware that the bank had revalued the gold he had pledged and had taken ₹1500 out of it for expenses.

His requests to return the gold that had been committed were denied for years. However, the bank claims that he failed to repay the loan, which is why the gold became a bank asset. 

 When it was purportedly reported by a valuer other than the one who had initially assessed the appellant's gold at the time of the loan that the material pledged was not gold in reality but rather gold plated on top of other metals, the aforementioned gold was revalued in order to recover the money involved in the transaction and was discovered to be counterfeit.

Additionally, the appellant filed a formal complaint against the bank's branch and credit manager for violations of Sections 420, 406, and 34 of the Indian Penal Code. 

The Patna High Court granted the respondent's (bank manager's) request to have the FIR quashed. A Special Leave Petition (SLP) has been submitted in response to this. The FIR against the bank has now been reopened by the Supreme Court.

Court Order

A bench of Justice Sanjay Karol and Justice Manoj Misra said that the High Court had looked at the bank’s policy to prevent and detect fraud and also considered the removal of the first valuer. 

Based on this, the High Court concluded that the bank had no bad intentions. It also said that the person who filed the case (the appellant) had tried to get a loan from the bank with bad intentions.

However, the judges of the Supreme Court stated that they were unable to comprehend how the High Court arrived at this result because genuine evidence is necessary to determine someone's purpose. They further questioned how, in the absence of evidence, the High Court determined that the applicant had a hidden motivation. 

 The Court added that there's still a chance the bank misappropriated money. When the High Court dismissed the FIR (police report), it failed to adequately take this into account. Furthermore, the bank failed to have a third party confirm the second valuer's findings. 

 Therefore, it is impossible to say with certainty that nobody from the bank or the valuers did anything improper with the gold that the appellant pledged without considering all of the available evidence.