Bombay High Court
Shri. Shailesh Vishwanath Jambhale vs The General Manager, State Bank Of India ... on 30 January, 2024
Author: A. S. Chandurkar
Bench: A. S. Chandurkar
2024:BHC-AS:4317-DB
Tauseef 08-WP.14373.2018-J..doc
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
CIVIL APPELLATE JURISDICTION
WRIT PETITION NO.14373 OF 2018
Shri. Shailesh Vishwanath Jambhale,
Age 46 years, Occupation: Advocate,
R/at.: 6, Varadvinayak Building,
CTS No.492 B/493 B, Kasba Peth,
Nar Kasba Post Office, Pune - 411 011. ..Petitioner
Versus
1. The General Manager,
State Bank of India,
Law Department, Local H. O. Mumbai
Synergy, Bandra Kurla Complex,
Bandra (East), Mumbai - 400 051.
2. Chief Execution Officer,
Indian Banks' Association,
Word Trade Centre Complex,
6th Floor, Cuffe Complex,
Mumbai - 400 005.
3. Reserve Bank of India,
Shahid Bhagatsingh Road,
Fort, Mumbai - 400 001. ..Respondents
__________
Mr. Vilas B. Tapkir a/w. Ms. Mrunmayi Khambete for the Petitioner.
Mr. Abhijeet Joshi a/w. Mr. Advait Vajaratkar for Respondent No.1.
Ms. Varsha Sawant for the Respondent No.2.
__________
CORAM : A. S. CHANDURKAR &
JITENDRA JAIN, JJ.
RESERVED ON : 23rd JANUARY 2024.
PRONOUNCED ON : 30th JANUARY 2024.
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JUDGMENT:
(Per Jitendra Jain, J.)
1. Rule. Rule made returnable forthwith. Heard finally by
consent of the parties.
2. By this petition under Article 226 and 227 of the Constitution
of India, the Petitioner seeks appropriate writ directing the Respondent
Nos.2- Indian Banks' Association to remove his name from the "caution
list".
Narrative of the events:-
(i) The Petitioner is practicing Advocate. In the year 2012, the
Petitioner was empanelled as Panel Advocate of State Bank of
Hyderabad now merged with Respondent No.1 (State Bank of
India). The Respondent No.1 entrusted work to the Petitioner for
obtaining Search and Title Report of the properties on which loan
was to be sanctioned.
(ii) On 14th October 2014, 11th November 2014 and 9th December 2014,
3 Search and Title Reports with respect to 3 different properties
were given by the Petitioner to the Respondent No.1. The
Respondent No.1, thereafter, sanctioned loan on these properties of
which the search report was given by the Petitioner. Subsequently,
a fraud came to be unearthed with regard to the loan sanctioned by
the Respondent No.1 against the security of these properties.
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(iii) In view of above, on 26th June 2015 and 30th June 2016, the
Respondent No.1 issued a show cause notice to the Petitioner
directing the Petitioner to give his comments on the lapses in
furnishing the Title and Search Report without due care and
caution. The Petitioner vide letters dated 7th July 2015 and 11th
July 2016 replied to the said show cause and denied the allegations
alleged in the said show cause notice.
(iv) On 1st August 2018, the Respondent No.2 replying to the
Petitioner's Advocate stated that the Petitioner's name has been
placed on the "Caution List" in accordance with the guidelines
dated 27th August 2009 issued by the Respondent No.2. The
Respondent No.2 further advised the Petitioner to approach the
Respondent No.1 for removing his name from the "Caution list".
3. The reasons given for placing the Petitioner's name on the
"Caution List" are as under:-
"(a) The advocate had failed to obtain certified copies of link
documents and compare them, with the documents submitted by the
borrower. Subsequently, the title deeds turned out to the fake.
(b) He admitted that he examined the photo copies only as against the
extant guidelines to examine original documents.
(c) He failed to properly compare the documents provided to him with
the records of Sub-Registrar's office.
(d) The advocate's gross negligence in verification of documents
resulted to preparation of a fraud of Rs.4.69 Crores in respect of 6
Housing/Mortgage loans at SBH's Sinhgad Road Branch, Pune and
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resulted in huge loss to State Bank of Hyderabad."
4. It is on this backdrop, the Petitioner has approached this Court
seeking direction to the Respondent Nos.1 and 2 to remove his name
from the "Caution List".
Submission of the Petitioner:-
5. The Petitioner submitted that he has discharged his duties in
submitting the Title and Search Report with due care and after
examining the documents submitted by the Respondent No.1. The
Petitioner submitted that the allegation of negligence in submitting these
reports are incorrect. The Petitioner has also taken us through the
report and submitted that he has taken due care and pre-caution in
discharging his professional duties. The Petitioner submitted that since
2012, he has been engaged by Respondent No.1 and on various
occasions given a negative report in favour of Bank to protect the
interest of the Bank. The Petitioner further submitted that he has been
placed on "Caution List" since 2016 and has already suffered on account
of professional work for last 8 years. The Petitioner further relied upon
the decision of the Nagpur Bench of this Court in the case of Rajan
Shrivallabha Deshpande Vs. Bank of Baroda & Anr. 1 and the decision of
this Court in the case of Mohana Raj Nair Vs. CBI2. The Petitioner,
2 2013 SCC Online Bom 1279
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therefore, prayed that his name be removed from the "Caution List" as
prayed for.
Submission of the Respondents:-
6. The Respondent No.1 opposed the petition and supported the
action taken of placing the Petitioner's name on the "Caution List", since
the Petitioner was negligent in discharging his professional duties. The
Respondent No.1 further relied on Affidavit-in-reply dated 2 nd February
2022 filed in the present proceedings and prayed that the petition be
dismissed.
7. We have heard learned counsel for the Petitioner and the
Respondent Nos.1 and 2 and with the assistance of the counsel have
perused the pleadings, documents annexed thereto, reply and rejoinder.
8. The short point which arises for our consideration is whether
the Petitioner could be held to be negligible so as to be placed in the
"Caution List" by Respondent Nos.1 and 2. The Search and Title Report
issued by the Petitioner on 14th October 2014, 11th November 2014 and
9th December 2014, expressly states that the documents scrutinised for
the report are photocopies. These photocopies are given by the
Respondent No.1-Bank to the Petitioner for carrying out the title and
search report, therefore, the Respondent No.1 was very well aware at
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the time of receiving the report that the Search and Title Report are not
based on certified copies, but are based on the photocopies. Therefore,
the Respondent No.1 cannot now turn around and allege negligence
against the Petitioner of the fact which they themselves were made
aware by the Petitioner in the report itself. In the said report, the
Petitioner has stated the process followed by him for giving his opinion
on title and no fault is found in the procedure by Respondent No.1. The
Petitioner has categorically stated in the report that prior to the
mortgage, NOC from the society should be obtained. The Petitioner also
expressly stated that original documents should be deposited for
mortgage and intimation of the mortgage should be given to the Sub-
registrar within 30 days from the date of notice. The Petitioner has also
stated that his search report is based on the records available at the
office of Sub-registrar and on the computer placed at JDR Office, Pune.
In our view, the Petitioner as an Advocate has expressed his opinion and
expressly stated the steps to be taken by the Respondent No.1 before
sanctioning the loan i.e. by deposit of original documents, etc. If
subsequently, title deeds are found to be faked, then the Petitioner
cannot be held to be negligent since based on a perusal of the report, he
can be said to have taken reasonable care and due diligence in
discharging his duties.
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9. It is important to note the guidelines issued by the Respondent
No.1 to its branches with respect to Title cum Search investigation
report. Clause 5 of the said guidelines expressly states that branch
officials should independently inspect the property to be mortgaged and
enquire into the possession of the property, tenancy rights, ownership,
litigation, etc. in respect of the property and no loan should be released
without completing independent physical inspection of the property
offered as security. Clause 6 of the said guidelines further provides that
a notarised affidavit is to be obtained to the effect that the property
proposed to be mortgaged is free from charges, incumberances,
litigation, attachment, etc. and that the mortgager has full an absolute
powers to mortgage. In our view, the reasons given for placing the
Petitioner on Caution List were really the responsibility of the officials of
Respondent No.1 as per these guidelines, which appears to have not
been observed by the officials of Respondent No.1. These
responsibilities, now post unearthing of the fraud, cannot be shifted to
the Petitioner to pass the buck.
10. It is also important to note that the aforesaid Circular dated
25th February 2013 is addressed by the Respondent No.1 to its branches
and there is no material shown to us that this was brought to the notice
of the Petitioner at the time of empanellement. Therefore, the allegation
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that certified copies should be obtained by the Panel Advocate (as stated
in the Circular), who shall compare the contents with the original
documents and the Petitioner having not done so is guilty of negligence
would not be correct. The said guideline also requires the branch of
Respondent No.1 to take periodical inspection and obtain encumbrance
certificate in respect of mortgage property. This was also responsibility
of Respondent No.1 and not the Petitioner.
11. The Circular dated 18th November 2015 issued by the
Respondent No.1 to its branches in continuation of its 2013 Circular
requires the branches to review the performance of Advocate every year.
Prior to 2015, there does not appear to be any adverse remark against
the performance of the Petitioner. The Petitioner has also stated that on
many occasions, he has given a negative report in favour of the Bank
against sanction of loan which has not been disputed by Respondent
No.1. The Respondent No.1 in its reply has stated that in addition to 3
Title reports against which show cause notices were issued, there were
other 4 cases of the Petitioner's issuing title report, where the fraud was
unearth. However, the Respondent No.1 could not produce any
document with respect to the said 4 Title reports against the Petitioner.
Nothing stopped Respondent No.1 to issue show cause notice if similar
fraud was found against the Petitioner. This also indicates that the
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Petitioner cannot be found to be negligent in discharging his duty.
12. With respect to title report dated 9th December 2014 in
connection with Row House No.C at village Baner, Pune, Respondent
No.1 issued the demand draft in favour of the seller and on behalf of the
borrower on 29th November 2014 itself. The Respondent No.1 did not
even wait for the title report before making the demand draft, therefore,
the allegation of negligence against the Petitioner on this count fails by
the conduct of Respondent No.1 itself.
13. The Respondent No.1 in paragraph 5(ee) of its affidavit-in-
reply has admitted that the Petitioner is not involved in the fraud or in
sanction or disbursement of the loan. In the said reply, the Respondent
No.1 has also stated that the Petitioner is not hand in gloves with the
borrower, but the only ground is on account of professional negligence
which has observed above, according to us is not correct. There is no
criminal proceedings initiated against the Petitioner by Respondent No.1
which also justifies the stand taken by the Respondent No.1 in their
reply referred to hereinabove.
14. There is no rebuttal to the Petitioner's rejoinder wherein it is
stated that in annual review meeting, Respondent No.1 did not point out
about obtaining certified copies and comparing the same with the
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original. The Respondent No.1 has obtained certified copies of title
documents only after the fraud took place which clearly indicates that
the Respondent No.1 themselves were granting loan without following
the procedure laid down in their Circular.
15. It is also important to note that since 2016, the Petitioner has
been placed on the Caution List by the Respondent No.2 and this has
resulted into none of the Banks giving professional work to the
Petitioner till today. The Petitioner, assuming any case is made out for
negligence (which according to us is not so) still, the Petitioner has
already suffered for last 8 years and further the Petitioner has made a
statement before us that he does not wish to get empanelled on the
Panel of the Respondent No.1-Bank. In our view, it would be too harsh
to keep Petitioner on "Caution List" forever. In our view, this would also
justify the prayer sought to be made by the Petitioner in the present
petition.
16. The Petitioner is justified in placing reliance on the decision of
this Court in the case of Rajan Shrivallabha Deshpande (supra) to which
one of us (Justice A. S. Chandurkar) is a party. On a very similar facts,
the Coordinate Bench has in a detailed order after referring to the
Supreme Court decisions have quashed the show cause notice. In our
view, this decision would apply with equal force to the facts of the
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present Petitioner. The Petitioner is also justified in placing reliance
upon the decision of this Court in the case of Smt. Mohana Raj Nair
(supra), wherein criminal proceedings initiated against an Advocate on
similar fact situation was quashed by this Court.
17. To conclude, in our view, the action of Respondent No.2 in
placing the Petitioner on "Caution List" is liable to be quashed since
there is no element of fraud involved even according to the Respondent
Nos.1 and 2 coupled with the fact that the Petitioner is sought to be held
negligent disregarding the opinion expressed by him in the title search
reports. The Respondent Nos.1 and 2 would thus be required to delete
the name of the Petitioner from the said "Caution List".
18. Petition is allowed in terms of prayer clause (a), which reads
thus:-
"a. This Hon'ble Court be pleased to issue writ of mandamus or any
other appropriate writ or order in the nature of writ and be pleased to
call for Record and Proceeding from Respondent Nos.1 and 2 and after
going through the same, be pleased to direct Respondent No.2 herein to
remove the name of the Petitioner from the Caution List forthwith."
19. No order as to costs.
(JITENDRA JAIN, J.) (A. S. CHANDURKAR, J.)
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