Loan Default Alone Cannot Become Criminal Case: Karnataka HC
What Happened
Pritesh Bari had taken a ₹39.92 lakh home loan from SBI for a flat in Bengaluru’s Grandeur Park project. The buyer, builder and bank signed a tripartite agreement, but the builder later sold the same flat to a third party without SBI or Bari’s consent. Bari subsequently stopped paying his EMIs, and SBI initiated criminal proceedings against him and the builder. The Karnataka High Court quashed the case against Bari, noting that no sale deed had been executed in his favour and there was no material showing that he acted together with the builder. The court also criticised SBI for invoking criminal proceedings against its customer in these circumstances.
Key Takeaways
An outstanding home loan or failed property transaction cannot by itself be treated as a criminal offence. The court said banks must exercise due care before using criminal proceedings against borrowers.