Madras High Court Declines to Quash Case Against City Union Bank Officials in ₹45-Crore Auction Scam, Orders Chargesheet Within Four Weeks

COIMBATORE — The Madras High Court has dealt a major setback to senior officials of City Union Bank facing allegations of orchestrating a ₹45-crore property auction fraud, outright rejecting a plea to quash the criminal case and ordering the Coimbatore Central Crime Branch to conclude its statutory investigation and submit a comprehensive chargesheet within four weeks.
The criminal proceedings stem from a complaint lodged in 2024 by Kesavapandian, a resident of Sivagangai district and director of apparel manufacturer Nature’s Touch Clothing Private Limited. According to the complaint, the firm had secured a credit facility from City Union Bank’s Tiruchengode branch. When the account slipped into non-performing asset status with an outstanding liability of ₹3.50 crore, the promoters remitted ₹2 crore toward settling the balance.
Despite this substantial repayment, bank officials allegedly engaged in deep-rooted document fabrication. Kesavapandian alleged that the officials forged his signature alongside the signatures of his father Murugan, mother Ponnuthai, and brother Arunpandian to manufacture counterfeit loan contracts and personal guarantee pacts without their knowledge or consent. Armed with these fabricated instruments, the bank approached the Debt Recovery Tribunal, falsely inflating the claim to ₹5.08 crore and securing an ex-parte recovery certificate behind the borrower’s back.
The primary objective behind creating the unauthorized liability allegedly lay in liquidating prime collateral. While the five mortgaged properties carried a collective market valuation of approximately ₹45 crore between 2015 and 2016, the bank offloaded all five assets in 2022 for a nominal sum of just ₹1.40 crore through a heavily compromised SARFAESI auction. In a glaring demonstration of deliberate undervaluation, one specific asset auctioned off for merely ₹56 lakh was pledged by the winning bidder to Indian Bank within 3 months, securing a fresh credit facility of ₹20 crore against that single property.
Following an inquiry, the Coimbatore City Central Crime Branch registered a formal first information report on November 14, 2024, booking six bank officials under charges of criminal conspiracy, document forgery, and cheating. The accused include Branch Manager Aravind, Bank Manager Kunjithapatham, Assistant Senior Manager Ganesan, Senior General Manager Maharajan, Regional Development Manager G. Swayambulingaraja, and Bank Officer Raman.
Seeking to halt the probe, Swayambulingaraja, listed as the fifth accused, approached the Madras High Court seeking to quash the proceedings. Although the bank’s counsel repeatedly assured the court that the original disputed loan documents would be submitted for scientific handwriting analysis by the Forensic Sciences Department, they consistently failed to surrender the physical records.
Dismissing the quash petition and vacating earlier interim protection, Justice D. Bharatha Chakravarthy observed that only an uninhibited police investigation could determine whether an unauthorized loan was papered over to conceal legacy non-performing assets from auditors or if the records were forged to misappropriate mortgaged properties.
Because serial legal challenges filed by the accused bank executives had stalled the probe for nearly two years, Kesavapandian moved a fresh plea seeking judicial intervention to expedite the case. Presiding over the matter, Justice Ilanthiraiyan pulled the brakes on further delay, issuing a strict directive to the Coimbatore Central Crime Branch to complete the probe and file a formal chargesheet within four weeks, setting the stage for a criminal trial.