Apex court calls for speedy trials in bank loan fraud cases
New Delhi, Feb. 25 -- The Supreme Court on Tuesday called for expeditious adjudication of matters relating to banks' decisions to classify loan accounts as "fraudulent", underlining that prolonged pendency in cases involving large sums of public money and critical economic infrastructure is against public interest.
A bench comprising Chief Justice of India Surya Kant and justices BV Nagarathna and Joymalya Bagchi said that the growing backlog of petitions filed after the court's 2023 ruling in State Bank of India Vs Rajesh Agarwal was a matter of concern and required urgent steps. In a significant push to unclog high courts grappling with such challenges, the court asked all banks to seek early hearing of pending cases and simultaneously requested high courts to take them up on an out-of-turn basis.
"This court in Rajesh Agarwal judgment has merely laid down broad guidelines for adherence to the principles of natural justice. The high courts are expected to see whether, on the anvil of prejudice, such principles have been substantially complied with or not. The large-scale pendency of such writ petitions, where large sums of public money and critical economic infrastructure are involved, is also undoubtedly against the public interest," the bench stated in its order released on Tuesday. "We also request the high court to take up such matters on an out-of-turn basis and decide the same as per the merits in each case. It is clarified that we have not expressed any opinion on the merits of the pending matters," the order added.
The directions came while allowing an appeal filed by Bank of India against an October 1, 2025 judgment of the Bombay High Court that had quashed a show-cause notice and a consequential order classifying the account of a Shrenuj Group entity as "fraud". The case involves loans of around Rs.1,536 crore sanctioned by a consortium led by Bank of India. After the account was declared a non-performing asset in 2015 and a forensic audit was conducted, the Joint Lenders' Forum decided in December 2019 to classify the account as fraud....
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