BENGALURU – A City Civil and Sessions Court in Bengaluru has granted anticipatory bail to a husband-and-wife duo, Mohan Rao B. and Smt. Jyothi M., who were accused by Karur Vysya Bank of securing a massive home loan using fabricated documents. The court observed that the case is primarily based on documentary evidence and does not warrant custodial interrogation at this stage.

The order was delivered by Sri A.V. Patil, the LXIII Additional City Civil and Sessions Judge (CCH-64), in response to Criminal Miscellaneous No. 538/2023. The petitioners, who are civil contractors by profession, had approached the court fearing arrest following an FIR registered by the Kumaraswamy Layout Police.

Details of the Loan Fraud Allegations

The legal battle began when Sri P.V. Sambasiva Rao, Chief Manager of Karur Vysya Bank Ltd., lodged a formal complaint against five individuals, including Mohan Rao B. (Accused No. 1) and Jyothi M. (Accused No. 2). According to the bank, the couple, operating under the business name M/s MBR Constructions, approached the bank in 2019 to purchase a luxury residential flat in Handenahalli village, Sarjapura Hobli.

The total value of the flat was quoted at Rs. 1,93,14,043, against which the bank sanctioned a loan of Rs. 1,54,00,000. To establish their eligibility for such a high-value loan, the petitioners submitted various documents, including Title Deeds and Income Tax (IT) Returns.

However, after the loan account turned into a Non-Performing Asset (NPA) on March 23, 2021, the bank conducted a deeper verification. The investigation allegedly revealed that the IT Returns and other financial credentials provided by the couple were forged and created solely to induce the bank into sanctioning the loan. The prosecution alleged a criminal conspiracy involving five accused persons aimed at defrauding the financial institution.

Arguments Presented by the Petitioners

The petitioners, through their legal counsel, Sri Yogananda Raju M.D., maintained their innocence. They argued that they had indeed applied for a loan in 2019 and that the bank officials had sanctioned the amount only after a thorough verification of all original documents.

The defense highlighted that the petitioners had been paying their monthly EMIs regularly until the COVID-19 pandemic disrupted their business, leading to the subsequent default. They contended that they had not forged any documents and that the entire case was a matter of record. Furthermore, they pointed out that the offences alleged—punishable under Sections 406 (Criminal breach of trust), 419 (Cheating by personation), 420 (Cheating), 463, 464, 468 (Forgery), and 120(A) (Criminal Conspiracy) of the IPC—are triable by a Magistrate and do not carry the death penalty or life imprisonment.

The Court’s Reasoning and Decision

Judge A.V. Patil, after hearing arguments from both the defense and the Public Prosecutor, observed that the case against the petitioners is heavily reliant on documentary evidence. The court noted that since the bank had already sanctioned the loan after its internal verification process, the truth regarding the alleged fabrications would only be established during a full-fledged trial.

The court further noted a delay in filing the complaint and emphasized that the petitioners are permanent residents of Bengaluru with established addresses, making them unlikely to flee from justice. The judge stated that the apprehension of the police regarding the investigation could be addressed by imposing strict conditions rather than through immediate arrest.

“The involvement of the petitioners is yet to be proved. The truth is to be ascertained during the course of trial,” the court remarked, adding that the petitioners are entitled to protection under Section 438 of the Cr.P.C.

Conditions of the Bail Order

The court directed the Kumaraswamy Layout Police to release the petitioners on bail in the event of their arrest, subject to a personal bond of Rs. 70,000 each and one surety of the like sum. To ensure a smooth investigation, the court imposed the following conditions:

• The petitioners must appear before the respondent police within 20 days of the order.
• They are strictly prohibited from tampering with prosecution witnesses.
• They must appear before the court during every trial date and cooperate with the disposal of the case.
• They must not commit any similar offences in the future.
• They are required to appear before the Investigating Officer (I.O.) whenever called for questioning.
• They must provide attested copies of their Aadhaar cards and residential address proof to the police.

This ruling underscores the judicial principle that in white-collar crimes involving documents already in the possession of authorities, custodial interrogation should not be used as a tool for harassment before the charges are proven.