The Supreme Court acquitted ex-bank manager V Balakrishnan, revealing Indian Bank's failure to return ₹2.7 crore in excess auction proceeds to borrowers' heirs.

Published on: Sep 14, 2026, 00:47:51 IST

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For more than three decades, a bank manager was made to answer for an alleged loss caused to Indian Bank by loans sanctioned in 1991-92. But when the Supreme Court finally acquitted him, it was the bank that found itself in the dock — over why it had kept more than ₹2.7 crore in excess auction proceeds with itself for years instead of handing the money over to the borrowers’ legal heirs.

In a striking turn in the 35-year-old case, the Supreme Court has not only overturned the conviction of V Balakrishnan, then branch manager of Indian Bank’s Anna Nagar branch, but also summoned the bank to explain what it did with the surplus money left after auctioning mortgaged properties to recover the loans.

A bench of justices JB Pardiwala and K Vinod Chandran noted that the bank received ₹1.175 crore from the auction of one borrower’s property against loan dues of only ₹16.42 lakh, while another auction fetched ₹2.42 crore against dues of just ₹5.35 lakh. A further property fetched ₹34.5 lakh, which was also appropriated towards the loan account.

The court said the loans had been fully satisfied, yet the excess money from the auctions was still lying with the bank. “More intriguing is the fact…that the amounts received in auction, in excess of the appropriation to the loan accounts are still remaining with the bank,” said the bench, expressing surprise that “no attempt was made to find out the legal heirs and pass on the money”.

The court has now impleaded the branch manager of Indian Bank’s Anna Nagar branch and ordered him to submit a report on the two loan accounts, their satisfaction, the auction proceeds and how the excess money was utilised. The bank has also been directed to produce the title deeds of the mortgaged properties.

The case will return before the Supreme Court on October 5, specifically to ascertain the status of the excess auction money and ensure its due disbursal.

Balakrishnan had been working as branch manager in 1991 when CBI alleged that he conspired with P Kumaradevan, a retired Indian Overseas Bank officer, to sanction loans to two borrowers who were allegedly Kumaradevan’s domestic helps. The prosecution case was that inflated property valuations were used to secure the loans and that Kumaradevan ultimately appropriated the money.

A CBI court convicted Balakrishnan in 2016 and sentenced him to one year’s rigorous imprisonment, more than two decades after the alleged irregularities. The high court upheld the conviction, bringing the matter to the Supreme Court.

But the apex court found the prosecution evidence fundamentally deficient. It noted that the loans had in fact been sanctioned by the Indian Bank’s Regional Office, with official witnesses acknowledging the approvals. The bank subsequently recovered the loan amounts in full by auctioning the mortgaged properties.

The court also found that the prosecution had failed to establish that Kumaradevan had actually signed the cheques through which the loan amounts were allegedly received by him. It further rejected the inference that the properties must have been overvalued in 1991-92 simply because they fetched substantially higher prices when auctioned in 2010 — nearly two decades later.

The Supreme Court held that the prosecution’s case was “fabricated” and had “no legs to stand”, holding that CBI had failed not only to prove its case but also to properly frame it. The court granted Balakrishnan a clean acquittal, setting aside both the trial court and high court judgments.

But the final twist came after the acquittal. Having spent years prosecuting a bank manager for allegedly causing a loss to the bank, the record before the Supreme Court showed that the bank had ultimately recovered the loans, and was still holding a substantial surplus from the auctions.

The court has now turned its scrutiny on that money, making the 35-year-old prosecution end with an altogether different question: what happened to the money that remained after Indian Bank had recovered every rupee it was owed?

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