2017 (6) TMI 1406 - HC - Indian Laws

Wrongful attachment of the property - Mistaken identity and lack of due diligence by the bank - genuine mistake or not - It is the submission of the petitioner that the trauma on account of the attachment of his residential property had grossly aggravated the stress with which he was suffering rendering his medical condition extremely fragile - HELD THAT - The action of the Bank touted as a mistake was not a genuine mistake but was a deliberate act which they have stood by even after they were put to notice that they had illegally attached the petitioner s property. The respondents did not withdraw the attachment even when the petitioner filed objection on 14th September 2015 against the order of attachment before the Debt Recovery Tribunal Lucknow. The petitioner attempted follow-up with the detailed reminder dated 29th September 2015 to the Canara Bank as well as the Recovery Officer Debt Recovery Tribunal which was of no avail. Even the filing of this writ petition on the 25th of October 2016 did not persuade the respondent bank to seek cancellation of the attachment which was informed by the petitioner as being completely wrongful. The attachment was withdrawn only on 7th of March 2017 by the Recovery Officer. The act of attachment of the property is a serious matter. This attachment was effected without taking the basic care and effecting a title search. The attachment remained in force from 14th September 2015 to 7th March 2017. Undoubtedly the present case is a fit case where the petitioner deserves to be compensated for the wrongful act of the respondents and the harassment insecurity and the trauma which has been faced by 68 year old petitioner for over one and a half years. The narration of facts manifests utmost negligence on the part of the officials of the bank in proceeding against the property of the petitioner thereby permitting the debtors to go scot free. Financial loss would have enured to the bank. The present case is a fit case in which the bank undertakes an inquiry and fixes responsibility for the failure of its employees in ascertaining assets of the debtors as well as wrongly proceeding against the property of the petitioner without a careful due diligence and without conducting basic title research/inspection of property and municipal records. Petition disposed off.

Summary

Issues Involved:

1. Wrongful attachment of property.
2. Mistaken identity and lack of due diligence by the bank.
3. Harassment and trauma caused to the petitioner.
4. Compensation and litigation costs.
5. Accountability and inquiry into bank's negligence.

Issue-wise Detailed Analysis:

1. Wrongful Attachment of Property:

The case revolves around the wrongful attachment of a property owned by the petitioner, who was mistakenly identified as a debtor by Canara Bank. The bank had obtained a warrant of attachment for the petitioner's property, mistaking him for another individual with a similar name, who was actually the debtor. The attachment was executed based on a report from a private detective agency without verifying the title documents or conducting a thorough investigation into the ownership of the property.

2. Mistaken Identity and Lack of Due Diligence by the Bank:

The bank's actions were based on a report from a detective agency, which led to the wrongful attachment. The court criticized the bank for not undertaking basic steps like inspecting title documents or municipal records, which would have revealed the correct ownership and parentage of the petitioner. The bank's reliance on a superficial report without due diligence was deemed negligent and unacceptable.

3. Harassment and Trauma Caused to the Petitioner:

The petitioner, a senior citizen, suffered significant stress and humiliation due to the wrongful attachment. The proclamation and announcement of the attachment using loudspeakers exacerbated the situation, causing distress to the petitioner and his family. The court noted the petitioner's fragile health condition, which was aggravated by the bank's actions, and highlighted the severe impact on his well-being.

4. Compensation and Litigation Costs:

The court recognized the undue hardship faced by the petitioner and awarded compensation for the wrongful attachment. The petitioner was granted Rs. 2,62,500 as compensation for the period during which the property was attached, along with Rs. 1,00,000 for litigation costs. The court emphasized the need for the bank to compensate the petitioner for the harassment and trauma endured over the prolonged period.

5. Accountability and Inquiry into Bank's Negligence:

The judgment directed Canara Bank to conduct an inquiry to fix responsibility for the negligent acts and omissions by its officials. The court instructed the bank to take appropriate action against those found culpable for the wrongful attachment and the failure to conduct due diligence. This directive aimed to ensure accountability and prevent similar incidents in the future.

In conclusion, the court's judgment underscored the importance of due diligence by financial institutions and the need to protect individuals from wrongful actions that can cause significant distress and harm. The case serves as a reminder of the responsibilities of banks to verify facts thoroughly before proceeding with legal actions that can impact individuals' lives and properties.