HC escalates bank fraud case, calls for action taken report; refers matter to CJ

The Patna High Court has ordered action against a major bank fraud involving ₹47 lakh in government funds, emphasizing the need for strict oversight.

In a case of large scale financial fraud involving a bank and siphoning of government funds, the Patna high court has directed the registry of the court to place the records of the case before the Chief Justice in larger public interest so that a strict measure could be taken to stop misappropriation of public money.

Patna high court (HT file photo)

In order to bridge the gap between judicial oversight and executive policy, the court has escalated the matter by directing that the order copies be sent to the Reserve Bank of India (RBI), the ministry of home affairs and the ministry of finance, seeking an “action taken report” to ensure that such embezzlement — especially of funds meant for government welfare schemes — is systematically eradicated, as funds were found to have been credited to bank accounts for investments under beneficiary schemes such as the “Pradhan Mantri Awas Yojana”, as well as, for agricultural loans and agricultural insurance intended for poor farmers. The order, passed on April 23, was uploaded on Monday.

The matter involves a case registered with Darauli police station of Siwan on August 14, 2024 on the basis of a report submitted by Satyam Shivam, branch manager, Uttar Bihar Gramin Bank, Kanhauli Branch-2, Siwan, against previous bank officials for embezzlement of bank funds amounting to ₹47,64,316 during the period 2013-2014 using forged and fake certificates.

The bank officials posted earlier in the branch, Dharmendra Kumar Singh and Dilip Kumar, who have been named as main accused and co-accused in the case, had filed the petition seeking pre-arrest bail on the plea that they were not the sole authority responsible for disbursement of money, the case was instituted after an unexplained delay of 10 years since the alleged occurrence and during the period regular internal audits of the bank were conducted and no irregularity was ever detected against the petitioner.

The petitioners’ counsel also referred to the Uttar Bihar Gramin Bank Accountability Policy, 2014, which provides that “no accountability shall be fixed for any lapse not pointed out in two successive audit reports or after four years from the date of occurrence of the alleged lapse”.

However, the court did not accept the arguments, apprehending “large-scale defalcation of public money by bank officials through a well-orchestrated and systematic modus operandi” in violation of the guidelines of the NABARD, and RBI circulars and observed that the financial loss attributed to the petitioner on account of the alleged fraud has been estimated at ₹1,89,95,765.77 and the ambit could grow beyond a specific branch or individuals involving high-ups.

“When bank customers, Satyaveer Yadav and Usha Kumari, approached the bank for withdrawal of their deposited money, an inquiry revealed that the accused and co-accused had allegedly withdrawn the customers’ deposits from various accounts on the basis of forged and fake certificates and pursuant to authorisation granted by the bank,” said the FIR lodged by the bank.

The “modus operandi” revealed a sophisticated exploitation of manual banking systems. Singh allegedly issued fake Fixed Deposit (FD) certificates to unsuspecting rural customers while never actually opening the accounts in the bank’s Core Banking Solution (CBS).

​In one startling instance, a customer who deposited ₹15,00,000 found that while the entry appeared in his manual passbook, the money was never credited to the bank’s actual registers.

The court noted that these frauds were so sophisticated they remained undetected for a decade, only surfacing when customers attempted to liquidate their “investments”.

“Based on the material which has come in the counter affidavit, rejoinder to the counter affidavit and the supplementary counter affidavit, it is a case of fraud committed by the bank personnel and involves siphoning of government fund deposited for distribution on account of different government schemes, causing serious threat to the financial health of the country and eroding public confidence,” said the bench of Justice Purnendu Singh.

Refusing to grant anticipatory bail, the bench observed that “economic offences constitute a class apart and must be met with a different approach than traditional crimes”.

Maintaining that the court finds it proper not to be treated lightly, the bench directed the registry of this court to place the records of the case before the Chief Justice.

“Let a copy of the order be communicated to the Advocate General, Bihar; Chairman, Bihar Gramin Bank to seek instruction and Dr KN Singh, Additional Solicitor General, Union of India, so that he may communicate this order to the RBI, MHA and and Finance Ministry for placing action taken report before the appropriate Bench on or before June 18, 2026,” the bench observed.