IN THE Judgment of the case- Advocate Shailesh Vishwanath Jambhale v. The General Manager, State Bank of India, Mumbai and others, delivered on January 30, 2024, by Justice Atul Chandurkar and Justice Jitendra Jain, at the Bombay High Court, the HC has expressed the view that the action of placing the name of the petitioner on the “Caution List “by the respondent – Chief Executive Officer, Indian Banks’ Association, is liable to be quashed, since there is no element of fraud involved even according to the Respondents – 1 and 2 coupled with the fact that the petitioner is sought to be held negligent disregarding the opinion expressed by him in the title search reports. Thus, the respondents 1 and 2 would be required to delete the name of the petitioner from the said “Caution List”. The petitioner is practicing Advocate. In the year 2012, he was included in the panel of Advocates at the State Bank of Hyderabad, now merged with the Respondent-State Bank of India, Which entrusted work to the petitioner of obtaining Search and Title Report of the properties on which loan was to be sanctioned. On October 14, 2014, November 11, 2014 and December 9, 2014, 3 Search and Title Reports with respect to 3 different properties were given by the petitioner to the respondent-Bank.

 

Thereafter, the Bank sanctioned loan on these properties of which the search report was given by the petitioner. Subsequently, a fraud came to be unearthed with regard to the loan sanctioned by the respondent-Bank against the security of these properties. In view of this, on June 26, 2015 and June 30, 2016, the Bank issued a show cause notice to the petitioner directing him to give his comments on the lapses in furnishing the Title and Search Report without due care and caution. Through the letters of July 7, 2015 and July 11, 2016, the petitioner replied to the said notice and denied the allegations made in the said show cause notice. On August 1, 2018, respondent-2, the Chief Executive Officer of Indian Banks’ Association Replying to the Petitioner’s Advocate stated that the petitioner’s name has been placed on the “Caution List” in accordance with the guidelines of August 27, 2009 issued by the said CEO, who had further advised the petitioner to approach the respondent-Bank for removal of his name from the “Caution List”. The HC has pointed out that the short point arising in the petition for its consideration is whether the petitioner could be held to be negligible so as to be placed in the “Caution List” by these two respondents.

 

The Search and Title Report issued by the petitioner on October 14, 2014, November 11, 2014 and December 9, 2014, expressly states that the documents scrutinised for the report are photo copies. These photo copies were given by the respondent -Bank to the petitioner for carrying out the title and search report, therefore, the respondent-Bank was well aware at the time of receiving the report that the Search and Title report are not based on certified copies, but are based on the photo copies. Therefore, the Bank cannot turn around now and allege negligence against the petitioner of the fact which they themselves were made aware by the petitioner in the report itself. In the said report, the petitioner has stated the process followed by him for giving his opinion on title and no fault is found in the procedure adopted by the petitioner by the Bank. The petitioner has categorically stated in the report that prior to the mortgage, NOC from the society should be obtained. The petitioner also expressly stated that original documents should be deposited for mortgage and intimation of mortgage should be given to the Sub Registrar within 30 days from the date of notice. The petitioner has also stated that his search report is based on the records available at the office of Sub Registrar and on the computer placed at the JDR Office at Pune.

 

In the HC’s view, the petitioner as an Advocate has expressed his opinion and expressly stated the steps to be taken by the Bank before sanctioning the loan, by seeking deposits of original documents etc. If subsequently, title deeds are found to be faked, then the petitioner cannot be held to be negligent since based on a perusal of the report, he can be said to have taken reasonable care and due diligence in discharging his duties. Considering it important, the HC has noted that the Circular of February 25, 2013 is addressed by the respondent-Bank to its branches and there was no material shown to the court that it was brought to the notice of the petitioner at the time of his empanelment. Therefore, the allegation that certified copies should be obtained by the Panel Advocate (as stated in the Circular), who shall compare the contents with the original documents and the petitioner having not done so is guilty of negligence, would not be correct. The said guideline also requires the branch of the Bank to take periodical inspection and obtain encumbrance certificate in respect of mortgaged property. This was also the responsibility of the Bank and not the petitioner. The Circular of November 18, 2015 issued by the Bank to its branches in continuation of its 2013 Circular requires the branches to review the performance of Advocate every year. Prior to 2015, there does not appear to be any adverse remark against the performance of the petitioner.

 

The petitioner has also stated that on many occasions, he has given report in favour of the Bank against sanction of loan which was not disputed by the Bank. The Bank could not produce any document in respect of said 4 title reports against the petitioner. Nothing stopped the Bank from issuing show cause notice to the petitioner, if some fraud was found on the part of the petitioner. This also indicates that the petitioner cannot be found to be negligent in discharging his duty. In the Bank’s affidavit in reply, that the petitioner was not found hand in gloves with the borrower, but the only ground is on account of professional negligence, which according to the court is not correct. The Bank has also not initiated any criminal proceedings against the petitioner, which also justifies the stand taken by the Bank in its reply. The HC has observed that it would be too harsh to keep the “Caution List” forever. According to the Court its decision in the case Rajan Shrivallabha Deshpande v. Bank of Baroda and another –(WP No. 3616 of 2021 at Mumbai) squarely applies to the facts of this case. Allowing the petition, the High Court has directed the respondent – C.E.O. Indian Banks’ Association to remove the name of the petitioner-lawyer from the “caution List”, forthwith.