Summary:
The first step in the orchestrated conspiracy began when Udaipur Urban Cooperative Bank (UUCB) suddenly and unlawfully closed a sanctioned ₹75 Lakhs credit facility granted to Impressive Art Interior (an MSME), which was backed by collateral mortgage of a prime residential property. This was done without issuing prior notice, obtaining borrower consent, or complying with mandatory RBI regulatory procedures.
In a parallel and deeply suspicious move, ICICI Bank, while sanctioning a ₹2.5 crore MSME business loan, released less than ₹38 Lakhs to the borrower. However, ₹75 Lakhs was directly diverted to UUCB—without any loan agreement clause permitting such transaction, and without approval of the borrower. This amount was falsely shown as a “settlement” of the UUCB loan, even though ICICI had no contractual basis to make such payment.
This fraudulent diversion served two illegal objectives:
- To hijack the collateral directly from UUCB and transfer it to ICICI Bank’s control—without the borrower’s signature, consent, or knowledge.
- To block any future financing options, by freezing the most valuable asset (the borrower’s house) under a new charge without transparency or fair procedure.
Further, to cover the shortage required to release the property from UUCB records, the same agent (working with both banks and the borrower’s CA) deposited a small top-up amount towards closure charges—again, without written approval of the borrower. This shows a calculated, fraudulent design to misuse sanctioned loan funds and seize control of high-value property under a fabricated financial trail.
Legal Breach Identified:
- Diversion of sanctioned loan amount without contractual authorization (Violation of Section 25 of the Indian Contract Act)
- Violation of RBI Guidelines on MSME Credit Lending and Collateral handling
- Fraudulent discharge of a third-party loan, amounting to criminal breach of trust under IPC Sections 409, 420, and 120B
- Illegal mortgage transfer without owner’s consent or signing of release deed
Recommended Legal Action:
- File criminal proceedings against the involved bank officers, agent, and Chartered Accountant under IPC Sections 420, 409, 463, and 120B
- Seek injunction and cancellation of the ICICI mortgage charge through DRT and Civil Court proceedings
- Submit a complaint before RBI Ombudsman, MSME Commissioner, and Registrar of Cooperative Societies against UUCB and ICICI Bank
- Demand a forensic audit of fund flows under the Ministry of Corporate Affairs (SFIO) or ED, citing cross-institutional fraud and fund laundering