Bank e-auctions are supposed to be transparent ways for banks to recover bad loans by selling mortgaged assets (like homes, land, or vehicles). They promise an opportunity for buyers to acquire properties at fair market prices. But unfortunately, this process is not always foolproof.
Cases are increasing, where buyers purchase properties through these e-auctions, only to discover later that the property is already under legal dispute, mortgaged to another bank, or occupied by tenants or owners who refuse to vacate. The same problem was faced by a Deputy Commissioner of Police (DCP) in Bengaluru, highlighting the growing concerns around bank e-auction transparency.
What is the case?
A senior police officer in Bengaluru, DCP VC Gopala Reddy, bought a flat for ₹28 lakh through an online auction (e-auction) held by Jana Small Finance Bank. Although the sale agreement was issued, the property registration in his name was still pending.
After a few months, another bank — Swarna Bharathi Sahakara Bank — sent him a legal notice. They claimed the same flat was already mortgaged (used as loan security) with them. Bank said that he was living there illegally and later seized the flat.
Reddy said he had checked all documents (including e-khata and legal opinions) before buying, and there was no sign of any loan or dispute. He blames Jana Bank officials for not informing him about the earlier loan or mortgage. He also tried contacting them and asked for his ₹28 lakh to be returned, but got no proper reply. He has filed a police complaint, saying he was cheated.
The police (Central Crime Branch) have registered a fraud case under BNS laws: Section 316 -Criminal breach of trust and Section 318 – Cheating. The case includes the names of four Jana Bank staff, Jana Small Finance Bank, and Swarna Bharathi Sahakara Bank. The police are now investigating to find out who is responsible for hiding the loan and causing the fraud.
DCP VC Gopala Reddy said he bought the flat in good faith through a bank auction, but later found out it was already mortgaged to another bank. He claims that key details was hidden from him, and now he’s fighting to get justice and his money back. Bank auctions must be transparent, responsible, and legally secure to maintain the integrity and confidence of the public in bank e-auctions.
