HC questions SBI loan on disputed Fab City land in Maheshwaram

Justice Nagesh Bheemapaka questioned SBI's loan sanction on disputed Fab City land and warned of a possible CBI probe into the matter.

Hyderabad: The Telangana High Court on Thursday, June 18, made sharp observations against bank officials while hearing a petition related to land allotted to a company in Fab City SEZ at Raviryala in Maheshwaram mandal of Rangareddy district.

Justice Nagesh Bheemapaka questioned how a bank could sanction a large loan against land that was already under legal dispute and reportedly protected by a High Court stay order. The judge remarked that the official who approved such lending had shown greater generosity than the legendary King Shibi, referring to allegations that a project worth around Rs 200 crore was extended loans running into several hundred crores.

SBI challenges Telangana govt’s move

The case arose from a petition filed by the State Bank of India (SBI), Bengaluru, challenging the Telangana government’s decision to resume 100 acres of land allotted to Sem India Fab Private Limited in the Fab City Special Economic Zone. The government had issued G.O. No. 9 in 2023 to take back the land.

During the hearing, SBI’s counsel submitted that the company had defaulted on its loans and that recovery proceedings had been initiated. The bank had reportedly issued a possession notice for the land in 2012 as part of the recovery process. However, while these proceedings were underway, the government moved to reclaim the land.

The court questioned the basis on which such a substantial loan was granted. When the bank’s counsel clarified that the larger amount included accumulated interest and that the outstanding dues had risen to about Rs 624 crore, the judge asked whether any complaint had been lodged against the official who approved the loan despite the legal issues surrounding the property.

Justice Bheemapaka warned that if no complaint had been filed, the court could consider ordering a CBI investigation suo motu. He described the matter as a serious issue involving public money, stating that banks must exercise caution while lending funds deposited by the public.

The judge further observed that companies sometimes obtain government-allotted land for industrial development, mortgage it to secure loans, and then fail to fulfill their commitments, leaving banks burdened with bad debts. Such practices, he said, could harm the financial system and defeat the government’s objective of creating employment through industrial projects.

Court refuses interim relief

Refusing to grant any interim relief, the court directed the Principal Secretary of the Industries Department, the Vice-Chairman and Managing Director of TGIIC, the Shamshabad Zonal Manager, and Sem India Fab Private Limited to file their counters. The matter was adjourned to June 25 for further hearing.