A recent case in the Allahabad High Court highlighted this issue, where a borrower filed a false FIR against the bank after it initiated recovery proceedings.
Allahabad High Court Recognizes Abuse of Process
In the case of Rajpal Singh vs. State of Uttar Pradesh, the borrower accused bank officials of fraud and breach of trust—simply because the bank began legal recovery procedures. The High Court dismissed the FIR, calling it a clear misuse of judicial process, and even imposed a penalty on the borrower.
This reflects a growing pattern where borrowers are weaponizing the legal system to stall legitimate recovery efforts.
Misuse of Protection Laws Rising
This is not an isolated incident. Across the country, financial institutions are facing increasing cases where borrowers exploit consumer protection laws, judicial delays, and loopholes in legal procedures to stall or evade repayment. False allegations, misrepresentation of facts, and retaliatory legal actions have become common strategies—especially among habitual or professional defaulters.
RCC Infraventures: A Multi-Bank, Multi-Crore Loan Scam
One of the largest cases is that of RCC Infraventures Ltd. and the Jain family, involved in a ₹100+ crore loan fraud.
As per FIR No. 0295/2024 registered at DLF Sector-29 Police Station, Gurugram, the company took multiple infrastructure loans for projects along NH-74 during 2018–19 and defaulted across all accounts in a premeditated fashion.
Strong Remarks from the Supreme Court
In similar hearings, the Supreme Court has advised that such cases be referred to the SFIO (Serious Fraud Investigation Office), underlining the gravity of this widespread financial misconduct.
Same Strategy, Multiple Banks
The RCC group and its key members—Love Jain, Ravi Kumar Jain—executed similar frauds between 2020 and 2023 with Yes Bank, HDFC, Union Bank, Kotak Mahindra, and other institutions across Delhi-NCR, Uttar Pradesh, Maharashtra, and Uttarakhand.
In several cases, they not only stopped repayments but filed false allegations, issued threats, and created legal roadblocks against recovery efforts.
They are already facing multiple cheque bounce cases, civil suits, and ED attachments. Several properties have been auctioned, and Ravi Jain has even been arrested in one FIR.
Tax Evasion & Public Money at Risk
The accused are also facing serious allegations of GST and income tax irregularities, revealing that their fraud extends beyond private lenders to government and public funds.
Regulatory Bodies Must Act Tough
Such systematic and repeat frauds pose a direct threat to financial institutions and undermine the credibility of India’s entire credit ecosystem. If not curbed, it may discourage even genuine borrowers.
Key Actions Needed:
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Implement robust screening systems to identify high-risk borrowers
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Introduce legal reforms to prevent misuse of FIRs and complaints
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Enable faster investigations by SFIO, EOW, and Crime Branch
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Impose strict penalties for abuse of the legal process
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