The Gauhati High Court has criticised the Assam Financial Corporation for retaining the original documents of a mortgaged property despite receiving ₹31.65 lakh towards settlement of a ₹2.8 lakh loan. Holding that the Corporation, being an state under Article 12 of the Indian Constitution, had no authority to retain the documents after the loan was liquidated, Justice Devashis Baruah termed its action illegal and arbitrary and directed the Corporation to hand over the documents forthwith.

The Court observed:

“It is rather shocking that the Respondent Corporation which is a ‘State’ within the meaning of Article 12 of the Constitution are resorting to such illegalities and coercion. At the cost of repetition, this Court finds it apposite to observe that against the loan amount of Rs.2,80,000/-, the Respondent Corporation at the time of settlement realized an amount of Rs.31,65,505/- which included ten times the interest to that of the loan amount. Apar from that, all other expenses were taken. Under such circumstances, the action of the Respondent Corporation not to return the documents amounts to illegal and arbitrary action.”