Telangana HC suspends IOB fraud proceedings against MBS Jewellers

The Telangana High Court has halted Indian Overseas Bank's (IOB) proceedings to classify MBS Jewellers' loan account as fraudulent, following a petition from the company. The court's stay comes after MBS Jewellers challenged the legality of a show-cause notice issued by IOB, alleging the bank violated natural justice by denying a personal hearing. The company argued the bank lacked the authority to classify the account, as it was assigned to Raytheon Asset Reconstruction Company in 2017. IOB's allegations against MBS Jewellers include misuse of bank guarantees and failure to disclose encumbrances on mortgaged land. The court cited a Supreme Court precedent requiring a personal hearing before classifying a loan as fraudulent.