2020 (6) TMI 835 - HC - Companies Law

CBI directed to file detailed status report on banking fraud case involving CDR scheme fund diversion

VINOD KUMAR DANDONA Versus CBI AND ORS.

Delhi HC directed CBI to file detailed status report regarding banking fraud case involving fund diversion under CDR scheme. Petitioner challenged FIR ... Banking frauds - diversion of funds of the corporate loans extended to ESL under the CDR - Section 120B r/w 420/467/468/471 IPC and Section 13(2) r/w Section 13(1) (d) of the Prevention of Corruption Act - HELD THAT:- Looking into the facts and circumstances of this case that on 2 previous occasions and on the basis of similar allegations no action was taken by the CBI or EOW and the contention of the Ld. Sr. Counsel for the petitioner that despite two closures, again on the same facts, the present FIR has been registered within a period of 4 days of the complaint dated 06.02.2020 without conducting any preliminary inquiry and without following the procedure established by law in regard to the alleged bank fraud cases and moreover, in the instant case, the petitioner had joined the company as a director on 13.11.2013 and all the loan facilities as per the FIR were prior to the petitioner joining the ESL as one of the Director and the only facility pursuant to his Directorship are under the CDR in which no fraud is alleged. In these circumstances, the respondent (CBI) is directed to file a detailed reply/status report mentioning about the outcome of the two previous complaints dated 27.03.2019 and 23.05.2019 and as to whether complicity of any public servant was found during the previous two investigations. List on 30.07.2020 before the Roster Bench. Issues Involved:1. Quashing of the FIR.2. Compliance with CVC guidelines.3. Allegations of fraud and misfeasance.4. Jurisdiction and involvement of public servants.5. Previous investigations and their outcomes.6. Compliance with procedural requirements for bank fraud cases.Issue-wise Detailed Analysis:1. Quashing of the FIR:The petitioner seeks a writ to quash FIR No.RCBD1/2020/E/0002 dated 10.02.2020, registered under Sections 120B, 420, 467, 468, 471 IPC, and Sections 13(2) read with 13(1)(d) of the Prevention of Corruption Act. The petitioner argues that the FIR fails to establish any criminality against him, asserting that the corporate loans were sanctioned to ESL after due scrutiny and restructured under the Corporate Debt Restructuring (CDR) mechanism approved by the consortium of Lender Banks.2. Compliance with CVC Guidelines:The petitioner contends that the FIR violates CVC circulars dated 21.08.2019 and 15.01.2020, which mandate that complaints should be referred to the Advisory Board for Banking Frauds before filing with investigative agencies. The petitioner claims that the complaint leading to the FIR was not referred to the Advisory Board, constituting a procedural illegality.3. Allegations of Fraud and Misfeasance:The petitioner argues that no fraud or misfeasance was found during the approval of the CDR by the consortium of Lender Banks. The forensic audit conducted during insolvency proceedings also did not detect any fraudulent transactions. The petitioner asserts that the allegations in the FIR are baseless and that the loans were restructured and utilized as per the approved CDR proposal.4. Jurisdiction and Involvement of Public Servants:The petitioner argues that the FIR does not name any public servant, and without their involvement, the applicability of the Prevention of Corruption Act and the jurisdiction of the CBI are not justified. The petitioner emphasizes that the CBI should clearly state whether any public servant's role emerged during previous investigations.5. Previous Investigations and Their Outcomes:The petitioner highlights that two previous complaints with similar allegations were investigated by the CBI and EOW, resulting in no criminality being found. The petitioner argues that despite these closures, the present FIR was registered within four days of the complaint dated 06.02.2020, without conducting a preliminary inquiry.6. Compliance with Procedural Requirements for Bank Fraud Cases:The petitioner contends that the CVC's Office Order No. 06/08/2019 mandates referring complaints to the Advisory Board for Banking Frauds, which was not followed in this case. The petitioner argues that the loans were disbursed and restructured by high-ranking officials, necessitating referral to the Advisory Board before filing the complaint with the CBI.Conclusion:The court directed the CBI to file a detailed reply/status report on the outcomes of the two previous complaints and whether any public servant's complicity was found. The investigation concerning the petitioner is stayed, and no coercive action is to be taken against him until further orders. The case is listed for further hearing on 30.07.2020, with directions for the CBI to comply with procedural requirements and provide necessary details in their report.