Fraud and connivance in bank lending led to CBI investigation, with borrower cooperation directed and no substantive writ relief granted.

The writ petition was treated as an attempt to delay insolvency proceedings after the borrower failed to honour a court-linked settlement commitment. The record showed repeated borrowing despite prior defaults and NPA status, while the banks had extended further facilities without proper due diligence, credit appraisal, adequate security, or effective post-disbursement monitoring. The Court noted possible non-compliance with RBI fraud-reporting directions and the need to protect public funds and farmers' dues. On these facts, it found a serious case of fraud and connivance warranting CBI investigation, with liberty to examine possible money-laundering aspects and a direction that the petitioner cooperate.

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Issues: Whether the writ petition challenging the rejection of the settlement offer and the insolvency proceedings deserved relief, and whether the conduct of the borrower and the banks disclosed fraud, breach of undertaking, and justified a direction for investigation.

Analysis: The petition was found to be an attempt to delay insolvency proceedings after the borrower failed to honour the commitment made before the Court to deposit the agreed amount. The record disclosed repeated borrowing from multiple banks despite prior defaults and NPA classification, while the banks had sanctioned further facilities without proper due diligence, credit appraisal, adequate security, or effective post-disbursement supervision. The Court also noted the apparent failure to comply with RBI fraud-reporting directions and the need to protect public money and farmers' dues. In these circumstances, the Court held that the matter disclosed a serious case of fraud and connivance warranting investigation by the CBI, with liberty to examine possible money-laundering angles and with a direction that the petitioner cooperate with the investigation.

Conclusion: The writ petition was not granted any substantive relief and was disposed of with directions for CBI investigation and cooperation by the petitioner.

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