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2026 (3) TMI 159
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....persons including the vendors and beneficiary group of the GTL Limited. 2. A Preliminary Enquiry vide PE 2192022E0001 was conducted into the allegation made in the complaint dated 14th July 2021 submitted to the CBI. After the inquiry, the CBI registered a crime vide RC2192023E0003 on 21st January 2023 under section 120-B read with section 420 of the Indian Penal Code and section 13(2) read with section 13(1)(d) of the Prevention of Corruption Act, 1988. This was the allegation against the GTL Ltd. that it fraudulently obtained various credit facilities from the consortium of banks and diverted/siphoned off major part of the loan amount to various vendor-companies which were created and operated with the mala fide intention in conspiracy with such vendors. 3. In brief, on conclusion of the Preliminary Enquiry a written complaint dated 16th January 2023 was submitted by the Inspector, CBI, EO-I, New Delhi and on that basis a First Information Report was registered. The allegation against the petitioner-company is that it generated Rs.1400 crores from capital non-convertible debentures and availed credit facilities from a consortium of 24 banks to the tune of Rs.4760.01 crores.....
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....petitioner-company at any stage, but the CBI selectively used the said audit report pertaining to the period till November 2011 and ignored the events post-November 2011 such as supply of materials, settlement with Aircel, recovery of outstanding advances etc. The petitioner-company contends that the consortium of banks took a decision to remove Red Flag Account ("RFA") tag from the account of the GTL Limited. The petitioner-company further states that if it had an intention to defraud at the inception it would not have made repayments to the tune of Rs. 5543 crores against the principal borrowing of Rs.3164 crores. These repayments were made by the petitioner-company without any borrowings from the banks or financial institutions. The lender banks never made any allegation of fraud or diversion of funds or wrongful loss to them and no complaint has been lodged by the lender banks. The FIR has been lodged on the basis of vague and incomplete information. The CBI concealed the important information and did not refer to relevant documents which, if taken into consideration, shall reveal that all financial transactions were bona fide and the losses reflected in the balance-sheets etc.....
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....ly, T. R. Chaddha & Co. LLP flagged the issue of advances to the vendors in its report dated 3rd March 2012 to the effect that an amount of Rs. 778.55 crores was outstanding for more than one year and Rs. 329.62 crores was outstanding for more than six months. It is stated that the petitioner-company did not receive the materials against the purchase orders to M/s. Venerate Multitrading Pvt. Ltd., M/s. Acuity Trading Pvt. Ltd., M/s. Vinamra Multitrading Pvt. Ltd., M/s. Lenity Trading Pvt. Ltd. and M/s. Network Telelink Pvt. Ltd. and gave additional advances of Rs. 344 crores to these parties. The petitioner-company availed short-term loans for working capital but diverted the loan amount through vendors as advances. There is a reference of loan of Rs. 128.05 crores to M/s. Acuity Trading Pvt. Ltd. which, according to the CBI was reportedly a SME vendor of the petitioner-company. The CBI has pleaded as under:- "24. That the averments made in para 5(Z) of the Writ Petition are denied. It is submitted that the sections of the Prevention of Corruptiion Act, 1988 were invoked in the FIR prima facie considering the role of the public servants. The offences u/s 420 IPC and that u....
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....th the terms and conditions of the CDR. Hence, the same were not recovery of the current assets rather were the receipts of the cost of services provided by the borrower company. 26. That the averments made in para 6 to 12 of the Writ Petition are denied except which are the matter of records. That in various judgments the Hon'ble Apex Court has held that the economic offences constitute a class apart and need to be visited with a different approach. The economic offences having deep-rooted conspiracies and involving huge loss of public funds need to be viewed seriously and considered as grave offences affecting the economy of the country as a whole and thereby posing serious threats to the financial health of the country. It is submitted that the instant writ petition may please be dismissed in the interest of justice, as the instant FIR is based on evidence of fraud of huge loan amount of Rs. 4760 Crores and the allegations made in the FIR are getting substantiated during the investigation which is continuing. The investigation is in progress and major evidences are surfacing on record" 7. Mr. Aabad Ponda, the learned senior counsel for the petitioner-company subm....
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....minary Enquiry, the CBI gathered as many as 52 documents a description of which is given in a tabular chart filed in the present proceedings. The CBI collected the loan policy and delegation of lending power to a few lender banks, balance-sheets of M/s. Spruce Trading Pvt. Ltd., M/s. Venerate Trading Pvt. Ltd., M/s. Lenity Trading Pvt. Ltd., M/s. Acuity Trading Pvt. Ltd., M/s. Vinarma Trading Pvt. Ltd. and M/s. Adjuvant Trading Pvt. Ltd. etc.; auditor report and balance-sheet of M/s. Delphic Trading, approval of the assignment of debt to M/s. Edelweiss Asset Reconstruction Company, estimation of recoverability of loan to M/s. Chennai Network Infrastructure Limited and the GTL Infrastructure Limited by the TRC Corporate Consulting Pvt. Ltd. and ITCOT Consultancy & Services Limited, minutes of meetings of Joint Lender Forum, appraisal report in search and seizure under section 132 of the Income Tax Act, the replies received from E & Y, Canara Bank, Steve Lyols, Phoenix ARC, and Forensic Audit Report of the GTL Limited by NBS & Co. If this is to be assumed that the CBI in course of the Preliminary Enquiry gathered sufficient material which prima facie disclosed commission of a cogniza....
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....he Hon'ble Supreme Court observed that there is a need for Preliminary Enquiry before proceeding against the public servant. However, the Manual puts a note of caution under paragraph no.7.2 that the important difference between a business risk and a mala fide conduct of the public servant should be kept in mind. The day when the CBI conducted the Preliminary Enquiry and lodged a crime bearing no. RC2192023E0003 on 21st January 2023, the Prevention of Corruption (Amendment) Act, 2018 was on the statute book. Section 17A which was inserted in the Prevention of Corruption Act puts a bar to conduct any inquiry or investigation into any offences by the police alleged to have been committed by a public servant where the alleged offence is relatable to any recommendation made or decision taken by such public servant in discharge of his official functions or duties without the prior approval of the appropriate Government or the competent authority as the case may be. The bank officials are public servants who are provided a protective umbrella under section 17A to shield them from frivolous complaints. The unknown bank officials could not have come to the Court but this is relevant in the....
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.... taken by the CBI in the background of the inquiries made against the petitioner-company under the supervision of the Ministry of Finance. Through the communication dated 9th October 2015, the details of the GTL Limited, GTL Infrastructure Limited and M/s. Chennai Network Infrastructure Limited were provided to the Ministry of Finance. The Union Bank of India which was the lead bank for GTL Infrastructure Limited stated in the said communication that the petitioner-company had been dealing with the bank since 2002 and availed credit facilities since 2003. It was sanctioned a term loan of Rs. 100 crores for establishing Passive Telecom BPO Infrastructure. The said loan amount was not availed of during the valid period as the Union Bank of India had taken shares of Rs. 100 crores in the project. A loan of Rs. 200 crores was also sanctioned by the Union Bank for the project and there are references of further loans provided to the petitioner-company. In conclusion, it was stated that the revenue projections by the petitioner-company were based on long term commitment of the Aircel Group on existing tower portfolio for 15 years and future tenancy based on tenancy study report of KPMG. ....
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....ld on 11th January 2017. This decision was communicated to the Central Fraud Monitoring Cell of the RBI through a communication dated 1st April 2017. In the said meeting, a decision was taken to remove the red flag qua the petitioner-company from CRILC data. The letter dated 1st April 2017 is reproduced herein below : "April 1, 2017 Ref No: GTL/2017-18/RBI/ General Manager Central Fraud Monitoring Cell, Department of Banking Supervision, Reserve Bank of India, 10/3/8, Nrupathunga Road, P.B.No. 5467, Bangalore-560 001 Dear Sir, Preliminary Enquiry to be conducted into the account of M/s GTL Ltd. with Union Bank of India and IDBI Bank Please refer to your letter Ref. DBS. CO. CFMC/11492/ 23.02.012/ 2015-16, dated April 01, 2016, and the subsequent correspondence on the captioned subject. As advised, IDBI Bank had classified the account of GTL Ltd as Red Flagged and instituted Forensic Audit. A copy of the Forensic Audit Report was forwarded to your office vide our letter no. GTL/2016-17/RBI/748, dated December 28, 2016. Further, on the observations contained in your letter no.BS. CO. CF....
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....ead Bank has got a Forensic Audit conducted into the accounts of M/s. GTL Ltd. IDBI Bank vide letter no. 605/Vig. GTL dated 21.01.2017 has forwarded a copy of the Forensic Audit Report (FAR) to this Department. The same is enclosed for your perusal. 2. IDBI Bank vide letter 766/Vig.G-8 dated 01.04.2017 (copy enclosed) has also informed that FAR was discussed in the JLF Meeting held on 11.01.2017. As many lenders had various queries on the observations made by the auditor, another JLF meeting was convened on 18.03.2017. The lenders in the meeting have concluded that based on the findings of the Forensic Audit Report, clarifications received from the company and further clarifications given by the auditors, there was no conclusive evidence of funds and hence the lenders close the Forensic Audit, without classifying the account as 'Fraud'. Copy of the minutes of the JLF held on 18th March, 2017 is enclosed. 3. CBI may take a further view in the matter. Encl: as above Yours faithfully Mritunjay Singh Under secretary (Vigilance)" 16. In "Rashmi Kumar" [Rashmi Kumar v. Mahesh Kumar Bhada: (1997) 2 SCC 397.], the Hon'ble Supreme Court observe....
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....ny fraud or diversion of any funds. The learned senior counsel submitted that this is an admitted position that the commercial decision taken by the lender banks and financial institutions have turned out to be a sound commercial decision and the petitioner-company has paid more than what was once due to the lender banks and financial institutions and the dissenting banks have accepted the offer of the petitioner-company under OTS Scheme. 18. The allegation of overpricing of the shares and the decision of the consortium of banks to accept the proposal cannot be examined with the standpoint of the Investigating Agency. The share market dynamics, the market forces and prevailing market conditions are important factors which decide the share price at a particular moment. The decision of the consortium of banks to wipe out a certain portion of the loan amount is a commercial decision. Except a lone dissent by the Canara Bank which also subsequently accepted one time settlement proposal for the petitioner-company, there was unanimity in the consortium of banks which accepted the proposal of the petitioner-company. This is a very crucial aspect of the matter that everything was under ....
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....ter is still under investigation. The learned counsel for the CBI, on instructions from the Investigating Officer who is present in the Court, states that wherever some doubt or suspicion had arisen, the Investigating Officer recorded the statements of a few of the directors of the vendor company and the auditors. The learned counsel for the CBI further states that the Investigating Officer has yet not formed his opinion and he is scrutinizing the materials on record. In course of the Preliminary Enquiry, commission of cognizable economic offence which affects the financial stability of the country was found and, therefore, the First Information Report has been lodged and now the CBI has a right to investigate the matter to take it to its logical conclusion. 3. Post the matter on 9th December 2025. To be listed first on Board." 20. The CBI has taken a specific stand that the matter is still under investigation and it has a right in law to investigate the case which prima-facie discloses commission of cognizable offence. The sphere of investigation is well demarcated and the case set up by the CBI in the First Information Report can be examined in the light of unimpeacha....