Former govt Secretary seeks Supreme Court-monitored probe into Anil Ambani–RCOM bank fraud

A public interest litigation (PIL) has been filed before the Supreme Court seeking a court-monitored investigation into what is described as a massive banking fraud involving Reliance Communications (RCOM), its group entities and its former promoter Anil Ambani, alleging systemic diversion of funds, fabrication of accounts and institutional complicity. [EAS Sarma v. Union of India]

Filed by EAS Sarma, former Secretary to the Government of India, the petition asserts that the first information report (FIR) registered by the Central Bureau of Investigation (CBI) on August 21, 2025 and the connected Enforcement Directorate (ED) proceedings cover only a fraction of the alleged wrongdoing. The agencies are not investigating the roles of bank officials and regulators despite detailed forensic audits and independent reports pointing to widespread fraud, it states.

It also states that the findings of systematic fraud and diversion of funds has been judicially affirmed by a decision of the Bombay High Court.

According to the petition, RCOM and its subsidiaries - Reliance Infratel and Reliance Telecom - received loans amounting to ₹31,580 crore between 2013 and 2017 from a consortium of banks led by State Bank of India (SBI).

The plea states that a forensic audit commissioned by SBI allegedly revealed substantial diversion of funds, including thousands of crores used to repay unrelated loans, transfers to related parties, investments in mutual funds and fixed deposits that were immediately liquidated, and complex circular routing of money to disguise evergreening of loans. The audit also noted transactions recorded from bank accounts that had been confirmed as closed, raising concerns of fabrication of financial statements, the PIL reads.

It is claimed that several shell entities and dubious corporate structures - such as Netizen Engineering and Kunj Bihari Developers - were allegedly used to siphon and launder loan funds. It highlights instances where subsidiaries were used to write off large liabilities through sham preference-share arrangements, allegedly causing losses of over ₹1,800 crore.

The petitioner asserts that these findings demonstrate a deliberate, systematic effort to disguise losses, conceal diversion of public funds and manipulate financial reporting.

A central grievance raised in the petition is the nearly five-year delay by SBI in acting upon the forensic audit report it received in October 2020. The bank filed its complaint only in August 2025, which the petitioner claims gives rise to a prima facie inference of “institutional complicity.”

As officers of nationalised banks are treated as public servants under the Prevention of Corruption Act, the petitioner argues that their conduct must be examined as part of the investigation.

The petition also places reliance on subsequent forensic audits and investigations involving other Anil Ambani–led entities. It refers to findings relating to Reliance Capital, which allegedly advanced nearly ₹16,000 crore in inter-corporate deposits to subsidiaries with negative net worth and devalued securities worth over ₹4,000 crore without adequate basis.

A separate investigation found that home finance subsidiaries had diverted thousands of crores to promoter-linked companies. Taken together, the petitioner asserts, these materials show a sustained pattern of financial impropriety across multiple companies in the group.

The PIL further points to allegations of offshore fund diversion amounting to tens of thousands of crores through multiple layers of shell entities, special purpose vehicles and companies incorporated in foreign jurisdictions such as Mauritius, Cyprus and the British Virgin Islands. According to the petitioner, these structures were repeatedly renamed, re-registered and eventually merged into promoter-controlled entities to obscure the money trail. The petition claims that such complex cross-border transactions point to possible violations of the Foreign Exchange Management Act and the Prevention of Money Laundering Act.

The petitioner contends that the present CBI and ED investigations fail to address core issues such as fabrication of accounts, forgery, use of non-existent bank accounts, the role of suspected shell entities, cross-border transactions and corporate layering. It is argued that without probing the involvement of bank officials, auditors, regulators and government authorities, the investigation is constitutionally deficient and violates the right to fair and complete investigation under Article 21.

The plea thus seeks a Supreme Court–monitored investigation covering all forensic audit findings, linked corporate insolvency proceedings and publicly available investigative material. It also requests directions to examine potential offences under the IPC, Prevention of Corruption Act, PMLA, FEMA, Companies Act, SEBI Act, RBI directions and the Insolvency and Bankruptcy Code. The petition states that only judicial oversight can ensure that a matter involving such extensive public-money exposure is thoroughly investigated and that all responsible individuals are held accountable.