RCOM bank fraud: Supreme Court frowns upon reluctance by probe agencies, orders time-bound investigation

The Supreme Court on Monday took exception to the manner in which investigating agencies had proceeded in the Reliance Communications banking fraud matter directed that the probe be carried out in a time-bound, fair and independent manner. [Eas Sharma vs Union of India].A Bench of Chief Justice of India (CJI) Surya Kant, Justice Joymalya Bagchi and Justice Vipul M Pancholi directed that the probe be carried out in a time-bound, fair and independent manner.“We cannot direct whom to arrest but the investigating agency, the way they have shown reluctance is not acceptable. They should come out in time bound manner as to what has been found out. Your investigation should reveal what has been done and must inspire confidence not only in us but everybody,” the Court said.It was hearing a plea seeking a court-monitored investigation into the alleged banking fraud involving Reliance Communications (RCOM), its group entities and Anil Ambani..Ambani is currently being probed by the Enforcement Directorate (ED) and the Central Bureau of Investigation (CBI) in connection with the fraud..According to the petition filed by former civil servant EAS Sarma before the Court, 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).As per the plea, a forensic audit commissioned by SBI 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.According to the petition, the agencies were not investigating the roles of bank officials and regulators despite detailed forensic audits and independent reports pointing to widespread fraud.On February 4, the Supreme Court had directed the Enforcement Directorate to constitute a Special Investigation Team (SIT) to probe the allegations.The Court had also directed CBI to ensure that any possible collusion by bank officials in the alleged fraud is investigated..During the hearing today, Solicitor General Tushar Mehta, appearing for the authorities, informed the Court that a Special Investigation Team of Enforcement Directorate officers has already been constituted.Advocate Prashant Bhushan, for the petitioner, told the Court that despite material already being available, the investigation had not moved with the urgency the matter warranted. “SEBI has already submitted a report that this is a scheme to siphon off money and yet CBI has not effected any arrests so far,” he said.."Arrests have been made. We cannot made random arrests,” SG Mehta responded..The Court, however, expressed its dissatisfaction with the pace and manner of the probe.SG Mehta assured the Bench that he will communicate the same to the investigating authorities. He also highlighted that assets worth ₹15,000 crore have been attached.“I will communicate harshly to the authorities. But assets worth ₹15,000 crore have been attached as well.”.Meanwhile, Anil Ambani filed a supplementary affidavit before the Court stating that the disputes before the court are commercial in nature, between lenders and borrowers, and can be resolved through a structured financial settlement.He asked the court to constitute a lenders' committee led by State Bank of India and Bank of Baroda to determine the actual dues owed across Reliance Group companies..The Bench went on to pass a detailed order pressing both the CBI and the ED to carry the probe to its logical end without delay. “This is a case where senior functionaries of the investigating agencies must join hands and make vigorous attempts to unearth the irregularities/illegalities and the connivance of public functionaries, specially the financial institutions, if any, in giving undue benefit to the [...]. While we do not express any opinion on the merits of the allegations, all that we wish to observe is that it is imperative upon the CBI and the ED to complete the investigation in a most dispassionate, fair, transparent and independent manner and take the ongoing investigations to logical conclusion in a time-bound manner," the order said. .The order also recorded the assurance given by the Solicitor General to the Court. “Learned SG assures that no stone shall be left unturned to unearth the truth and that endeavor shall be made to complete investigation in 4 weeks”.The Court also took note of the ED’s status report stating that an SIT had been constituted comprising an Additional Director, two Deputy Directors and four Assistant Directors of the ED. It further noted that forensic analysts and two staff members of Bank of Baroda have also been made part of the SIT and that investigation into eight cases has commenced.The order additionally referred to the material said to have surfaced during the probe.The Bench directed all stakeholders including financial institutions to cooperate with the probe so that the ED is able to proceed unhindered..[Read Live Coverage]