The Bombay High Court has quashed a First Information Report registered by the Central Bureau of Investigation (CBI) against GTL Limited and others in connection with alleged diversion of loans worth ₹4,760 crore obtained from a consortium of banks. The Court held that the investigation could not be continued in the absence of identifiable accused or material establishing criminal intent.
A Division Bench comprising Chief Justice Shree Chandrashekhar and Justice Gautam A. Ankhad allowed a writ petition filed by GTL Limited seeking quashing of the FIR registered on 21 January 2023 under Sections 120-B and 420 of the Indian Penal Code and provisions of the Prevention of Corruption Act, 1988.
The FIR alleged that the company fraudulently availed credit facilities from a consortium of 24 banks and diverted loan funds by advancing large amounts to vendor companies that allegedly supplied goods far below the value of the advances. The CBI claimed that part of the funds was routed through vendor entities and group companies, causing wrongful loss to lender banks.
However, the High Court noted that despite conducting a preliminary enquiry for nearly 18 months, the CBI had registered the FIR against “unknown directors”, “unknown bank officials”, and “unknown vendors”, without identifying any specific individual responsible for the alleged offence.
The Court observed that the forensic audit conducted into the company’s accounts did not conclusively establish diversion of funds or fraud. It also noted that the consortium of lender banks had, after deliberation, decided not to classify the company’s account as fraudulent.
Emphasising the distinction between commercial disputes and criminal liability, the Bench held that decisions taken by banks regarding restructuring, settlement, or commercial arrangements cannot be examined through the lens of criminal prosecution in the absence of evidence of deception or dishonest intention at the inception of the transaction.
Holding that criminal proceedings cannot be permitted merely to conduct a speculative or roving inquiry, the High Court quashed the FIR and allowed the writ petition filed by GTL Limited.
Appearances :
Mr. Aabad Ponda, Senior Advocate with Mr. Manoj Mohite, Senior Advocate, Mr. Sajal Yadav, Ms. Sonam Gupta, Ms. Apporva Agrawal, Mr. Prasad Lotlikar, Mr. Essaji Vahanvati, Ms. Aparna Kulkarni, Mr. Suyash Gadre, Mr. Abhishek Thote i/b. Mr. Harsh Ghangurde, Advocates for the Petitioner.
Mr. Kuldeep Patil with Mr. Sumitkumar Nimbalkar, Ms. Sanika Joshi, Mr. Anay S. Joshi and Ms. Saili Dhuru, Advocates for Respondent No.1-CBI.
Ms. M. M. Deshmukh, In-Charge Public Prosecutor with Mr. S. V. Gavand, APP for Respondent No. 2
