The Delhi High Court has issued notice on a petition filed by CG Power and Industrial Solutions Limited seeking quashing of a supplementary prosecution complaint lodged by the Directorate of Enforcement (ED) under the Prevention of Money Laundering Act, 2002 (PMLA), along with all consequential proceedings, including the Special Court’s order dated 30 August 2025 and summons dated 3 September 2025.
The petition arises from allegations pertaining to the period 2015–2019, when CG Power was under the control of its erstwhile promoter group, Avantha Group, led by Gautam Thapar. Subsequently, in 2020, the company underwent a comprehensive resolution under the RBI’s Prudential Framework for Resolution of Stressed Assets, resulting in a complete change of ownership. Tube Investments of India Ltd. (TIIL) acquired majority control, replacing the prior promoters.
In 2021, a CBI FIR was registered on a complaint by lender banks alleging offences under various provisions of the IPC and the Prevention of Corruption Act, 1988. Based on this, the ED registered an ECIR and later filed a supplementary prosecution complaint, arraying CG Power as an accused and flagging seven transactions in which borrowed funds were allegedly diverted to Avantha Group companies for their benefit.
Senior Advocate Sidharth Luthra, appearing for CG Power, contended that under the RBI Prudential Norms, once a borrower company undergoes resolution with replacement of defaulting promoters and is completely delinked from the erstwhile management, criminal proceedings can continue only against the old promoters/management and not against the restructured company. It was argued that the RBI directions have statutory force, that CG Power has fully complied with the settlement and all debts stand resolved, and that continuation of proceedings against the company under the new, unrelated management would amount to an abuse of process and a grave miscarriage of justice.
Opposing the plea, ED Special Counsel Anupam S. Sharma submitted that the Prudential Norms does not grant criminal immunity to the restructured company and that CG Power remains liable for offences allegedly committed during 2015–2019.
The Court took note of Norm 34 of the RBI Prudential Norms, which states that while borrowers involved in fraud or wilful default are generally ineligible for restructuring, where existing promoters are replaced and the borrower company is totally delinked from them, lenders may permit restructuring without prejudice to the continuance of criminal action against the erstwhile promoters/management. The petitioner relied on this provision to argue that post-resolution, prosecution should survive only against former promoters and management.
Observing that the issue requires consideration, Justice Ravinder Dudeja issued notice to the ED, granted time to file a reply, and listed the matter for February 24, 2026. In the interim, the High Court directed the trial court to adjourn the proceedings qua CG Power to a date subsequent to the hearing before the High Court, effectively granting interim protection to the petitioner-company.
Appearances:
For the Petitioner: Mr. Sidharth Luthra, Sr. Adv. with Mr. Shri Singh, Mr. Nikhil Vashney, Mr. Vineet Unnikrishnan, Mr. Ishu Gupta, Mr. Ansh Asawa, Ms. Sonu Bhasi, Ms. Shruti Bhutaaa, Mr. Nav Teji, Ms. Arunima, Advs.
For the Respondent: Mr. Anupam S. Sharma, Special Counsel, with Ms. Harpreet Kalsi, Mr. Vashisht Rao, Mr. Ripudaman Sharma, Ms. Riya Sachdeva, Advs.
