The Supreme Court on Friday issued notice on a plea seeking a court-monitored probe into an alleged ₹1,500-crore banking fraud involving public sector banks, Asset Reconstruction Companies (ARCs), and infrastructure company JKM Infra Projects Ltd. The petition seeks a court-monitored investigation by agencies including the Serious Fraud Investigation Office (SFIO), Enforcement Directorate (ED), Reserve Bank of India (RBI), Securities and Exchange Board of India (SEBI), and Central Bureau of Investigation (CBI) into an alleged systemic misuse of the ARC framework.
During the hearing, Senior Advocate Meenakshi Arora opposed the plea, contending that the dispute was essentially a family feud between promoters and multiple proceedings on the same allegations had already been pursued before various forums, including the Delhi High Court, NCLT and investigating agencies. Referring to previous litigation, she submitted that writ petitions seeking investigation had either been dismissed or withdrawn and argued that the present PIL was another attempt by one brother to pursue a personal vendetta against the other.
However, Advocate Ashwinin Kumar Dubey submitted that– “The entire loss of public money, you fight yourself, this is your family dispute. But why are you opposing investigation by the SFIO? Why are you opposing investigation by the ED?”
the Bench of Chief Justice Surya Kant and Justice V Mohana expressed concern about the allegations involving public money and questioned why investigations by specialised agencies should be opposed.The Bench observed that while there may be a family dispute between the promoters, the allegations concerning public sector bank loans raised issues beyond a private dispute.
The Court noted that if public funds had been advanced and subsequently written down through settlements, the matter warranted scrutiny from a larger public interest perspective.
When counsel argued that the debt assignment and settlement process fell within commercial decisions taken by banks and ARCs, the Bench acknowledged the limits of judicial review over commercial wisdom but simultaneously voiced concern about the broader implications. The Court said:
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“We know our limitations to go into commercial wisdom of the banks. But if this is the commercial wisdom, that you collect taxpayers’ money, public money, release it as loans and then make no effort to recover it, we are concerned.”
Background of the case
The petition alleges that a consortium of banks led by SBI extended loans to JKM Infra, after which a forensic audit by Ernst & Young reportedly identified large-scale fund diversion through shell entities and other suspicious transactions. The petition further claims that debts running into hundreds of crores were later assigned to ARCs and eventually settled at substantial discounts.
Counsel for the company disputed the allegations, contending that the loans had been assigned through recognised ARC mechanisms and that banking authorities had previously examined the matter. He also argued that numerous other debt assignments occur across the banking sector and that the petition selectively targeted a single company.