2020 (7) TMI 837 - HC - Companies Law

Fraudulent transactions - Existence of fraud or mis-appropriation or not - requirement of registration of FIR - HELD THAT - Since the learned SPP for the CBI is not present today the Investigating Officer on his behalf submits they intend to file a reply. Be filed within two weeks from today with an advance copy to the learned counsel for the petitioner. List on 30.07.2020 and till then the order dated 10.06.2020 passed in W.P.CRL.645/2020 shall be applicable in the present two matters also.

Summary

Issues:
1. Exemption allowed subject to filing sworn affidavit and court fee.
2. Incorporation and loan details of M/s. ESL and M/s. ESPL.
3. Loan restructuring process and approvals.
4. Initiation of insolvency proceedings by M/s. ESL.
5. Complaints filed against M/s. ESL and subsequent investigations.
6. Circulars issued by CVC regarding banking fraud complaints.
7. Filing of multiple complaints with CBI and registration of FIR.
8. Previous investigations by EoW and CBI finding no fraud.
9. Court order directing CBI to provide detailed report on previous complaints.
10. Stay on investigation and directive for detailed reply/status report.

Analysis:
1. The petitioners were granted exemption subject to the condition of filing sworn affidavits and requisite court fees within 72 hours upon the resumption of the court's regular functioning.

2. M/s. ESL and M/s. ESPL availed loan facilities from a consortium of banks, with M/s. ESL initiating insolvency proceedings under the Insolvency and Bankruptcy Code in May 2017. The resolution professional appointed affirmed no fraudulent transactions.

3. Despite complaints filed against M/s. ESL, investigations by EoW and CBI did not find any fraud. Circulars from CVC directed PSBs to refer complaints to the Advisory Board of Banking Fraud before filing with investigating agencies.

4. Multiple complaints were filed with CBI against M/s. ESL, with a subsequent FIR registered in February 2020. The court directed CBI to provide a detailed report on previous complaints and investigations.

5. Previous investigations by EoW and CBI did not find any fraud or misappropriation, and the Resolution Professional confirmed the absence of fraudulent transactions. The court ordered a stay on the investigation and directed CBI to file a detailed reply/status report.

6. The court emphasized the need for following established procedures in bank fraud cases and sought clarification on the complicity of any public servant in the investigations. The case was listed for further proceedings on a specified date.