Mumbai: The Bombay High Court has quashed and set aside First Information Reports (FIRs) filed by the Central Bureau of Investigation against GTL Limited and GTL Infrastructure Limited in connection with an alleged bank fraud exceeding ₹4,000 crore.
A bench led by Chief Justice Shree Chandrashekhar and Justice Gautam A. Ankhad delivered two separate judgments on February 27, allowing petitions filed by the companies seeking quashing of the FIRs registered in 2023. The cases had also named unknown directors, bank officials and private individuals, including vendors and alleged beneficiary groups.
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In its January 2023 FIR against GTL Ltd, the CBI had alleged that the company fraudulently secured multiple credit facilities from a consortium of 24 banks amounting to ₹4,760.01 crore. The agency claimed that the company diverted or siphoned off a substantial portion of the loan funds to vendor entities that were allegedly created and operated with mala fide intent. It further alleged that GTL Ltd raised ₹1,400 crore through capital non-convertible debentures and misappropriated lender funds by extending advances to purported vendors.
In a separate FIR registered in August 2023 against GTL Infrastructure Limited (GTLIL), the agency alleged financial irregularities in availing credit facilities from a consortium of 19 banks and financial institutions. According to the CBI, out of a total loan exposure of ₹11,263 crore, around ₹7,200 crore was converted into equity shares, while ₹4,063 crore remained payable to lenders. The agency contended that GTLIL diverted significant portions of loan funds through vendors, where goods were allegedly not supplied and the advances were later written off.
Senior counsel appearing for the companies argued that the FIRs lacked substantive material and that the companies had been wrongly implicated. They maintained that business decisions taken collectively by lending institutions could not be criminalised in the absence of clear evidence of fraud or dishonest intent.
The High Court, in its rulings, observed that there was “no allegation in the FIR that the petitioner-company had dishonest intention at the beginning” or that financial projections were made knowing them to be false. The bench emphasised that criminal proceedings require specific allegations of intent to deceive, which were absent in the present case.
The court further noted that mere dissent by certain banks within a lending consortium does not, by itself, establish criminality in a collective commercial decision taken by the majority of lenders. It underlined that disagreements among financial institutions over restructuring or revival plans cannot automatically translate into allegations of fraud.
Significantly, the bench observed that there was no evidence of any undue favour extended to or by the companies. It also held that alleged losses to the public exchequer would not qualify as “wrongful loss” in the absence of proof of intentional and fraudulent conduct. The court remarked that the investigating agency had not been able to detect any illegal act or deceit by the directors in the transactions under scrutiny.
Allowing the pleas, the High Court concluded that the CBI could not be permitted to continue its investigation merely in the hope that an offence might eventually be identified. With these observations, the FIRs against both companies were quashed, bringing major relief to GTL Ltd and GTL Infrastructure Limited in the long-running case.
