The High Court of Jammu & Kashmir and Ladakh has refused to quash the chargesheets filed in the alleged ₹227 crore J&K Bank loan fraud case involving Aman Hospitality Pvt. Ltd. (AHPL), ruling that the material collected during the investigation discloses a prima facie case that warrants a full-fledged trial.
A bench of Justice Sanjay Dhar dismissed a batch of petitions challenging the chargesheets, observing that the High Court cannot undertake a detailed examination of evidence while exercising its inherent powers under Section 482 of the Code of Criminal Procedure.
The case relates to loans sanctioned by J&K Bank’s Ansal Plaza Branch in New Delhi to Aman Hospitality Pvt. Ltd. for the construction of a five-star hotel project in Shahdara, Delhi. According to the investigation, the company obtained loans totalling ₹227 crore along with a bank guarantee facility of ₹15 crore.
Investigators stated that the bank initially sanctioned a term loan of ₹100 crore and a bank guarantee of ₹5 crore to the company in August 2009. The company subsequently secured a second term loan of ₹50 crore in October 2011, a third term loan of ₹77 crore in January 2012 and a Funded Interest Term Loan (FITL) of ₹47.21 crore in December 2014.
Following an investigation into the first disbursal of ₹35 crore from the initial loan, the Anti-Corruption Bureau (ACB) filed a chargesheet alleging criminal conspiracy, criminal breach of trust, cheating and corruption-related offences. The chargesheet named accused Raj Singh Gehlot, Mohan Singh, Sheela Gehlot, Madhu Bakshi, Aman Hospitality Pvt. Ltd., Ambiance Pvt. Ltd., NGR Consultants Pvt. Ltd., Raj Commercial and Agencies, along with former officials of J&K Bank.
In June 2021, the Jammu and Kashmir Government transferred the investigation to the Central Bureau of Investigation (CBI), which registered a fresh case, carried out further investigation and subsequently filed a supplementary chargesheet before the Special Court.
Before the High Court, the petitioners argued that there was neither any criminal conspiracy nor diversion of loan funds. They contended that the transactions merely reimbursed project expenses already incurred by the turnkey contractor, the hotel project had been completed successfully and forensic audits had not established any fraud.
Rejecting these arguments at the preliminary stage, the High Court observed that the loan sanction conditions clearly required the funds to be used exclusively for the approved project and prohibited their utilisation for any other purpose.
The court noted that the investigation had indicated that loan proceeds were transferred from the designated borrower account to several entities allegedly controlled by the principal accused. It further observed that although the hotel project had ultimately been completed and substantial investment had already been made by the company before obtaining the loans, these facts alone did not rule out the possibility of cheating.
The court clarified that if the dispute had merely involved repayment issues or a one-time settlement without dishonest intent at the time of obtaining the loans, it could have been treated as a civil dispute. However, the material placed on record prima facie suggested diversion, misutilisation and siphoning of loan funds for purposes other than those for which the loans had been sanctioned.
Holding that the evidence collected during the investigation raises sufficient grounds for criminal prosecution, the High Court dismissed all the petitions, allowing the trial to proceed before the competent court.
