NEW DELHI: The Supreme Court on Wednesday directed the Enforcement Directorate (ED) to constitute a Special Investigation Team (SIT) to probe allegations of large-scale bank fraud involving Reliance Communications (RCOM), its group companies and industrialist Anil Ambani, while recording an undertaking that Ambani will not leave the country without the Court’s permission.
A Bench comprising Chief Justice of India Surya Kant and Justices Joymallya Bagchi and Vipul Pancholi said the ED must take all necessary measures to ensure that the investigation is taken to its “logical conclusion”. “ED is well-advised to constitute a SIT comprising senior officers and take all the measures so that the ongoing probe is taken to a logical conclusion,” the Court said.
The direction came amid apprehensions that Ambani could leave India before the completion of the investigation. Senior Advocate Mukul Rohatgi, appearing for Ambani, assured the Bench that his client would not travel abroad without prior permission. “He will not leave the country without the permission of this Court,” Rohatgi said. The assurance was met with skepticism from Solicitor General Tushar Mehta, who pointed out that a similar undertaking given by Rohatgi in an earlier case before the Delhi High Court had not prevented a client from fleeing the country. Rohatgi countered that the individual later returned and repaid substantial dues to the government. Senior Advocate Prashant Bhushan, appearing for petitioner EAS Sarma, questioned the value of such assurances, asking what purpose a statement would serve if a person left the country. Recording the submissions, the Court noted that the ED had assured it would take all preventive measures to ensure the probe is not hindered, while Ambani had committed not to leave India without the Court’s leave.
In a significant direction, the Bench also asked the Central Bureau of Investigation (CBI) to examine whether bank officials had colluded in the alleged fraud. “It is imperative for the CBI to probe the conduct of bank officials to check if funds were released with the collusion of bank officers. The nexus, collusion or conspiracy, if any, must be investigated and all lawful measures adopted to take the probe to its logical end,” the Court said.
The Bench expressed concern over the pace of investigation by both the ED and the CBI, observing that there had been unexplained delays despite the scale of the alleged fraud. It directed both agencies to act promptly, independently and fairly, and ordered them to file status reports within four weeks. The Court also orally remarked that it expected periodic updates on the progress of the investigation, noting the magnitude of the amounts involved. It further observed that the CBI’s FIR was initially registered on a complaint by the State Bank of India (SBI) and later expanded to include complaints from other banks, a course that appeared procedurally questionable.
The case arises from a petition filed by former Union Secretary EAS Sarma seeking a court-monitored investigation, contending that the probes being conducted by the CBI and ED were inadequate. Bhushan submitted that although the FIR was registered in 2021, the first arrest had been made only recently, calling it one of the largest corporate frauds in the country.
A forensic audit commissioned by SBI is stated to have revealed large-scale diversion of funds, including the use of thousands of crores to repay unrelated loans, transfers to related parties, investments in mutual funds and fixed deposits that were immediately liquidated, and complex circular transactions allegedly used to disguise the evergreening of loans.
During the hearing, Bhushan also raised concerns over the misuse of the Insolvency and Bankruptcy Code (IBC), alleging that insolvency proceedings were being used to evade accountability.