Bombay High Court Quashes CBI FIR Against GTL Infrastructure Over ₹11,263 Crore Loan Restructuring

The Bombay High Court on 27 February quashed an FIR registered by the Central Bureau of Investigation (CBI) against GTL Infrastructure Ltd. (GTLIL) concerning alleged irregularities in the restructuring and assignment of loans from a consortium of 19 banks.

A Division Bench comprising Chief Justice Shree Chandrashekhar and Justice Gautam A. Ankhad allowed GTLIL's writ petition and set aside the FIR dated 16 August 2023, which had alleged offences under Sections 120B and 420 of the IPC and provisions of the Prevention of Corruption Act.

The judges held:

“As a result of the above discussions, we have formed an opinion that the investigation in RC2192023E0022 registered on 16th August 2023 cannot be permitted to continue any further. This First Information Report requires interference by this Court and is, accordingly, quashed.”

The case arose from credit facilities totalling Rs. 11,263 crore extended to GTLIL.

Under the Strategic Debt Restructuring (SDR) mechanism in 2016, Rs. 7,200 crore was converted into equity, while Rs. 4063 crore remained outstanding. The CBI alleged that the assignment of 79.3% of the outstanding dues to Edelweiss Asset Reconstruction Company for around Rs. 1867 crore caused wrongful loss to public sector banks.

GTLIL argued that a forensic audit by Chokshi & Chokshi LLP found no diversion of funds or abnormal transactions. The Union Bank of India also communicated that no fraud had been detected and that the account was not fit to be classified as fraudulent.

The Bench noted that, despite a 24-month preliminary enquiry, the CBI failed to identify any specific public servant or director involved in the alleged wrongdoing. Referring to settled law on cheating, the court held that there was no deception at inception or subsequently by GTLIL.

The Court termed the FIR a roving and fishing enquiry into a commercial decision of banks. It further observed:

“There was no deception at the inception or subsequently by the GTLIL. The alleged loss of public exchequer does not fall within the meaning of wrongful loss in absence of any evidence, intent and fraudulent act on the part of the GTLIL or omission by unknown bank officials.”

Accordingly, the Court allowed the writ petition and quashed the criminal proceedings against GTLIL.

For Petitioner: Senior Advocate D.P. Singh with Advocates Sajal Yadav, Sonam Gupta, Apoorva Agrawal, Prasad Lotlikar, Essaji Vahanvati, Aparna Kulkarni, Suyash Gadre, Abhishek Thote, Harsh Ghangurde

For Respondents: In Charge Public Prosecutor M.M. Deshmukh, APP S.V. Gavand, with Advocates Kuldeep Patil, Sumitkumar Nimbalkar, Sanika Joshi, Anay S. Joshi, Saili Dhuru