NEW DELHI: Observing that financial frauds were being committed with greater finesse nowadays with the help of technological innovations, the Supreme Court on Wednesday underscored the need to have a specialised agency to deal with such cases and said that a CBI probe in all cases was not required.
While hearing a petition alleging that the Centre and the Reserve Bank of India were not taking strict action against corporate houses and industrialists defaulting on paying back loans taken from public sector banks and seeking a CBI probe against them, a bench of Justices Sanjay Kishan Kaul, Abhay S Oka and B V Nagarathna said “unleashing” the CBI in all cases of financial frauds would not be advisable, particularly in those cases in which multiple investors had been cheated.
Advocates Prashant Bhushan and Pranab Sachdeva, appearing for the petitioner NGO, pressed for a CBI probe on the ground that a government-appointed committee itself had recommended that the CBI should be brought in to probe cases where the amount of default was more than Rs 50 crore as the local police might not be able to carry out investigation properly in big cases. They said that as per the recommendations, the passport of the defaulter should be seized and prosecution be done by a fast-track court.
With the RBI contending that it could not pass any direction for fast-track courts and seizure of passports as the issues fell in the government’s domain, the bench asked solicitor general Tushar Mehta to look into it and file a response.
“Some concern has to be addressed. You have to think about it. If you unleash the CBI in every case then there are consequences which will follow… If someone has done wrong, he has to face its consequences. But are all cases needed to be probed by the CBI? …it troubles us. The CBI should concentrate on huge default cases. If you burden the CBI with all cases then nothing will happen. Everybody would be left high and dry. We have seen in many cases,” the bench said.
The bench then pointed out that financial frauds and scams were being done with the use of advanced technology and said that a specialised agency was needed to deal with such cases. It said that law enforcement agencies would have to keep up with technological advancement to crack such cases and expressed concern that India was lagging on that front despite being a software giant.
When Bhushan submitted that CBI probes should be directed in all large financial frauds as PSU banks disburse loans to corporate houses on the instructions of ministers and government officials, the solicitor general opposed it. But the bench said, “He (Bhushan) seems to have great faith in the CBI.” Bhushan replied that the CBI was “relatively free”.
The bench thereafter granted six weeks time to the Centre to file its response on measures to be taken, including preventive ones, to deal with cases of financial fraud.
The petitioner had alleged that banks were reluctant to initiate criminal proceedings against defaulting corporate houses and urged the court to direct banks and financial institutions to enforce RBI’s 2016 circular. Even the Central Vigilance Commission has issued a circular in 2018 saying that all public sector banks should report financial frauds to local/state police and the CBI, the petitioner added.
While hearing a petition alleging that the Centre and the Reserve Bank of India were not taking strict action against corporate houses and industrialists defaulting on paying back loans taken from public sector banks and seeking a CBI probe against them, a bench of Justices Sanjay Kishan Kaul, Abhay S Oka and B V Nagarathna said “unleashing” the CBI in all cases of financial frauds would not be advisable, particularly in those cases in which multiple investors had been cheated.
Advocates Prashant Bhushan and Pranab Sachdeva, appearing for the petitioner NGO, pressed for a CBI probe on the ground that a government-appointed committee itself had recommended that the CBI should be brought in to probe cases where the amount of default was more than Rs 50 crore as the local police might not be able to carry out investigation properly in big cases. They said that as per the recommendations, the passport of the defaulter should be seized and prosecution be done by a fast-track court.
With the RBI contending that it could not pass any direction for fast-track courts and seizure of passports as the issues fell in the government’s domain, the bench asked solicitor general Tushar Mehta to look into it and file a response.
“Some concern has to be addressed. You have to think about it. If you unleash the CBI in every case then there are consequences which will follow… If someone has done wrong, he has to face its consequences. But are all cases needed to be probed by the CBI? …it troubles us. The CBI should concentrate on huge default cases. If you burden the CBI with all cases then nothing will happen. Everybody would be left high and dry. We have seen in many cases,” the bench said.
The bench then pointed out that financial frauds and scams were being done with the use of advanced technology and said that a specialised agency was needed to deal with such cases. It said that law enforcement agencies would have to keep up with technological advancement to crack such cases and expressed concern that India was lagging on that front despite being a software giant.
When Bhushan submitted that CBI probes should be directed in all large financial frauds as PSU banks disburse loans to corporate houses on the instructions of ministers and government officials, the solicitor general opposed it. But the bench said, “He (Bhushan) seems to have great faith in the CBI.” Bhushan replied that the CBI was “relatively free”.
The bench thereafter granted six weeks time to the Centre to file its response on measures to be taken, including preventive ones, to deal with cases of financial fraud.
The petitioner had alleged that banks were reluctant to initiate criminal proceedings against defaulting corporate houses and urged the court to direct banks and financial institutions to enforce RBI’s 2016 circular. Even the Central Vigilance Commission has issued a circular in 2018 saying that all public sector banks should report financial frauds to local/state police and the CBI, the petitioner added.