New Delhi
The Supreme Court on Friday agreed to examine a public interest litigation (PIL) seeking a court-monitored investigation into an alleged bank fraud involving more than Rs 1,500 crore of public sector bank funds and the role of asset reconstruction companies (ARCs) in settling debts at a steep discount.
A Bench headed by Chief Justice of India Surya Kant and comprising Justice N. Kotiswar Singh issued notice on the petition and directed that the matter be listed again after four weeks.
The PIL, filed through advocate-on-record Ashwani Kumar Dubey, seeks an investigation by the Enforcement Directorate (ED), the Serious Fraud Investigation Office (SFIO) and the Reserve Bank of India (RBI) into the alleged diversion of public funds and subsequent debt settlement arrangements.
According to the petition, loans and accumulated dues amounting to Rs 1,537.59 crore owed by JKM Infra Projects Ltd were ultimately settled through Prudent ARC Ltd and Phoenix ARC Pvt. Ltd. for just Rs 73.50 crore, resulting in a recovery of less than five per cent of the outstanding amount.
The plea alleges that the Noida-based infrastructure company obtained loans worth around Rs 912 crore from a consortium of public sector banks led by State Bank of India between 2012 and 2015. It claims that the loans were sanctioned against collateral valued significantly below the borrowing amount and that defaults began shortly thereafter.
Citing a forensic audit conducted by Ernst & Young in 2018, the petition alleges that over Rs 902 crore was diverted through shell companies, non-existent vendors and forged documentation. The plea contends that despite findings that allegedly met RBI criteria for classifying the account as fraudulent, no such classification was made and no effective recovery action followed.
The petition further alleges that the debt was transferred between ARCs before being settled in 2025 without attachment of assets, freezing of accounts or coordinated action by enforcement agencies.
Seeking a comprehensive probe under the Prevention of Money Laundering Act, the PIL also calls for accountability of banks, ARCs and other entities involved, along with safeguards to prevent defaulting promoters from regaining stressed assets through discounted settlement arrangements.
