HC vacates stay to act on fraud firms
The Telangana High Court on Tuesday vacated its earlier order restricting the Central Bureau of Investigation (CBI) and the Enforcement Directorate (ED) from taking coercive steps against the directors, promoters and others of the firms, whose bank accounts had been declared as fraud by the Reserve Bank of India (RBI). With the new orders, the investigating agencies can go ahead by following due procedure prescribed under the law.
The bank accounts of Transstroy Ltd and its director Sridhar Cherukuri, Ind-Barath Thermal Powers Ltd and its directors Kanumuri Raghurama Krishnam Raju, his wife Rama Devi, family members K. Indira Priyadarshini and some of others, VMC Systems Ltd and its promoters Himabindu and Bhagavathula Venkataramana, V.N.R. Infra and some other firms and persons are on the blacklist.
They approached the High Court in 2020, challenging the declaration of their bank accounts as fraud in an impugned circular issued by the RBI, fraud classification after being reported by some commercial banks and select financial instuitions in 2016. Following that, the RBI declared the accounts of these firms as fraud on the ground they had defrauded the banks, which gave loans to the firms and their owners.
After their accounts were declared fraud, the CBI and the ED registered cases and started investigating the cases. The firms and persons approached the High Court challenging the circular issued by the RBI declaring their accounts as fraud. They also sought to quash the cases filed by the CBI and the ED. Based on this, the court had earlier ordered the probing agencies not to take any coercive step. But, it had not stopped the enquiry proceedings.
On Monday, RBI Counsel Nalini Kumar informed the court that the RBI had issued a circular to protect the banks. B.S. Prasad representing the State Bank of India, which is the lead bank in consortium of banks, and lent money to the some of the firms, informed that at the time of forensic audit, explanation of the petitioners was sought and after that only the banks decided to declare them as fraud account in terms of the circular issued by RBI.
Hearing both the sides, a division bench comprising Chief Justice Satish Chandra Sharma and Justice N. Tukaramji made clear that the interim orders of stay in all connected matters were vacated and the CBI and ED shall be free to proceed in accordance with law.