HC vacates stay order on CBI, ED probe

Telangana High Court has vacated the order staying investigation by the CBI and the Enforcement Directorate against the bank accounts (which were declared fraud accounts by the Reserve Bank of India) of some private companies.

This paved way for continuation of the probe by the CBI and the ED authorities into the bank transactions of noted companies like Coastal Projects, Ind-Barath, Transstroy, VNR Infra and VMC Systems. The stay vacation order was passed by a bench of Chief Justice Satish Chandra Sharma and Justice N. Tukaramji.

The RBI on July 1, 2016 issued a master circular under section 35-A of Banking Regulation Act declaring bank accounts of the companies as fraud. Challenging this circular, owners of the companies moved the HC.

The petitioners’ counsel contended that issuing the circular without hearing the responses of the companies was against principles of natural justice. The RBI should have permitted directors of the companies to express their version on the matter, he argued.

The lawyer said the RBI had claimed that forensic audit of the accounts of the companies was conducted. However, the said forensic audit report was not given to the company directors, he contended.

Advocate General B.S. Prasad, appearing for State Bank of India made it clear that the RBI had issued circular about the fraud accounts only after conducting the forensic audit of the bank accounts of the companies.

The companies secured hundreds of crores of loans from consortium of banks. Unable to pay back the loan amounts, they applied for liquidation. The matter was posted to April 7 for next hearing.

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Printable version | Jan 17, 2022 4:09:32 PM | https://www.thehindu.com/news/cities/Hyderabad/hc-vacates-stay-order-on-cbi-ed-probe/article37888970.ece

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