The High Court of Karnataka on Tuesday ordered the issue of notice to the State government on a petition filed by the Union Bank of India seeking a direction to transfer to the Central Bureau of Investigation (CBI) the investigation being carried out by the State police into the multi-crore financial scam at the Maharshi Valmiki Scheduled Tribes Welfare Development Corporation.
The UBI had filed the petition for transfer of investigation while contending that it is the CBI that is authorised to investigate the probe involving employees of the public sector banks when the amount of alleged fraud exceeds rupees ₹30 crore.
The UBI had filed an FIR with the CBI on June 3 as some of the officials of the bank were found to be involved with the officials of the Corporation in the transfer of crores of rupees from the corporation’s account maintained in UBI’s M.G. Road branch in Bengaluru to various accounts illegally.
Justice M. Nagaprasanna, before whom the petition came up for hearing, has adjourned further hearing till August 7 while directing the State government to file its statement of objections.
Earlier, Attorney General of India R. Venkataramani, who appeared for the UBI in his personal capacity, contended that the probe into the bank frauds involving officials of the public sector banks will have to be probed by the CBI when the amount of alleged fraud exceeds ₹50 crore as per the master circulars issued by the Reserve Bank of India (RBI).
When the RBI, the statutory body controlling the banks, mandates that investigation into bank frauds of certain type will have to be conducted by the CBI it is necessary that the investigations by the State agencies will have to be transferred to the CBI as per the intent of the statutory framework, which require probe by the CBI in such cases.
Today, even fraud in a small domestic bank may have international ramifications, Mr. Venkataramani said while pointing out that once the bank has entrusted the matter to the CBI, it cannot appear before the state investigating agency for investigation and the State should also follow suit and entrust the matter to the CBI.
Meanwhile, the UBI, in its petition, has said that the State government has not responded to its June 19 representation for transferring the probe into the FIR registered by the State police on the alleged scam to the CBI as per statutory requirement in terms of RBI’s mandate.
No coercive action
Meanwhile, the court also continued its earlier interim orders on the petitions filed by UBI’s Managing Director and CEO A. Manimekhalai, Executive Directors Nitesh Ranjan, S. Ramasubramanian, Sanjay Rudra and Pankaj Dwivedi, questioning FIR registered against them by the State police. The court had directed the State police not to take any coercive action against them while asking the petitioners to cooperate with the probe.
