GTL LIMITED THROUGH MILIND BAPAT v. CENTRAL BUREAU INVESTIGATION AND ANR.
Quashing of FIR - Distinction Between Business Risk and Criminality - CBI Prohibited from Conducting Roving Inquiries into Bona Fide Commercial Decisions of Banks.
Court: Bombay High Court
Citation: 2026:BHC-AS:10318-DB
Decision Date: 27-02-2026
List of Laws
The Indian Penal Code, 1860; The Code of Criminal Procedure, 1973; The Prevention of Corruption Act, 1988; The Prevention of Corruption (Amendment) Act, 2018; Section 17A of the Prevention of Corruption Act; Section 482 of the Code of Criminal Procedure; Law of Cheating (Section 415 IPC)
- Facts: GTL Limited (the Petitioner) was accused by the Central Bureau of Investigation (CBI) of fraudulently obtaining credit facilities worth Rs. 4760.01 crores from a consortium of 24 banks and siphoning funds through vendor companies. The CBI registered an FIR in January 2023 following a Preliminary Enquiry (PE) initiated in 2021. The CBI alleged that advances were made to vendors without actual supply of materials and that funds were routed back to the company. Conversely, the Petitioner argued that the advances were recovered, the banks had not declared the account as "fraud", and the Joint Lender Forum (JLF) had actually removed the "Red Flag Account" (RFA) status after forensic audits. Furthermore, the Income Tax Settlement Commission had previously found the purchases to be genuine. Notably, the CBI had closed a previous inquiry into the same matter in 2018 under the direction of the Ministry of Finance.
- Procedural Posture: The Petitioner filed a Writ Petition under Article 226 of the Constitution of India read with Section 482 of the Code of Criminal Procedure, 1973, seeking to quash the FIR registered by the CBI.
- Issue: Whether the FIR and the ensuing criminal proceedings against GTL Limited should be quashed on the grounds that the allegations do not prima facie constitute a cognizable offence and amount to a roving inquiry into a bona fide commercial transaction?
- Holding: Yes, the Court allowed the petition and quashed the FIR.
- Reasoning: The Court reasoned that the CBI failed to identify any specific individual or public servant involved in the alleged conspiracy despite an 18-month Preliminary Enquiry. It observed that the consortium of banks, overseen by the RBI, had made a collective commercial decision and found no evidence of fraud or diversion of funds. The Court emphasized the distinction between "business risk" and "mala fide conduct", noting that mere breach of contract or failure to keep a promise does not constitute cheating under Section 415 of the IPC unless dishonest intention exists at the inception. Furthermore, the CBI’s registration of an FIR against "unknown" persons after a lengthy PE indicated a "roving and fishing inquiry". The Court held that continuing the investigation would be a miscarriage of justice, especially since previous inquiries by competent authorities had concluded there was no foul play and the loans were largely repaid or settled through One Time Settlement (OTS) schemes.
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