GTL INFRASTRUCTURE LIMITED vs CENTRAL BUREAU INVESTIGATION AND ANR.

2026:BHC-AS:10317-DB
WP-3632-24 (GTL Infra)-28.02.26.doc PDP/Panchal
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
CRIMINAL APPELLATE JURISDICTION
WRIT PETITION NO. 3632 OF 2024
GTL Infrastructure Limited } Petitioner
versus
Central Bureau of Investigation & Anr. } Respondents
Mr. D. P. Singh, Senior Advocate with Mr. Sajal Yadav, Ms. Sonam
Gupta, Ms. Apoorva Agrawal, Mr. Prasad Lotlikar, Mr. Essaji
Vahanvati, Ms. Aparna Kulkarni, Mr. Suyash Gadre, Mr. Abhishek
Thote i/b. Mr. Harsh Ghangurde, Advocates for the Petitioner.
Mr. Kuldeep Patil with Mr. Sumitkumar Nimbalkar, Ms. Sanika
Joshi, Mr. Anay S. Joshi and Ms. Saili Dhuru, Advocates for
Respondent No.1-CBI.
Ms. M. M. Deshmukh, In-Charge Public Prosecutor with Mr. S. V.
Gavand, APP for Respondent No.2.
CORAM: SHREE CHANDRASHEKHAR, CJ. &
GAUTAM A. ANKHAD, J.
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Reserved on : 12 December 2025
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Pronounced on : 27 February 2026
JUDGMENT
Per, Shree Chandrashekhar, CJ :
The GTL Infrastructure Limited (in short, GTLIL) which is a
public limited company incorporated under the Companies Act,
1956 seeks quashing of the First Information Report registered on
th
16 August 2023 by the Central Bureau of Investigation (in short,
CBI) vide RC2192023E0022 alleging commission of the offence
under section 120-B read with section 420 of the Indian Penal
Code and section 13(2) read with section 13(1)(d) of the Prevention
of Corruption Act, 1988. It has invoked the jurisdiction of this
Court under Article 226 of the Constitution of India read with
section 482 of the Code of Criminal Procedure, 1973
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(corresponding to section 528 of the Bharatiya Nagrik Suraksha
Sanhita, 2023). This First Information Report is registered against
the GTLIL, unknown public servants and unknown others.
th
2. On the basis of the information dated 14 July 2021, a
Preliminary Enquiry vide PE 2192022E0001 was initiated by the
CBI to inquire into the financial impropriety and irregularity by
the GTLIL in availing credit facilities from the consortium of 19
banks and financial institutions. The basis for registering the FIR
against the GTLIL and the unknown public servants is said to be
the facts revealed in course of the Preliminary Enquiry. It is stated
that the GTLIL was referred for the Corporate Debt Restructuring
(in short, “CDR”) upon expressing its inability to service interest
and pay installments on the credit facilities availed by it from
various banks and financial institutions and its inability to raise
equities and shortfall in the revenues. The CDR approved package
rd
for restructuring dated 23 December 2011 did not work out and
the lender banks decided in the year 2016 to invoke the Strategic
Debt Restructuring (in short, SDR) and out of a total loan of
Rs.11,263 crores, the debt of Rs.7,200 crores was converted into
equity shares and the balance amount of Rs.4063 crores was to be
paid to the lender banks and financial institutions. According to
the CBI, the GTLIL diverted a substantial amount of the loan
funds through different vendors which were not repaid and goods
were not supplied but, later on, written off. This is a fact revealed
during the Preliminary Enquiry that the funds so diverted through
the vendors were invested in M/s. European Projects and Aviation
Ltd. (in short EPAL) or M/s. Chennai Network Infrastructure
Limited (in short, CNIL) or GTLIL during the period 2011-2012 to
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2013-2014. As on 30 June 2018, the GTLIL had outstanding
dues of Rs. 4063.31 crores and this debt was proposed to be
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assigned to M/s. Edelweiss Asset Reconstruction Company (in
short, EARC) but the proposal of assignment of the said debt to
the EARC was not accepted by the Canara Bank which dissented
on the ground that there was no fresh valuation of the
hypothecated/mortgaged assets of the GTLIL to justify the offer of
Rs. 2354 crores by the EARC. The total depreciated value of the
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plants and equipments of the GTLIL as on 31 March 2018 was
Rs. 7944.50 crores and it had 27729 Telecom towers with useful
life of 35 years which could be valued at Rs. 10330 crores
considering the similar deals between M/s. ATC Telecom
Infrastructure and M/s. Vodafone India Ltd. The Preliminary
Enquiry further revealed that huge wrongful loss was caused to
the banks on account of the assignment of 79.3% outstanding
dues valued at Rs. 3224 crores by 13 lender banks including the
Union Bank of India for a consideration of approximately Rs.1867
crores. Though the lender banks were holding 64.97% equity in
the GTLIL by way of 1212.17 crores shares, the lender banks did
not sell their equity in block deal while assigning the debt to the
EARC nor did they proceed against the GTLIL under the
Securitization and Reconstruction of Financial Institutions and
Enforcement of Security Interest Act, 2002 (in short, SARFAESI
Act) to secure their loan from the collateral securities which has
depreciated value of about Rs.7944.50 crores. On the contrary,
the lender banks adopted ARC route with mala fide intention and
caused huge wrongful loss to the banks.
3. In its defence, the GTLIL states that it was incorporated in
the year 2004 and engaged in the business of providing passive
Telecom infrastructure which was registered as an Infrastructure
Provider Category-1 with the Department of Telecommunication,
Government of India. The GTLIL ventured into the network
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outsourcing and passive infrastructure sharing which is a globally
well accepted model and it was offered projects from the leading
players in the CDMA and GSM space. It claims that it worked with
Hutch, Bharti, Aircel, Idea, BSNL, MTNL, Spice in the GSM space
and Reliance and Tata Indicom in the CDMA space and
established itself as a leading player in the network sharing and
passive Telecom infrastructure without having an operator
background. It was awarded for its outstanding contribution to
the Telecom sector and earned and generated revenue to the tune
of Rs.49.66 crores in 2006-07 (EBITDA-Rs.33.61 crores);
Rs.124.58 crores in 2007-08 (EBITDA-Rs.63.16 crores) and
Rs. 220.84 crores in 2008-09 (EBITDA-Rs.114.09 crores). It was
able to make timely repayment to its creditors and earned lenders’
trust. The increasing growth of the Telecom sector in India
included growing new players such as Swan Telecom, Unitech
Wireless, Shyam Systema, Reliance Telecom, Loop, Videocon
Telecom, S Tel etc. This led to huge opportunity and increase in
demand for number of towers and network plans. With a plan for
23,700 Telecom towers by FY-2011, the GTLIL availed credit
facilities from several banks for the proposed expansion. Around
2010, the GTLIL had a long-term commercial arrangement to take
over 17,500 Telecom towers with 21,000 committed tenancies. It
had owned a further commitment to build 20,000 new sites from
the Aircel. Ultimately, the Aircel’s tower portfolio was acquired by
it through a Special Purpose Vehicle, namely, CNIL for a
consideration of Rs.8026 crores.
4. It is further stated that a consortium of 19 lender banks led
by the Union Bank of India provided a debt of Rs.5000 crores and
the promoters infused Rs.3036 crores. For installation and
commencing of the Telecom towers, the GTLIL needed a strong
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and robust supplier base and several vendors were appointed in
consultation with the Aircel. To meet the obligation in timely
manner, the GTLIL provided advance to the vendors so that the
stringent timelines could be met and any penalty for time overrun
could be avoided. The GTLIL narrates several incidents such as
registration of a criminal case against new players, tabling of the
report of the DoT regarding allocation of 2G Spectrum, incessant
increase in rate of interest by the RBI etc. which constituted a
kind of force majeure events. Eventually, the GTLIL lost tenancies
and the revenue generation was not on expected lines. Compelled,
the GTLIL opted for the restructuring of its debt under the CDR
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mechanism. On 31 December 2011, a Master Restructuring
Agreement was executed with the CDR lenders after the
restructuring package of the GTLIL was approved with thorough
due diligence, audit and independent scrutiny by the SBI Capital
Markets Ltd. The lender banks and financial institutions had
agreed to the restructuring package because the GTLIL had
chances of revival. Soon thereafter, the judgment in 2G Spectrum
case was delivered and all licences granted in 2009 were canceled.
The GTLIL suffered huge loss by loosing more than 6000 tenancies
in 2011-12. Due to the investigation in the Aircel-Maxis deal, the
Aircel did not honor its commitment of more than 20,000
tenancies and, therefore, the GTLIL had to cancel its contract with
the vendors which had supplied materials in parts. Adding to the
woes of the GTLIL, the lender banks invoked the SDR mechanism
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in terms of the RBI Notification dated 8 June 2015. As part of the
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SDR scheme, the CNIL was merged into the GTLIL on 22
December 2017 and a part of the debt was converted into equity
with the lender banks holding 51% equity stake. The lender banks
appointed Ernst & Young to run the process for bringing new
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investors but the lender banks could not induct a new investor. In
the meantime, the RBI issued a circular withdrawing the SDR
scheme and the Telecom sector witnessed continuous dip in the
market. The lender banks abandoned the SDR and explored the
possibility of assignment of debt to an ARC. There were other
events in the interregnum which severely affected the market
condition and the viability of the GTLIL, such as, Aircel which was
an anchor client accounting for 43% of the revenues went into
insolvency and the Reliance Communications and Tata Group
decided to exit the industry.
5. It is further stated that the JLF appointed M/s. Chokshi &
Chokshi LLP to carry out the forensic audit of the GTLIL’s
accounts in compliance with a communication issued from the
Department of Financial Services, Ministry of Finance to examine
a possible fraud angle across the banking sector. The Forensic
Audit Report was submitted on examination of the documents
such as statutory auditor’s reports, internal audit reports,
concurrent audit reports, flash report, transfer pricing report,
lenders insurance advisory report etc. But no abnormal
transaction in the books of accounts of the GTLIL was detected.
The Union Bank of India (lead bank) through its communication
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dated 16 October 2019 informed the lender banks that no
instance of any fraud/diversion of funds was detected by the
auditors. In the Swiss auction process, the Edelweiss-ARC and
Bank of America Merrill Lynch submitted bid for Rs.2000 crores
on full cash basis which was increased to Rs.2113 crores and later
on Rs.2400 crores. The EARC was finally declared as the highest
bidder and the sale was approved by the consortium of lender
banks for Rs.2400 crores.
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6. Mr. D. P. Singh, the learned senior counsel for the GTLIL
contended that no fraud was detected in the Forensic Audit Report
and the allegation of causing loss to the lender banks while
assigning the debt of the GTLIL to the EARC is based on
assumptions inasmuch as the statutory auditors and the
statutory Commission of the Income Tax, etc. recorded a clear
finding that even an iota of evidence was not produced in the
proceedings before them to disclose fraudulent transactions. The
Forensic Audit Report records a clear finding that no advances
were given to the vendors during the check period and no payment
was routed back to the GTLIL or CNIL or EPAL through the
vendors. The GTLIL pursued the resolution plan through its letters
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dated 27 March 2018 and 27 April 2018 for recovery of the debt
amount qua the assignment of debts to the ARC. The JLF minutes
disclosed that the lender banks were opposed to equity dilution
and the sale of debts to the EARC was an unanimous decision.
Any representative of the GTLIL was not present in the meeting of
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the JLF held on 3 March 2018 and, in fact, the Union Bank of
India which is the lead consortium bank of the JLF admitted that
the GTLIL was regularly servicing the monthly interest on the
balance debts.
7. The learned senior counsel for the GTLIL further submitted
that the CBI could not identify any public servant involved in the
alleged conspiracy who caused financial loss to the lender banks
and registration of the FIR is barred under section 17A of the
Prevention of Corruption Act, 1988. The GTLIL has paid Rs.19,253
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crores as on 30 September 2025 which includes Rs.1,868 crores
paid to the lender banks under the assignment by the EARC as
against the borrowing of Rs.11,263 crores. The Canara Bank
which was a dissenting voice has received full settlement amount
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under the One Time Settlement (in short, OTS) and has issued a
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discharge letter to the GTLIL on 18 September 2025. The
Forensic Audit by M/s. Chokshi and Chokshi LLP did not observe
any fraud or funds diversion and the transactions in the books of
the borrower were not abnormal. It was a commercial decision of
the lender banks and financial institutions not to sell their equity
in the GTLIL and opted for revival and the CBI cannot exercise its
own wisdom over the lenders’ choice. The dissent by a few lender
banks and financial institutions was a dispute inter se the lender
banks and the assignment of the debts of the GTLIL was within
the parameters of the RBI Master Circular.
8. The GTLIL states that it was provided advances to the
vendors to ensure compliance within the timelines under the
Aircel deal for commissioning of more than 23,000 towers. The
vendors were not the related parties nor any director was common
to the GTLIL. Moreover, the advances provided to the vendors were
from its own funds available to the GTLIL. The vendors received
advances during the FY 2010-2011 and the investments in the
EPAL and CNIL were made in FY 2011-2012 to 2013-2014. In the
Swiss auction by the lender banks and financial institutions, the
GTLIL had no role to play and it was conducted as per the RBI
Master Circular. The GTLIL states that the lender banks and
financial institutions considered the developments in the
interregnum such as the Aircel-Maxis investigation, Sector Y
restructuring, large number of exits in Telecom sector and 2G
Spectrum judgment on account of which the milestones under the
CDR were not achieved. Clause 3.1.5 of the RBI Master Circular
on prudential guidelines on restructuring of advances provided
that a borrower is eligible for debt restructuring if it is not involved
in fraud or malfeasance. We further find that the inquiry into the
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matter expands over a decade and there are reports of the
independent auditors against whom no allegation of collusion is
made. The OTS with the lender banks such as Canara Bank,
Punjab National Bank, IDBI Bank, SIDBI etc. and the decision by
the Income Tax Settlement Commission are such factors which
prima facie controvert the allegation of cheating and conspiracy. A
number of documents including the Forensic Audit Report are
said to be examined by the CBI in course of the Preliminary
Enquiry and the CBI admits that it received other documents as
well which are produced by the GTLIL. However, the CBI has
taken a stand that it is still investigating the matter and
examining a few persons to get clarity in case of any doubt.
9. In our opinion, this is of considerable importance that the
CBI could not identify the accused in course of the Preliminary
Enquiry and the First Information Report has been lodged against
unknown. This is also of equal importance that the CBI is unable
to identify an accused even today. This is an admitted position
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that the source information dated 14 July 2021 which triggered
the Preliminary Enquiry did not provide adequate materials and
the First Information Report was not lodged on that basis. If this
is to be assumed that the CBI in course of the Preliminary Enquiry
gathered sufficient material which prima facie disclosed
commission of a cognizable offence then the CBI must indicate the
name of the accused person or persons or a public servant who
committed serious misconduct to cause loss to public exchequer.
The paragraph no.7.15 of the Manual provides that a regular case
should be registered when sufficient material is collected and it is
felt that outcome of the investigation is likely to culminate in
prosecution. The Manual puts a note of caution under paragraph
no.7.2 that the important difference between a business risk and a
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mala fide conduct of the public servant should be kept in mind.
However, there is no indication, not even a whisper, in the counter
affidavit filed by the CBI that the witnesses made a statement
during the Preliminary Enquiry regarding any foul play on the part
of the GTLIL. There is no statement in the First Information Report
that the witnesses stated anything about the role played by the
GTLIL and collusion or conspiracy between the GTLIL and the
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vendor-entities or the bank officials. The order dated 5 December
2025 passed in the present proceedings records the statement
made in the Court on behalf of the Investigating Officer that
statements of certain individuals have been recorded wherever
there was any doubt as regards any transaction. It was observed
by this Court that the counter affidavit filed on behalf of the CBI is
unsatisfactory but no fresh affidavit was filed by the CBI
indicating the result of investigation conducted so far and only a
vague statement was made in the Court. The order dated
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5 December 2025 passed by this Court reads as under :-
“The original source of information and a copy of the
assessment made by an officer of the Central Bureau of Investigation
(CBI) in a sealed cover are produced in the Court. The said complaint
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was made on 14 July 2021. These documents are returned in a
sealed cover to the Investigating Officer who is present in the Court.
2. Mr. Kuldeep Patil, the learned counsel for the CBI has taken us
through the Forensic Audits Report at page page no.344 onwards. He
has mainly argued on the basis of the counter affidavit filed on behalf
of the CBI and emphasized that the matter is still under investigation.
The learned counsel for the CBI, on instructions from the Investigating
Officer who is present in the Court, states that wherever some doubt or
suspicion had arisen, the Investigating Officer recorded the statements
of a few of the directors of the vendor company and the auditors. The
learned counsel for the CBI further states that the Investigating Officer
has yet not formed his opinion and he is scrutinizing the materials on
record. In course of the Preliminary Enquiry, commission of cognizable
economic offence which affects the financial stability of the country
was found and, therefore, the First Information Report has been
lodged and now the CBI has a right to investigate the matter to take it
to its logical conclusion.
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3. Post the matter on 9 December 2025. To be listed first on
Board.”
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10. Chapter XII of the Code of Criminal Procedure, 1973 deals
with the information to the police and their powers to investigate.
The right, discretion and powers of the police to investigate a case
which may prima-facie disclose the commission of a cognizable
offence was considered unfettered for some time. However, over a
passage of time the right of the police to investigate a cognizable
offence is no longer considered unfettered and the Courts have
held that the police cannot proceed to investigate a case where
there is no criminality or a legal bar. The day when the CBI
conducted the Preliminary Enquiry and lodged a First Information
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Report bearing no. RC2192923E0022 on 16 August 2023, the
Prevention of Corruption (Amendment) Act, 2018 was on the
statute book. Section 17A which was inserted in the Prevention of
Corruption Act puts a bar to conduct any inquiry or investigation
into any offence by the police officer alleged to have been
committed by a public servant where the alleged offence is
relatable to any recommendation made or decision taken by such
public servant in discharge of his official functions or duties
without the prior approval of the appropriate government or the
competent authority as the case may be. The bank officials are
public servants who are provided a protective umbrella under
section 17A to shield them from frivolous complaints. The bank
officials of the consortium banks were discharging their official
duties and there is no allegation that they violated any provision
under the extant circular, guidelines or rules with dishonest
intention. The decision of the Consortium of Banks is approved in
the lenders meeting and the Ministry of Finance has control over
them. Against them, neither any inquiry nor investigation has
been sought be conducted. In our opinion, this cannot be an
argument that the purpose of present investigation is to ascertain
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the identity of unknown accused persons including unknown
bank officials. Such exercise was to be conducted in course of the
Preliminary Enquiry. Surprisingly, not a single individual was
identified by the CBI in the course of the Preliminary Enquiry and
the First Information Report seems to have been lodged only for
making a roving and fishing inquiry.
11. The GTLIL states that the CDR was introduced because of
the shortfall in revenue on account of the volatile telecom sector. It
was a case of non-fulfilment of the contractual obligations on
account of the circumstances beyond the control of the GTLIL. The
GTLIL was not classified for CDR due to any fraud detection or
diversion of funds and no ingredients of the offence of cheating
has been, prima facie, shown by the CBI. The Income Tax
th
Settlement Commission in its order dated 8 November 2013
clearly held that there was no bogus purchase or any evidence
was found of purchases by accommodation bills. Such findings by
the Income Tax Settlement Commission clearly held that the
vendors were genuine and supplies were made. It is submitted
that the entire edifice of lodging the FIR is built on assumptions,
omissions and suppression of material information and
documents. All the vendors and suppliers have been issued PAN
and CIN numbers and provided identifiable addresses. They are
registered with Service Tax and have been filing income tax
returns. The advances were made by the GTLIL after taking due
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approval from its shareholders through postal ballets dated 28
January 2010. The OTS proposals were submitted to the lender
banks and were accepted in principle as communicated to the
GTLIL by the banks.
12. This is a very crucial aspect of the matter that everything
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was under the purview of the RBI and the Ministry of Finance was
aware of every development and decisions of the lender banks. The
lender banks and financial institutions had full disclosures before
them about the viability of the GTLIL and feasibility of the
proposed assignment of debts to the EARC. The lender banks and
the financial institutions made assessments on the basis of the
Forensic Audit Report, prevalent market conditions and followed
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the RBI’s Master Circular dated 1 July 2015. The decision was
taken after due deliberations and the dissent by a few lender
banks was on the ground that a fresh valuation of the assets and
liabilities of the GTLIL was not made. Such dissent by itself cannot
impute criminality to the collective business decision taken by the
majority of the lender banks and financial institutions. The
commercial wisdom and decision of the consortium of banks and
financial institutions are of paramount importance and do not
permit any inquiry or investigation where no case of collusion and
fraud is made out. On the contrary, there shall be an assumption
of the commercial decision being taken in bona fide . There is no
allegation of collusion or conspiracy between the bank officials
and the GTLIL to assign the debts of the GTLIL to the EARC. The
GTLIL is not alleged to have made a false projection to deceit the
lender banks and financial institutions. It is not said to have
forged any document or manipulated the Forensic Audit Report.
The decision to appoint M/s. Chokshi & Chokshi LLP was an
independent decision taken by the lender banks and financial
institutions. The Forensic Audit Report made a categoric
observation that the verification of some of the parties (vendors)
was carried out through the MCA Defaulter Company List/SEBI
Shell Company List and no abnormality was detected in the
dealings of such companies and they were not in the list of
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shell companies. The relevant portions of the Forensic Audit
Report are reproduced herein below :-
“FORENSIC AUDIT REPORT
OF
GTL INFRASTRUCTURE LTD
CHOKSHI & CHOKSHI LLP
CHARTED ACCOUNTANTS
7) Write-off of Capital Advances to certain parties:- The borrower
had given capital advances aggregating Rs. 575 crore prior to our
period under audit, out of which, provision of Rs. 369 crore was made
in respect of 8 parties during the FY 2013-2014 and written off during
FY 2016-17 as per the audited financial statements. Based on audit
procedures (viz visits, financial statements, balance confirmations),
anomalies were identified as referred in the Para G & Exhibits 8 to
11. Certain transactions by certain parties as identified in the report,
in regard to investments/write-off of advances carried forward,
seemed to be unusal and hence explanations were sought.
The borrower explained the rationale for such write off as being
attributable to, subsequent cancellation of contractual commitments
by AIRCEL and several external/internal business exigencies beyond
management control viz, 2G spectrum, telecom operators, shut down,
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unfavorable Arbitration Awards dated 17 April 2017 by the
Honorable Retd. High Court Judge, and the same have been relied
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upon. The borrower explained that as per the Order dated Nov 28 ,
2013 of borrower by the Honorable Bench of the Settlement
Commission, the Commission was of the considered opinion that,
"Action u/s 132 and 133A did not bring out even iota of evidence to
support that any purchase/expenses were in any bogus or not
supported by paper documentation", which have been relied upon.
(Refer Exhibits 12 & 13). Further, despite the limitation of audit
period, a verification of some of these parties was carried out through
the MCA Defaulter Company List/SEBI shell company list based on
available information thereat. None of the said companies indicated
any abnormalities against their names and also were not indicated to
be part of the said Shell list of companies. The above is relied upon.
It is difficult for us to comment upon the source of funds for
investments or the rationale of any transactions/investments by such
parties as limited information was indicated to be available of such
parties financial statements (indicated to be not filed
completely/parties seen under CIRP proceedings)
The replies to the clarifications sought by Canara Bank vide its letter
nd
dated Feb 02 , 2019, to the extent appropriate and within the scope
& audit period, have been incorporated under para L and (Refer
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Exhibit 9 - Detailed profiling of parties along with Management
comments).
8) Operations in Bank account TRA & Non-TRA:- The verification
of payment transactions on sample basis from the operations of the
TRA and non TRA bank accounts indicate utilisation for operational
purposes being capital/revenue expenditures, repayment of bank
dues, tax payments, investments in liquid funds or for term deposits
for temporary purposes.
The borrower's explanations and review of information provided such
as external evidences, viz the relevant Orders of the Honourable High
Court, Honourable Retd. Judge of High Court's Arbitration Award, the
Tax and Transfer Pricing Assessment Orders, the Settlement
Commission orders, the reports of Concurrent auditors (on sample
basis) specifically appointed by the lenders for verification of
operations, revenue, pre-audit of expenditure and resource utilization
for revenue generation and observations therefrom, about the
borrower receiving funds from sales proceeds, redemption of
investments, petty cash deposits, receipts from related parties, etc. in
the TRA & Non TRA accounts and utilisation thereof for
operational/capital/revenue expenditures, repayment of bank dues,
tax payments, investments in liquid funds/for term deposits/for
temporary purposes have been relied upon, which are not indicative of
any unusual/abnormal transactions.
Based on review of reports on sample basis of other independent
agencies for the audit period such as Statutory Auditors' Reports/
Internal Audit Reports/ Concurrent Audit Reports/ Flash Report/
Transfer Pricing Report/ Lenders Insurance Advisory Report, prima-
facie nothing has come to our attention during our audit period which
indicates that transactions in the books of account of the Borrower are
abnormal inter-alia diversion of funds.”
13. This is important to keep in mind that previously there was
an inquiry into the matter and the CBI has taken a decision not to
conduct a Preliminary Enquiry. This decision was taken by the
CBI in the background of the inquiries made against the GTLIL
under the supervision of the Ministry of Finance. Through the
th
communication dated 9 October 2015, the details of GTL
Limited, GTLIL and CNIL were provided to the Ministry of Finance.
The Union Bank of India stated in the said communication that
the GTLIL had been dealing with the bank since 2006 and availed
credit facilities. Most importantly, the Union Bank of India
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provided its opinion to the Ministry of Finance that the entities
were generating profit. This communication summarizes thus:
“Conclusion:
M/s Mott MacDonald, who have done the due diligence of the
telecom towers of CNIL in April 2015 have informed that telecom
towers found to be in order and overall passive infrastructure of
CNIL is in good condition.
Valuation of telecom towers at Rs.48.00 per tower is the valuations
done in the similar structure l.e., Tatas with Quippo (Rs.61.00 lacs)
and ATC with Scel Tlecom (Rs.41.00 lacs per tower).
Revenue projections were based on long term commitment of Aircel
Group on existing tower portfolio for 15 years and future tenancy
based on Tenancy Study Report of KPMG.
M/s Barclays Capital and Citi Group's Global Markets India Pvt
Ltd (financial advisor to ascertain the valuation of the transaction
with Aircel) and SBI Capital Markets Ltd, advisors who carried out
financial appraisal for the Aircel deal were independent agencies
having a good reputation and did not form part of the consortium,
valuations submitted by the consultants were considered
Independently and without conflict of interest.
All the three group concerns namely M/s. GTL Infrastructure Ltd.,
M/s. GTL Ltd. and M/s. Global Holding Corporation Pvt. Ltd were
generating profit.
In view of the foregoing, the bank has not identified the referred account
(GTL) fit to be declared as fraudulent one as on date and the bank has
not come across any adverse opinion on the private persons.
Therefore, we are of the opinion that there is no need to file a complaint
with Central Bureau of Investigation in this regard.
Yours' sincerely,
CK JA (VK JAIN)
GENERAL MANAGER
Copy to: CVO, Union Bank of India, Central Office, Mumbai”
14. The whole case of the CBI seems to have been built on the
Forensic Audit Report which did not confirm any diversion of
funds. The vendor-companies were the registered entities and, in
existence, which supplied goods. The Income Tax Settlement
Commission recorded a categoric finding that the purchases were
genuine and there was no fabrication of documents. The GTLIL
engaged in negotiation with Aircel and secured Rs.900/- crores on
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net basis. This is recorded in the Forensic Audit Report that
petitioner-company did not make any fresh roll-out after the CDR
implementation. To respond to the argument of the CBI that the
debt/equity was wrongly converted at the face value, Mr. S. D.
Singh, the learned senior counsel for the GTLIL contended that
the loan agreements empowered the lender banks and financial
institutions to convert the debt to equity. Section 53 of the
Companies Act did not permit any discount and the shares were
to be issued at the face value. It is further submitted that the
fluctuations in the price was on account of the Aircel’s insolvency
and other market factors. The GTLIL had no role in determining
the price of the shares and it was governed by the regulations. The
lender banks and financial institutions were holding 64.9% equity
in the GTLIL and there is no allegation of putting pressure on
them by the GTLIL to take a particular decision. Moreover, this is
an admitted position that the commercial decision taken by the
lender banks and financial institutions have turned out to be a
sound commercial decision and the petitioner-company has paid
more than what was once due to the lender banks and financial
institutions. The dissenting banks have also accepted the offer of
the GTLIL under the OTS scheme.
15. A few directors in the vendor-entities are the common
directors but they are not part of the GTLIL. Kizhakkeveetil
Prakasan is a sole director of M/s. Venerate Trading Pvt. Ltd.. He
is also one of the directors in M/s. Datalink Informatics Pvt. Ltd.
Vinayak Harishchandra is one of the directors in M/s. Vinamra
Multitrading Pvt. Ltd. and M/s. Acuity Trading Pvt. Ltd. Similarly,
Kamlesh Devashankar Mehta is one of the directors in both, M/s.
Vinamra Multitrading Pvt. Ltd. and M/s. Acuity Trading Pvt. Ltd.
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The Forensic Audit Report of the GTLIL on which Mr. Kuldeep
Patil, the learned counsel for the CBI placed heavy reliance
confirms the existence of six vendor-entities which the CBI
endeavoured to project as shell companies. The remark under
Exhibit-9 of the Forensic Audit Report recorded that (i) the
vendors have done business with the company in past before the
CDR and (ii) the vendor-entities provided their respective balance-
sheets which matched with the balance-sheet of the GTLIL.
Mr. Kuldeep Patil, the learned counsel for the CBI emphasized the
management response at S.No.3 that the physical letters sent to
the vendor-entities were returned undelivered. However, it is
indicated in the said remark that the letters were sent at the last
known address and there was a possible location change. It is
also indicated that some of the vendor-entities are in the process
of liquidation before the NCLT.
16. The allegation of overpricing of the shares and the decision
of the consortium of banks to accept the proposal cannot be
examined with the standpoint of the Investigating Agency. The
share market dynamics, the market forces and prevailing market
conditions are important factors which decide the share price at a
particular moment. The decision of the consortium of banks to
wipe out a certain portion of the loan amount is a commercial
decision. Except a lone dissent by the Canara Bank which also
accepted the OTS proposal for the GTLIL, there was unanimity in
the consortium of banks which accepted the proposal of the
GTLIL. It was a commercial decision of the Canara Bank to dissent
against assignment of the debts to the EARC but finally it has
accepted for settlement of its dues with the GTLIL. The
Preliminary Enquiry continued for 24 months but no specific
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allegation of conspiracy between the bank officials and the GTLIL
is stated in the First Information Report. This is unimaginable
that 18 private/public sector banks joined hands and hatched
conspiracy with the GTLIL to cover up siphoning of funds. The
allegation of not proceeding against the GTLIL under the statutory
regime for recovering the loan amount is merely ipse dixit of the
Investigating Agency. There is no allegation in the First
Information Report that the petitioner-company had dishonest
intention at the beginning and it made projections knowing the
same not to be true. The CBI collected 52 documents in course of
the investigation and, as stated by the Investigating Officer during
the Court proceedings, he has yet to make up his mind whether or
not to file a charge-sheet.
17. The registration of a crime by the police entails serious
consequences. It has adverse impact on the business deals,
present or future, of any business entity. It would certainly impact
the commercial transactions and the business entity may be
debarred from participating in any government contract. It may
diminish its value with the banks, financial institutions and
private arrangements with the other government or private
entities. While all these aspects may not be a determinative factor
but, the inquiry and investigation in a criminal case cannot go on
only for the reason that the police has unfettered powers to
investigate a crime.
18. The offence of cheating as defined under section 415 of the
Indian Penal Code requires (i) deception of a person either by
making a false or misleading representation or by other action or
omission, (ii) fraudulent or dishonest inducement of other person
to either deliver any property or to consent to the retention thereof
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by any person or to intentionally induce that person to do or omit
to do anything which he would not have done or omitted to do if
he were not so deceived and (iii) that act or omission causes or is
likely to cause damage or harm to that person in body, mind,
1
reputation or property. In “ Hridaya Ranjan Prasad Verma” , the
Hon’ble Supreme Court observed that there is a fine distinction
between mere breach of contract and the offence of cheating. Mere
breach of contract cannot give rise to criminal prosecution for
cheating unless fraudulent or dishonest intention is shown right
at the beginning of the transaction. The Hon’ble Supreme Court
further held that it is necessary to show that the accused person
had fraudulent or dishonest intention at the time of making the
promise and mere failure to keep up the promise subsequently is
not sufficient. There was no deception at the inception or
subsequently by the GTLIL. The alleged loss of public exchequer
does not fall within the meaning of wrongful loss in absence of any
evidence, intent and fraudulent act on the part of the GTLIL or
omission by unknown bank officials. There is no allegation of any
favor extended to the GTLIL which was all the time insisting on a
resolution plan for its revival. The CBI could not detect any illegal
act or deceit played by any of the directors of the GTLIL in the
entire transaction. There seems to be an inseparable obstacle in
the stand of the CBI that unknown persons were involved in the
crime. In our opinion, the machinery of criminal justice system
cannot be put in motion for making a roving inquiry. The CBI
cannot be permitted to continue with the investigation in this
matter in a hope that some day it may identify the offender where
no offence is disclosed.
19. The CBI has taken a specific stand that the matter is still
1
Hridaya Ranjan Prasad Verma & Ors. v. State of Bihar & Anr.: (2000) 4 SCC 168.
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under investigation and it has right in law to investigate the case
which prima facie discloses commission of cognizable offence.
However, the sphere of investigation is well demarcated and the
case set up by the CBI in the First Information Report can be
examined in the light of unimpeachable documents produced by
the GTLIL. The registration of an FIR after the Preliminary Enquiry
against unknown bank officials and unknown directors of the
GTLIL indicates the fluid state of affairs. The scope of Preliminary
Enquiry and investigation in a cognizable offence after an FIR is
lodged are different. But then, it is difficult to accept the
proposition that the CBI is still searching for the accused. The
continuance of criminal proceedings against the GTLIL cannot be
permitted on the ground that the Investigating Officer may some
day find the real culprits and form an opinion to file a charge-
sheet.
2
20. In “Rashmi Kumar” , the Hon’ble Supreme Court observed
that such powers should be sparingly and cautiously exercised
and only when the Court is of the opinion that otherwise there will
be miscarriage of justice. The special features of a case and the
defence set up by the accused person through uncontroverted
document can be considered to arrive at a decision whether it is
expedient and in the interest of justice to permit the prosecution
to continue. The registration of the First Information Report affects
the GTLIL in many ways. In a case like the present one, the High
Court can examine the materials on record even though the
investigation is said to be still continuing. On examination of the
materials brought on record by the GTLIL which were collected by
the CBI in course of the Preliminary Enquiry, if it is found that the
allegations in the First Information Report are completely wiped
2
Rashmi Kumar v. Mahesh Kumar Bhada: (1997) 2 SCC 397.
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out then this Court should interfere in the matter and quash the
First Information Report even if minor issues remain unresolved.
There is no doubt that the High Court while taking into
consideration the special facts of the case can quash the criminal
proceedings at a preliminary stage. The power of the High Court is
a wholesome power and seeks to achieve a public purpose that a
criminal proceeding ought not to be permitted where it shall
amount to miscarriage of justice.
21. As a result of the above discussions, we have formed an
opinion that the investigation in RC2192023E0022 registered on
th
16 August 2023 cannot be permitted to continue any further.
This First Information Report requires interference by this Court
and is, accordingly, quashed.
22. Writ Petition No.3632 of 2024 filed by GTL Infrastructure
Limited is allowed.
[GAUTAM A. ANKHAD, J.] [CHIEF JUSTICE]
Digitally signed
by PRAVIN
DASHARATH
PANDIT
Date: 2026.02.28
13:27:44 +0530
PRAVIN
DASHARATH
PANDIT
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