CBI to probe ₹727-crore loss in coal workers’ provident fund investment; Jharkhand High Court orders FIR

The petitioners sought, among other reliefs, a direction for investigation into the loss of approximately ₹727.67 crore suffered by the Coal Mines Provident Fund Organisation (CMPFO) following its investment of about ₹1,300 crore in Dewan Housing Finance Corporation Limited (DHFL).

The petitioners alleged that CMPFO officials failed to withdraw the investment despite financial experts’ warnings and that the matter had not been meaningfully investigated.

CMPFO’s Regional Commissioner-II stated that a major penalty proceeding had been initiated against former Commissioner Animesh Bharti but also characterised the matter as a commercial loss that did not warrant a separate FIR, before the departmental proceeding had concluded.

By an earlier order, the Court had directed certain respondents to file affidavits addressing, among other matters, whether criminal action would be initiated; only the CBI filed an affidavit, stating that it was willing to investigate the CMPFO–DHFL transaction if directed.

Whether the material on record disclosed a prima facie case and exceptional circumstances warranting a direction under Article 226 for the CBI to register an FIR and investigate the CMPFO–DHFL investment and resulting loss.

Whether the petitioners were entitled to compensation at this stage, before the investigation’s outcome.

Article 226 confers plenary power on a High Court, but a direction transferring an investigation to the CBI must be exercised sparingly and cautiously, not merely because allegations have been made; the record must disclose a prima facie case and the circumstances must justify independent investigation to secure credibility, public confidence, or complete justice.

The Court relied on State of West Bengal v. Committee for Protection of Democratic Rights, (2010) 3 SCC 571, and Secretary, Minor Irrigation & Rural Engineering Services, U.P. v. Sahngoo Ram Arya, (2002) 5 SCC 521, on the exceptional exercise of this power; Dr. Manik Bhattacharya v. Ramesh Malik, (2022) 17 SCC 781, on the requirement of a prima facie case; and Legislative Council, U.P., Lucknow v. Sushil Kumar, 2025 INSC 1241, on the need for prima facie disclosure of offences and a justification for central-agency investigation, including complexity, scale, or wider ramifications.

The Court also recognised that investment loss or commercial error alone does not establish criminal liability; criminal liability requires dishonest intention.

The Court considered the substantial public-fund loss, the continued exposure of approximately ₹1,300 crore despite repeated expert warnings, and the connection to DHFL, aspects of whose affairs were already under CBI investigation.

Together, these circumstances raised prima facie questions about the decisions made, the persons who made or influenced them, and possible extraneous considerations or collusion—questions requiring investigation rather than judicial determination at this stage.

The absence of meaningful inquiry, the premature description of the loss as purely commercial, and the failure of relevant respondents to provide the directed affidavits reinforced the need for an independent investigation, though the Court stated that its conclusion did not rest merely on the non-filing of affidavits.

The Court therefore found the threshold for exceptional intervention under Article 226 satisfied, while leaving the existence of offences to be determined through investigation.

The respondents were directed to cooperate and provide relevant records.

The departmental proceedings against Animesh Bharti were to continue independently and be concluded expeditiously; the premature “clean chit” in the CMPFO affidavit was to be disregarded.

The Court declined to order compensation as premature, while preserving the petitioners’ liberty to renew that claim at an appropriate stage.

Its observations were expressly characterised as prima facie and not findings on the merits or against persons not heard.

The petition was disposed of without costs.