Criminal investigation based on commercial decisions and inconclusive forensic audits lacks criminality and constitutes an abuse of process.

GTL Infrastructure Limited (GTLIL) sought the quashing of FIR RC2192023E0022 registered by the CBI on August 16, 2023, alleging criminal conspiracy and cheating under Section 120-B r/w 420 IPC and Section 13 of the Prevention of Corruption (PC) Act.

GTLIL had availed credit facilities from a consortium of 19 banks which, following financial distress in the telecom sector (2G spectrum judgment and Aircel insolvency), underwent Corporate Debt restructuring (CDR) and Strategic Debt Restructuring (SDR).

The CBI’s Preliminary Enquiry (PE) alleged that GTLIL diverted loan funds through vendors and that lender banks caused "wrongful loss" by assigning debt to Edelweiss Asset Reconstruction Company (EARC) at a depreciated value instead of selling equity or pursuing SARFAESI actions.

However, a Forensic Audit by M/s. Chokshi & Chokshi LLP found no abnormal transactions or diversion.

Furthermore, the Lead Bank (Union Bank of India) had previously informed the Ministry of Finance that no fraud was detected and there was no need for a CBI complaint.

1. Whether the FIR and subsequent investigation constitute an abuse of the process of law when no prima facie criminality or specific accused (public servants) were identified after a 24-month Preliminary Enquiry

2. Whether the dispute is purely commercial in nature, involving bona fide business decisions by a consortium of banks, thereby ousting criminal jurisdiction

3. Whether the investigation is barred under Section 17A of the Prevention of Corruption Act, 1988

The Court applied the principles of Section 482 CrPC (Section 528 BNSS) regarding the inherent power to quash proceedings to prevent miscarriage of justice.

It relied on Hridaya Ranjan Prasad Verma v. State of Bihar, distinguished mere breach of contract from cheating, necessitating fraudulent intention at the inception of the transaction.

The Court also invoked Section 17A of the PC Act (as amended in 2018), which mandates prior approval for investigating public servants for decisions taken in discharge of official duties.

Further, it referenced Rashmi Kumar v. Mahesh Kumar Bhada regarding the cautious exercise of quashing powers when a defense is supported by unimpeachable documents.

The Court observed that the CBI failed to identify any specific public servant or GTLIL official as an accused even after a two-year PE, indicating a "roving and fishing inquiry".

The court emphasized that the Forensic Audit Report—the primary basis of the CBI's suspicion—actually recorded that vendor transactions were not abnormal, parties were not shell companies, and no fund diversion was detected.

The decision of 18 out of 19 banks to assign debt to an ARC was deemed a "collective business decision" taken in commercial wisdom, which turned out to be sound as GTLIL eventually settled dues with dissenting banks like Canara Bank via OTS.

The Court found no evidence of "deception at the inception," as required for cheating under Section 415 IPC, noting that the financial shortfall was due to external market factors (2G judgment/Aircel collapse) rather than dishonest intent.

It further held that the CBI could not override the commercial discretion of banks or ignore the protective umbrella of Section 17A of the PC Act for bank officials.

The Court ruled that the continuation of the FIR would result in a miscarriage of justice and adversely impact the petitioner’s business.

Holding that the allegations were "completely wiped out" by the Forensic Audit and the lead bank's own assessments, the Court allowed the Writ Petition and quashed the FIR RC2192023E0022 dated August 16, 2023.