In a major legal development, the Bombay High Court has quashed FIRs filed by the Central Bureau of Investigation (CBI) against GTL Limited and GTL Infrastructure Limited in an alleged bank fraud case exceeding ₹4000 crore. The decision brings significant relief to both companies in a case that had drawn attention due to the scale of the alleged financial exposure.
A bench led by Chief Justice Shree Chandrashekhar and Justice Gautam A. Ankhad delivered 2 separate judgments on February 27, allowing petitions filed by the companies to quash the FIRs registered in 2023. The cases had also named unknown directors, bank officials, private individuals, vendors and alleged beneficiary groups. In its January 2023 FIR, the CBI alleged that GTL Ltd secured credit facilities of ₹4760.01 crore from a consortium of 24 banks and diverted funds to vendor entities allegedly created with mala fide intent. The agency also claimed the company raised ₹1400 crore through capital non-convertible debentures and misappropriated lender funds.
In a separate August 2023 FIR against GTL Infrastructure Limited, the CBI alleged irregularities in loans from a consortium of 19 banks and financial institutions. Out of a total exposure of ₹11263 crore, around ₹7200 crore was converted into equity shares, while ₹4063 crore remained payable. The agency contended that loan funds were diverted through vendors where goods were allegedly not supplied and advances were later written off. Senior counsel for the companies argued that the FIRs lacked substantive material and that collective commercial decisions by lenders could not be criminalised without clear evidence of fraud.
The High Court observed that there was “no allegation in the FIR that the petitioner-company had dishonest intention at the beginning” or that projections were knowingly false. It stressed that criminal proceedings require specific proof of intent to deceive, which was absent. The bench noted that dissent within a lending consortium does not establish criminality and that disagreements over restructuring cannot automatically amount to fraud. It also found no evidence of undue favour or illegal acts by directors, holding that alleged losses to the public exchequer would not qualify as “wrongful loss” without proof of fraudulent conduct. The court concluded that the CBI could not continue its probe merely hoping an offence might surface, and quashed the FIRs.
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