Bombay High Court Grants Bail to Vishwanath Rao in CBI Bank Fraud Case Over Generic Allegations

The Bombay High Court granted bail on August 25, 2026, to Vishwanath Devaraja Rao, a former Senior Vice President and Joint President of the Reliance Communications group, in a CBI bank fraud case, holding that the prosecution's allegations were "generic" and lacked specific evidence of any overt act by the applicant.

Justice Milind N. Jadhav, presiding over the Criminal Appellate Jurisdiction, allowed Bail Application No. 3030 of 2026, noting that the CBI had failed to prima facie establish Rao's active involvement in the alleged misrepresentation or diversion of loan funds.

CBI's Case Based on 'Generic' Allegations

The CBI had registered an FIR (RCBD 1/2025/E/0005) in connection with an alleged loan default of over ₹19,694 crore by the Reliance Communications group. Rao, a qualified Chartered Accountant, was arrested on April 24, 2026, and charged under Sections 120-B, 406, 420, and 409 of the Indian Penal Code, read with Section 13(2) and 13(1)(d) of the Prevention of Corruption Act, 1988.

The agency alleged that between April 2013 and March 2017, the company induced a consortium of banks led by the State Bank of India (SBI) to sanction credit facilities through misrepresentation and suppression of material facts. Rao was accused of playing an active role in sanctioning and disbursing these facilities, as well as diverting funds through layered transactions, bill discounting, and round-tripping via group entities, causing a wrongful loss of ₹2,929.05 crore. The CBI also claimed that Rao signed 67 Letters of Credit and acted as a guarantor for a ₹1,200 crore loan from SBI.

'No Direct Evidence of Any Overt Act'

The court, however, found that the prosecution's case was built on documentary evidence such as loan agreements, sanction letters, and audit reports, without linking Rao to any specific act of deception.

"Firstly and prima facie prosecution has to show an overt act by the Applicant about misrepresentation and suppression so as to have deceived the Complainant into parting of humongous funds... No such overt act attributed to the Applicant is prima facie shown to Court. No direct evidence of any overt act is either shown to Court or directly attributed to the Applicant," Justice Jadhav observed.

The judge emphasized that the allegations were " generic " and that the CBI could not rely on mere assumptions. "If prosecution wants to levy the above charge, then it cannot be so generic in nature and to such an extent merely to submit that Applicant is responsible for causing financial loss of Rs.2,929.05 crores. Without specific facts being pleaded for such a humongous charge, prosecution case at this stage cannot be accepted at face value ," the order stated.

NCLT Proceedings Weighed In

Rao's counsel argued that the very transactions characterized as diversion and round-tripping by the CBI were already examined by the National Company Law Tribunal (NCLT) during the Corporate Insolvency Resolution Process. The Resolution Professional had filed 17 Avoidance Applications under the Insolvency and Bankruptcy Code, none of which were sustained. The court noted this as a significant prima facie factor in Rao's favor.

No Recovery, No Benefit, Poor Health

The court also highlighted that Rao was not a beneficiary of any of the alleged transactions, and no money or material was recovered from him. The 67-year-old applicant suffers from uncontrolled Type-2 diabetes, hypertension, and coronary artery disease, and had undergone angioplasty with stenting in February 2026. Medical reports from Dr. L.H. Hiranandani Hospital were placed on record and accepted by the court.

Rao had cooperated with the investigation, appearing four times for questioning, but was arrested on the fourth instance, nearly nine years after the alleged transaction period. "Admittedly, prosecution has not recovered any material or amounts from Applicant and therefore on the first count of charge against Applicant, prima facie , no case is made out by the CBI so as to continue the incarceration of the Applicant," the court noted.

Bail Granted with Conditions

Rao was released on a personal bond of ₹1 lakh with one or two sureties in the like amount. He was permitted to furnish provisional cash bail for immediate release. The conditions include reporting to the investigating officer on the first Sunday of every month, cooperating with the trial, not leaving Maharashtra without court permission, depositing his passport, and not influencing witnesses.

The court clarified that its observations were limited to the bail decision and would not influence the trial on merits. "Needless to state that the above observations and the reasons to follow will not come in the way of trial as they are prima facie in nature based on the submissions made by both Advocates and the material placed before this Court," the order concluded.

The case is now registered as Special Case No. 1046 of 2026, with trial pending. Rao remains in judicial custody at Arthur Road Jail, Mumbai, since his arrest in April 2026.