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2026 Supreme(Bom) 319
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
SHREE CHANDRASHEKHAR, CJ., GAUTAM A.ANKHAD, J.
GTL Limited - Petitioner
Versus
Central Bureau of Investigation & Anr. - Respondent
Writ Petition No. 3631 of 2024
Decided On : 27-02-2026
Important Points
Subject
Criminal Law - Quashing of FIR
Act Referred
PREVENTION OF CORRUPTION ACT : S.13(1)(d), S.13(2), S.17(a)
INCOME TAX ACT : S.132
CRIMINAL PROCEDURE CODE : S.482
Headnote
(B) Economic Offences - Scope of Investigation - FIR against unknowns post-preliminary enquiry unsustainable where uncontroverted documents (audits, bank decisions, balance sheets) wipe out allegations - No deception/misrepresentation in loan availment; losses due to sector volatility, not fraud - Mere breach of contract or provisioning insufficient for cheating without initial fraudulent intent - Commercial wisdom of lender consortium paramount absent collusion proof. (Paras 16,18,20,22)
Facts of the case:
Petitioner-company challenged FIR registered after preliminary enquiry alleging fraudulent short-term loans from bank consortium misrepresented for business use but diverted as vendor advances without commensurate supplies; substantial advances outstanding/routed back; fixed assets/investments from working capital - Company countered with recoveries reflected in statements, genuine supplies per tax settlement, clean audits, bank no-fraud calls, excess repayments, one-time settlement acceptance.
Findings of Court:
No ingredients of cheating/conspiracy; FIR built on assumptions, omissions, suppressions; continuance would cause miscarriage of justice.
Issues: Whether FIR discloses cognizable offence prima facie; validity sans specific accused identification post-enquiry; impact of prior closure, bank decisions, section 17A on probe.
Ratio Decidendi: Cheating demands fraudulent inducement/dishonest intent from transaction start; absent same, plus supportive audits/bank views showing bona fides, FIR quashed even if probe ongoing - High Court to intervene on materials revealing no offence.
Result: Writ petition allowed; FIR quashed.
For the Petitioner:Mr. Aabad Ponda, Senior Advocate with Mr. Manoj Mohite, Senior Advocate, Mr. Sajal Yadav, Ms. Sonam Gupta, Ms. Apporva Agrawal, Mr. Prasad Lotlikar, Mr. Essaji Vahanvati, Ms. Aparna Kulkarni, Mr. Suyash Gadre, Mr. Abhishek Thote i/b. Mr. Harsh Ghangurde, Advocates
For the Respondent:Mr. Kuldeep Patil with Mr. Sumitkumar Nimbalkar, Ms. Sanika Joshi, Mr. Anay S. Joshi and Ms. Saili Dhuru, Advocates Ms. M. M. Deshmukh, In-Charge Public Prosecutor with Mr. S. V. Gavand, APP
| Table of Content |
|---|
| 1. fir alleges loan siphoning via fraudulent vendors (Para 1 , 2 , 3) |
| 2. advances recovered; genuine vendor transactions (Para 4 , 5) |
| 3. outstanding advances indicate fund diversion (Para 6) |
| 4. banks' commercial wisdom paramount absent fraud (Para 7 , 8) |
| 5. no named accused despite extensive pe (Para 9 , 10) |
| 6. s17a bars probe of bank officials sans approval (Para 11) |
| 7. prior cbi closure; jlf no fraud (Para 12 , 13 , 14 , 15) |
| 8. quash fir if documents wipe allegations (Para 16 , 17 , 18 , 19 , 20 , 21) |
| 9. cheating needs initial dishonest intent (Para 22) |
| 10. fir quashed for lacking prima facie offence (Para 23 , 24) |
JUDGMENT :
Shree Chandrashekhar, CJ.
The GTL Limited represented through its authorized representative is seeking quashing of the First Information Report registered by the Central Bureau of Investigation (in short, CBI) on 21st January 2023 against the GTL Limited, unknown directors of the GTL Limited, unknown bank officers and unknown private persons including the vendors and beneficiary group of the GTL Limited.
2. A Preliminary Enquiry vide PE 2192022E0001 was conducted into the allegation made in the complaint dated 14th July 2021 submitted to the CBI. After the inquiry, the CBI registered a crime vide RC2192023E0003 on 21st January 2023 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. This was the allegation against the GTL Ltd. that it fraudulently obtained various credit facilities from the consortium of banks and diverted/siphoned off major part of the loan amount to various vendor-companies which were created and operated with the mala fide intention in conspiracy with such vendors.
3. In brief, on conclusion of the Preliminary Enquiry a written complaint dated 16th January 2023 was submitted by the Inspector, CBI, EO-I, New Delhi and on that basis a First Information Report was registered. The allegation against the petitioner-company is that it generated Rs.1400 crores from capital non-convertible debentures and availed credit facilities from a consortium of 24 banks to the tune of Rs.4760.01 crores. A short-term loan was availed by the petitioner-company on a misrepresentation that the loan amount shall be utilized for the business activities. However, the petitioner-company cheated the lender banks and misappropriated the funds by providing advances to the purported vendors. A substantial part of such advances remained outstanding and a part of it was routed back to the petitioner-company by the vendor-entities. The petitioner- company utilized the working capital funds availed from the bank to acquire fixed assets from the vendors and investments were made by it in other companies through purchase of shares. According to the CBI, the inquiries revealed that the petitioner- company provided advances to the vendors year after year and without supply of materials and eventually those advances were provisioned. The vendor-companies were not supplying the goods commensurate with the advances given to them and none of the vendor-companies supplied goods more than 16% of the advances given to it. There was supply of materials worth only Rs. 347.32 crores by M/s. Acuity Trading Pvt. Ltd., M/s. Lenity Trading Pvt. Ltd., M/s. Venerate Trading Pvt. Ltd. and M/s. Vinamra Multitrading Pvt. Ltd. but they were provided Rs.1213.97 crores as in advance. It is further alleged that the vendor-companies were incorporated within a short span of less than three months. The account of the petitioner-company was red-flagged by the IDBI Bank Ltd. pursuant to the advice received from the RBI for a Forensic Audit Report and M/s. NBS & Co. was appointed to conduct the forensic audit of the petitioner-company. In the complaint, there is a mention of part of the Forensic Audit Report to the effect that no material was received by the petitioner- company against the advance of Rs.1141.84 crores given to the vendors in FY 20
