New Delhi: The Supreme Court has dismissed a public interest litigation seeking directions to investigate alleged ARC-facilitated banking fraud concerning JKM Infra Projects Limited, bringing relief to the company in the proceedings.
In its September 24 order in Prateeksha & Others versus Union of India & Others*, the court said: “Keeping in view the nature of proceedings and the material placed on record, we are not inclined to entertain this PIL.”
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The court expressly clarified that it had not expressed any opinion on the merits. It also said the dismissal would not preclude the Enforcement Directorate, Serious Fraud Investigation Office, Central Bureau of Investigation or Reserve Bank of India from taking cognizance of the allegations.
The contesting respondents had challenged the petition’s maintainability, alleging that it had been filed at the instance of respondent No. 18. The court had consequently directed the petitioners to disclose their particulars, bona fides and sources of information and documents.
After examining their joint affidavit, the court declined to entertain the PIL and dismissed it. It nevertheless clarified that its decision cast no aspersion on the petitioners’ bona fides.
The dismissal follows submissions by SBI and RBI contesting key aspects of the petition. SBI’s counter-affidavit states that its Fraud Identification Committee resolved to treat JKM’s account as a “no fraud” case.
SBI expressly disputes the contention that the Ernst & Young forensic audit conclusively established fraud. It describes the report as inconclusive and says the lenders subsequently appointed AKG & Associates to verify the company’s responses.
AKG’s report supported specific accounting explanations, including the reversal of a Rs 0.50 crore entry and the recording of questioned receipts and payments in JKM’s books. Its verification was subject to documentary and scope limitations; the “no fraud” decision is the assessment reported by SBI’s committee.
SBI says the company’s account remained satisfactory until FY2015, after which delays in land allotment, statutory clearances and realisation of receivables affected operations.
The bank also defends its debt assignment to Prudent ARC for Rs 120 crore against book outstanding of Rs 427.43 crore, on a 50:50 cash-and-security-receipts basis.
According to SBI, the transaction followed recovery efforts, a Swiss Challenge process and scrutiny through an External Screening Committee chaired by a retired High Court judge, followed by senior credit and board-level committees.
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RBI states that its examination of the petitioners’ complaint found no regulatory violation warranting intervention. It explains that acquisition prices and compromise settlements fall within banks’ and ARCs’ commercial judgment, subject to applicable safeguards.
The September 24 order closes this PIL without directing the investigation sought by the petitioners. SBI’s reported committee decision and RBI’s regulatory response remain central to JKM’s defence, while the court has preserved the statutory agencies’ ability to act in accordance with law.
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