Karnataka High Court Issues Notice On Union Bank Of India's Plea To Transfer Valmiki Development Corporation Probe To CBI

A Single judge bench of Justice M Nagaprasanna issued notice and posted the matter for further hearing on August 7.

Attorney General R Venkataramani appearing for the bank in his personal capacity submitted that the bank was concerned with the integrity of the banking institute, and RBI had given it the authority not only to be a regulator of banking function but also on the function where the bank errs. RBI has issued directions that in case of Bank fraud, the bank will abide by these directions and transfer the investigation to CBI, it was said.

Further, he said that unlike other cases where the Central Government said that a federal investigation agency may have to step in to ensure confidence in the investigation process, impartiality, neutrality etc, in this case, the RBI by a statutory process says that it would ask the bank to go to a Federal agency.

Highlighting the importance of the case being conducted by CBI he submitted that a federal agency choice is important because many public sector banks, keep aside private sector or cooperative sector banks, all of whom come under the RBI scanner. They have thousands of branches all over the country. If there is fraud which transcends state frontiers, I do not think it would be wiser and advisable for a particular area concerned to go to a local investigating agency, he added.

He added “In order that this investigation level, competence, equipment and importance of non-partiality etc are enhanced. Initial action taken by the government would yield to the parliamentary intent and RBI direction given to the bank. Today even a small domestic bank (fraud) may have international ramifications. As a bank, I want to retain the integrity of the bank so that I am not the offender.”

Following this the court said that the Attorney general would seek to demonstrate the bank has now entrusted the investigation to CBI, and the state should follow suit with that for entrusting it to the CBI as there cannot be a Union Bank of India approaching a state investigation agency "in the teeth of matter being entrusted to CBI for conducting investigation."

Advocate General Sashi Kiran Shetty informed that he would file the objections to the petition and sought two weeks time.

Background:

The Valmiki case came to light after an official of the corporation Chandrasekaran who worked as a Superintendent died by committing suicide and left a note containing an allegation of multi-crore corruption in the corporation.

In a six-page suicide note recovered by the police, Chandrasekaran mentioned the names of three officials and alleged corruption worth crores in the corporation, demanding action against the named officials. Subsequently, the Scheduled Tribes Welfare Minister, B Nagendra resigned and is presently in custody of the Enforcement Directorate.

A Rajashekar, Managing Director of the KMVSTDC, had filed a complaint on May 29, saying Rs 94.73 crore money was siphoned off from the corporation's account maintained in the Union Bank of India (UBI), fake signatures on board resolutions were made to illegally transfer the amount to various accounts.

A case has been registered against UBI bank officials at the High Grounds police station on May 28 for offences of cheating and other provisions and they have approached the court seeking quashing of the offence which is also pending and an interim order of not taking any coercive action is made.