Supreme Court Asks Subramanian Swamy To Show Specific Instances Of Lapses By RBI Directors In Banking Scams

“If the petitioner prima facie shows that though there is material against independent directors, the Central Bureau of Investigation has not filed charge-sheets against them or proceeded against them, we may have an opportunity to examine the role of the CBI itself.”

Right at the outset, the Solicitor-General for India Tushar Mehta objected to Swamy’s allegation that the Reserve Bank nominees were not touched by the CBI enquiries that were carried out after the Kingfisher, Bank of Maharashtra, Yes Bank, and other scams even as other directors were investigated for their role. Appearing for both the central agency as well as the central bank, the top law officer argued that a prayer for a particular set of offenders to be investigated when competent agencies were already probing into the scams, was unsustainable. He said:

“All these offences are being investigated by the Central Bureau of Investigation, the Directorate of Enforcement, the Serious Fraud Investigation Office, et cetera. If the role of Reserve Bank officials are made out in the process of investigation, they will be added as accused. There cannot be a direction to investigate a particular set of offenders, when the main offence is being probed.”

Besides this, the Solicitor-General also pointed out that the averments made by Swamy were ‘broad propositions’ and did not indicate any particular instance of an RBI official slipping under the radar of the investigating agency despite their involvement in the financial scams. Mehta said, “He has not named a single officer, but only submitted a broad proposition asking all Reserve Bank officials to be prosecuted for these scams.” This is not the correct way, Mehta added.

“Can this court make a roving enquiry?” Justice Gavai asked.

In response, Swamy denied that he was inviting the top court to initiate a ‘roving enquiry’. He asserted that he was merely relying on an earlier ruling in Delhi Development Authority v. Skipper Construction Company Private Limited [(1997) 11 SCC 430], in which the Supreme Court had held that the Reserve Bank nominees played a central part in deciding whether a loan should be given and as such, should also be investigated by the CBI.

When Justice Gavai brought up the role of the Central Bureau of Investigation in Reserve Bank officials allegedly escaping prosecution, Mehta vehemently assured the bench that if any director was found to be involved in the scams, they would undoubtedly be investigated by the federal agency and dealt with in accordance with the law. Swamy, the top law officer further suggested, could directly provide the information that he was proposing to furnish in the affidavit, to the investigating agency.

“Let us also be satisfied as to that. Let him file the affidavit,” Justice Gavai said, as he urged the petitioner to point out specific instances to corroborate his claim. Finally, the bench pronounced:

“Four weeks’ time granted to file affidavit pointing out specific instances wherein though there was material against independent directors, the Central Bureau of Investigation has not proceeded against them. Put up after six weeks.”

On the issue of filing a counter-affidavit, the Solicitor-General expressed his doubts as to whether Swamy would be able to point out such specific instances. “I suspect that he would provide broad and general propositions. Let him file the affidavit. Then CBI will decide whether to file a counter,” the top law officer said. Earlier as well, in January, Mehta had told the bench that the agency would not be filing its response to Swamy’s petition. The Reserve Bank of India, however, has filed a counter-affidavit.

Last year, Swamy had pointed out at the admission stage that there was no explanation why no Reserve Bank official had been investigated in a single case since 2000, “even the latest one of Geetanjali and Vijay Mallya, where the bureau took the Reserve Bank to task”. “This is a pure question of a failure of the Reserve Bank,” Swamy exclaimed.

In his petition, Swamy has also placed reliance on information obtained under the Right to Information Act, 2005 which purportedly revealed that no officer of the Reserve Bank had even been held accountable for any “dereliction of duty in case of any fraud reported by any bank”. This, Swamy has argued, is in sharp contrast to the burgeoning number of frauds in the banking sector. He has further contended that RBI officials had acted in ‘demonstrable active connivance’ in direct violation of statutes such as the Reserve Bank of India Act, Banking Regulation Act, and State Bank of India Act. On these grounds, the senior BJP leader has urged the top court to direct the Central Bureau of Investigation or any other authority to examine the role, in banking scams, of RBI officials, which includes all directors who were involved in the process of allocating the loans that subsequently became non-recoverable.

Case Titles

Dr Subramanian Swamy v. Central Bureau of Investigation | Writ Petition (Civil) No. 196 of 2021

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