"RBI Officials Involved In Scams Like Kingfisher, Yes Bank", Alleges Subramanian Swamy; Supreme Court Issues Notice On Plea For CBI Probe

"Despite playing a key role in the bank's allocation of funds to various projects, the Reserve Bank nominees have not been touched by the subsequent CBI enquiries that were carried out."

Relying on a Supreme Court ruling in Delhi Development Authority v. Skipper Construction Company Private Limited [(1997) 11 SCC 430], Swamy argued that there was "no explanation" why RBI officials had not been investigated in "a single case" since 2000 –

"This Court in 1997 had considered the matter that this petition deals with. In this judgement, it is brought out very clearly that the Reserve Bank nominee played a central part in deciding whether a loan should be given, and should also be in the prosecution by the CBI. There is no explanation why there has not been a single case starting from 2000 till today, even the latest one of Geetanjali and Vijay Mallya, where the CBI has taken the Reserve Bank to task."

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. He submitted –

"The number and value of banking frauds detected by RBI and other agencies during the last couple of years categorically shows that despite enjoying the wide powers which in effect tantamount to direct participation in the management of the banks, the RBI has failed to protect the interest of various stakeholders which includes interest of depositors, investors and shareholders. This failure to protect the interest of stakeholders, has led to the loss of faith in the entire banking system in India with the Regulator being supinely indifferent to the series of bank frauds with questions now being raised about it."

Therefore, Swamy requested the apex court to direct an investigation by the Central Bureau of Investigation or "any authority that this court decides should investigate" to examine the role of the Reserve Bank of India and its officials in various banking or financial scams in the country "involving the public money, which adversely affects the rights of the citizens of this country." He told the Bench –

"My prayer is that the CBI or any authority that this court decides should investigate, should include all directors who were there in the process of allocating the loans."

Justice Gavai enquired –

"Unless the CBI finds any specific role played by an individual person, can we direct an investigation?

Swamy supplied a quick rejoinder –

"They are nominee directors. They are not ordinary persons. He is an appointee of the Reserve Bank. He heads a committee on the risk element. On the face of it, it is clear, that he is a full-fledged member of the Board of Directors."

He also added –

"Therefore, if the other directors are culpable, the representative of the RBI should also be examined and if cleared only if found innocent. Not investigating RBI officials in the same manner other directors are is a violation of Article 14."

Justice Gavai asked –

"What is the stage of investigation with regard to other directors?"

Swamy firmly asserted –

"Some of them haven't started, some of them are underway. I would say, in the last ten years, none of them have come to a conclusion."

Ultimately, the Bench decided to issue notice on Swamy's writ petition. Justice Gavai said –

"We will consider. Issue notice."

Case Titles

Dr Subramanian Swamy v. Central Bureau of Investigation [WP (C) No. 196/2021]