The Bombay High Court has quashed an FIR registered by the Central Bureau of Investigation against GTL Infrastructure Limited in a bank fraud case involving a consortium of 19 banks and financial institutions. The Court held that the CBI could not continue a “roving inquiry” in the hope of identifying an offender when the material on record did not disclose any offence.
A Division Bench of Chief Justice Shree Chandrashekhar and Justice Gautam A. Ankhad delivered the judgment on February 27, 2026 in GTL Infrastructure Limited v. Central Bureau of Investigation & Anr., Writ Petition No. 3632 of 2024.
Challenge To FIR
GTL Infrastructure Limited approached the High Court under Article 226 of the Constitution read with Section 482 of the Code of Criminal Procedure, 1973, corresponding to Section 528 of the Bharatiya Nagarik Suraksha Sanhita, 2023. The company sought quashing of FIR RC2192023E0022 dated August 16, 2023.
The FIR invoked 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. It named GTLIL, unknown public servants and other unknown persons.
Senior Advocate D.P. Singh appeared with Sajal Yadav, Sonam Gupta, Apoorva Agrawal, Prasad Lotlikar, Essaji Vahanvati, Aparna Kulkarni, Suyash Gadre and Abhishek Thote, instructed by Harsh Ghangurde, for the petitioner.
Kuldeep Patil appeared with Sumitkumar Nimbalkar, Sanika Joshi, Anay S. Joshi and Saili Dhuru for Respondent No.1-CBI.
M.M. Deshmukh, In-Charge Public Prosecutor, appeared with S.V. Gavand, APP, for Respondent No.2.
CBI Allegations
The CBI began a preliminary enquiry based on source information dated July 14, 2021. The enquiry concerned alleged financial irregularities by GTLIL in availing credit facilities from a consortium of 19 banks and financial institutions.
According to the agency, the company later entered Corporate Debt Restructuring after it failed to service interest and instalments. The restructuring package dated December 23, 2011 did not succeed.
Lenders subsequently invoked Strategic Debt Restructuring in 2016. As part of the process, Rs.7,200 crores out of the total Rs.11,263 crore debt was converted into equity shares. The remaining Rs.4,063 crores stayed payable.
The CBI alleged that the company diverted loan funds through vendor entities. It claimed that the money was later invested in European Projects and Aviation Ltd., Chennai Network Infrastructure Ltd., or GTLIL itself during 2011-12 to 2013-14. The agency also alleged that assigning debt to Edelweiss Asset Reconstruction Company caused wrongful loss to banks.
GTLIL’s Defence
GTLIL argued that it operated as a telecom infrastructure provider and had expanded rapidly while working with major telecom operators. The company stated that its business suffered severe setbacks due to sectoral developments. These included the 2G spectrum case, the Aircel-Maxis investigation, Aircel’s failure to honour tenancy commitments, and Aircel’s eventual insolvency.
The company further stated that SBI Capital Markets Ltd. approved the restructuring package after due diligence. When the SDR process failed, lenders considered assigning the debt to an asset reconstruction company.
The Joint Lenders’ Forum appointed Chokshi & Chokshi LLP to conduct a forensic audit. According to GTLIL, the audit found no abnormal transactions in the company’s books.
The company also relied on a Union Bank of India communication dated October 16, 2019, which stated that auditors had not found any instance of fraud or diversion of funds.
Submissions Before The Court
Senior Advocate D.P. Singh submitted that the forensic audit report did not detect fraud. He further argued that statutory auditors and Income Tax authorities had also found no fraudulent transactions.
According to the petitioner, the audit specifically recorded that no advances were given to vendors during the relevant period. Counsel added that no funds moved back to GTLIL, CNIL or EPAL through vendors.
The petitioner also argued that lenders unanimously decided to assign debt to EARC as a commercial decision. Singh further submitted that the CBI failed to identify any public servant involved in the alleged conspiracy.
He contended that Section 17A of the Prevention of Corruption Act, 1988 barred the registration of the FIR.
GTLIL also informed the Court that as of September 30, 2025, it had repaid Rs.19,253 crores against borrowings of Rs.11,263 crores. This amount included Rs.1,868 crores paid under the assignment to EARC.
The company added that Canara Bank accepted a full settlement under a One Time Settlement scheme and issued a discharge letter on September 18, 2025.
Court’s Findings
The Bench noted that the dispute stretched over more than a decade. Independent auditors had examined the company’s transactions during this period. No allegation of collusion was made against those auditors.
The Court observed that settlements with Canara Bank, Punjab National Bank, IDBI Bank and SIDBI, along with proceedings before the Income Tax Settlement Commission, prima facie contradicted allegations of cheating and conspiracy.
Another significant factor noted by the Court was the CBI’s inability to identify any accused during the preliminary enquiry. Even at the time of hearing, the agency could not identify any person responsible for the alleged misconduct.
The Bench stated that if the CBI believed a cognizable offence had occurred, it should have at least indicated the names of accused persons or the public servant involved.
No Material Showing Conspiracy
The Court held that there was “no indication, not even a whisper” in the CBI’s counter affidavit suggesting statements from witnesses pointing to foul play by GTLIL.
The affidavit also did not disclose material showing collusion between GTLIL, vendor entities and bank officials.
Earlier, the Court had found the CBI’s counter affidavit unsatisfactory and sought clarification. However, the agency did not file a fresh affidavit explaining the results of the investigation.
Instead, the CBI merely stated in court that it had examined certain persons whenever suspicion arose.
Section 17A Bar
The Bench also held that Section 17A of the Prevention of Corruption Act applied to the case.
Since the FIR was registered on August 16, 2023, the 2018 amendment introducing Section 17A was already in force.
The provision requires prior approval before any inquiry or investigation into offences allegedly committed by public servants while discharging official duties.
The Court observed that bank officials involved in the consortium qualified as public servants protected under Section 17A. These officials were performing official functions when they took commercial decisions regarding the restructuring.
The Bench found no allegation that the officials violated any circular, guideline or rule with dishonest intent.
Forensic Audit And Bank Records
The High Court referred extensively to the forensic audit report. The report noted that none of the vendor companies appeared on the MCA Defaulter Company List or SEBI’s shell company list.
It further stated that reviews of statutory audit reports, internal audits, concurrent audits and transfer pricing reports did not reveal abnormal transactions or diversion of funds.
The Bench also referred to a Union Bank of India communication dated October 9, 2015 sent to the Ministry of Finance. The bank recorded that GTLIL and its group entities were generating profit and that independent agencies had conducted due diligence and valuation of telecom towers.
According to the bank, the account was not considered fit to be declared fraudulent or reported to the CBI.
Commercial Decisions Of Lenders
The Court rejected the CBI’s allegation that lenders’ decisions amounted to criminal wrongdoing.
Share prices, the Bench observed, depend on market forces and prevailing market conditions. Decisions taken by lenders regarding restructuring or settlement are essentially commercial decisions.
Apart from an initial dissent by Canara Bank, the consortium ultimately accepted the company’s proposal.
The Court observed that it was “unimaginable” that 18 public and private sector banks conspired with GTLIL to conceal siphoning of funds.
The FIR also failed to allege dishonest intention at the inception of the loan transactions.
Supreme Court Precedents
The Bench relied on Hridaya Ranjan Prasad Verma v. State of Bihar (2000) 4 SCC 168. The Supreme Court in that case distinguished between breach of contract and the offence of cheating.
Applying that principle, the High Court held that GTLIL neither deceived lenders at the beginning of the transaction nor acted deceitfully later.
The Court also cited Rashmi Kumar v. Mahesh Kumar Bhada (1997) 2 SCC 397. The judgment reiterated that High Courts may examine uncontroverted documents relied on by the accused when deciding whether to quash criminal proceedings.
Final Decision
The High Court held that criminal law cannot be invoked merely to conduct a roving or fishing inquiry.
It observed that the CBI cannot continue investigating in the hope that an offender might eventually be identified when the available material does not disclose any offence.
Accordingly, the Bench quashed FIR RC2192023E0022 dated August 16, 2023 and allowed Writ Petition No. 3632 of 2024 filed by GTL Infrastructure Limited.
