SC Issues Notice on Subramanian Swamy’s Plea Seeking CBI Investigation into Role of RBI Officials in Several Banking Frauds

Sakina Tashrifwala

Published on: October 18, 2022 at 20:12 IST

A Division Bench of the Supreme Court of India issued notice on Monday on a writ suit filed by Dr. Subramanian Swamy seeking a CBI investigation into the role of Reserve Bank of India officials in several banking frauds.

Swamy is a former Member of Parliament and Bharatiya Janata Party senior leader.

Dr. Swamy claims in the plea, co-signed by Advocate Sathya Sabharwal, that the role of RBI officials in scams involving various businesses such as Kingfisher, Bank of Maharashtra, and Yes Bank has not been investigated.

Swamy, who appeared in person before the Bench of Justices BR Gavai and BV Nagarathna, the RBI officials allegedly dodged inquiry about their role –

“Despite playing a crucial role in the bank’s disbursement of cash to numerous projects, the Reserve Bank nominees were unaffected by the subsequent CBI inquiries.”

Swamy said that there was “no explanation” why RBI officials had not been examined in “a single case” since 2000, citing a Supreme Court judgment in Delhi Development Authority vs. Skipper Construction Company Private Limited.

“This Court considered the matter that this petition deals with in 1997, and in this judgement, it is brought out very clearly that the Reserve Bank nominee played a central role 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 most recent one of Geetanjali and Vijay Mallya, where the CBI has taken the Reserve Bank to task.”

Swamy’s petition also relies on information obtained under the Right to Information Act of 2005, which supposedly revealed that no Reserve Bank officer has even been “held responsible” for any “dereliction of duty in case of any fraud disclosed by any bank.” This, according to Swamy, is in “sharp contrast” to the growing frequency of banking frauds.

He has also claimed that RBI personnel behaved with “demonstrable active connivance” in blatant violation of laws such as the Reserve Bank of India Act, the Banking Regulation Act, and the State Bank of India Act. He consented –

“The number and value of banking frauds detected by the RBI and other agencies over the last couple of years categorically shows that, despite having broad powers that effectively amount to direct participation in the management of banks.”

“The RBI has failed to protect the interests of various stakeholders, including depositors, investors, and shareholders, resulting in a loss of faith in the entity.”

As a result, Swamy asked the Supreme Court to order an investigation by the CBI or “any authority that this court decides should investigate” into the role of the Reserve Bank of India and its officials in various banking or financial scams in the country “involving public money, which adversely affects the rights of the citizens of this country.”

“My request is that the CBI, or whatever institution this court decides should investigate, include those directors who were present throughout the loan allocation process.”

Justice Gavai enquired:

“Can we conduct an investigation until the CBI finds any specific role performed by an individual?”

Swamy was quick to respond –

“They are nominated as directors.” They are not regular people. He is a Reserve Bank of India appointee. He is the chairman of the risk committee. On the surface, he appears to be a full-fledged member of the Board of Directors.”

He also stated –

“As a result, if the other directors are found to be responsible, the representative of the RBI should likewise be investigated and cleared only if found innocent.” It is a breach of Article 14 to not investigate RBI officials in the same manner as other directors.”

Justice Gavai inquired –

“How far along is the probe of other directors?”

Swamy was adamant –

“Some have yet to begin, while others are well underway.” I would conclude that none of them have reached a conclusion in the previous ten years.”

Finally, the Bench decided to serve notice on Swamy’s writ petition, as Justice Gavai stated.

“We will think about it.” Give notice.”

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