Today, on 4th February, the Supreme Court directed the Enforcement Directorate to form a Special Investigation Team to probe alleged bank fraud involving Anil Ambani, Reliance Communications, and group companies, while hearing a PIL filed by former bureaucrat EAS Sarma. Bench expressed concern.
NEW DELHI: The Supreme Court directed the Enforcement Directorate (ED) to establish a Special Investigation Team (SIT) consisting of senior officials to investigate allegations of extensive bank fraud involving Reliance Communications (RCOM), its associated entities, and Anil Ambani. The court heard a Public Interest Litigation (PIL) filed by former bureaucrat EAS Sarma and expressed concern over the unexplained delay in the probe, especially on the part of the ED.
The directive came from a Bench comprising Chief Justice of India (CJI) Surya Kant and Justices Joymalya Bagchi and Vipul Pancholi.
The Court remarked,
“The ED is well advised to constitute a SIT comprising senior officers and take all the measures so that the ongoing probe is taken to a logical conclusion,”
The Court also noted the assurance given by Senior Advocate Mukul Rohatgi that the concerned respondent would not leave the country without prior permission. Stressing the gravity of the alleged misuse of public funds, the Supreme Court directed both the CBI and the ED to speed up their investigations.
Senior Advocate Mukul Rohatgi, representing Ambani, stated,
“Why will he (flee)? He is here. He will not leave without the permission of this court.”
However, Solicitor General (SG) Tushar Mehta countered with,
“Mr. Rohatgi in Delhi High Court had given an assurance that a person will not flee.. but he did.”
Rohatgi clarified,
“(He) came back and paid ₹5000 crores.”
It cautioned that continued delay could lead to judicial intervention and indicated that future hearings may involve closer monitoring, registration of separate FIRs, and greater accountability of banking authorities.
Factual Background of the Case:
The PIL alleges that several Reliance Group companies, including Reliance Communications, Reliance Capital Financial Services Ltd (RCFL), and Reliance Home Finance Ltd (RHFL), obtained massive loans from public and private banks between 2017 and 2019.
According to investigative agencies:
- RHFL borrowed Rs 7,523.46 crore from 33 lenders
- RCFL borrowed Rs 6,202.56 crore from 22 lenders
- Reliance Communications has outstanding dues of Rs 40,185.55 crore
- Total alleged loss to public money: over Rs 10,552 crore
- Overall group dues: nearly Rs 1.78 lakh crore
In insolvency proceedings, many of these companies were sold at steep discounts, raising concerns over misuse of the Insolvency and Bankruptcy Code (IBC). For instance, Reliance Communications, with dues of nearly Rs 47,000 crore, was sold for only Rs 455 crore.
The petition alleges that funds were siphoned to tax havens and shell entities, and that bank officials may have colluded in the process.
Towards the end of 2025 and in the early months of 2026, the Supreme Court issued notices to the Union government, the CBI, the Enforcement Directorate, Anil Ambani, and the Anil Dhirubhai Ambani Group in relation to the PIL, seeking comprehensive replies and updates on the progress of investigations.
The Court directed both the CBI and the ED to place detailed status reports on record regarding their probes into the alleged financial irregularities. It also granted Anil Ambani and the ADAG an opportunity to present their responses to the petition within the stipulated time frame.
Contentions of the Petition:
The plea claims that a forensic audit commissioned by SBI revealed significant fund diversion, including massive amounts used to settle unrelated loans, transfers to related parties, investments in mutual funds and fixed deposits that were quickly liquidated, and intricate circular money routing to mask loan evergreening.
The petition asserts that the FIR registered by the CBI on August 21, 2025, and the accompanying ED proceedings only cover a fraction of the alleged wrongdoing. Furthermore, it argues that the agencies are not investigating the roles of bank officials and regulators, despite comprehensive forensic audits and independent reports suggesting widespread fraud.
Another major issue raised in the petition is the nearly five-year delay by SBI in responding to the forensic audit report it received in October 2020. The complaint was only filed in August 2025, leading the petitioner to suggest a prima facie inference of “institutional complicity.”
The petition concludes that only judicial oversight can ensure that such a significant matter involving public money is thoroughly investigated.
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Submissions of Parties before Supreme Court:
Chief Justice of India raised concerns over the CBI’s decision to club multiple bank complaints under a single FIR.
He questioned,
“There are two aspects that are troubling. First, are you also representing the CBI? My concern is this: how do they justify not registering separate FIRs for these subsequent complaints?”
The CBI stated that it had initially registered an FIR based on an SBI complaint and later expanded it to include other banks’ complaints.
Senior Advocate Prashant Bhushan explained the agency’s position and replied,
“My Lord, is that specific instructions were taken. The first FIR was lodged on the complaint of SBI. Thereafter, other banks informed the investigating agency about alleged siphoning of funds, which has now been included as part of the same investigation. The stand taken is that separate FIRs cannot be registered.”
He further highlighted findings of forensic audits and said,
“The banks have conducted a forensic audit through an independent external forensic auditor. The auditor has recorded findings of siphoning of funds and other irregularities.”
Appearing for Respondent No. 5, Senior Advocate Mukul Rohatgi argued against criminal action that,
“He isn’t against an SIT. He claims it isn’t siphoning. suggests that if the court and government form a committee of finance officers etc., then there could be ways to examine the matter instead of pursuing prosecution.”
Solicitor General Tushar Mehta supported further investigation and said,
“We, the banks, conducted a forensic audit by an outside forensic auditor, my Lord. And the forensic auditor has said that there is siphoning and other things”
He also stated:
“Even bank officials are being investigated, and if they have colluded, they will be examined.”
Justice Joymalya Bagchi questioned the CBI’s reluctance to register separate cases.
He asked,
“what you are submitting, see paragraph 27 of the CBI report. You are dwelling on 17 capital A again. If the forensic auditor says that there was a breach not of loan terms, but of collusion, then what is the question of stopping the registration of RCs in view of taking sanctions? These are clear allegations.”
The Chief Justice made strong observations on alleged fund diversion.
CJI said,
“If there is an intent to divert public funds, the Solicitor General (SG) is right, and prosecution can indeed proceed.”
Later, the CJI said:
“At least 26,000 crores has been siphoned out to these tax havens like Mauritius, etc. Not a single penny has been cuffed up.” They have declared bankruptcy in all their companies. 1,78,000 crores of outstanding dues in these companies. 1,78,000. The only amount recovered in bankruptcy proceedings is 15,000 out of 1,78,000. More of the money has been siphoned out.”
SG Tushar Mehta replied,
“Let me respond to two concerns raised. First, the forensic audit indicates that in some instances funds were borrowed from one bank to repay another. Second, any suggestion made before this Court should not be misconstrued in other forums to imply that this Hon’ble Court is contemplating the constitution of a committee to determine payments.”
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Observations of the Court:
The CJI stated,
“We are not constituting any committee. We expect the CBI and the ED to continue and complete their investigations independently and in accordance with law.”
Criticizing the misuse of bankruptcy laws, the court said,
“it is increasingly evident that the IBC framework is being misused. Companies voluntarily declare bankruptcy, valuations are conducted at a fraction of market value, and assets are acquired at steep haircuts.”
The Court acknowledged,
“SG has assured that all preventive action will be taken to not hinder the probe. Mr. Rohatgi assured that his client will not leave the country without leave of this court.”
Among other directives, the Court instructed the Central Bureau of Investigation (CBI) to examine any potential collusion by bank officials in connection to the alleged fraud.
The order stated,
“It is imperative for CBI to probe the conduct of bank officials to check if funds were released with the collusion of bank officers. We direct that… the CBI must look into the nexus, collusion, conspiracy, if any, and for that purpose, all lawful measures to take the investigation to its logical end are adopted,”
The Bench expressed concern over claims that both the ED and CBI had been slow in their investigations, expecting both agencies to ensure a fair process.
The Court ordered,
“It has been contended that there has been an unexplained delay on part of ED… Both agencies have taken their own time to take action, and therefore we expect both agencies to act impartially and in a dispassionate manner. Let status reports be filed by ED and CBI in four weeks,”
During the hearing, the Court mentioned that it anticipated periodic updates from the CBI and ED on their investigative progress.
The Court stated,
“Mr. SG (Solicitor General Tushar Mehta), we expect your agency to act impartially. We need status reports every month. Such a huge amount has been siphoned. Submit the final status report also after three months. The amount is Rs 1,78,000 crores,”
As the discussion continued, the Court added,
“We are hopeful that CBI and ED will do their jobs.”
CASE TITLE: EAS Sarma v. Union of India
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