Supreme Court asks CBI stand on plea to probe ‘fraud’ by Kolkata’s SREI Group

SC seeks CBI’s stand on SREI Group financial fraud probe

The Supreme Court on Wednesday sought the CBI‘s stand on a plea seeking a probe into the alleged financial fraud committed by Kolkata-based SREI Group. A bench comprising Chief Justice Sanjiv Khanna and Justice Sanjay Kumar took note of the submissions of advocate Prashant Bhushan, appearing for Lucknow-based petitioner Bhupendra Nath, seeking a comprehensive probe by the CBI and the ED into alleged financial irregularities committed by the SREI Group, headed by Kanodias.

The petitioner alleged the SREI Group, which is now under the management of National Asset Reconstruction Company Limited after the Reserve Bank of India (RBI) superseded the boards of some group firms due to governance concerns and repayment defaults in 2021, was accused of fraud involving round-tripping of funds through a private trust and siphoning of public money borrowed from various banks. The plea challenged the Allahabad High Court order of March 18, 2024, by which it accepted the report of the economic offences wing, Varanasi closing the investigation against the group.

Kanodia family controlled SREI Group and got the control of Deccan Chronicle-based newspaper group through an insolvency case at NCLT. But later the SREI Group also faced several cases involving financial irregularities.[1]

The apex court bench noted the submission of additional solicitor general S V Raju, appearing for the ED, that he would also represent the CBI and seek instructions from the central probe agency over the probe in the present case. “It is for them (CBI) to take a decision as per law,” the CJI said when Bhushan said a matter involving huge banking and financial fraud ought to be probed by the CBI. It was alleged that the amount involved runs into several thousand crores.

Prashant Bhushan referred to RBI’s master directions on frauds and said the cases of fraud exceeding Rs.500 crore must be referred to the CBI. Despite the directive and clear evidence of fraudulent activities, no serious action was taken by investigating agencies, he alleged. The CJI considered the submissions of some lawyers appearing for the opposite parties suspecting that the petitioner did not exist and the case was fictitious.

The bench said the petitioner would have to appear before the apex court registrar through the video-conferencing facility before the next date of hearing. Bhushan said the petitioner visited the top court to comply with the procedural formalities for filing the plea. The bench has posted the plea for hearing on May 5.

SREI Infrastructure Finance Limited and M/S Sahaj e-Village, the plea said, received approval from the UP government to run “Jan Suvidha Kendras” in the various districts of the state. It was alleged in the Jaunpur district, these firms were allegedly demanding and receiving illegal and unofficial amounts varying from Rs.7,000 to Rs.25,000 from people showing interest in opening and running such “Jan Suvidha Kendras”.

Jan Suvidha Kendras, also known as common service centers, act as digital touchpoints offering a wide range of government and private services, including Aadhaar enrollment, banking, bill payments, and more, aiming to provide accessible and cost-effective e-governance services. The petitioner, who also paid Rs.7,000 to the firms, sought a probe against them. Aside from the CBI, and ED, he made Uttar Pradesh, its director general of police, and superintendent of police of Jaunpur as parties.

Reference:

[1] ED attaches Rs.122 crores worth assets of Deccan Chronicle newspaper group and its promoters Reddy brothers – Oct 16, 2020, PGurus.com

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