A special court in Mumbai on Wednesday remanded Amitabh Jhunjhunwala, the former group managing director of Anil Ambani-led Reliance Communications, to the custody of the Central Bureau of Investigation (CBI) until Friday in connection with a multi-crore bank loan fraud case involving Reliance Commercial Finance Limited.
Details of the Fraud
The alleged fraud has caused a loss of approximately Rs 4,097 crore to 13 public sector banks. According to the complaints, the company had originally availed credit facilities exceeding Rs 9,280 crore from 31 banks, financial institutions, and corporate bodies before the accounts were officially declared non-performing assets on March 25, 2020.
CBI's Submission in Court
The CBI, represented by special public prosecutor Jitendra Kumar Sharma, approached the court to secure Jhunjhunwala's custody. Jhunjhunwala is currently lodged in Arthur Road Jail under judicial custody for a separate but related matter. The CBI informed the court that the investigation is being closely monitored by the Supreme Court.
Seeking Jhunjhunwala's custody, the CBI submitted that during the investigation, his role and complicity have emerged. He was the managing director of the ADA Group and was looking after corporate finance of the group at the relevant time. The CBI stated, "It has also come to fore that he was holding the authoritative position in the group and used to direct senior executives of Reliance ADA Group companies to sanction or approve loans to shell or paper companies of Reliance ADA Group or interlinked entities."
The investigation further disclosed that he was directing the CEOs, CFOs, CROs, and directors to sanction general purpose corporate loans to shell or paper companies of Reliance ADA Group or interlinked entities, which were ultimately routed to the group companies of Reliance ADA. Those loans remained unpaid, causing wrongful loss to lending banks.
Electronic Instructions and Violations
The CBI further submitted that Jhunjhunwala was giving instructions via electronic messages to route the funds of Reliance Commercial Finance Limited and Reliance Capital Limited to other companies of the group, which were in complete and repeated violations of sanction terms and conditions of the loans. "Hence, there are reasons to believe that Jhunjhunwala, being the group MD and holding the entire financial management of the group, has rendered active participation in rotating and diverting the public money without any underlying genuine business, as it has been disclosed during investigation that the companies (shell or paper companies) of Reliance ADA Group or interlinked entities were neither having any fixed assets nor having any employees but loans of hundreds of crores of rupees were extended which remained unpaid causing wrongful loss to lending banks," the CBI said.
Need for Custodial Interrogation
The CBI argued that Jhunjhunwala's custodial interrogation was necessary to uncover the full criminal conspiracy and identify the culprits, including complicit public servants, responsible for defrauding the banks. The CBI also wanted to confront him with co-accused and recovered electronic evidence, such as internal Reliance ADA Group communications. "Further, it is necessary to find out the ultimate beneficiaries of the defrauded loan amount, which is within the exclusive knowledge of… Jhunjhunwala," the CBI added.
