CBI Probe Sought in Valmiki Scam: Karnataka HC Notices Govt on Bank Plea

CBI Probe Sought in Valmiki Scam: Karnataka HC Notices Govt on Bank Plea

Bengaluru, July 23, 2024 - The Karnataka High Court has issued a notice to the state government in response to a petition filed by the Union Bank of India (UBI). The bank is seeking to transfer the investigation of a multi-crore financial scam involving the Maharshi Valmiki Scheduled Tribes Welfare Development Corporation to the Central Bureau of Investigation (CBI).

Case Background

The Union Bank of India filed the petition contending that the CBI is the authorized agency to investigate fraud involving public sector banks when the alleged fraud amount exceeds ₹30 crore. The bank's plea followed an FIR filed with the CBI on June 3, after discovering that some of its officials, in collusion with corporation officials, had illegally transferred crores of rupees from the corporation’s account at UBI’s M.G. Road branch in Bengaluru to various other accounts.

Court Proceedings

Justice M. Nagaprasanna presided over the petition hearing and directed the state government to submit its objections by August 7, 2024. The court also maintained its earlier interim orders protecting UBI's Managing Director and CEO A. Manimekhalai, Executive Directors Nitesh Ranjan, S. Ramasubramanian, Sanjay Rudra, and Pankaj Dwivedi from any coercive action by the state police, while ensuring their cooperation with the investigation.

Legal Arguments

Appearing for the UBI, Attorney General of India R. Venkataramani, argued that according to the Reserve Bank of India (RBI) master circulars, the CBI must investigate bank frauds involving public sector banks when the fraud amount exceeds ₹50 crore. He emphasized the necessity of transferring the investigation to the CBI to align with statutory requirements and ensure thorough investigation as mandated by the RBI.

Implications and Concerns

Venkataramani highlighted the broader implications of banking frauds, stating that even frauds in small domestic banks could have international ramifications. He argued that once the bank had entrusted the matter to the CBI, it could not be expected to appear before the state investigating agency, urging that the state should comply with the statutory framework and transfer the investigation to the CBI.

Petition Details

The Union Bank of India had earlier represented to the state government on June 19, seeking the transfer of the probe to the CBI, citing the RBI's mandate. However, the state government did not respond, prompting the bank to approach the Karnataka High Court.

Interim Protection for Bank Officials

The court has ensured that no coercive actions will be taken against UBI's top officials, maintaining the status quo from earlier interim orders while directing them to cooperate fully with the ongoing investigation.

Conclusion

The Karnataka High Court's notice to the state government marks a significant development in the ongoing investigation into the Maharshi Valmiki Corporation scam. The decision to potentially transfer the case to the CBI underscores the importance of adhering to statutory mandates for investigating large-scale financial frauds involving public sector banks. This move aims to ensure a more thorough and unbiased investigation, in line with the guidelines established by the RBI.

The next hearing is scheduled for August 7, 2024, by which time the state government is expected to file its objections, paving the way for further legal proceedings in this high-profile case.