The Bombay High Court has granted bail to Vishwanath Rao, the former Senior Vice President of the Reliance Communications group, who was booked in Rs 19,694.33 crore loan default case by the Central Bureau of Investigation (CBI).

Single-judge Justice Milind Jadhav noted that the CBI has failed to bring on record any direct evidence against Rao indicating that he played an active role in the loan default case.

The judge noted that Rao worked as a Senior VP and Joint President of the Reliance Communications Group and that the group borrowed monies from a consortium of banks led by the State Bank of India (SBI) between 2013 to 2017, allegedly by misrepresentation and suppression of material facts.

He noted that the CBI has alleged that Rao played an active role in sanction, disbursement of credit facilities obtained from the lenders under multiple banking arrangements.

The judge further noted that the another charge against Rao was that he was aware of the end utilisation of funds through layered transactions including bill discounting and tripping of funds through the company's entities.

"Prima facie in so far as the first charge is concerned, a lot will have to be said about the banking due diligence involved and carried out by the lenders' consortium before disbursement of credit facilities to the Company of which Applicant was a key managerial person as alleged. Firstly and prima facie prosecution has to show an overt act by the Applicant about misrepresentation and suppression so as to have deceived the Complainant into parting of humongous funds and disbursement of credit facilities as alleged. No such overt act attributed to the Applicant is prima facie shown to Court. No direct evidence of any overt act is either shown to Court or directly attributed to the Applicant. In short, prosecution case is that a massive fraud is committed and Banks are induced to part with funds by misrepresentation and suppression," the judge said in the order passed on August 25.

Entire allegation and case of prosecution is based on documents namely institutional records loan agreements, sanctioned letters, audit reports, regulatory filings, bold minutes and insolvency records which are either with the concerned banks or with the CBI, the judge said, further adding that the facts are required to be pleaded for prima facie belief of Rao's role and involvement.

"Admittedly, prosecution has not recovered any material or amounts from Applicant and therefore on the first count of charge against Applicant, prima facie, no case is made out by the CBI so as to continue the incarceration of the Applicant. It is alleged that he was privy to and had knowledge of the entire financial structure including the origin and end-utilisation of funds and played an active role in diversion of loan amounts through layered transactions including bill discounting under Letters of Credit and routing of funds through group entities resulting in round-tripping and wrongful loss of Rs.2,929.05 crores. This is a very serious charge on the face of record as pleaded by the prosecution. However, to show that Applicant was privy to and had knowledge of the entire financial structure and more specifically about the end-utilisation of funds, the precise role of Applicant and motive needs to be shown or attributed at the threshold from the documentary evidence i.e. loan agreements, sanction letters, board minutes, audit reports and regulatory findings which are confiscated by the prosecution. If prosecution wants to levy the above charge, then it cannot be so generic in nature and to such an extent merely to submit that Applicant is responsible for causing financial loss of Rs.2,929.05 crores. Without specific facts being pleaded for such a humongous charge, prosecution case at this stage cannot be accepted at face value," the judge opined.

The judge further noted that Rao is 67 years old and suffers from uncontrolled Type-2 diabetes, hypertension and coronary artery disease having undergone angioplasty with stenting in February 2026 and also took note of his reports from Dr. LH Hiranandani Hospital.

"I have no reasons to disbelieve the reports. Applicant is deeply rooted in the society, is a qualified Chartered Accountant and there is no likelihood of him evading or jumping bail either. Hence for all the above prima facie observations and findings, I am inclined to consider the Applicant's case for allowing bail, who is presently lodged in judicial custody at Arthur Road Jail, Mumbai since April 24, 2026," the judge said while ordering Rao's release.

With these observations, the bench disposed of the plea.

Appearance:

Advocates PK Sanghrajka and Shrishankar Prajapati appeared for the Applicant.

Special Public Prosecutor Amit Munde assisted by Advocates Jai Vohara and Aamir Khan represented the CBI.

Case Title: Vishwanath Devaraja Rao vs Central Bureau of Investigations (Bail Application 3030 of 2026)

Citation: 2026 LiveLaw (411)

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