Delhi High Court Refuses To Quash CBI Case Against Due Diligence Firm In ₹600 Lakh Bank Loan Fraud Case

The Delhi High Court has refused to quash the criminal charges framed against a due diligence firm and its authorised signatory in a ₹600 lakh bank loan fraud case, holding that the material on record discloses grave suspicion warranting a full-fledged trial.Justice Saurabh Banerjee observed, “in view of the positive Report submitted by the Petitioners despite the glaring irregularities and contradictions, there arises grave suspicion regarding involvement of the Petitioners in the alleged offence and which can be only tested in trial.”The bench thus upheld the order of the Special CBI Court framing charges against the Petitioners under Sections 120B read with Sections 420, 468 and 471 of the IPC, along with Sections 13(2) and 13(1)(d) of the Prevention of Corruption Act.The case arises from a complaint lodged by Corporation Bank, alleging that a ₹600 lakh working capital loan was sanctioned in 2013 to a borrower firm on the basis of forged and fabricated documents, including false title deeds and financial records. During investigation, the Central Bureau of Investigation (CBI) alleged that the borrower firm and its proprietor were fictitious, and that senior bank officials, private individuals and the Petitioners entered into a criminal conspiracy to facilitate sanction of the loan.According to the prosecution, the Petitioners, who were empanelled by the bank as a due diligence agency, submitted a favourable due diligence report without conducting genuine physical or financial verification. Rejecting the Petitioners' contention that they had merely relied on documents supplied by the bank and borrower, the Court observed that the terms of their empanelment “casted/ imposed a positive duty upon the petitioners to independently verify and form a considered opinion regarding the genuineness of the borrower's identity/ integrity/ market standing/ financial position for preparation of their Report.”Therefore, the Court added, “it is hard to believe that the petitioners were only expected to merely rely upon the documents supplied by the Bank or the borrower. The petitioners were not dealing as/ with a fly by night operator. As such, the role of the petitioners and the Report submitted by them assumed substantial significance in consideration and sanction of the loan proposal.”Emphasising that the power to quash charges must be exercised sparingly, the Court dismissed the petition.Appearance: Mr. Naman Gupta, Ms. Mansi Goyal, Advocates for Petitioners; Mr. Anuram S. Sharma, SPP for CBI alongwith Ms. Harpreet Kalsi, Mr. Vashisht Rao, Mr. Ripudaman Sharma, Ms. Riya Sachdeva and Ms. Amisha, Advs. for RespondentCase title: Vikas Garg & Anr. v. State through CBICitation: 2026 LiveLaw (Del) 211Case no.: CRL.M.C. 6496/2022Click here to read order

Delhi High Court Refuses To Quash CBI Case Against Due Diligence Firm In ₹600 Lakh Bank Loan Fraud Case

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Delhi High Court Refuses To Quash CBI Case Against Due Diligence Firm In ₹600 Lakh Bank Loan Fraud Case

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