Special Court Can Order Further Investigation After Submission Of Final Report: Kerala High Court

Justice A. Badharudeen, delivered the judgment in a petition challenging the order of the Special Court directing further investigation in a case involving alleged loan fraud against the State Bank of India.

A case was registered before the Central Bureau of Investigation (CBI) in 2019 based on a complaint by the State Bank of India, alleging that Heera Constructions Company Pvt. Ltd. (HCCPL) and its directors cheated the bank in connection with a Rs.15 crore project loan. A final report was filed by CBI after the investigation, excluding bank officials who are public servants from the array of the accused, stating that while there was gross negligence and dereliction of duty, there was no evidence of mens rea or quid pro quo to establish offences under the Prevention of Corruption Act, 1988.

Special Judge (CBI/SPE), Thiruvananthapuram, rejected the final report and directed the CBI to conduct further investigation to examine the possible criminal involvement of the bank officials.

The High Court examined whether the Special Court erred in ordering further investigation, after the submission of the final report by CBI.

The Court noted that the CBI's own reports had acknowledged serious procedural lapses and gross negligence on the part of bank officials in sanctioning and monitoring the loan, yet the agency had prematurely given them a clean chit without examining key aspects, including the absence of an escrow account, repeated loan extensions despite non-payment, and the sale of secured assets without the bank's consent.

The Court further noted that the Special Court found serious doubt regarding the role of bank officials and the investigating officer failed to consider this aspect.

“On scrutiny of the order impugned,...the involvement of the bank officials in this crime could be gathered and the report of the investigating officer giving them clean chit in the matter of criminal culpability by merely alleging lapses alone on the part of the bank officials within the orbit of negligence or dereliction of the duty could not be justified.” the Court noted.

The Court thus found that the order by the Special Judge for further investigation was justified. Hence, observed that the challenge seeking quashment of order would not stand and dismissed the petition.

The Court has directed the investigating officer to conduct effective investigation and file a report before the Special Court within two months.

Case Title: Abdul Rasheed @ Dr A R Babu v Central Bureau of Investigation

Case No: OP(Crl.) 712/ 2023

Citation: 2025 LiveLaw (Ker) 659

Counsel for Petitioner: C S Manum C Y Vijay Kumar, Manju E R, Anandhu Satheesh, Alint Joseph, C A Anupaman, Dilu Joseph, T B Sivaprasad, S Sreekumar (Sr.)

Counsel for Respondent: Sreelal N Warrier, Akhil Suresh, Kalliyani Krishna B, Gilbert Heorger Correya