Is CBI Raid on the Roys a Criminal Investigation or a Witch-Hunt?

Depending on where you stand, the CBI raid against Prannoy and Radhika Roy consequent to an FIR filed against them is either the law finally catching up with serial violators or (yet another) case of the government persecuting dissenting voices.

There was some confusion as to what the CBI was investigating but as the copy of the FIR became public, it is evident now that this is in the context of loans that NDTV’s promoters, the Roys and RRPR Ltd, are said to have obtained from ICICI Bank Ltd.

Specifically, the CBI is investigating whether the loans obtained and repaid by the RRPR and the Roys amount to an offence under the Prevention of Corruption Act, 1988 (PCA).

Also Read: Probe Into ICICI Loss, Not Loan Default: CBI Replies to NDTV Claim

Definition of ‘Public Servant’

At first this may seem puzzling – ICICI bank is after all a private bank and the PCA deals with corruption and bribery by “public servants”.

The answer to this lies in the recent judgement of the Supreme Court in CBI v Ramesh Gelli. Interpreting Section 49-A of the Banking Regulation Act, 1949, and the Prevention of Corruption Act, 1988, the court clarified that employees and officials of even privately-owned banks would fall within the definition of “public servant”.

There was some confusion over this since the Banking Regulation Act was amended in 1956, to deem employees and management of all banks “public servants”, for the purposes of prosecuting bribery and corruption offences under the IPC.

However, when the IPC was subsequently amended to remove the sections dealing with corruption and bribery (Chapter IX), and place them in a new legislation (the PCA), there was confusion as to whether those in private banks would continue to be “public servants” for the purposes of the new law.

Also Read: Who Is NDTV’s “Disgruntled Ex-Consultant” Sanjay Dutt?

Alleged Offence

But what is the actual offence that the FIR says is committed by the ICICI and the Roys?

The FIR itself just reproduces the entire complaint addressed to it by one Sanjay Dutt who is a director of Quantum Securities Ltd and claims to hold shares in both NDTV and ICICI Bank.

It is only right at the end, in one laconic paragraph, that the CBI concludes that the complaint shows an offence being committed under Sections 13(2) read with 13(1)(d) of the PCA – i.e. a public servant having helped another to illegally obtain some benefit (apart from conspiracy to commit the same and cheating).

The SP (Superintendent of Police) doesn’t disclose exactly which act is being investigated and exactly why ICICI Bank and the Roys are supposed to be in the dock. Keep in mind that the CBI only has jurisdiction over this case if there is any “corruption” shown and not otherwise.

Also Read: Editors Guild Condemns Attempts to “Muzzle Media” After NDTV Raid

Loss of Rs 48 Crore

The main allegation that attracts the PCA seems to be that the RRPR and ICICI Bank officials colluded to cause a “loss” of Rs 48 crore to the bank.

The basis for this is that the settlement by which RRPR paid Rs 350 crore to the ICICI Bank as full settlement of its dues, and acknowledged by ICICI Bank as full settlement of its dues, meant that the bank “lost” what was owed as interest to it.

Did ICICI Flout Bank Regulations?

The allegation that ICICI Bank acted in violation of Section 19(2) of the 1949 Banking Regulation Act by taking NDTV shares as collateral is also a misreading of the law, since there is nothing that prevents banks from taking shares as collateral so long as they do so in accordance with RBI regulations and circulars.

Even the alleged discrepancy pointed out in RRPR’s balance sheet for FY 2010-11, where the complainant claims that RRPR has acknowledged it still owed ICICI Bank money, nowhere says that the amount mentioned as long-term loan is what is due to ICICI.

The further allegation is that ICICI Bank officials ensured the bank took a hit on the money owed to it by RRPR and even colluded with RRPR to help them raise money from Vishwapradhan Commercial Private Limited, though no material or documents are presented on this front.

The complainant does not even say that he has personal knowledge of this, but somehow this is enough for the CBI to not only to register an FIR, but also carry out raids based on “due diligence”.

Also Watch: Watch: Was NDTV’s Nidhi Razdan Right To Ask Sambit Patra to Leave?

An Eight-Year Delay

The CBI’s bare-bones FIR, with little or no details relating to the specifics of the offence, of what the exact decisions of ICICI Bank officials amount to a violation of the PCA, why these actions of ICICI Bank amount to a violation of the PCA, and more importantly, why no action has been taken for eight years, suggests that this is not a case that will stand up to scrutiny in court.

Delay is usually a factor in the quashing of an FIR, and it is not clear how the CBI will explain the delay of eight years in registering this FIR, more so since these allegations have been made in the past by the very same person against NDTV.

The Cost of a Loan Waiver

Be that as it may, even if these allegations are proven to be true and are acted upon, consider the implications – if you have gotten some sort of a waiver or a reduction on a home loan or personal loan from the bank, both you and the employee of the bank who gave you the waiver may have committed an offence under the PCA!

Consider also the fate of the officials of the lenders’ consortium which just gave a 7-month loan waiver to Reliance Communications, thinking perhaps, in good faith, that they’re only helping a troubled lender!

All of which makes us circle back to the initial debate – is this a criminal investigation being undertaken in good faith or just a witch-hunt to put someone in their place?

(Alok Prasanna Kumar is an advocate based in Bengaluru and can be reached @alokpi. This is an opinion piece and the views expressed above are the author’s own. The Quint neither endorses nor is responsible for the same.)