The Supreme Court has agreed to investigate a public interest litigation (PIL) requesting a court-monitored probe by the Enforcement Directorate (ED), the Serious Fraud Investigation Office (SFIO), and the Reserve Bank of India (RBI) into an alleged banking fraud exceeding Rs 1,500 crore of public sector bank funds. The PIL focuses on the involvement of asset reconstruction companies (ARCs) in facilitating debt settlements at a fraction of the outstanding dues.
The PIL, filed through advocate-on-record Ashwani Kumar Dubey, claims that loans and dues totaling Rs 1,537.59 crore owed by JKM Infra Projects Ltd were settled through two ARCs — Prudent ARC Ltd. and Phoenix ARC Pvt. Ltd. — for just Rs 73.50 crore, resulting in a significant loss of public funds. JKM Infra Projects, a Noida-based infrastructure company, received loans of around Rs 912 crore from a consortium of public sector banks, primarily led by the State Bank of India (SBI), between 2012 and 2015.
According to the petition, the loans were sanctioned against collateral valued at only Rs 60-72 crore, and the company started defaulting shortly after receiving the funds. A forensic audit conducted by Ernst & Young (EY) and submitted on May 23, 2018, revealed that over Rs 902 crore was diverted through various means, including shell companies and forged documents.
The plea alleges that despite the forensic audit findings meeting the criteria for classifying the account as a fraud under RBI Master Directions, no action was taken to recover the diverted funds. The consortium banks did not initiate criminal proceedings or refer the matter to enforcement agencies, as per the plea. The debt owed by JKM Infra Projects was later transferred to Prudent ARC in 2020 at a discount and then to Phoenix ARC in 2025, where a settlement was reached for Rs 73.50 crore against an outstanding debt of over Rs 1,537 crore.
