Top Court Issues Notice Seeking Probe into Alleged Collusion Involving Officials and Judiciary

New Delhi | Special Correspondent: Arun Sharma

The Supreme Court of India on Friday took serious note of allegations of a multi-crore corporate fraud and issued notices to the Union Government, the Central Bureau of Investigation (CBI), the Enforcement Directorate (ED) and the Serious Fraud Investigation Office (SFIO) on a plea seeking an independent and time-bound probe into the matter.


A Bench comprising Chief Justice Surya Kant and Justice Joymalya Bagchi directed the Ministries of Home Affairs, Finance, Law and Justice, and Corporate Affairs to file their responses, signalling the Court’s concern over the gravity of the allegations.


Allegations of Judicial Influence and ₹150-Crore Diversion
The petition alleges a well-orchestrated conspiracy involving senior government officials and a high-ranking member of the judiciary, claiming that nearly ₹150 crore was siphoned off by the suspended management of an insolvent company by misusing judicial influence to stall insolvency proceedings for over 30 months.


The plea refers to proceedings before the National Company Law Appellate Tribunal (NCLAT), Chennai, where a judicial member reportedly made a startling disclosure in open court, stating that he had been approached through a Chief Justice of a High Court for a “favourable order” in favour of the suspended directors of KLSR Infratech Limited.


Manipulation of Insolvency Records Under CIRP
According to the petition, despite the company being admitted into the Corporate Insolvency Resolution Process (CIRP) in July 2023, statutory records were allegedly manipulated to show the company as “active” instead of “under CIRP”.


This alleged manipulation enabled the directors to raise fresh loans worth approximately ₹148.9 crore from various banks, charging the company’s assets.


GST Raids, Arrests and ‘Arm-Twisting Tactics’
The plea further alleges that state tax authorities initiated malicious GST proceedings, conducted illegal searches and even arrested a family member using what were described as “fabricated documents”. These actions, the petitioner claims, were designed to coerce a settlement and silence opposition.


Supreme Court Seeks Accountability
The petitioner has sought a CBI and SFIO investigation into the alleged collusion and an ED probe into suspected money laundering.


By issuing notices to all concerned authorities, the Supreme Court has underscored that allegations striking at the credibility of corporate governance and judicial integrity cannot be ignored.


Legal experts view the Court’s intervention as a significant step towards ensuring transparency, accountability and the rule of law, particularly in cases where insolvency processes and public institutions are alleged to have been compromised.


The matter is expected to come up for further hearing after responses are filed, with wide implications for corporate regulation, insolvency law and institutional integrity in the country.