Judge in Delhi cash row was named in CBI's 2018 sugar mill fraud case

The CBI had filed an FIR against Simbhaoli Sugar Mills, its directors, and others, including then non-executive director Yashwant Varma, over a complaint by Oriental Bank of Commerce regarding a frau

Justice Yashwant Varma, a sitting judge of the Delhi High Court embroiled in a cash recovery row, was named in a Central Bureau of Investigation (CBI) FIR related to a sugar mill bank fraud case from 2018. This development comes after unaccounted cash was reportedly discovered at his Delhi residence.  

 

The CBI had registered an FIR against Simbhaoli Sugar Mills, its directors, and others, including Justice Varma, who was a non-executive director at the time. The case stemmed from a complaint by the Oriental Bank of Commerce (OBC), alleging that the sugar mill had defrauded the bank through a fraudulent loan scheme.  

 

As per the complaint, between January and March 2012, OBC’s Hapur branch sanctioned ₹148.59 crore to 5,762 farmers for purchasing agricultural inputs such as fertilisers and seeds. The funds were supposed to be transferred to an escrow account before being credited to the farmers' individual accounts. Simbhaoli Sugar Mills had guaranteed the repayment and was responsible for covering defaults or identity fraud.  

 

The company allegedly misused the loan by submitting falsified Know Your Customer (KYC) documents and diverting the funds. By March 2015, OBC had classified the loan as fraudulent, reporting a loss of ₹97.85 crore, with an outstanding amount of ₹109.08 crore.  

 

Among those named in the FIR was Gurpal Singh, the deputy managing director of the company and son-in-law of former Punjab chief minister Amarinder Singh. The Enforcement Directorate (ED) later initiated a parallel probe into money laundering based on the CBI case.  

 

Court's directive for a fresh probe 

 

In December 2023, the Allahabad High Court ordered the CBI to conduct a fresh investigation into seven banks involved in the loan disbursement. The court remarked that the fraud had "shaken the conscience" of the judiciary.  

 

It was stated that certain bank officials appeared to have colluded with Simbhaoli Sugar Mills in approving loans worth ₹900 crore. Of the involved banks, only OBC approached the Enforcement Directorate, resulting in the seizure of some assets.  

 

In its order, the court said, "Bank officials completely ignored RBI guidelines and circulars. We direct the CBI to investigate which officials approved these loans, which members of the board or credit committee facilitated the disbursements, and which officials allowed the embezzlement to continue unchecked."  

 

CBI's renewed investigation in 2024  

 

Following the Allahabad High Court’s orders, the CBI launched a fresh inquiry in February 2024 to determine why banks continued to lend to Simbhaoli Sugar Mills between 2009 and 2017 despite its loan default history. The probe targeted the company, its directors, and unidentified bank officials.  

 

However, in March 2024, the Supreme Court put a stay on the Allahabad High Court’s directive.  

 

Incident at Justice Varma’s residence  

 

On March 14, a fire broke out in the storeroom of Justice Varma’s official residence in Lutyens’ Delhi. The fire department responded at 11:43 pm and reportedly found cash among burnt jute sacks. A staff member claimed that the damaged materials included court-related documents and stationery.  

 

Since no injuries were reported, no FIR was lodged. However, videos showing the cash were allegedly recorded and forwarded to senior Delhi Police officials, leading to government and judicial intervention. An inquiry was subsequently ordered by the Chief Justice of India (CJI). Reports suggest that the total cash recovered amounted to ₹15 crore.  

 

Following the incident, the Supreme Court Collegium, led by Chief Justice of India Sanjiv Khanna, decided to transfer Justice Varma back to the Allahabad High Court. The transfer was described as a preliminary measure, with further inquiry still ongoing.  

 

(With agency inputs)