RCOM fraud probe: SC says can't order arrest to sensationalise issue

The Supreme Court refused to direct Anil Ambani's arrest in the RCOM fraud case, saying investigative agencies must decide on custodial action

The Supreme Court on Friday declined to issue any direction for the arrest of industrialist Anil Ambani in connection with the alleged bank fraud involving Reliance Communications (RCOM) and its group companies, observing that arrest powers lie with investigating agencies and cannot be exercised merely to create sensation.

 

A Bench led by Chief Justice of India (CJI) Surya Kant and Justice Joymalya Bagchi made the remarks while hearing a plea filed by former Union government secretary E A S Sarma seeking a court-monitored probe into alleged financial irregularities involving Reliance entities.

 

“This court has ruled every now and then this court would be very shy to order arrest unless the investigating arm wants. Arrest cannot be ordered to sensationalise it,” Justice Bagchi observed. Calling Ambani’s arrest a “tool of last resort”, Justice Baghchi observed: “In monitored investigations, collateral damage can sometimes become very severe by the time the investigation culminates in a final report or acquittal”.  

 

 

“There are cases where custodial interrogation becomes needed. We have to leave it to the (investigating) agency,” CJI Kant added.

 

The case concerns allegations that RCOM and its subsidiaries, Reliance Infratel and Reliance Telecom, secured loans worth ₹31,580 crore between 2013 and 2017 from a consortium led by State Bank of India (SBI). 

 

The petition cites a forensic audit allegedly uncovering large-scale diversion of funds, including use of borrowed money to repay unrelated liabilities, routing of funds to related entities, investments in mutual funds and fixed deposits that were quickly liquidated, and circular transactions allegedly designed to evergreen loans.

 

Sarma had earlier contended that investigative agencies were failing to examine the role of bank officials and regulators despite material indicating widespread fraud. Acting on allegations of “institutional complicity”, the Supreme Court in February directed the Enforcement Directorate (ED) to form a Special Investigation Team (SIT) to probe the matter.

 

During Friday’s hearing, the Central Bureau of Investigation (CBI) and ED submitted status reports in sealed cover.

 

Appearing for the petitioner, Advocate Prashant Bhushan argued that the agencies had already chargesheeted Anil Ambani and his son Anmol Ambani and that the chargesheet referred to siphoning of funds and purchase of a yacht.

 

“In this ₹17,000 crore scam, Anil Ambani is the kingpin but still neither CBI or ED is not willing to arrest him as if he is some holy cow. They are arresting (other) people, not him,” Bhushan submitted.

 

Solicitor General Tushar Mehta responded that the probe remained underway.

 

"Investigation is ongoing. If this court thinks that we are not on correct track, then we can come to the right track,” he said.

 

“In light of the sealed cover report as of now we are willing to wait,” the CJI remarked, indicating that the Court was not inclined to intervene at this stage.

 

Justice Bagchi referred to the Supreme Court’s rulings on arrest jurisprudence, including Satender Kumar Antil and Pankaj Bansal.

 

“See Satender Kumar Antil (judgment). If evidences or witnesses are not being tampered (with), then arrest need not be there. Cart need not be put before the horse. We create Antil and Pankaj Bansal judgments but then chase agencies like bloodhounds? It will run contrary to our judgments. Mr Bhushan you know it,” he said.

 

Bhushan, however, reiterated that the chargesheet itself identified Ambani as the principal figure behind the alleged fraud.

 

“Chargesheet says all of this(was) done at the instructions of kingpin and who is this kingpin? Anil Ambani!” he argued.

 

Justice Bagchi responded, “Why should we ex parte express opinion on merits of such arrests?”

 

Senior Advocate Kapil Sibal, representing Ambani, questioned how the petitioner had obtained access to the chargesheet before cognisance had been taken by the trial court.

 

“Cognisance of chargesheet not taken. How does he have a copy? His only agenda is (the) arrest (of) Anil Ambani. How does he have the chargesheet? There is more than what meets the eye. Why all this?” Sibal submitted.

 

Senior Advocate Shyam Divan, appearing for Reliance Infra and Reliance Power, cautioned the Court about the wider commercial fallout of coercive measures taken during investigations.

 

“All project revenues flow into lender-controlled bank and financial institution accounts, and no funds may be withdrawn or transferred without the prior written approval of lenders. 

 

The architecture of the cash flows itself is a complete answer to any allegation of diversion. There have been eight provisional attachment orders. As far as Reliance Infra is concerned, one of the provisional attachment orders dated January 28, 2026 concerns strategic regulated utility shareholding valued at approximately ₹1,575.39 crore.

 

The shares attached include 53 crore equity shares of BSES Rajdhani, 28.36 crore equity shares of BSES Yamuna and 37.89 crore equity shares of Mumbai Metro. These are not ornamental holdings. BSES Rajdhani and BSES Yamuna together supply electricity to crores of consumers in the National Capital Territory of Delhi. 

 

The attachment and arrests have produced consequences that no economic remedy can later repair. The freezing of working capital headroom and the reputational impact are severe. As far as these listed companies are concerned, there is no specific allegation except with respect to one entity. These are companies with tens of thousands of shareholders. They are blemishless. Merely because they are part of the group, they are also being implicated,” Divan argued.

 

“We are only hearing you on the issue of jurisdiction. We cannot comment on these exercises,” Justice Bagchi replied.

 

“I am not inviting the Court to do that. The purpose of putting this across is to indicate the consequences,” Divan said.

 

Justice Bagchi then reflected on the broader implications of prolonged court-monitored investigations.

 

“In monitored investigations, collateral damage can sometimes become very severe by the time the investigation culminates in a final report or acquittal. Look at the Jain Hawala monitored investigation. What collateral damage it caused. Vineet Narain judgment evolved the jurisprudence of continuing mandamus. It became a unique judicial tool, perhaps something the Indian judiciary can be proud of. But its consequences have also been devastating. We are fully conscious of that. That is why, to a certain extent, we did not listen to Mr Bhushan about the over-enthusiastic use of a tool which is ultimately a tool of last resort (arrest of Anil Ambani),” he observed.

 

The matter has now been posted for further hearing in July, with the Court refraining from issuing any interim directions.