Bombay High Court

VISHWANATH DEVARAJA RAOversusCENTRAL BUREAU OF INVESTIGATION AND ANR

Decided: 25 August 2026
Disposal: Disposed Off

Holding

The court held that, in the absence of prima facie evidence of an overt act by the applicant, bail should be granted with conditions.

Summary

The High Court considered the bail application of Vishwanath Devaraja Rao, a 67‑year‑old senior vice‑president of Reliance Communications, who was arrested in connection with a large banking fraud alleged to have occurred between 2013 and 2017. The charges under Section 120‑B read with Sections 406, 420 and 409 of the IPC and Section 13(2) read with 13(1)(d) of the Prevention of Corruption Act alleged that he participated in the sanction, disbursement and diversion of loan funds obtained from a consortium of banks, resulting in massive financial loss. The prosecution argued that the applicant’s senior position enabled him to facilitate misrepresentations and layered transactions, while the defence highlighted the lack of direct evidence, the applicant’s clean criminal record, his health issues, and his cooperation with investigators. The court held that the prosecution had not prima facie established an overt act or specific involvement sufficient to justify continued detention. Consequently, the court granted bail with stringent conditions and ordered the application disposed.

Issues considered

Whether the prosecution has established prima facie evidence of the applicant's active participation in the alleged fraud and corruption offences.
Whether the applicant's age, health, lack of prior criminal record, and cooperation with investigation justify the grant of bail.
Whether the alleged offences under the IPC and the Prevention of Corruption Act warrant denial of bail on grounds of potential tampering with evidence or influencing witnesses.

Legislation cited

Indian Penal Code, 1860 — s. 120B, 406, 409, 420
Insolvency and Bankruptcy Code, 2016 — s. 43, 45, 46, 66
Prevention of Corruption Act, 1988 — s. 13(1)(d), 13(2), 19

Subjects

bail
white‑collar crime
bank fraud
corruption
IPC
Prevention of Corruption Act
corporate finance
misrepresentation
layered transactions
health considerations

Judgment

29.BA.3030.2026.doc

Ajay

IN THE HIGH COURT OF JUDICATURE AT BOMBAY
CRIMINAL APPELLATE JURISDICTION

BAIL APPLICATION NO. 3030 OF 2026

Vishwanath Devaraja Rao .. Applicant
Versus
Central Bureau of Investigation
(Bank Securities and Fraud Branch, New Delhi)
& Anr. .. Respondents
....................
 Mr. P.K. Sanghrajka a/w Shrishankar Prajapati, Advocates for
Applicant
 Mr. Amit Munde, Special P.P. a/w Mr. Jai Vohara & Mr. Aamir
Khan, Advocates for Respondent No.1
 Tathagat Vardan, Addl. SP, CBI, BSFB, New Delhi
......…...........

CORAM : MILIND N. JADHAV, J.
DATE : AUGUST 25, 2026.

P.C.:

1. Heard Mr. Sanghrajka, learned Advocate for Applicant and

Mr. Munde, learned Special PP for Respondent No.1

2. After the Bail Application was heard yesterday, in view of the

verbose submissions made by either side, this Court had passed the

following order:-

"1. Heard Mr. Sanghrajka, learned Advocate for Applicant
and Mr. Munde, learned Special PP for Respondent No. 1 and
with their able assistance, perused the entire record placed
before me for grant of bail. Reply of CBI has been taken on
record and duly considered.
2. By this Bail Application, Applicant - accused is seeking
enlargement on bail in FIR No. RCBD 1/2025/E/0005
registered with the Central Bureau of Investigation, Bank
Securities and Fraud Branch, New Delhi, under Section 120-B
read with 406, 420 and 409 of the Indian Penal Code, 1860 (for

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short "IPC") and Section 13(2) read with Section 13(1)(d) of
the Prevention of Corruption Act, 1988.
3. After considering their respective submissions and in view
of the prima facie verbose submissions and arguments
advanced by both the learned Advocates before me, the reasons
will be given later on. I am convinced that Applicant deserves
to be enlarged on bail.
4. The Applicant is released on bail on the following terms
and conditions:-
(i) Applicant is directed to be immediately released
from prison in connection with RC No.
RCBD1/2025/E/0005 dated 21.08.2025 registered
with the Central Bureau of Investigation, Bank
Securities and Fraud Branch, New Delhi;
(ii) Applicant is directed to be released on bail on
furnishing P.R. Bond of Rs. 1,00,000/- (Rs. One
Lakh only) with one or two sureties in the like
amount;
(iii) Applicant is permitted to furnish provisional cash
bail of Rs. 1,00,000/- for his release immediately
and file undertaking that he will provide one or two
sureties in the like amount of Rs. 1,00,000/- within
a period of four weeks after his release which shall
be accepted by the Trial Court, Applicant shall
provide surety as directed;
(iv) Applicant shall report to the concerned
Investigating Officer once every month on the first
Sunday of the month between 10:00 a.m. to 12:00
p.m.;
(v) Applicant shall co-operate with the conduct of trial
and attend the Trial Court on all dates, unless
specifically exempted and will not take any
unnecessary adjournments, if he does so it will
entitle the prosecution to apply for revocation of
this order;
(vi) Applicant shall not leave the State of Maharashtra
without prior permission of the Trial Court. He
shall deposit his passport, if any, with the Trial
Court within one week of being released from
prison;
(vii) Applicant shall not influence with any of the
witnesses or tamper with the evidence in any
manner;
(viii) Applicant shall keep the Investigating Officer
informed of his current address and mobile contact
number and / or change of residence or mobile

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details, if any, from time to time, as applicable; and
(ix) Any infraction of the conditions shall entail
cancellation of bail granted to the Applicant.
5. Needless to state that the above observations and the
reasons to follow will not come in the way of trial as they are
prima facie in nature based on the submissions made by both
Advocates and the material placed before this Court.
6. Bail Application is allowed and disposed of in the
above terms."

3. The reasons for passing the aforesaid order are given herein.

4. Applicant is arraigned as Accused No.2 in the charge-sheet

filed on 29.05.2026 which is registered as a Special Case No.1046 of

2026 on 17.06.2026. The RC No. of the case is RCBD1/2025/E/ 0005

dated 21.08.2025 for offences punishable under Section 120B read

with Sections 406, 420 and 409 of Indian Penal Code, 1860 (for short

"IPC") and Sections 13(2) read with 13(1)(d) of Prevention of

Corruption Act, 1988 (for short "PC Act"). The period during which the

offence/crime/incident has occurred is between 01.04.2013 to

31.03.2017.

5. Mr. Sanghrajka, learned Advocate for Applicant would

vehemently submit that Applicant is 67 years old today and is in

judicial custody since 24.04.2026 on the ground that he actively

participated in sanction and disbursement of credit facilities obtained

from consortium lenders under multiple banking arrangements by

misrepresentation and suppression of material facts.

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5.1. He would submit that Applicant has no criminal antecedents,

that out of 20 accused persons who were chargesheeted only 3 have

been arrested during the course of investigation, that admittedly even

according to prosecution Applicant is not beneficiary of a single rupee

or any monies obtained from the consortium of banks and the entire

case of the prosecution rests on documentary evidence which are

statutory documents and no direct evidence of any overt act is

attributed to the Applicant. He would submit that Applicant worked as

a Middle Management Officer in the capacity of Senior Vice President /

Joint President of the Reliance Communications group and looked

after its corporate finance operations.

5.2. He would submit that the entire case of prosecution is based

upon the fact that Applicant being the senior most official in the group

of companies, he signed 67 cheques / credit facilities extended by the

Company to third parties in the normal day to day business

transactions of the Company and through these transactions diverted

and layered the funds received / borrowed from the Banks and was in

the complete knowhow. He would submit that every allegation against

the Applicant is generic in nature and no direct involvement of the

Applicant subsists in the alleged fraud or charge levied under the PC

Act. Hence, he would urge the Court to consider the Application for

bail.

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6. PER CONTRA, the Bail Application is vehemently opposed by

CBI led by its Special Counsel Mr. Munde. At the outset, he would

draw my attention to Affidavit dated 25.08.2026 filed by Mr. Tathagat

Vardan, Additional Superintendent, Central Bureau of Investigation –

Bank Securities and Fraud Branch, New Delhi (for short “CBI”) and

contend that role of Applicant in disbursement of funds received from

lenders and handling the corporate finance operations of the group of

companies is direct and prominent. He would forcefully submit that

material collected during investigation including banking records,

internal communications, transaction trails, witness statements all

prima facie indicate Applicant’s active and direct involvement in

carrying out layered transactions, bill discounting arrangements and

routing of funds through the Reliance group entities designed to

facilitate diversion and round – tripping of loan funds in violation of

the sanction terms and misuse of the said funds. He would strongly

submit that Applicant’s senior position facilitated his participation in

the questioned transactions.

6.1. He would submit that allegations against Applicant disclose

a continuing course of conduct whereby consortium lender banks led

by State Bank of India (for short “SBI”) were induced to sanction and

disburse credit facilities on the basis of misleading representations

regarding financial position and viability of the borrower Company and

after receiving the loan amounts has allegedly diverted, layered and

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utilized the same contrary to sanction terms. He in his usual fair-

mindedness would candidly admit that though Applicant did not derive

any monetary benefit but the relevant question to be answered was

whether he knowingly participated and facilitated the transactions

under investigation on behalf of the group of Companies.

6.2. He would submit that facility of Letters of Credit (LoC) was

obtained by the accused persons including Applicant from the banks by

misrepresentation and suppression of records and those funds were

discounted at a different bank and were finally routed to Reliance

Communications Ltd. causing financial loss of Rs.618 crores to two

banks. He would submit that prosecution therefore has reasonable

apprehension to believe that because of his powerful position the

Applicant if released on bail will undoubtedly tamper with

investigation and shall attempt to influence witnesses and hence his

Bail Application be dismissed.

6.3. He would submit that the Company in which Applicant was

working has caused financial loss to the tune of several thousand

crores to Indian and Foreign Commercial Institutional Investors

through a complex web of transactions by circuitous movement of

funds with ulterior motive and therefore case pleaded that he was in

the middle management and carried out orders of the Board of

Directors of the Company should not be countenanced at all for grant

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of bail.

6.4. Mr. Munde, learned Special Counsel has referred to and

relied upon the decisions of the Supreme Court in the case State of

Gujarat Vs. Mohanlal Jitamalji Porwal and Anr.1, Y.S. Jagan Mohan

Reddy Vs. CBI 2 and State of Bihar Vs. Amit Kumar3 and taken me

through them. He would argue that Applicant has indulged in a

massive white collar crime with a permissive eye unmindful of the

damage and with utter disregard for the interest of the

community/society with a deliberate motive and design for personal

profit disregarding the entire society at large. He would stress that

Applicant is involved in deep rooted conspiracy involving huge loss of

public funds which is a socio-economic offence which affects the moral

fibre of the society and resultantly the economy of the country and the

financial health of the country as a whole. Hence he would

passionately persuade me to reject the Applicant’s Bail Application

since further investigation is on to determine tracing and the end use

of the borrowed amounts from the Indian and foreign lenders

including banks.

7. I have considered the submissions made by Mr. Sanghrajka

and Mr. Munde and with their able assistance perused the record of

the case placed before me by them. Their submissions have received

1 AIR 1987 SC 1321
2 2013 (3) RCR (Criminal) 108
3 2017 (3) RCR (Criminal) 690

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due consideration by the Court.

8. In this case, it is prima facie seen that the Complainant is SBI

for itself and SBI led consortium of lenders. Applicant was working as

Senior Vice President/Joint President of the Reliance Communications

group. It is alleged that the group borrowed monies from the lenders

i.e. Banks between 2013 to 2017 by misrepresentation and suppression

of material facts and that Applicant being Senior Vice President/Joint

President played an active part in sanction, disbursement of credit

facilities obtained from commercial lenders under multiple banking

arrangements. The second charge is about disbursement/end

utilization of these funds by Applicant through layered transactions

including bill discounting and tripping of funds through group entities.

9. Prima facie in so far as the first charge is concerned, a lot

will have to said about the banking due diligence involved and carried

out by the lenders’ consortium before disbursement of credit facilities

to the Company of which Applicant was a key managerial person as

alleged. Firstly and prima facie prosecution has to show an overt act

by the Applicant about misrepresentation and suppression so as to

have deceived the Complainant into parting of humongous funds and

disbursement of credit facilities as alleged. No such overt act attributed

to the Applicant is prima facie shown to Court. No direct evidence of

any overt act is either shown to Court or directly attributed to the

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Applicant. In short, prosecution case is that a massive fraud is

committed and Banks are induced to part with funds by

misrepresentation and suppression. Entire allegation and case of

prosecution is based on documents namely institutional records loan

agreements, sanctioned letters, audit reports, regulatory filings, bold

minutes and insolvency records which are either with the concerned

banks or with the CBI. Facts are required to be pleaded for prima facie

belief of Applicant’s role and involvement. Admittedly, prosecution has

not recovered any material or amounts from Applicant and therefore

on the first count of charge against Applicant, prima facie, no case is

made out by the CBI so as to continue the incarceration of the

Applicant. Needless to state that trial will prove Applicant’s complicity,

but at this stage qua the first charge, I am unable to accept the generic

and fanciful submissions advanced by Mr. Munde.

10. In so far as the second charge against the Applicant is

concerned, it is alleged that he was privy to and had knowledge of the

entire financial structure including the origin and end-utilization of

funds and played an active role in diversion of loan amounts through

layered transactions including bill discounting under Letters of Credit

and routing of funds through group entities resulting in round-tripping

and wrongful loss of Rs.2,929.05 crores. This is a very serious charge

on the face of record as pleaded by the prosecution. However, to show

that Applicant was privy to and had knowledge of the entire financial

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structure and more specifically about the end-utilization of funds, the

precise role of Applicant and motive needs to be shown or attributed at

the threshold from the documentary evidence i.e. loan agreements,

sanction letters, board minutes, audit reports and regulatory findings

which are confiscated by the prosecution. If prosecution wants to levy

the above charge, then it cannot be so generic in nature and to such an

extent merely to submit that Applicant is responsible for causing

financial loss of Rs.2,929.05 crores. Without specific facts being

pleaded for such a humongous charge, prosecution case at this stage

cannot be accepted at face value.

11. At this stage, when the Bail Application is considered,

prosecution will have to prima facie show the degree of Applicant’s

role his privy to the transactions and layering of funds and he having

knowledge of the end-utilization of funds and he having diverted the

loan amount through layered transactions which is the most crucial

aspect.

12. Mr. Munde has vehemently argued that Applicant has signed

67 such documents for onward transmission of funds which are Letters

of Credit and has opened a total 67 Letters of Credit in favour of its

own subsidiary Companies which are signed by the Applicant. He has

argued that with regard to the loan amount of Rs.1200 crores taken

from SBI, he has signed as guarantor. These are the three specific

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submissions which are contained in the Reply filed by the CBI in

paragraph ‘M’ and ‘1F’ of the CBI’s Affidavit-in-Reply. I have perused

the same and considered the said submissions. It is prima facie seen

that the very transactions which are characterized as diversion and

round-tripping by the prosecution were already placed before the

National Company Law Tribunal (NCLT) during the Corporate

Insolvency Resolution Process filed by the company in at least 17

Avoidance Applications filed under Sections 43, 45, 46 and 66 of the

Insolvency and Bankruptcy Code, 2016 which were in fact moved by

the Resolution Professional (RP) under the supervision of the

Committee of Creditors led by the consortium lender bank, namely SBI

and not even one Avoidance Application came to be sustained. At this

stage, this much prima facie material placed before me by the

Applicant can be considered by me because the case of the prosecution

to indict the Applicant is generic in nature.

13. I am also inclined to accept the submissions made by Mr.

Sanghrajka that even according the prosecution no recovery

whatsoever is made from the Applicant and he is not a beneficiary. I

am also inclined to accept one more factual submission advanced by

Mr. Sanghrajka about the cooperation extended by the Applicant to the

prosecution. He was called four times for recording his statement and

had cooperated fully, but on the fourth instance and attendance and

that too nearly after 9 years after the transaction period as stated in

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the FIR, without specifying the specific role attributed to the Applicant,

the Applicant is arrested and is kept in judicial custody. The charge-

sheet is filed on 29.05.2026 and investigation is complete.

14. However, the cognizance stands deferred solely for want of

sanction under Section 19 of the PC Act with regard to the public

servant-accused persons with whom the Applicant has no nexus. In the

present case, Applicant is 67 years old and suffers from uncontrolled

Type-2 diabetes, hypertension and coronary artery disease having

undergone angioplasty with stenting in February 2026 and his such

reports from Dr. L.H. Hiranandani Hospital are appended at Exhibit ‘G’

- page No.146 onwards. I have no reasons to disbelieve them.

Applicant is deeply rooted in the society, is a qualified Chartered

Accountant and there is no likelihood of him evading or jumping bail

either.

15. Hence for all the above prima facie observations and

findings, I am inclined to consider the Applicant's case for allowing

bail, who is presently lodged in judicial custody at Arthur Road Jail,

Mumbai since 24.04.2026.

16. The Bail Application is therefore allowed in terms of prayer

clause 'a' which reads thus:-

“a. That this Hon’ble Court be pleased to enlarge the
Applicant/Accused on bail in connection with RC No.
RCBD1/2025/E/005 dated 21.08.2025, registered for offences

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under Sections 120-B read with 406, 420 and 409 of the Indian
Penal Code and Section 13(2) read with Section 13(1)(d) of the
Prevention of Corruption Act, 1988, on such terms and conditions
as this Hon’ble Court may deem fit and proper in the interests of
justice.”

17. Present order is to be read alongwith the operative order

dated 25.08.2026 and uploaded on the same date where this Court has

laid down the terms and conditions for grant of bail to the present

Applicant and the same is reproduced in paragraph No.2 of this order.

18. It is clarified that the observations made in this order are

limited for the purpose of granting bail only and they may not be

construed as observations on the merits of the case. The trial shall be

adjudicated on the strength of the evidence led and evidence in

rebuttal and strictly on its own merits being uninfluenced with any of

the prima facie observations and findings made hereinabove in this

order.

19. In view of the above, Bail Application is allowed and

disposed.

[ MILIND N. JADHAV, J. ]

Ajay
Digitally signed
by AJAY
AJAY TRAMBAK
TRAMBAK UGALMUGALE
UGALMUGALE Date: 2026.08.26
18:35:13 +0530

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