Karnataka High Court Rejects Union Bank's Plea to Involve CBI in Fraud Investigation

The Karnataka High Court dismissed Union Bank of India's petition to transfer a fraud investigation involving the Karnataka Maharshi Valmiki Scheduled Tribes Development Corporation Ltd to the CBI. The court found no justification under the Banking Regulation Act for such a move, underscoring state jurisdiction over the case.

The Karnataka High Court has dismissed a petition from Union Bank of India seeking to transfer the investigation of an alleged scam involving the Karnataka Maharshi Valmiki Scheduled Tribes Development Corporation Ltd to the Central Bureau of Investigation (CBI). Justice M Nagaprasanna ruled that Section 35A of the Banking Regulation Act does not support transferring the case to CBI, maintaining that such actions might circumvent the Delhi Special Police Establishment Act.

The case, reserved for judgment since September 30, revolved around whether the petition should be referred to the Supreme Court under Article 131 and if Section 35A justified a CBI probe without invoking the DSP Act. The Karnataka government, represented by senior advocate B V Acharya, opposed the petition, affirming that the state police possess the legal mandate to conduct the investigation.

Attorney General R Venkataramani, representing the Union Bank, argued for CBI involvement to maintain the banking system's integrity, asserting a broad interpretation of Section 35A. The alleged scam surfaced after the suicide of the corporation’s accounts superintendent, Chandrasekharan P, resulting in subsequent legal repercussions and the resignation of Congress MLA B Nagendra.

(With inputs from agencies.)