The Karnataka High Court on Tuesday directed the issuance of a notice to the Karnataka state government and other relevant parties in response to a petition by Union Bank of India. The petition seeks to transfer the ongoing investigation of alleged financial irregularities in a state-run corporation from a state-constituted Special Investigation Team (SIT) to the Central Bureau of Investigation (CBI).
Justice M Nagaprasanna of the single-judge bench has scheduled the next hearing for August 7. During the proceedings, Attorney General R Venkataramani, representing Union Bank of India, emphasized the importance of maintaining the integrity of banking institutions. He referenced directives from the Reserve Bank of India (RBI), which mandate that banks refer cases of fraud to the CBI to ensure impartial investigations, especially those involving inter-state activities.
The court seemed receptive to Venkataramani’s arguments, indicating that the state should consider the bank’s request to shift the investigative responsibilities to the CBI. In response, Advocate General Sashi Kiran Shetty requested a two-week period to file objections to the petition.
The backdrop of this legal motion involves a series of events that began with the Karnataka government forming an SIT, led by Manish Kharbikar, Additional Director General of Police, Economic Offences, at the Criminal Investigation Department (CID). This team was tasked with investigating a complaint filed against top officials of Union Bank of India for embezzlement of funds from the Karnataka Maharshi Valmiki Scheduled Tribes Development Corporation Ltd.
The case gained significant attention following the tragic suicide of Chandrasekharan P, an accounts superintendent, who left a note revealing the unauthorized transfer of Rs 187 crore from the corporation’s accounts. Of this, Rs 88.62 crore was allegedly diverted to accounts associated with notable IT companies and a cooperative bank based in Hyderabad, among others.
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Amidst the unfolding scandal, B Nagendra, the Scheduled Tribes Welfare Minister, resigned on June 6 after facing allegations related to the scam. He was subsequently arrested by the Enforcement Directorate on July 12 and is currently under judicial custody.
