The Supreme Court on Friday issued notices to the Centre, Telangana government, and key investigative agencies on a petition alleging a massive corporate fraud of nearly ₹150 crore, implicating the suspended management of an insolvent company, KLSR Infratech Ltd, and raising serious concerns of judicial interference in ongoing insolvency proceedings.
A bench comprising Chief Justice Surya Kant and Justice Joymalya Bagchi was hearing a petition filed by Saurabh Agarwal, director of Bengal Cold Rollers Pvt Ltd, who alleged that the promoters of KLSR Infratech siphoned off funds and manipulated official records despite a statutory moratorium under the Insolvency and Bankruptcy Code (IBC).
The top court issued notices to the Union Ministries of Home, Finance, Law and Justice, and Corporate Affairs, as well as the Central Bureau of Investigation (CBI), Enforcement Directorate (ED), and Serious Fraud Investigation Office (SFIO), seeking their responses.
According to the petition, KLSR Infratech was admitted into the Corporate Insolvency Resolution Process (CIRP) in July 2023, leading to the suspension of its board and the imposition of a moratorium under Section 14 of the IBC. Despite this, the plea alleges, the suspended directors continued to operate using their “proximity to power” and manipulated the Ministry of Corporate Affairs (MCA) portal to reflect the company’s status as “active” instead of “under CIRP”.
This allowed them, the petitioner claims, to:
- Raise loans of ₹148.87 crore from banks by charging the company’s assets.
- Secure government tenders worth nearly ₹6,000 crore during CIRP—without the consent of the Interim Resolution Professional (IRP).
- Evade statutory oversight and undermine the resolution process.
The petition also states that the petitioner and another financial creditor were subjected to retaliatory action by state tax authorities in Telangana, including illegal GST proceedings, fabricated arrests, and coercive tactics aimed at forcing a settlement.
One of the most striking elements of the petition pertains to an incident before the National Company Law Appellate Tribunal (NCLAT), Chennai. It alleges that Justice Sharad Kumar Sharma, an NCLAT member, recused himself from the proceedings involving KLSR Infratech after disclosing in open court that he had been contacted by a sitting Chief Justice of a High Court, who sought a favourable order for the suspended directors.
The petition claims Justice Sharma not only named the high-ranking judicial officer but also displayed his mobile phone showing call logs and messages to counsel present in the courtroom on August 13, 2025. The petitioner has now sought the release of video recordings and transcripts of that hearing.
The plea, filed through advocate Ashwani Kumar Dubey, has sought:
- A court-monitored investigation by the CBI and SFIO into the alleged fraud and collusion between KLSR’s management and government officials.
- An ED probe into alleged money laundering and financial irregularities.
- A direction to the MCA to rectify the company’s status on its portal to reflect that it is “under CIRP”.
- Release of NCLAT courtroom recordings to verify the judicial influence claim.
The bench has sought replies from the authorities and agencies within a stipulated time. The matter is expected to have significant ramifications for both corporate governance and judicial transparency, particularly in the handling of insolvency proceedings.
