Involvement in Simbhaoli Sugar Mills Fraud Case
Justice Yashwant Varma, a sitting judge of the Delhi High Court, has been named in a Central Bureau of Investigation (CBI) FIR related to a 2018 bank fraud case involving Simbhaoli Sugar Mills. The case originated from a complaint by the Oriental Bank of Commerce (OBC), which alleged that the company, along with its directors, orchestrated a fraudulent loan scheme. At the time, Justice Varma was a non-executive director of Simbhaoli Sugar Mills.
Fraudulent Loan Scheme and Bank’s Complaint
According to the bank’s complaint, between January and March 2012, OBC’s Hapur branch disbursed Rs 148.59 crore to 5,762 farmers under a scheme meant to help them purchase fertilisers and seeds. The funds were to be transferred to an escrow account before being distributed to the farmers. Simbhaoli Sugar Mills had guaranteed repayment and covered any defaults. However, the company allegedly submitted falsified Know Your Customer (KYC) documents and misappropriated the funds. By March 2015, OBC declared the loan a fraud, with losses amounting to Rs 97.85 crore and an outstanding sum of Rs 109.08 crore.
Other Accused and ED’s Parallel Probe
Another significant figure named in the FIR was Gurpal Singh, the deputy managing director of the company and son-in-law of then Punjab Chief Minister Amarinder Singh. Based on the CBI’s FIR, the Enforcement Directorate (ED) launched a separate investigation into money laundering allegations.
Allahabad High Court Orders Fresh Investigation
In December 2023, the Allahabad High Court ordered a fresh CBI probe into seven banks linked to the loan disbursement, stating that the fraud had “shaken the conscience” of the judiciary. The court found that several bank officials may have colluded with Simbhaoli Sugar Mills in approving loans amounting to Rs 900 crore. It was noted that OBC was the only bank that approached the Enforcement Directorate, leading to the seizure of some properties. The court directed the CBI to investigate the involvement of bank officials and members of credit committees who facilitated the fraudulent transactions.
CBI’s Renewed Investigation in 2024
Following the Allahabad High Court’s order, the CBI launched a fresh investigation in February 2024. The focus was to determine why banks continued to extend loans to Simbhaoli Sugar Mills between 2009 and 2017 despite its status as a loan defaulter. The new probe named the company, its directors, and unidentified bank officials. However, in March 2024, the Supreme Court stayed the Allahabad High Court’s order.
Fire and Cash Discovery at Justice Varma’s Residence
On March 14, a fire broke out in the storeroom of Justice Yashwant Varma’s official residence in Lutyens Delhi. When the fire brigade arrived at 11:43 pm, they reportedly found a large sum of cash scattered among burnt jute sacks. A staff member claimed the destroyed materials included court-related documents and stationery.
Though no FIR was registered since no injuries occurred, videos of the cash were recorded and shared with senior Delhi Police officials. The matter was escalated to the government and the Chief Justice of India (CJI). The total amount recovered was reportedly Rs 15 crore, prompting an immediate inquiry by the CJI.
Judicial Response and Transfer of Justice Varma
Following the incident, the Supreme Court Collegium, led by Chief Justice of India Sanjiv Khanna, decided to transfer Justice Varma back to the Allahabad High Court. However, the transfer was described as only the “first step” in an ongoing preliminary inquiry. Justice Varma did not hold court the following day and was reportedly “on leave.”
Sources suggest that some members of the Collegium are advocating for stricter action against him. If he does not step down voluntarily, the Collegium could initiate an internal inquiry, potentially leading to his removal through impeachment by Parliament.
