Judge In Cash Pile At Home Case Was Named in CBI's 2018 FIR

Justice Yashwant Varma, a sitting judge of the Delhi High Court, at whose Delhi residence a pile of unaccounted cash was allegedly discovered on March 14, was named in a Central Bureau of Investigation (CBI) FIR linked to a sugar mill bank fraud case in 2018.

The CBI registered an FIR against Simbhaoli Sugar Mills, its directors, and others, including Yashwant Varma, who was then a non-executive director of the company. The case originated from a complaint by the Oriental Bank of Commerce (OBC), accusing the sugar mill of defrauding the bank through a fraudulent loan scheme.

According to the bank's complaint, between January and March 2012, the Hapur branch of OBC disbursed Rs 148.59 crore to 5,762 farmers to help them purchase fertilisers and seeds. Under the agreement, the funds were to be transferred to an escrow account before being distributed to the farmers' personal accounts. Simbhaoli Sugar Mills guaranteed to repay the loan and cover any defaults or identity fraud by the farmers.

Yashwant Varma, who was then a non-executive director of the company. named in the FIR.

The company allegedly submitted falsified Know Your Customer (KYC) documents and embezzled the funds. By March 2015, OBC declared the loan a fraud, with a total amount of Rs 97.85 crore lost and an outstanding sum of Rs 109.08 crore.

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Another key 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. The Enforcement Directorate (ED) later launched a parallel investigation into money laundering based on the CBI FIR.

High Court's Intervention

In December 2023, the Allahabad High Court ordered a fresh CBI investigation into seven banks linked to the loan disbursement. The court stated that the fraud had "shaken the conscience" of the judiciary.

The court found that several bank officials appeared to have colluded with Simbhaoli Sugar Mills in passing loans amounting to Rs 900 crore. OBC was the only bank that approached the Enforcement Directorate, leading to the seizure of some properties.

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In its order, the court stated: "Bank officials completely ignored RBI guidelines and circulars. We direct the CBI to investigate which officials approved these loans, which members of the board or credit committee facilitated the disbursements, and which officials allowed the embezzlement to continue unchecked."

CBI's New Investigation In 2024

Acting on the Allahabad High Court's orders, the CBI initiated a new probe in February 2024. The objective was to uncover why banks continued to extend loans to Simbhaoli Sugar Mills between 2009 and 2017 despite the company being a loan defaulter. The enquiry named the company, its directors, and unidentified bank officials.

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The Supreme Court intervened in March 2024, staying the Allahabad High Court's order.

Fire At Justice Varma's Residence

On March 14, a fire broke out in the storeroom of Justice Varma's official Lutyens Delhi residence. The fire brigade arrived at 11:43 pm and found cash allegedly scattered among burnt jute sacks. A staff member claimed that the destroyed materials included court-related documents and stationery.

No FIR was filed since no one was injured. However, videos of the cash were recorded and shared with senior Delhi Police officials, who subsequently informed the government and the Chief Justice of India (CJI). An inquiry was ordered by the CJI.

The total sum recovered reportedly amounted to Rs 15 crore.

Judiciary Shaken

In the aftermath, the Supreme Court Collegium, led by Chief Justice of India Sanjiv Khanna, decided to transfer Justice Varma back to the Allahabad High Court. The transfer, however, was described as only the "first step," with the preliminary inquiry still underway.

Justice Varma did not hold court the day after the incident and was reportedly "on leave." Sources within the judiciary hinted that some members of the Collegium were pushing for more stringent action. If he refuses, the Collegium could initiate an internal inquiry, potentially leading to removal by Parliament.

Public And Legal Outrage

Delhi High Court Chief Justice DK Upadhyaya said the incident has left the judiciary "shaken and demoralised." Senior advocate Kapil Sibal echoed these concerns, urging the judiciary to rethink its opaque appointment process.

"Corruption within the judiciary is a serious issue. We need more transparency in the appointment process," Mr Sibal said.

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Former Solicitor General Harish Salve questioned the basis of the inquiry itself, citing conflicting accounts. Delhi Fire Chief Atul Garg stated that no cash was recovered from the site, which only added to the murkiness.

"I was proceeding on the assumption that there was a recovery. I believe the Delhi fire chief has said there was no recovery. It is now a very odd situation in which the Supreme Court Collegium has issued transfer orders for the judge and an inquiry has been ordered and, on the other hand, it is being said there is no recovery. If there is no recovery, what is the inquiry about?" Mr Salve said in an exclusive interview with NDTV.

"I don't know what's going on, because if such a serious allegation is being falsely made, it raises very serious questions. And if the allegation is true, then again it raises very serious questions," the former solicitor general added.

Mr Salve insisted on the need for an external panel to ensure credibility.

"In my personal view, in either event, his transfer should now be put on hold. Because if he (Justice Varma) was being transferred not because of this but because of other administrative reasons, the two issues have got joined at the hip. If the allegations against him are false, it is very unfair to him to transfer him and if they are true, then a transfer is too little," he said.