Fraud Classification Stay Does Not Bar CBI Probe | HC

Case Details: Vivimed Labs Ltd. vs. Central Bureau of Investigation - [2026] 187 taxmann.com 594 (HC - Telangana)

Judiciary and Counsel Details

• Nagesh Bheemapaka, J.

Facts of the Case

In the instant case, the petitioner company availed credit facilities from the respondent No. 3 bank. After financial stress, the account was classified as NPA. The Bank issued a show-cause notice proposing classification of borrower’s account as ‘Fraud’ under the RBI Master Directions.
The petitioner filed W.P. No. 24697 of 2025 and, by order dated 20.08.2025, the High Court suspended operation and effect of fraud classification and all further proceedings pursuant thereto.

Meanwhile, on bank’s written complaint, the CBI obtained statutory consents under Section 6 of the Delhi Special Police Establishment (DSPE) Act and registered an FIR for offences under Sections 120B, 420, 468, 471 and 477A IPC and Section 13(2) read with Section 13(1)(d) of Prevention of Corruption Act, alleging diversion and siphoning of public funds.

The CBI obtained judicial search warrants under Section 96 of the Bharatiya Nagarik Suraksha Sanhita, 2023, and conducted searches at various premises connected with the petitioner. The petitioner filed an instant writ petition contending that the interim order dated 20.08.2025 suspending fraud classification interdicted any reliance on or action predicated upon such classification.

It was noted that the interim order dated 20.08.2025 in W.P. No. 24697 of 2025, suspending the administrative ‘Fraud’ classification under the RBI Master Directions on Fraud Risk Management, could not be construed as a prohibition against the registration of FIRs, the continuation of criminal investigations, or the conduct of search and seizure operations in relation to cognizable offences.

High Court Held

The High Court held that the petitioners failed to make out any case warranting interference with the ongoing criminal investigation or search-and-seizure operations conducted by the CBI pursuant to judicial warrants. Therefore, the instant writ petition was to be dismissed.

List of Cases Reviewed

• CBI v. Sarvodaya Highways Ltd. (para 31),
• Anil Bhavarlal Jain v. State of Maharashtra 2024 INSC 1039 (para 33)
• Gian Singh v. State of Punjab (2012) 10 SCC 303 (para 36)
• Union of India v. W.N. Chadha, 1993 supp 4 SCC 260
• Anju Chaudhary v. State of U.P. (2013) 6 SCC 384 (para 37) followed
• State Bank of India v. Rajesh Agarwal [2023] 148 taxmann.com 425 (SC)/(2011) 14 SCC 770 (para 35) distinguished

List of Cases Referred to

• State Bank of India v. Rajesh Agarwal [2023] 148 taxmann.com 425 (SC) (para 2.2),
• CBI v. Surendra Patwa [2025] 173 taxmann.com 947 (SC) (para 2.5)
• Anju Chaudhary v. State of U.P. (2013) 6 SCC 384 (para 3.10)
• Gian Singh v. State of Punjab (2012) 10 SCC 303 (para 30)
• Anil Bhavarlal Jain v. State of Maharashtra 2024 INSC 1039 (para 32)
• Union of India v. W.N. Chadha 1993 SCC (Cri) 1171 (para 37)