Introduction:
The Supreme Court of India, while hearing EAS Sarma v. Union of India and Others (W.P.(C) No. 1217/2025), reiterated an important principle governing criminal investigations: courts cannot direct the arrest of any individual merely because allegations have been made against them. A Bench comprising Chief Justice Surya Kant, Justice Joymalya Bagchi, and Justice V. Mohan was dealing with a Public Interest Litigation seeking a court-monitored investigation into the alleged loan fraud of over ₹40,000 crore involving companies belonging to the Anil Dhirubhai Ambani Group (ADAG). The petitioner alleged that despite serious findings by regulatory authorities and investigating agencies, the investigation had not adequately proceeded against the principal persons allegedly responsible for the fraud.
The PIL was filed by former Union Secretary EAS Sarma, who sought an independent and effective investigation into the alleged diversion of public money and fraudulent loan transactions involving several companies of the ADAG. During earlier hearings, the Supreme Court had expressed concern over delays in the investigation by the Central Bureau of Investigation (CBI) and the Enforcement Directorate (ED). It had also directed both agencies to expedite their investigation and periodically inform the Court about the progress made.
The case assumed greater significance because of allegations that loans amounting to thousands of crores had been sanctioned and subsequently settled through insolvency proceedings at substantially reduced amounts, resulting in significant losses to public financial institutions. The Court had earlier referred to the ED’s report indicating that debts worth approximately ₹2,983 crore were settled for merely ₹26 crore through insolvency proceedings. It also noted concerns regarding possible misuse of the Insolvency and Bankruptcy Code (IBC), particularly where distressed assets were allegedly acquired by persons connected with the original promoters at undervalued prices.
At the latest hearing, the Court considered a fresh status report filed by the investigating agencies while examining the extent of progress made in the investigation and whether judicial monitoring required any further directions.
Arguments of the Parties:
Senior Advocate Prashant Bhushan, appearing for the petitioner, argued that despite repeated assurances by the investigating agencies regarding completion of the investigation, meaningful action had not been taken against the principal individuals allegedly responsible for the fraud. He submitted that although the agencies had earlier informed the Court that multiple chargesheets would be filed by June, no comprehensive status report had initially been placed before the Court.
Referring to reports of the Securities and Exchange Board of India (SEBI), Bhushan argued that one of the principal persons associated with the corporate group had allegedly been identified as the “kingpin” behind the financial irregularities. Nevertheless, according to him, the investigating agencies had proceeded only against lower-level officials while leaving the principal decision-makers untouched. He questioned whether the investigation was being conducted fairly and sought greater transparency regarding the role assigned to senior management in the chargesheets filed before the trial courts.
Bhushan further requested that copies of the chargesheets be made available before the Supreme Court so that the petitioner could examine whether the investigation had properly addressed the allegations against the key persons involved.
Solicitor General Tushar Mehta, appearing for the Union of India and the investigating agencies, informed the Court that substantial progress had been made. He submitted that the CBI had already filed three chargesheets, while the ED had filed four prosecution complaints. Investigations in the remaining aspects of the case were continuing. He also clarified that the agencies had not confined their action to junior officers alone and stated that the Managing Director of the concerned corporate group had also been arrested. The Solicitor General maintained that the investigation was proceeding independently and in accordance with law.
Senior Advocate Kapil Sibal, appearing for the affected private parties, strongly opposed any judicial observation permitting scrutiny of the chargesheets for determining the role of a particular individual. He argued that once a chargesheet is filed, it is for the competent criminal court to consider whether cognizance should be taken. Any observation made by the Supreme Court at this stage could prejudice the rights of the parties and interfere with the ordinary criminal process. He therefore urged the Court to avoid passing any order that might influence the ongoing proceedings.
Court’s Judgment:
The Supreme Court adopted a cautious and balanced approach while monitoring the investigation. Responding to the petitioner’s grievance that only lower-ranking officers had been arrested, the Bench clearly observed that it would not be appropriate for the Court to direct the arrest of any individual. The Court emphasized that decisions relating to arrest form part of the investigative process and must be taken by the investigating agencies on the basis of evidence collected during the investigation.
The Court noted the status report submitted by the CBI and ED indicating that several chargesheets and prosecution complaints had already been filed while investigations continued in the remaining matters. It accepted the report on record and expressed satisfaction that the investigation was progressing.
When the petitioner requested access to the chargesheets to verify the role attributed to a particular individual, the Chief Justice orally observed that the petitioner could examine the chargesheets already filed before the competent courts. However, after objections were raised that such an observation could prejudice the parties, the Bench consciously chose not to record anything on that aspect in its formal order.
The Court reiterated that while it was monitoring the progress of the investigation, it remained equally conscious that no judicial observation should influence either the investigating agencies or the trial courts. It therefore refrained from issuing any direction concerning arrests or expressing any opinion on the culpability of any individual.
Accordingly, the Supreme Court took the latest status report on record and directed that the matter be listed again for further consideration. The proceedings reaffirm the settled principle that judicial monitoring of an investigation does not permit the Court to dictate investigative decisions such as whom to arrest. Such decisions must remain within the exclusive domain of the investigating agencies, subject to judicial scrutiny only where illegality, arbitrariness, or abuse of power is established.