A Public Interest Litigation filed in the Supreme Court has alleged that a Noida-based infrastructure company, JKM Infra Projects Ltd, defrauded a consortium of public sector banks of over INR 1,500 crore, using asset reconstruction companies as cover to settle the debt for a fraction of its value, and that multiple regulatory and investigative agencies have failed to act despite documented forensic evidence.
The petition seeks a court-monitored investigation by the CBI, Enforcement Directorate, Serious Fraud Investigation Office, RBI and SEBI into what it describes as a systemic misuse of India’s ARC framework.
“The PIL is being filed under Article 32, seeking RBI, SEBI, SFIO, ED & CBI Investigation of the largest Banking Fraud, facilitated by the Asset Reconstruction Companies. A total debt of Rs. 1537 crores owed to public sector banks has been settled, through two complicit Asset Reconstruction Companies, Prudent ARC and Phoenix ARC, for a mere Rs. 73.50 Crores. It is a loss of over 95% of public money,” said the petition.
According to the petition, JKM Infra availed loans of INR 912 crore from a seven-bank consortium led by the State Bank of India between 2012 and 2015, against collateral valued at just INR 60-72 crore.
The company began defaulting within a year of disbursement. A forensic audit by Ernst & Young, submitted on May 23, 2018, reportedly documented that over INR 902 crore were routed out of the company through shell companies, fake invoices, undisclosed bank accounts and non-existent vendors.
The petition alleges that SBI, despite receiving the report, did not classify the account as fraud, suppressed the EY findings in Debt Recovery Tribunal proceedings, and appointed a second auditor to dilute the findings.
The petition further alleges that the debt was then sold to Prudent ARC at INR 120 crore against a then-outstanding amount of INR 596 crore, with Prudent emerging as the sole bidder.
In 2025, the debt, by then grown to INR 1,537 crore, was transferred to Phoenix ARC at INR 73.5 crore and formally settled on October 31, 2025. The total haircut across all settlements, the petition says, exceeds INR 1,500 crore.
“The systemic and structural failures in the framework governing ARCs, particularly the acquisition of NPAs of public sector banks at deep discounts, followed by settlements with defaulting borrowers at grossly undervalued amounts, is in violation of RBI guidelines and at significant cost to the public exchequer,” said the petition.
According to the petition, two FIRs have been registered so far including one with EOW, Delhi in 2021, and another in Gautam Budh Nagar in January 2026. The Delhi Police had attempted to close the first FIR as a family dispute, but a court rejected the closure report and directed fresh investigation into the EY findings. Representations have been filed with the ED, Income Tax authorities, RBI and MCA, but no coordinated enforcement action has followed, the petition alleges.
“This Court’s intervention is essential to quantify and recover the full extent of public loss. The loss in this case does not stop at the banking system. When nationalized banks absorb losses of this scale, the shortfall is replenished through government recapitalization which means taxpayer money,” the petition noted.
The matter is yet to be listed before the Supreme Court.
(No response was received from JKM Infra Project at the time of publication of this story. The copy will be updated once we receive a comment)
