Karnataka HC declines to quash cyber fraud case against accused involved in ₹225 crore loan scam

The High Court of Karnataka has declined to quash criminal proceedings against four persons, who were among the several accused persons involved in a cyber fraud case of allegedly cheating a businessman of ₹7.15 crore by promising him to get a ₹225 crore loan from State Bank of India (SBI), and opening a fake account in his name by using counterfeit website in the name of SBI Corporate Finance (sbicf.co.in).

The court has termed the criminal case as “akin to a crime thriller or a crime potboiler” on noticing how the accused persons had created a counterfeit website in the name of SBIFC, generated fake emails and One Time Passwords (OTP) to make the complainant believe that the offer of loan is from ‘SBI’s corporate finance branch.”

Justice M. Nagaprasanna passed the order while dismissing the petition filed by K. Balajee, a resident of Dindigul in Tamil Nadu; S. Jeevan Sebaratnam, who is of Sri Lankan origin, having German citizenship, and having residences both in the United Kingdom and Bengaluru; Vinay Kumar Agarwal, a city-based businessman, and Simia Fathia, a resident of Chennai in Tamil Nadu.

The Bengaluru city police registered the case in 2022 on the complaint lodged by Vinayak Kabadi, a businessman from Betageri in Gadag district.

The court noted that the prime accused, Muzib Abdul Mian alias Niyaz, also from Tamil Nadu, was involved in cheating other businessmen in Hyderabad and Mumbai in a similar way by creating fake websites of banks, and criminal cases have been registered earlier against him in those cities.

The accused had made the complainant, who was looking for loan to set up a sugar factory, to believe that they would get the loan required for him from SBIFC, and demanded a commission of 7% on the sanctioned loan amount. They had arranged meetings at five start hotels in Bengaluru and Chennai during 2017 where some of the accused impersonated as officials of the bank.

The chargesheet alleges that the counterfeit website was created to mislead the complainant, and emails and OTP alerts were allegedly generated to show that ₹225.49 crore had been credited to his purported account created using the counterfeit website. Believing them, the complainant paid ₹7.15 crore as 50% of the agreed commission, through bank transfers and cash instalments in early 2018.

However, when the complainant could not withdraw ₹225 crore from the account, the accused convinced him that it was due to a technical snag. The fraud came to light when the complainant’s repeated attempts to withdraw funds failed, he discovered that the website was inactive, and later some accused became incommunicado during 2020. The complaint was lodged in 2022, citing a delay due to assurances from the accused to return the commission amount and COVIND-19.

Refusing to accept the claim of the accused that it was a civil dispute over payment between them and the complaint, the court said that “the allegations of creation of fake websites, impersonation of bank officials, fabrication of electronic communications cannot not treated as civil disputes”.