By Mushtaq Dar
Srinagar- A legal battle that has shadowed one of Jammu and Kashmir’s largest banking fraud investigations reached a decisive stage on Tuesday as the High Court of Jammu & Kashmir and Ladakh refused to halt criminal proceedings against the promoter of the Ambience Group and several others accused in the ₹289-crore Jammu & Kashmir Bank loan fraud case.
The ruling keeps alive a prosecution that investigators say involved the diversion of loan funds sanctioned for a major hospitality project.
Justice Sanjay Dhar held that the material collected during the investigation disclosed a prima facie case of cheating and deserved a full trial, leaving the evidence to be tested before the Special Judge, Anti-Corruption, Srinagar.
The judgment disposed of eight petitions filed under Section 482 of the Criminal Procedure Code by Madhu Bakshi, Raj Singh Gehlot, Sheela Gehlot, Mohan Singh and four connected companies linked to Aman Hospitality Pvt. Ltd. Gehlot is the promoter of the Ambience Group.
The petitions sought to quash charge sheets arising out of FIR No. 15/2019 registered by the Anti-Corruption Bureau in Srinagar and a parallel case registered by the Central Bureau of Investigation’s Bank Securities Fraud Branch in New Delhi.
Investigators have charged the accused under provisions dealing with criminal conspiracy, criminal breach of trust, cheating and corruption.
Prosecutors alleged that loan tranches released by Jammu & Kashmir Bank were diverted and siphoned through entities controlled by the borrower instead of being used for the sanctioned project.
Counsel representing the Anti-Corruption Bureau and the Central Bureau of Investigation argued that the charge sheets contained substantial material showing diversion of public funds.
He submitted that disputed factual issues belonged before the trial court and cited established Supreme Court precedents limiting the High Court’s power to quash criminal proceedings at an early stage.
Senior Advocate Tanveer Ahmad Mir, appearing for the petitioners, maintained that investigators had failed to establish any conspiracy with bank officials.
He argued that the funds served as reimbursements to the turnkey contractor, M/S APL, while a forensic audit had detected no fraud.
Completion of the hotel project and the bank’s decision to enter into a One-Time Settlement, he submitted, reflected a commercial dispute rather than a criminal offence.
Justice Dhar rejected those arguments. The judgment states that the bank “has been dishonestly induced to release the tranches of loan” and that the money was subsequently used for purposes beyond the sanctioned objective, making out a prima facie offence of cheating.
The court also drew a clear distinction between financial recovery and criminal accountability.
“Merely because the Bank has agreed to enter into a One-Time Settlement with the borrower company, the criminal liability of the borrower company and its Directors cannot be wiped away,” the judgment said, adding that the material accompanying the charge sheets pointed to alleged fraudulent conduct requiring judicial examination.
Dismissing all eight petitions, the court vacated interim protections granted during the proceedings and directed the trial court to continue independently without being influenced by observations contained in the present order.
That direction leaves the prosecution poised to enter its next phase, where witnesses, financial records and investigative findings will determine whether allegations surrounding one of Kashmir’s biggest bank loan cases ultimately translate into criminal liability.
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