In a major controversy shaking the Indian judiciary, Justice Yashwant Varma of the Delhi High Court has been named in a Central Bureau of Investigation (CBI) FIR linked to a RS109-crore sugar mill bank fraud. The controversy deepened after unaccounted cash, allegedly worth ₹15 crore, was discovered during a fire incident at his official Lutyens Delhi residence on March 14.
Justice Varma Named in Simbhaoli Sugar Mills Fraud Case
The CBI registered the FIR against Simbhaoli Sugar Mills, its directors, and others, including Justice Yashwant Varma, who served as a non-executive director of the company in 2018. The case stems from a complaint filed by the Oriental Bank of Commerce (OBC), accusing the sugar mill of defrauding the bank through a fraudulent loan scheme.
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As per the complaint, between January and March 2012, OBC disbursed ₹148.59 crore to 5,762 farmers via the Hapur branch. The funds were intended for purchasing fertilisers and seeds, routed through an escrow account. Simbhaoli Sugar Mills had guaranteed repayment and coverage of defaults or identity fraud. However, the company allegedly submitted falsified KYC documents and embezzled the funds. By March 2015, OBC declared the loan fraudulent, reporting a loss of ₹97.85 crore and an outstanding amount of ₹109.08 crore.
Gurpal Singh, the deputy managing director of the company and son-in-law of then Punjab Chief Minister Amarinder Singh, was also named in the FIR. The Enforcement Directorate (ED) subsequently launched a money laundering probe based on the CBI case.
Allahabad High Court Orders Fresh CBI Probe
In December 2023, the Allahabad High Court ordered a fresh CBI investigation into the multi-bank loan fraud. The court noted that the scam had “shaken the conscience” of the judiciary. It highlighted the role of several bank officials who allegedly colluded with Simbhaoli Sugar Mills, facilitating loans amounting to ₹900 crore.
“Bank officials completely ignored RBI guidelines and circulars. We direct the CBI to investigate which officials approved these loans, which members of the board or credit committee facilitated the disbursements, and which officials allowed the embezzlement to continue unchecked,” the court observed.
Fire at Justice Varma’s Official Residence
On March 14, a fire broke out in the storeroom of Justice Varma’s residence. Firefighters arrived at 11:43 pm and discovered cash allegedly scattered among burnt jute sacks. A staff member claimed the destroyed materials included court-related documents and stationery. Although no FIR was filed, videos showing the cash were recorded and shared with senior Delhi Police officials, prompting the Chief Justice of India (CJI) to order an inquiry.
The total cash recovered reportedly amounted to ₹15 crore.
Supreme Court Collegium Orders Transfer
Following the incident, the Supreme Court Collegium, led by Chief Justice of India Sanjiv Khanna, ordered the transfer of Justice Varma back to the Allahabad High Court. The transfer was termed as the “first step,” with a preliminary inquiry underway. Justice Varma did not hold court the following day and was reportedly on leave.
Sources indicated that some Collegium members were advocating stricter action. If Justice Varma refuses the transfer, the Collegium may initiate an internal inquiry, potentially leading to his removal by Parliament.
Growing Outrage and Demands for Transparency
The Delhi High Court Chief Justice DK Upadhyaya expressed deep concern, stating the incident has left the judiciary “shaken and demoralised.” Senior advocate Kapil Sibal stressed the need for transparency in judicial appointments.
“Corruption within the judiciary is a serious issue. We need more transparency in the appointment process,” said Mr. Sibal.
Former Solicitor General Harish Salve raised questions over the conflicting reports. Delhi Fire Chief Atul Garg stated no cash was recovered, further complicating the narrative.
“I was proceeding on the assumption that there was a recovery. I believe the Delhi fire chief has said there was no recovery. It is now a very odd situation in which the Supreme Court Collegium has issued transfer orders for the judge and an inquiry has been ordered and, on the other hand, it is being said there is no recovery. If there is no recovery, what is the inquiry about?” Mr. Salve said in an interview with NDTV.
He added, “If such a serious allegation is being falsely made, it raises very serious questions. And if the allegation is true, then again it raises very serious questions.”
Mr. Salve also called for an external panel to ensure the inquiry’s credibility, urging the Collegium to reconsider the transfer until facts are established.
“In my personal view, in either event, his transfer should now be put on hold. Because if he (Justice Varma) was being transferred not because of this but because of other administrative reasons, the two issues have got joined at the hip. If the allegations against him are false, it is very unfair to him to transfer him and if they are true, then a transfer is too little,” he concluded.
