W .P.(C) 274/2023 Page 1 of 32 $~ 4 * IN THE HIGH COURT OF DELHI AT NEW DELHI % Judgment Delivered on: 08.09.2025 + W .P.(C) 274/2023 AVANTHA HOLDINGS LIM ITED & ANR. ...Petitioner s Through: M r. Krishnan Venugopal, Sr. Adv. with Dr. Sushil Kumar Gupta, M s. Suni ta Gupta and M r. Sakshit Bhardwaj, Advs. versus UNION OF INDIA & ORS. ...Respondent s Through: M r. Sandep Kumar M ahapatra, CGSC with M r. Tribhuvam , Adv. for R-1/UOI. M r. Sanjeev Sagar, Sr. Adv. with M s. Nazia Parven and M r. Akash Gahlot, Advs. f or R -3/SBI. M r. M alak Bhatt, M s. Neha Nagpal and M s. Nitya Prabhakar, Advs. for R - 4. CORAM : HON'BLE M R. JUSTICE VIKAS M AHAJAN JUDGM ENT VIKAS M AHAJAN, J 1. The writ petition , as initially filed , sought the relief of declaration to the efect that report dat ed 27.04.2020 >KHUHDIWHUµ3LSDUD prepared E\ UHVSRQGHQW QR3LSDUD &R > commissioned and prepared under the aegis of respondent no.3/State Bank of India (SBI) is void and cannot be relied upon being in complete breach of t he principles of natural justice. The petitioners also sought setting aside and quashing of the Pipara Report. 2. During the pendency of present petition, respondent no.3/SBI had W .P.(C) 274/2023 Page 2 of 32 brought on record the declaration as fraud dated 29.05.2020 under Reserve Bank o f India (Frauds classification and reporting by commercial banks and select FIs) Directions 20 >KHUHDIWHU µ0DVWHU s RQ )UDXGV respect of the account of CG Power and Industrial Solutions Ltd. [hereafter µ&*3RZHU¶ ]. Petitioners sought to ins ert the prayer seking quashing and set ting aside of the said declaration of the acount of CG Power to the extent it concerns the transactions undertaken during the period when petitioners were prom oters and directors of CG Power. 3. The case set out in the present petition is that in the year 2017, KKR &RQVRUWLXP>KHUHDIWHUµ ..5¶ ] lent an amount of Rs.900 crores to petitioner no.1 and the sam e was secured by a pledge of 22% shares of CG Power where petitioner no.1 had 34% of shareholding. 4. On 08.03.2019, KKR invoked the pledge of about 10.8% shares of CG Power , thereby acquiring the share s of CG Power. The balance 10.8 % shares of CG Power were invoked on 20.03.2019. 5. Sim ultaneously, on 08.03.2019 itself, an µ2SHUDWLRQV&RP formed consisting of M r. Narayan Seshadri (also appointed as an Additional and Non -Executive Independent Director at CG Power) , M r. K.N. Nelkant and M r. Sudhir M athur selected by KKR to focus on operational improvem ent and restructuring. On the sam e very day, petitioner no.2 resi gned as Non -Executive Director of CG Power . 6. Subsequently, on 24.04.2019, Operations Committe of CG Power appointed Vaish Associates, Advocates to investigate alleged iregularities with regard to certain transactions of CG Power . Vaish Associates in turn appointed Deloitte to conduct an acounting -focused investigation. Incidentally, Deloitte was also the global auditor of KKR. Deloitte subm itted W .P.(C) 274/2023 Page 3 of 32 its report to Vaish Associates, Advocates on 05.08.2019 and Vaish Associates subm itted the sam e to CG Power on the sam e day. 7. Sequel to above, CG Power on 19.08.2019 made a disclosure to Bombay Stock Exchange (BSE) alleging certain iregularities and understatem ent of related party transactions in the books of acounts of CG Power for the period 2015 -19, based on the analysis of the Vaish Report by M r. Narayan Seshadri and M r. Sudhir M athur. Furtherm ore, on 22.08.2019, a meting of the lenders of CG Power was convened wherein M r. M athur, representing CG Power, reafirm ed the veracity of the disclosure. 8. On 30.08.2019 , a circular resolution initiated by M r. M athur for removal of M r. Gautam Thapar as Chairm an of CG Power Board was circulated and approved . Subsequently, the lenders were informed about the change in the m anagement of CG Power. 9. The lenders, thereafter, dec ided to initiate a Resolution Process as per the guidelines contained in RBI circular dated 07.06.2019 and the date of default was fixed as 27.08.2019. A subsequent joint lenders meting was held on 27.09.2019 wherein it was apparently decided that SBI wou ld appoint a forensic auditor to conduct forensic audit of CG Power for the period 01.04.2015 to 31.08.2019. 10. Acordingly, SBI appointed respondent no.4/ Pipara as the Forensic $XGLWRUDQGRQWKHDF the bas is of disclosures m ade to SBI vide disclosure dated 19.08.2019. 11. In the m eanwhile, Securities and Exchange Board of India (SEBI) on 17.09.2019 had directed BSE to appoint an independent auditor for conducting a detailed forensic audit of books of acounts o f CG Power for the Financial Year s 2015 -19. Acordingly, BSE vide its letter dated W .P.(C) 274/2023 Page 4 of 32 10.10.2019 assigned M SA Probe Consulting Pvt. Ltd. to conduct forensic audit of CG Power for the relevant period. 12. M SA Probe Consulting Pvt. Ltd. subm itted its final forensi c audit report to SEBI on 18.03.2020 thereby highlighting its observation on each of the transactions. Likewise, forensic auditor Pipara , on 27.04.2020 , subm itted its final report to SBI. 13. A joint lenders m eting was convened wherein the Pipara Report was tabled. It was informed to lenders that as per the R eport , conclusion drawn was that fraud had ben committed . The report was adopted by majority of lenders. Subsequently, respondent no.3/SBI classif ied the account of CG Power as fraud vide im pugned resolu tion dated 29.05.2020, based on forensic audit conducted by M /s Pipara & Co. 14. Later, on a complaint filed by SBI, CBI registered FIR dated 22.06.2021 against petitioner no.2 and others under Section 120B read with Sections 406, 420, 467, 468, 471, 477A IPC and Section 13(2) read with Section 13(1)(d) of PC Act, 1988. 15. The petitioners , thereafter , filed a writ petition being W .P.(C) 12335/2021 seking issuance of writ of mandamus directing respondent nos.3 and 4 to provide a copy of the said report dated 27.0 4.2020 to petitioners. This Court vide order dated 07.03.2022 allowed the writ petition and directed respondent no.3/SBI to supply a copy of the said report to petitioners. The sam e was subsequently complied with and copy of the report was furnished to pet itioners. 16. Pursuant to the above, petitioners filed the present writ petition in January, 2023, inter alia, praying for declaration to the effect that Pipara Report is void and further seeking to quash and set aside the same. W .P.(C) 274/2023 Page 5 of 32 17. The present writ petition, as noted above, was sought to be am ended to lay a challenge against im pugned declaration o f acount of CG Power as fraud . The reason put forth in the application seking am endment was that during the pendency of writ petition, petitioners were m ade aware tha t the acount of CG Po wer has ben declared as fraud when respondent no.3/SBI had raised an objection regarding the maintainability of writ petition on the ground that petitioners had not challenged the declaration of fraud dated 29.05.2020 , which was cons equent to the forensic audit report by respondent no.4/Pipara. 18. The application seking amendment of writ petition was allowed by this Court on 10.11.2023. 19. Thus, petitioners in the present petition essentially assail the Pipara Report , as well as , 6%,¶VGHF ision to decla UH&*3RZHU¶VDFF . 20. M r. Krishnan Venugopal, the learned Senior Counsel appearing on behalf of the petitioners assails the forensic audit report, inter alia , on the following grounds: (i) At the tim e of forensic audit and fraud declar ation, the borower i.e. CG Power was under a new m anagement . (ii) The new management, after comple tely ousting the old managem ent, had complained to the lenders in Septem ber, 2019 about the functioning of the old m anagement during the period 01.04.2014 to 31. 08.2019. (iii) Only the new m anagem ent of borower CG Power was involved in the preparation of Pipara Report. (iv) On the other hand, the inform ation and documents actually given by the old m anagement were rejected by respondent no.4/Pipara on the ground that only CG Power was required to be heard. W .P.(C) 274/2023 Page 6 of 32 21. To buttress his contention, M r. Venugopal has invited attention of the Court, inter alia, to the following excerpts of the report: ³This document has ben prepared by M /s. Pipara & Co LP based on the analysis of various records, information, details, GRFXPHQWVHWFSURYLGHGWRXVE xxx xxx xxx On 5 th February, 2020, after incorporating all the changes, based on comments/evidences provided by various lenders, the report of the Forensic Audit of CG PISL was shared with the SUHVHQWPDQDJHPHQW«´ 22. He subm its that i n regard to the inform ation provided by M /s Bharucha and Partners, Advocates and Solicitors for and on behalf of their client M r. Gautam Thapar, following observations have ben made in the Pip ara Report, which show that the documents provided by M r. Gautam Thapar , erstwhile Chairperson of CG Power, were not considered only on the ground that the sam e were not received through CG Power: ³:HKDYHORRNHGLQWRWKHLQIRUP Thapar through Bharucha & Partners, Advocates & Solicitors, as per their letter dated 6th February, 2020. At the outset we are not in a position to rely upon the said information/submission/evidences, as the same has ben supplied in the individual capaci ty of M r. Gautam Thapar and same has not received through the Company. Further all these papers/correspondence is pertaining to investigation carried out by the SEBI and therefore, being the matter already under investigation, it may not be appropriate for us to enter into the same as we do not have any authority to deal with the same nor OHJDOO\ERXQGDVLWLVEH\RQG 23. Likewise, the documents furnished by petitioner no.2 were not considered in the Pipara Report as the sam e were not giv en through CG Power. M r. Venugopal has also drawn attention of the Court to the observations in the report to the efect that it is the curent m anagem ent that W .P.(C) 274/2023 Page 7 of 32 had provided all the available inform ation to the auditors. 24. He subm its that the curent m anageme nt cooperated with Pipara & Co . (forensic auditors) to the extent it suited them . He contends that the new