A concerning new trend is emerging, in which loan defaulters are increasingly resorting to the legal system — not in pursuit of justice, but as a means to evade repayment. A striking example of this misuse emerged in a case heard by the Allahabad High Court, where a borrower, after defaulting on their obligations, went as far as to file a false First Information Report (FIR) against the lender. The Borrower accused the lender of cheating and criminal breach of trust, merely because the lender had initiated lawful recovery proceedings.
In Rajpal Singh vs. State of U.P. & Others, the borrower accused the bank officials of cheating and criminal breach of trust after recovery action was initiated. The High Court saw through the façade and dismissed the FIR, calling it a clear abuse of process, and even imposed a penalty on the borrower. This case underscores how some defaulters are now weaponizing the legal system to obstruct legitimate recovery.
A Growing Misuse of Legal Protections
This is not an isolated incident. Financial institutions across India are increasingly facing challenges with borrowers who exploit consumer protection laws, procedural delays, and judicial leniencies to stall or entirely evade repayment. The filing of frivolous and false complaints, deliberate misrepresentation of facts, and launching retaliatory legal action against lenders have become common tactics employed by habitual or professional defaulters.
RCC Infraventures: A Multi-Crore, Multi-Lender Scam
The eyeballs raised when during the court proceedings one of our editors observed that even the Hon’ble Supreme Court in such kind of matters was typically of the view that such matters should ideally be referred to Serious Fraud Investigation Office (SFIO) for investigation as the same pertains to a fraud of colossal amount, underlining the seriousness of the charges.
The loan fraud involves RCC Infraventures Ltd., and the Jain family, who orchestrated a ₹100+ crore fraud across multiple lending institutions. As per FIR No. 0295/2024 filed at DLF Sector-29 Police Station, Gurugram, RCC undertook an infrastructure project on NH-74 and obtained multiple loans during 2018–2019 and as a part of pre-hatched criminal conspiracy defaulted on all the loans.
Despite receiving large sums—amounting to over ₹100 crores — the company allegedly defaulted on payments and engaged in forgery, falsification of records, and criminal conspiracy. The Punjab & Haryana High Court, followed by the Supreme Court, rejected the accused’s repeated attempts to block investigations.
Pattern of Fraud: Not Just One Lender
What makes the case more concerning is that RCC and the same group of individuals have defrauded other banks/ lender(s) such as Yes bank in the year 2020, HDFC Bank in the year 2021, Union Bank of India in the year 2022 and Kotak Mahindra bank in the year 2023 along with another lender based in Delhi, NCR and Uttar Pradesh, Maharashtra, Uttarakhand etc., using similar tactics. In the case of a Delhi-based lender, after taking disbursal under a loan facility, RCC defaulted and then responded with threats, non-cooperation, and false, frivolous and baseless criminal allegations—all meant to delay or derail recovery proceedings.
This shows a clear pattern of repeated misconduct by such borrowers, in order to evade repayment of their loan obligations to various lenders. Key individuals in the RCC network, include but are not limited to Luv Jain and Ravi Kumar Jain, who are already involved in multiple cheque bounce cases, loan defaults, and civil suits across various jurisdictions like Delhi, Uttar Pradesh, Gurugram, Punjab, and Mumbai. Properties owned by them have been attached and auctioned in several enforcement actions. In fact, Ravi Jain was arrested in one of the FIR(s).
There have been numerous evasions with respect to filing of GST and Income Tax returns which run into crores of rupees. The crimes are thus not limited to private lenders but the same has now turned into crimes against the state and ex-chequer.
Why Regulatory Bodies Must Intervene Swiftly
The systemic nature of these frauds—and the ease with which legal and regulatory mechanisms are being manipulated—pose a serious threat to the stability of the financial system. If this trend is allowed to continue, lenders will grow increasingly risk-averse, and genuine borrowers may face tighter scrutiny as a consequence.
There is an urgent need for:
- Stronger screening mechanisms and early-warning systems for identifying high-risk borrowers.
- Legal reforms to prevent malicious FIRs and complaints from stalling recovery actions.
- Time-bound enforcement and investigation support from regulatory and investigative bodies like the Economic Offences Wing, Crime Branch and SFIO.
- Strict penalties for borrowers who are found to misuse legal processes to avoid legitimate repayment obligations.
Conclusion
From the corridors of the Allahabad High Court to the alleys of Delhi and Gurugram, the story is the same: a small group of defaulters are misusing the law to escape their liabilities, leaving lenders entangled in unnecessary legal battles. If left unchecked, this trend could have long-term consequences for India’s lending ecosystem.
It’s time for regulatory authorities to take a firm and decisive stand—to distinguish between protection and exploitation, and to ensure that justice serves the honest, not the manipulative.
