Special CBI court declares Zylog Systems promoters fugitive offenders

What the Record Shows

A special CBI court declared two former promoter-directors of Zylog Systems Ltd fugitive economic offenders, and the Enforcement Directorate has attached and confiscated assets connected to the alleged offence under the Prevention of Money Laundering Act, 2002 and the Fugitive Economic Offenders Act, 2018. The two named in the actions are Sudarsan Venkatraman and Ramanujam Sesharathnam, former directors of the Chennai-based software company; their names appear in court records in variant spellings.

The declaration was made by the XIII Additional Special CBI Court, Chennai on 31 July 2023 in Spl CC 12 and Spl CC 13 of 2022, per the court order and the Union Government's reply in the Lok Sabha on 1 December 2025, which listed the two among 15 persons declared fugitive economic offenders.

The underlying criminal cases were filed by the CBI and are recorded in the Madras High Court's file. Both men have held American passports and their whereabouts were shown as not known. The Madras High Court, in an order dated 29 April 2026, treated them as absconding accused and clarified that proclamation proceedings against them could continue while related cases were split for trial.

No response from the two, who remain outside India, is recorded in the proceedings. Two points frame what follows: a provisional attachment and a fugitive-offender declaration are preventive steps, not findings of guilt, and the criminal allegations against them have not been tested at a trial.

How It Worked

The origin of the matter is a set of bank loans to Zylog Systems that turned bad. Per the CBI cases recorded by the Madras High Court, the company and its directors were accused of entering criminal conspiracies to defraud lenders. In one case the CBI alleged that credit availed against project work was siphoned off, and in a second that credit for a technology project "were siphoned off and was diverted to Shell Companies", as the High Court recorded the charge.

Those CBI cases identify the public-sector lenders and the sums. The Madras High Court order records a Dena Bank exposure of Rs 97.42 crore in CC No. 41/2015 and a Union Bank of India exposure of Rs 64.50 crore in CC No. 2/2018. The charges invoked Sections 420, 467, 468 and 471 of the Indian Penal Code together with Section 13(2) read with Section 13(1)(d) of the Prevention of Corruption Act, 1988.

Following the CBI first information reports, the Enforcement Directorate opened a money-laundering investigation. Per the agency's account, it put the proceeds of crime at about Rs 186 crore, of which about Rs 58.12 crore was said to have been remitted overseas on the stated pretext of funding a United States subsidiary and through invoices the agency described as not genuine. Those characterisations are the agency's allegations and remain untested at trial.

With the directors outside the country, the state moved under the Fugitive Economic Offenders Act. After the special CBI court declared them fugitive economic offenders on 31 July 2023, property valued at about Rs 33 crore was confiscated to the Central Government under that Act, alongside provisional attachment orders issued under the PMLA. The sequence runs from the CBI cases of 2015 and 2018, through the money-laundering investigation, to the 2023 declaration and confiscation.

Who Lost Money

The creditors are public-sector banks that lent to Zylog Systems. The Madras High Court file records Dena Bank, since merged into Bank of Baroda, at Rs 97.42 crore and Union Bank of India at Rs 64.50 crore across the two CBI cases, a combined court-recorded exposure of about Rs 162 crore. The Federal Bank separately pursued recovery: in a 2021 order the Madras High Court noted that the bank had sought to impound the directors' passports because their whereabouts were not known, and that winding-up proceedings against the company were already under way.

The Enforcement Directorate's figure for the proceeds of crime, about Rs 186 crore, is higher than the two banks' combined claim because it reflects the agency's wider tracing of funds it alleges left the country. As in most such matters, the headline figures are claims and allegations, not sums returned to the lenders.

Against that exposure, the property confiscated so far under the Fugitive Economic Offenders Act was valued at about Rs 33 crore, a fraction of the claimed loss. With the accused abroad, recovery remains incomplete, and any distribution to the lenders runs through the confiscation and recovery machinery rather than a single payout.

Where It Stands Now

As of today, neither man has been convicted. They stand declared fugitive economic offenders since 31 July 2023, property has been confiscated under that Act, and the criminal cases continue. The most recent position on the record is the Madras High Court's order of 29 April 2026, which treated them as absconding accused, allowed proclamation proceedings to continue, and dealt with the splitting of the cases so that the trial of the present accused is not held up by those who remain abroad.

Nothing on the record since the 2023 declaration reverses it: the fugitive-offender status stands, the confiscation stands, and the CBI cases remain pending trial. The matter has not moved to a verdict on the underlying allegations, because the two accused have not appeared to face trial.

A provisional attachment, a fugitive-offender declaration and a chargesheet contain allegations and preventive measures, not findings of guilt; the accused are presumed innocent until proven guilty, and due process continues. Readers can follow comparable matters through the Oquilia enforcement archive.

What It Means

The case shows how the Fugitive Economic Offenders Act is meant to bite when an accused leaves the country. Ordinarily a criminal trial cannot proceed to a verdict without the accused, and assets can sit frozen for years. The 2018 Act lets a special court declare a person a fugitive economic offender and then confiscate the identified property to the Central Government even before the trial concludes, which is why a confiscation figure can appear while the underlying charges are still to be tried.

For anyone reading the numbers, the practical point is the distance between a claimed loss and an actual recovery. Banks here recorded exposure of roughly Rs 162 crore across two cases, the Enforcement Directorate put the proceeds of crime at about Rs 186 crore, and the property confiscated so far was worth about Rs 33 crore. A provisional attachment freezes assets while the adjudicating authority decides whether to confirm it; it is a preventive measure, not a punishment. Comparable dynamics appear in other fugitive-offender files, such as the Sterling Biotech settlement and the recovery from Vijay Mallya's attached assets.

The broader lesson is that a fugitive-offender declaration is a tool to secure assets, not a substitute for a trial. Until the accused face the court, the question of guilt on the loan allegations stays open.

FAQ

Were the Zylog Systems promoters found guilty?

No. Neither man has been convicted. A special CBI court declared them fugitive economic offenders on 31 July 2023, which is a preventive status under the 2018 Act, not a finding of guilt, and the underlying CBI cases remain pending trial because the two accused have not appeared to face them.

Does this mean the people named are guilty?

No. A provisional attachment, a fugitive-offender declaration and a chargesheet contain allegations and preventive measures, not findings of guilt; the accused are presumed innocent until proven guilty, and due process continues.

What did the special CBI court declare?

Per its order dated 31 July 2023 in Spl CC 12 and Spl CC 13 of 2022, the XIII Additional Special CBI Court, Chennai declared the two former Zylog Systems directors fugitive economic offenders under the Fugitive Economic Offenders Act, 2018. The Union Government listed them among 15 such declared offenders in a reply to the Lok Sabha on 1 December 2025.

Which banks lent to Zylog Systems?

The Madras High Court file records Dena Bank, since merged into Bank of Baroda, with an exposure of Rs 97.42 crore and Union Bank of India with Rs 64.50 crore across the two CBI cases. The Federal Bank separately pursued recovery and winding-up proceedings against the company.

Have the banks recovered their money?

Not in full. Property valued at about Rs 33 crore has been confiscated to the Central Government under the Fugitive Economic Offenders Act, against a claimed exposure of roughly Rs 162 crore in the two CBI cases and an Enforcement Directorate proceeds-of-crime figure of about Rs 186 crore. With the accused abroad, recovery remains incomplete.

Where can I read the official record?

The Madras High Court orders in these matters, including the order of 29 April 2026 on the absconding accused and the earlier CBI-case and Federal Bank records, are on Indian Kanoon and are linked at the foot of this report.

This report is based on the Madras High Court order of 5 July 2019 recording the CBI cases and bank exposures, the Madras High Court order of 29 April 2026 on the absconding accused and the Madras High Court order of 7 October 2021 in the Federal Bank matter, together with the Union Government's Lok Sabha reply of 1 December 2025, reviewed on 31 July 2026.