Nagpur: The Supreme Court, while cancelling the bail of an alleged economic offender of Nagpur recently, has underscored the necessity for High Courts to impose strict conditions when granting bail in cases involving significant financial irregularities, particularly those impacting a large number of people. The apex court’s decision came as it set aside a bail granted by the Nagpur Bench of Bombay High Court, criticising lack of stringent conditions imposed on the accused.
Earlier, the Economic Offences Wing (EOW) of Nagpur Police had arrested six accused, including the President of Jai Shri Ram Urban Credit Co-operative Society Khemchand Mehrukure and his son Abhishek for their involvement in the Rs 86 crore fraud case.
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Tuesday 12 Nov. 2024
All the accused have been charged with swindling retired employees of Rs 86 crore through daily collection, FD, RD etc. As the erring President of the society would not respond to the investors’ queries, the latter were left with no choice but to lodge a complaint with police.
While considering that instant appeal challenging the impugned order of Nagpur Bench of Bombay High Court, wherein the Single Judge Bench had granted bail to the respondent for offences under Sections 409, 420, 467, 468, 471 and 120-B of the Penal Code, 1860 (IPC) and Section 3 of the Maharashtra Protection of Interest of Depositors (in Financial Establishments) Act, 1999 (MPID Act); the Division Bench of Supreme Court comprising Justices Hima Kohli and Ahsanuddin Amanullah remarked , “In cases where the allegations and materials brought on record by the investigation and are in the nature of an economic offence affecting a large number of people, reveal the active role of the accused seeking anticipatory or regular bail, it would be fit for the Court to impose appropriately strict and additional conditions while granting such bail”
The accused, who was the President of Jai Shriram Urban Credit Co-operative Society Limited in connivance with the co-accused, misappropriated an amount of Rs 79.54 crore. The chargesheet and the statements of 798 depositors further revealed that their deposits aggregating Rs 29.06 crore were not returned and the amount was misappropriated. The instant appeal has been filed by some of the depositors, who purportedly fell victim to this misappropriation.
The prosecution further narrated that Respondent- 1 was the co-conspirator and friend of the alleged mastermind. During investigation, Respondent-1 was arrested on 28-4-2021. The Nagpur Bench of Bombay High Court vide the impugned order, had released him on bail noting that the material on record is not sufficient to establish Respondent-1’s complicity.
Counsels for the appellants submitted that the High Court did not correctly appreciate the role of Respondent-1 as stated in the chargesheet. The counsels drew the Court’s attention towards the forensic audit report that wherein it had been revealed that the President of the Society colluded with Respondent-1 and relatives, invested Rs 2.38 crore against which he was given financial assistance of Rs 9.69 crore, which was not refunded.
Furthermore, the High Court, in the impugned order, did not consider the statements of the Society’s staff recorded during investigation. The State submitted that a money trail had been unearthed between the Respondent-1 and the Society. Therefore, it was prayed that the privilege of bail granted to him by the High Court be cancelled.
Examining the impugned order, the Court pointed out that the Single Judge simply proceeded on the premise that only some persons made allegations against Respondent-1, and he was not a member of the Society which had committed such financial irregularities. The Court further found that the Single Judge, while noting that no positive finding needs be recorded on the sufficiency of the said material to establish conspiracy, had without any basis thought it fit to record that, “in his prima facie opinion, it is extremely debatable whether such material is sufficient to establish conspiracy.”
The Court further pointed out that the impugned order goes on to state that Respondent-1 was not involved in the affairs of the Society nor was he responsible for the irregularities alleged. However, it emerged from the chargesheet that there was some material indicative of the involvement of Respondent-1 in the withdrawal of Rs 9 crore, based on the records and cash-book entries and other book of accounts, though he had invested only Rs 2.38 crore.
Taking note of the submission that Respondent-1 was a close associate of the main accused i.e., the President of the Society and investigation also indicated that out of the monies withdrawn from the Society’s account by Respondent-1 was used to make investments in property in the name of his relatives, the Court pointed out that the Single Judge Bench completely lost sight of the fact that the deposits in/to the Society were made by people having meagre earnings without anything else to fall back upon.
“Tentatively speaking, it seems that the President of the Society systematically siphoned off these funds, with the aid of other office-bearers as also through Respondent-1”. The Court further stated the strict conditions must be imposed in cases of economic offences affecting many people, but the same was not done in the impugned order as the High Court had imposed usual conditions simpliciter. Therefore, the Court found that the Single Judge Bench of Bombay High Court erred in law while granting bail via the impugned order.
