..(1).. IN THE HIGH COURT OF JUDICATURE AT BOMBAY CRIMINAL APPELLATE JURISDICTION CRIMINAL WRIT PETITION NO.2533 OF 2008 The State of Maharashtra. ..Petitioner. Versus Dnyaneshwar C. Agashe and others. ..Respondents. .... Mr.V.B.Konde-Deshmukh, APP, for the petitioner - State. Mr.S.R.Chitnis, Sr.Counsel a/w. Mr.S.V.Kotwal, Adv. for respondent Nos.1 to 7 and 9 to 13. Mr.Solkar Mobin, Adv. for respondent No.8. Mr.A.P.Mundargi, Sr.Advocate for respondent No.15. .... CORAM : SMT.V.K.TAHILRAMANI,J. CORAM : SMT.V.K.TAHILRAMANI,J. CORAM : SMT.V.K.TAHILRAMANI,J. DATED : 3rd December, 2008. DATED : 3rd December, 2008. DATED : 3rd December, 2008. P.C.: 1. Heard Mr.Konde-Deshmukh learned APP for the petitioner - State of Maharashtra, Mr.Chitnis the learned Senior Counsel for respondent No.1 to 7 and 9 to 13 and Mr.Mundargi the learned Senior Advocate for respondent No.15. None appears for respondent No.14, though served. As far as respondent No.8 is concerned, the learned APP states that as at present they have obtained the police custody of respondent No.8, they are not pressing this Petition in respect of respondent No.8 at this stage. Hence, this Petition is being considered only in respect of respondent Nos.1 to 7 & 9 to 15 only. ..(2).. 2. FIR No.376 of 2008 came to be lodged on 22.11.2008 against the respondents and some other accused at Deccan police station, Pune. The case is under Sections 406, 409, 420 read with 34 of Indian Penal Code. On the very same day i.e. on 22.11.2008, the case was taken over by the EOW, Crime Branch, Pune for investigation. 3. All the respondents - accused came to be arrested in the said case on the very same day i.e. on 22.11.2008. They were produced before the learned J.M.F.C. (A.C.) Court, Pune at 4 p.m.. The investigating agency sought police custody of all the respondents for 14 days. However, the learned Magistrate granted police custody only upto 24.11.2008. Thereafter, on 24.11.2008 a fresh remand application was preferred by the investigating agency wherein they sought police custody of 12 days. The learned Magistrate rejected the said application for police custody and remanded all the respondents - accused to judicial custody. Being aggrieved by the said order, this Writ Petition has been preferred to set-aside the order of the learned J.M.F.C. rejecting request of the investigating agency for further police custody and it is prayed that the ..(3).. respondents be remanded to police custody till the period of 15 days from the arrest of the respondents’ expires. 4. At the relevant time, respondent Nos.1 & 2 were the Chairman of Shree Suvarna Sahakari Bank Ltd., Pune, respondent Nos. 3 to 7 & 9 to 13 were the Directors of the said Bank and respondent Nos.14 & 15 were employed in the said Bank on high posts. Audit came to be conducted in respect of the affairs of the Bank and it was found that there were several irregularities especially in granting loans. Hence, FIR came to be registered by the Special Auditor. As stated earlier, the said FIR is under Sections 406, 409, 420 read with 34 of Indian Penal Code. The prosecution case is that all the accused persons from the year 1998 to 2006 disbursed loans to themselves, their own companies, their relations, their employees and close acquaintances. In many cases requisite security was not taken, loans were disbursed in absence of necessary documents, the necessary paper work was not found to be complete. In some cases the resolutions which are necessary for disbursing the loans were also not passed and yet loans came to be disbursed. About 270 cases of such loans have been found. Due to this disbursement, huge loss was ..(4).. sustained. As per the prosecution case, the amount involved is Rs.436 crores. 5. The learned APP has submitted that all the accused were arrested only on 22.11.2008. They were produced before the learned Magistrate on the very same day at 4:00 p.m. and police custody was granted only upto 24.11.2008. Thereafter request for police custody was rejected by the learned Magistrate. The learned APP submitted that 15 accused came to be arrested on 22.11.2008. All of them were produced before the Magistrate and effectively the investigating agency only got one and half day to investigate the matter. In the said period the residences of all the accused persons had to be thoroughly checked, their statements had to be recorded, various documents had to be obtained, enquiries were to be made with the accused as to what they had done with the money taken by them i.e. where they had kept the money or where they had invested the money and also to find out exact role played by each accused and the involvement of each accused in this case. The period was not sufficient for the investigating agency to investigate the fraud which pertains to about at least 270 loans and the amount relating to which runs into Rs.436 crores. He ..(5).. has submitted that the said time period was too inadequate to investigate the matter thoroughly and hence the learned Magistrate ought to have granted further police custody of the accused persons. 6. Mr.Chitnis, the learned Counsel for the respondent Nos.1 to 7 & 9 to 13 submitted that in the present case the Administrator was appointed on 14.9.2006 and he has taken charge of all the documents pertaining to the transactions and hence there is no question of any of the accused persons being in possession of any of the documents and hence the police custody of the respondents would not be necessary. As far as this aspect is concerned, it is seen that police custody is not sought only in relation to seizure of documents but for various other reasons stated in the earlier para. 7. Mr.Chitnis further submitted that the prosecution has alleged that loans were disbursed without following the directives of RBI and in such case, the Auditor could not lodge FIR with the investigating agency and the investigating agency also could not investigate an offence of this nature. In support of this contention, Mr.Chitnis has placed reliance on the Banking Regulation Act, 1949. ..(6).. Mr.Chitnis has drawn my attention to Sections 21, 27, 28, 29, 35(A), 45 and 46 of the said Act. He has submitted that Section 46 of the said Act provides for penalties in the said act and it would not be open to the auditor to lodge FIR against any of the respondents with the police. He submitted that if FIR could not have been lodged, no case is made out for police custody. At this stage, it may be stated that no section under the Banking Regulation Act has been invoked or applied by the investigating agency in respect of any of the respondents. The Sections applied are only under the Indian Penal Code i.e. Sections 406, 409, 420 read with 34 of Indian Penal Code. Thus, as of now there are no allegations in respect of any irregularities under the Banking Regulations Act, 1949. The only allegations as stated are under Indian Penal Code and hence the Banking Regulation Act would not apply to this case at present. 8. Thereafter, Mr.Chitnis submitted that Sections 406 and 409 of Indian Penal Code cannot be invoked in respect of any of the respondents as it cannot be said that there was any entrustment to any of the respondents of the money of any of the depositors. However, it is pertinent to note that besides ..(7).. Sections 406 and 409 of IPC, Section 420 has also been applied by the prosecution. As far as Section 420 of IPC is concerned, Mr.Chitnis submitted that this section would only apply if there is intention to cheat right from the inception. He submitted that there is no material in the FIR to show that the case falls under Section 420 of IPC. As to what is the prosecution case against the respondents has already been stated by me in paragraph four above. From a perusal of the papers, prima facie case under Section 420 IPC is made out. The investigation is at a very nascent stage. The allegations against all the respondents are serious. The fraud involved is to the tune of Rs.436 crores. Hence, at this stage in my opinion the investigating agency needs to be given fair chance to investigate the matter and to find out the exact nature and extent of this crime and to find out the exact involvement and role of each of the accused in this case. Only when a fair chance is given to investigate, the proper facts will be before the Court. In such case in my opinion police custody of the respondents would be necessary. 9. Mr.Chitnis has submitted that the prosecution case is that the amount involved is Rs.436 crores, however, out of the said amount Rs.411 crores have ..(8).. already been paid. Mr.Chitnis has admitted that the said amount has been paid only after the Administrator was appointed and he started looking into the bank matters. Mr.Chitnis further submitted that as far as the remaining amount of Rs.25 crores is concerned, an undertaking has been given that the said amount would be returned back to the bank. Hence, it is submitted that the police custody of the respondents is not necessary. Even if Rs.411 crores have been returned, huge amount of Rs.25 crores remain. Even if the amount is paid up, the police custody of the respondents would be necessary to find out who else besides the accused is involved and to find out the exact role of each respondent and the nature and extent of the whole racket. 10. Thereafter, Mr.Chitnis has submitted that two of the respondents i.e. respondent Nos.3 & 9 are ladies and respondent Nos.1, 4, 5, 9 & 10 are suffering from medical problems. Mr.Chitnis pointed out the provisions of Section 437 of Cr.P.C. wherein it is stated that if a person is a woman or is sick or infirm that person may be released on bail. As far as this submission is concerned there are two aspects. The first aspect is that this Court is not considering whether bail should be granted or not, ..(9).. but, only considering the question whether further police custody is to be granted or not. Secondly Section 437 is not a mandatory section, but, the section clearly says that the Court "may" grant bail to a woman or a person who is sick or infirm. Thus, it is seen that the section leaves it to the discretion of the Court whether to grant bail or not. As stated earlier, I am not considering a case wherein bail is to be granted. Hence, Section 437 of Cr.P.C. would be of no help to the respondents in the present matter. 11. Mr.Mundargi the learned Counsel for respondent No.15 submitted that respondent No.15 is only the Deputy General Manager incharge of recovery from the year 2002 and prior to that he was a branch manager having power to disburse loans only upto Rs.5 lakh whereas the loans in the present matter pertain to figure above Rs.5 lakhs. However, the learned APP stated that in the present case there are some loans which are also below Rs.5 lakhs. In any event according to the prosecution the offence took place during the period 1998 to 2006. Respondent No.15 was the Deputy General Manager incharge of the recovery from the year 2002 till the time the audit was conducted in 2006. Till then the amount of Rs.436 ..(10).. crores which were disbursed by way of loans had not been recovered. Respondent No.15 was in charge of recovery. Moreover there is material to show that he was present in the meetings wherein decisions were taken to disburse the loans which loans were disbursed without following the necessary procedures. Thus, it cannot be said that there is no involvement at all of respondent no.15. In my view the police custody of respondent No.15 would also be necessary to find out the exact nature of his involvement and to find out the exact role played by him. 12. Mr.Mundargi further submitted that the reasons stated in the remand application are general in nature and no specific reasons have been given in respect of each individual accused for seeking police custody of the accused. He submitted that no good reasons have been made out for grant of further police custody of any of the respondents. In my view as police custody of only two days was granted to the investigating agency and looking to the nature and magnitude of this crime it would not be possible for the investigating agency to segregate the case of each accused and to state the specific case in respect of each accused and to give specific details or particulars as to why custody of each accused is ..(11).. necessary. 13. As observed by me earlier, the amount involved is a huge amount. Fifteen accused persons were arrested on 22nd November, 2008. They were produced before the Magistrate at 4:00 p.m.. Police custody was granted only upto 24.11.2008. Thereafter on 24.11.2008 further police custody was refused. In the said period from 22nd November, 2008 to 24th November, 2008 the houses of all the accused came to be searched. However, the prosecution case is that the accused have taken loans of huge amounts for their personal work, they also granted loans to their relatives, friends, their own companies etc.. These loans were disbursed bypassing the regular procedures. Money was invested by some of the accused in different companies owned by themselves or by their relatives. Hence, it is necessary for the investigating agency to interrogate the accused to find out where the amounts have been invested or where the amounts have been kept by the accused persons. The police custody of the respondents would also be necessary to thoroughly interrogate each of these accused to find out exact nature and extent of the fraud as well as to find out the exact nature and extent of the involvement of each accused in this ..(12).. case and for this purpose police custody of two days is absolutely inadequate and further police custody is very much necessary. 14. Looking to the above facts and the fact that there are 15 accused who were arrested, looking to the magnitude of this offence and looking to the amount involved, in my opinion, further police custody of the respondents is very much necessary. Hence, the order dated 24.11.2008 passed by the learned Magistrate rejecting remand application for further police custody is set-aside. The respondents accused are remanded into police custody till the period of 15 days from the date of their arrest is over. As the period of 15 days is soon coming to an end the jail authorities to forthwith hand over the respondents to the investigating agency. On expiry of period of 15 days from the date of arrest, the custody of the respondents be handed over by the investigating agency to Yerwada jail, Pune where the respondents are at present. 15. Writ Petition is disposed of accordingly. 16. The investigating agency as well as the jail authorities to act on an authenticated copy of this ..(13).. order. 17. At this stage, Mr.Chitnis submitted that the respondents accused have preferred application for bail before the learned Sessions Judge under Section 439 Cr.P.C.. The bail applications have already been heard, however, orders are yet to be passed thereon. He submitted that in view of the pendency of the present matter the learned Sessions Judge has not yet passed any orders in these bail applications. Mr.Chitnis submitted that even though police custody has been granted the learned Sessions Judge can yet grant bail to the accused persons. In support of his contention, Mr.Chitnis has placed reliance on para-22 of the decision of the Supreme Court in the case of Gurbaksh Singh Sibbia etc. vs. The State of Punjab Gurbaksh Singh Sibbia etc. vs. The State of Punjab Gurbaksh Singh Sibbia etc. vs. The State of Punjab reported in AIR 1980 SUPREME COURT 1632 AIR 1980 SUPREME COURT 1632 AIR 1980 SUPREME COURT 1632. Even if police custody is granted, a bail application can be considered, however, as I have already come to conclusion that police custody of the petitioners would be very much necessary for a few more days, grant of bail at this stage by the sessions Court would defeat the order of this Court, which would not be proper. Hence it is directed that till the period of police custody of the present respondents is over the learned Sessions Judge shall not pronounce the ..(14).. order in the said bail applications. The learned Sessions Judge to dispose of the bail applications without being influenced by any of the observations made in the present order. 18. Criminal Writ Petition is disposed of. (SMT.V.K.TAHILRAMANI,J.) (SMT.V.K.TAHILRAMANI,J.) (SMT.V.K.TAHILRAMANI,J.)