1 IN THE HIGH COURT OF JUDICATURE AT BOMBAY: NAGPUR BENCH: NAGPUR CRIMINAL APPLICATION NO.1351/2008 Milind Dinkarrao Chimurkar versus State of Maharashtra =================================== CORAM: S.R. DONGAONKAR, J. CLOSED FOR ORDER ON:5/6/2008 PRONOUNCED ON:13/6/2008 ORDER Heard Mr. S.V. Manohar, Advocate for the applicant and Mrs. B.H. Dangre, Additional Public Prosecutor. 2] This is an application under section 439 of Cr.P.C. for grant of bail. The applicant is facing trial for the offences under section 406, 408, 409, 467, 468, 471, 201, 420 read with section 34 of I.P.C. and 120-B of the I.P.C. in R.C.C.No.112/2008. 3] The applicant was the Director & Chairman of Samata Sahakari Bank, a Cooperative Bank registered under the Cooperative Societies Act. It is alleged that there were several misappropriations, frauds, advancement of loans without any proper documents to various persons in the lacs and crores of rupees, so one first information report was lodged against present applicant along with other several accused persons including the members of Board of Directors on 15.11.2007 at Police Station Sitabuldi. It was alleged that earlier, the father of the applicant was the Chairman and Director of the said bank. This applicant came to 2 be elected as Chairman of the said bank from 24.12.2001 and continued as such upto 24.10.2005. Then again he was elected as Chairman from 8.7.2006 upto 22.10.2006, when Administrator came to be appointed in respect of the said bank. According to him, he is a very respectable and law abiding citizen and has a very good reputation in the society and is permanent resident of Nagpur. When the offence was registered against him his father and other members of Board of Directors, Chief Executive Officer of the said bank, Branch Manager of the said bank and some others many of them applied for grant of anticipatory bail to the Sessions Judge, Nagpur. The applications were rejected so they approached to this court. Some of them were granted anticipatory bails, whereas rest of them were refused. 4] As the investigation was pending and this applicant came to be arrested, he applied for bail in the trial court. That application was rejected. Thereafter, he applied for bail to this court. As in the meanwhile charge sheet was filed, against this applicant, liberty to apply for bail in sessions court was granted and he was allowed to withdraw the said application. Accordingly he applied for bail in the trial court. That application was rejected by the Ad-hoc Additional Sessions Judge and Additional District Judge, Nagpur vide Misc. Criminal Application No.641/2008 with the following observations : “6. The property involved in the matter yet to be recovered. Complete investigation of the matter yet to be completed against co-accused. In the present matter, no other accused are shown absconding but the prosecution 3 have made provisions for their investigation against other 29 accused by submitting charge sheet against the applicant / accused only. So there is no legal impediment to conduct the trial against the present accused. 7. No doubt, “bail and not jail” is the well- cherished principle based on a right to personal liberty. It does not and cannot have dominion over larger interest, social order, public safety, public health and of course national interest or security as well as or possibility of liberty being abused. 8. Considering the nature of offence, facts and circumstances of the matter, considering large interest of the public and the State, merely because charge sheet is filed against the accused, it would not be reasonable to exercise the judicial discretion in favour of the applicant/ accused when there is prima facie case against the accused. Hence, application is rejected.” Hence the applicant has approached this court for grant of bail. 5] Relevant First Information reads thus: (Translation) “During the aforesaid period of time and at the spot of occurrence, as mentioned in the complaint, the herein accused persons from serial number 1 to 30 as mentioned in the list enclosed herewith, who are the various officers, employees, Chairman, Vice Chairman, Board of Directors and Debtors namely Aman Hemani and Rajashri Hemani of Samata Sahakari Bank Limited, Branch Bhagwaghar Layout, Dharampeth, Zenda Chowk, having colluded with one another, sanctioned the loan limit of Rs.250 lakhs (Rs. two hundred fifty lakhs only) by charging the less commission in the Bill Discount Account of Hemani Group without taking any mortgage and intentionally did manipulation in the Bank computer in order to hide it. Similarly, inspite of the restrictions of R.B.I. i.e. the accused persons did rephasement in the loan case of Rs.10.51 crores of M/s Naval Harsha Group and thereby violated the directions of the R.B.I.; instructions of Cooperative Department and various provisions under Banking &Regulations Act, 1949. Similarly, they sanctioned huge amount of loan illegally, did misappropriation by violating the rules while selling the property mortgaged with the Bank, disbursed more amount of loan by accepting mortgage of less valuation. In the same way, they put the Bank to loss by violating the rules while investigating the amount in the Government Securities and Mutual Funds. Moreover, they refunded the deposits on large scale to the depositors before the maturity without obtaining the permission of the committee headed by the District Deputy Registrar, Cooperative Societies, 4 Nagpur in spite of the restrictions of the Reserve Bank, which is against the rule. Similarly, in some loan cases, they compromised unlawfully while dealing under O.T.S. Scheme. In the loan case of M/s Ashok Vaults, the immovable property mortgaged against the loan was sold out and thereby committed illegal transactions. Similarly, interest on some accounts was waived unauthorizedly. In this way, the accused persons in collusion committed misdeeds. By preparing fake documents and using them as if true, they have committed Misappropriation of Rs.145,60,57,332/- crores by cheating the Bank and Bank account holders. The Chairman, Vice Chairman, Board of Directors, Officers and Staff of the Samata Sahakari Bank and others, who are the accused persons, jointly committed the said misappropriation during the period w.e.f. 30.3.1997 to 31.3.2007 by preparing fake documents and thereby cheated the Bank. On the basis of the written report given by the complainant, an offence under sections 406, 408, 409, 467, 468, 471, 420 read with 34 of the Indian Penal Code has been registered and taken up for investigation.” 6] Relevant allegations in the charge sheet are thus : (Translation) “16-Brief facts of the case (Add separate sheet, if necessary- - - - The Samata Cooperative Bank is a trustee institution of the depositors and share holders. But the Board of Directors of the said bank / Chief Executive Officer/ Branch Officer / Recovery Officer and borrowers, in collusion with one another hatched a plan and A] committed irregularity on large scale in Inward Bill Account of the bank and deposited an amount of Rs.5,55,00,000/- in the account of Amanraj Hemani Group towards bill discounting and thereby committed misappropriation of above mentioned amount. B] In the computer of the bank, the name of the loan account of Hemani Group was changed fraudulently and new name, address and sanction limit have been entered which is against the rules. C] Pradeep Chaudhary, the Chief Executive Officer of the bank, Shri Sanjay Deshpande, the then Branch Manager of Bhagwaghar Branch and the then Board of Directors committed irregularities on large scale in the loan case of Naval Harsh Group and other loan cases by doing rephasement of sum of Rs.10.51 lakhs against the rules when the Reserve Bank of India had imposed financial restrictions on the bank under section 35(a) of the Banking Regulation Act 1949 since 4.8.2006. D] The unsecured loans have been disbursed to 12 Groups and 15 b ig borrowers against the rules and an amount of Rs.103,32,84,480 including the interest is outstanding. As 5 sufficient pledge is not obtained in loan cases, the entire loan amount has become unsecured. E] The then Board of Directors of the bank, Shri Pradeep Chaudhary, the Chief Executive Officer of the Bank and Shri Keshav Kamle, the Special Recovery Officer committed irregularities on large scale while selling the pledged and other immovable property in the loan cases and thereby caused loss of Rs.9,09,30,003 to the bank. F] In the month of October, 2004, as the Bank did not maintain 3% and 25% in cash demand and minimum cash payable in a period and liquidity respectively as per the provisions of sections 18 and 24 of the Banking Regulation Act 1949, the Reserve Bank of India has imposed the fine of total Rs.94,54,938/- and consequently the bank has suffered loss. Out of this fine amount, the bank has made payment of fine of Rs.59,68,136 to the Reserve Bank and the remaining amount of fine is not paid. Due to mismanagement and wrong investment policy of the bank, non-compliance of directives and investments made in mutual funds, government securities, S.L.R. and non- S.L.R. though the Bank was not having minimum liquidity and untimely sale thereof, the Bank has suffered financial loss of Rs.18571574.17 during the period from 2004-2005 to 2006-07. Similarly, the sale and purchase transactions of more than 5% bonds have been executed through single agent. G] On 24.05.2006, though the Reserve Bank had given instructions not to transact the business of acceptance of fresh deposits, the Bank after 24.5.2006, accepted deposits on large scale and refunded the deposits before maturity. Similarly, fresh loans have also been disbursed. During this period, the deposits of total Rs.3,94,28,008/- have been refunded to the depositors before maturity as a result of which the Bank has suffered loss. The transactions of refund of deposits before maturity are to be verified. Similarly, though the financial restrictions were imposed under section 35(a) and rule 56 of the Banking Regulation Act, 1949 with effect from 4.8.2006, the deposits have been refunded on large scale. The amount of such deposits is Rs.6,39,67,718/-. H] The members of the Loan Review Sub-Committee and the then Board of Directors had compromised against the rules, in respect of outstanding loans under lump-sum Repayment Scheme and waived the huge amounts of interest to the borrowers as a result of which the Bank has suffered huge loss. Such recoverable amount is Rs.1,57,36,091/-. I] In the loan case of M/s Ashoka Vaults, irregular transactions have taken place on large scale. As the immovable 6 property in the said loan case has been sold, the entire loan amount of Rs.3,39,55,649/- has become unsecured. In this case, the mortgaged property has been sold without fixing its reserved value. In this way, by indulging in suspicious, illegal and irregular transactions, the trust of share holders and depositors is breached. The Samata Cooperative Bank is a trustee institution of the share holders, but the accused persons have committed breach of trust of the share holders who had deposited their amount with trust, by indulging in illegal transactions and caused loss of Rs.145,60,57,332 crores to the depositors and share holders and thereby committed embezzlement and cheating. On the basis of such complaint of the complainant, the said offence has been registered.” Samata Cooperative Bank is registered on 30.6.1985. Bank . . . omission . . . business licence and it commenced banking transactions on 22.10.1987. Bank's functioning is limited to Nagpur, Wardha,. Chandrapur and Bhandara districts. Bank's seven branches and two extension counters are functioning in Nagpur City. Work of Samata Bank is conducted as per provision of Bye-laws of Bank. As per the orders of Hon'ble Cooperative Commissioner and Registrar, Cooperative Societies, Maharashtra State, Pune, Shri Sadanand Uikey, Chief of Mobile Squad and Special Auditor, Class I conducted audit of Samata Cooperative Bank, Nagpur and submitted report for necessary action. in the said report it is mentioned that irregularities and acts against the rule are committed and thereby defalcation is done. for the entire transactions, Board of Directors from 1997 to 2006 and Chief Executive Officer, Recovery Officer, Branch Manager of Bhagwaghar Branch and Audit Officer are held responsible. During the course of investigation of the said crime, complete documents pertaining to transactions mentioned in the audit report have been seized. In that, files of loan cases and loan sanctions to 12 big groups and 15 big loanees granted on large scale without following prevailing practice have been seized. In some cases, it is seen that the Board of Directors has sanctioned loans but mortgage is not found to have taken in proper proportion. it is revealed that loan forms of the loanees are kept blank and while auctioning mortgaged properly, no advertisements were given and tenders were called but the same were sold directly without getting done valuation. Evidence of conducting transactions against the rules viz-to-sanction I.B.P. facility to Hemani Group without taking any kind of mortgage and after their cheques returned dishonoured, to alter names and sanction limits in the account of Hemani Group in the computer and transfer the said accounts to someone else in respect of the said transactions, resolution register of Samata Bank is seized; to stick out contents of resolution register on 7 large scale of the board of directors, to over write, to leave blank spaces in the resolution register and fill the same later on to stick pages in the resolution register subsequently, to sale and purchase bonds at odd times for not maintaining liquidity and cash proportion in the bank transactions, to waive loans under the name of rephasement even when restrictions were imposed on the bank and to sell mortgaged property without doing its valuation etc. has been collected against the said accused persons. Accused Milind Dinkar Chimurkar is the President / member of Loan Sub Committee and President of Loan Review Committee, President of Investment Review Committee and also the president of th bank. As per provision of sub rule 39 and bye- law 39(A); 39(b), it was his duty and responsibility to supervise general functioning of the bank. However, he failed to discharge his duty properly. Consequently, the bank is duped by Rs.145,60,57,332/- and for the embezzlement caused thereby, he is responsible as per the evidence received. Hence charge sheet is filed against him for the sake of justice. Similarly, investigation of the said crime is continued as per provision of section 173(8) of Cr.P.C. Provision is made to file supplementary charge sheet against the said accused, presently found 29 accused and the accused persons who would be found in further investigation at proper times. 17. Refer Notice served: yes/ : No Date (Acknowledgment to be places) 18. Dispatched on 16.3.2006 sd/ S.D.Tayade 16.3.2006 Signature of Investigation Officer, submitting the final report/ charge sheet Name : S.D. Tayade Rank: Dy. Superintendent of Police, C.I.D. Nagpur sd/- S.D. Tayade 16.3.2006 Forwarded by Station House Officer / Officer In-charge, Name : S.D. Tayade Rank: Dy. Superintendent of Police, C.I.D. Nagpur. 7] It is necessary to note that star witness of the prosecution is one Sadanand Ukey who had conducted Special Audit of the said 8 bank. He has indicted this applicant specifically for all the lapses mentioned above, he being the Chairman. According to him, this applicant being the Chairman, had misappropriated several amounts in the bank and was responsible for the losses caused to the bank. Loans were advanced without proper documentation, without verifying the entitlement for the loan to the tune of crores. Some one line resolutions without due administrative process were inserted in the Minutes Book of the Board of the Directors to facilitate the advance of loan illegally to the concerned. 8] The perusal of the charge sheet would show that ex-facie though charge sheet is “one”, several offences were committed by the applicant and therefore, the charge sheet was filed for the aforesaid offences. The noticed misappropriation is stated to be of more than Rs.145 crores rupees and therefore, applicant was charge-sheeted for the aforesaid offences . It is also stated that the investigation, in this respect of other accused including other members of the Board of Directors and officials of bank is still being proceeded and the charge sheet is likely to be filed in near future against them. As such though the charge sheet is filed against the present applicant, investigation is still in progress in respect of this applicant as well as other accused for these offences. 9] As stated above the learned Sessions Judge has rejected the application for grant of bail of the applicant, the applicant has approached this court for grant of bail. 9 10] Learned counsel for he applicant Shri A.S. Manohar has submitted that the offence was registered on 5.11.2007 and this applicant was arrested on 27.11.2007. According to him this is the sole arrest in the present crime, and other accused are not arrested. He has also submitted that some persons have been granted anticipatory bail, some were not. It is his contention that about 12 accused have not at all applied for anticipatory bail, still they are not arrested. The C.E.O. Choudhari who is alleged to be prime accused in the present case, has not been yet arrested and in fact no attempt is made by the investigating agency, for reasons best known to it; to arrest him. He is neither declared absconder nor any attempt is made to arrest him. This applicant was in jail for about 90 days and on the 90th day the charge sheet was filed for the obvious purpose to make him not entitled for bail in default, though the investigation was not complete. It is further his case that the allegations against the applicant are only of imprudent decisions or negligence to watch the affairs of the bank. He further submitted that charge sheet is silent about the breach of the rules committed by the applicant. It is also his submission that all the documents in the present case have been seized and now nothing remains to be seized from the applicant and in fact the investigation against him is over. It is also his case that all the offences are committed by the Branch Manager Sanjay Deshpande and C.E.O. Choudhari and this applicant is booked only for he being negligent in conducting the affairs of the bank. Negligence cannot make out 10 any offence and as such he may be guilty of negligence in attending duties, but not for any offence. He further submitted that there cannot be any tampering of evidence. In fact the tampering can be done by the C.E.O., who is not yet arrested. According to him, no specific role is attributed to the applicant who is Chairman of the Board of Directors. There is no gravity of the offence and the chances of acquittal of applicant are much more. He has further submitted that the state would not be prejudiced if the applicant is released on bail. Trial is not likely to take place in near future as other accused are yet to be arrested and several other matters are pending in subordinate courts. Further there is no allegation of any tampering with the prosecution evidence against the applicant and ends of justice could be met, if stringent conditions are imposed against him. Therefore, according to him, the applicant should be released on bail. 11] He has relied on some decisions. I quote the same along with relevant observations therein. 1] (1998)9 Supreme Court Cases 611 [Dr. Jagannath Mishra ..vs.. C.B.I. “2- Considering the facts and circumstances of the case, particularly the facts that charge-sheet has already been submitted against the appellant and that at present no further investigation in this case is in progress against him we direct that the appellant be released on bail to the satisfaction of the Special Judge (A.H.Case), Patna and subject to following conditions” 2] (1998)5 Supreme Court Cases 607 [Sunil 11 K.Sinha ..vs.. State of Bihar through S.P. CBI.] “2-In view of the long incarceration of the appellant since 25.5.1996 and the trial likely to consume some time, we think that a case for grant of bail has been made out in favour of the appellant.” 3] Criminal Application No.1996/2002 [State of Maharashtra ..vs.. Ketan Parekh] dated 11.6.2002. “20] In the present case, the custody of none of the accused is required any more for the purpose of investigation of the case and though the custody of the accused is insisted upon on behalf of the prosecution, it was not pointed out as to why the custody of the accused was necessary for the purposes of investigation, except by arguing that a large amount of Foreign Company is involved which may have repercussions at the International level to discourage foreigners from coming to this country and make investment. Secondly, it is not the case of the prosecution that the accused are likely to abscond and not make themselves available for trial in case the charge sheet comes to be filed against them. It was argued on behalf of the prosecution that the SEBI had investigated the infractions of rules and regulations by the accused and, therefore, their license of dealing and trading in shares has been cancelled. It was argued that one of the accused by name Ketan Parekh is also a notified person under the provisions Special Courts Act 1992 and that he is also an accused in a complaint filed by the Bank of India which was investigated by CBI for the bouncing of pay orders and is also involved in Madhavpura Co- op Bank Case. It is not in dispute that in both the cases of Madhavpura Co-op Bank as well as Bank of India, the accused Keatan Parekh was released on bail. He was also released on bail when he was notified in a scam case to the extent of Rs.5 lacs under the provisions of the Special Courts Act 1992. 12 This is essentially a case between two companies, i.e. Triumph which is the share broker and the complaint-firm which is a company trading in shares. The pendency of the other criminal case against one of the accused and the cancellation of the brokerage license by NSE cannot be the ground for not releasing these accused persons on bail. 21] Since the custody of the accused is no longer necessary, I do not see any flaw in the order of the Sessions Court granting bail to the respondents – accused by imposing strict conditions. By the impugned order the accused are directed to be released on bail not only on the high amount of bail of Rs.2.50 lacs but the conditions imposed on the accused are very stringent. For instance, the accused cannot leave Bombay without permission of the remand court till the charge sheet is filed. The accused cannot leave India, without the permission of the concerned court and their passports are surrendered to the authorities. The accused are also directed to report to the Investigating Agency for a period of three months and thereafter report to the Investigating Agency twice in a week for a further period of three months.” 4] AIR 1978 Supreme Court 429 [Gudikanti Narasimhulu & others ..vs.. Public Prosecutor, High Court of Andhra Pradesh] “Bail or jail?” at the pre-trial or post conviction stage belongs to the blurred area of the criminal justice system and largely hinges on the hunch of the bench, otherwise called judicial discretion. (Para 1) Personal liberty, deprived when bail is refused, is too precious a value of our constitution al system recognised under Art. 21 of the Constitution that the crucial power to negate it is a great trust 13 exercisable, not casually but judicially, with lively concern for the cost to the individual and the community (Para 1) The relevant criteria for grant of refusal of bail in the case of a person who has either been convicted and has appealed or one whose conviction has been set aside but leave has been granted by the Supreme Court to appeal against the acquittal are as follows: When the crime charged (of which a conviction has been sustained) is of the highest magnitude and the punishment of it assigned by law is of extreme severity, the court may