2022 (7) TMI 195 - HC - Money Laundering

Seeking grant of regular bail - Money Laundering - scheduled offences or not - siphoning off of funds - misappropriation of funds and fraud committed in connection with the affairs of Sri Guru Raghavendra Sahakara Bank, Netkallappa Circle, Bengaluru - cases under other acts were filed earlier also - HELD THAT - Admittedly, a case has been registered earlier in Crime No.69/2020 and he has been enlarged on bail, wherein, PMLA offences are not invoked and one more case was registered in Crime No.37/2020, wherein, an offence under Section 9 of the Karnataka Protection of Interest of Depositors in Financial Establishments Act was invoked. The matter was also earlier referred to CID and got it deleted Section 9 of the Karnataka Protection of Interest of Depositors in Financial Establishments Act and also a case has been registered and numbered as C.C.No.28892/2021 which is pending before the Court. It is also important to note that the Assistant Director, Directorate of Enforcement, Bengaluru Zonal Office has collected the source of information and the report was also received from the office of the Registrar of Co-operative Societies and collected all information and issued summons invoking Section 50 of the PMLA Act and a case was registered in ECIR/BGZO/09/2020. The allegation that this petitioner did not co-operate and the allegation is that the Crores of rupees more than 1000 Crores was misappropriated and the said amount was depositors money. Without obtaining the mandate from the depositors created advances and allowed to withdraw over and above the actual deposits and also an allegation is that the loans were sanctioned by just obtained partial coverage of mortgages and the Bank did not create charge in respect of the said properties in favour of whom, the loans were advanced. This petitioner is in custody. No doubt, the provisional order has been passed and the same has been confirmed and also questioned, which is pending. Having taken note of the allegations made in the complaint and also analysis of Bank Statement held by this petitioner and his family members and the fact is that he is the Chairman and earlier he was the Vice-President, is not in dispute and collected the source of information having acquired the deposits made by this petitioner and his family members i.e., son, wife and daughter. The main allegation is that while advancing the loan amount to 24 borrowers, the properties were not taken as security and the fictitious loan accounts are opened and money laundering to the tune of Crores of rupees utilized and depositors money has been siphoned by creating the fictitious loan. When such being the factual aspects, it is not a fit case to exercise the powers under Section 439 of Cr.P.C. No doubt, the learned senior counsel brought to the notice of this Court the orders passed by this Court. The factual aspects to be kept in mind while passing an order of granting bail and exercising the discretion and those two judgments will not comes to the aid of this petitioner instead of the judgment referred by the learned counsel for the respondent of the Apex Court while canceling the bail comes to the conclusion that the High Court failed to take note of the fact that the huge amount of money belonging to the investors has been siphoned off has not been considered. There are no merit in the petition to enlarge him on bail - petition dismissed.

Summary

Issues Involved:
1. Petitioner's involvement in the misappropriation of funds and fraud at Sri Guru Raghavendra Sahakara Bank.
2. Applicability of the Prevention of Money Laundering Act (PMLA) and the sufficiency of evidence against the petitioner.
3. Petitioner's health condition and age as factors for bail consideration.
4. Previous bail orders and their relevance to the current petition.
5. Arguments from both sides regarding the petitioner's role and the legal provisions under PMLA.

Issue-wise Detailed Analysis:

1. Petitioner's Involvement in Misappropriation and Fraud:
The prosecution's case is based on allegations that the petitioner, as the President of Sri Guru Raghavendra Sahakara Bank, was involved in misappropriating Rs. 892.85 Crores by creating advances against deposits without obtaining mandates from depositors. The petitioner allowed withdrawals over and above the actual deposits and sanctioned loans with partial coverage of mortgages. The bank released charges against collateral securities even when loan accounts were active, and overdraft limits were enhanced without genuine basis. The investigation revealed that the petitioner failed to share information about the actual beneficiaries of the proceeds of the crime.

2. Applicability of PMLA and Sufficiency of Evidence:
The Directorate of Enforcement invoked Sections 3 and 4 of the PMLA Act, alleging money laundering. The Assistant Director collected information from the Registrar of Co-operative Societies and found a prima facie case of money laundering. The petitioner's properties were provisionally attached, and the Adjudicating Authority confirmed this attachment. The petitioner argued that the materials collected by the police were insufficient to hold him responsible for the alleged offences. However, the court noted that the petitioner did not cooperate with the investigation and that substantial evidence indicated his involvement in money laundering.

3. Petitioner's Health Condition and Age:
The petitioner, aged 71 and suffering from heart ailments, argued that his health condition should be considered for bail. He produced medical evidence to support his claim. However, the court found that the severity of the allegations and the petitioner's key role in the misappropriation outweighed his health concerns. The court emphasized that economic offences involving a deep-rooted conspiracy and significant loss to investors must be viewed seriously.

4. Previous Bail Orders and Relevance:
The petitioner cited previous bail orders in related cases (Crl.P.No.1189/2022 and Crl.P.No.2344/2021) to argue for bail. The court, however, distinguished these cases based on their specific facts and noted that the petitioner's role in the current case involved a larger conspiracy and significant financial misappropriation. The court referred to the judgment of the Delhi High Court in Sekar v. Union of India and the Supreme Court's decision in Central Bureau of Investigation v. Ramendu Chattopadhyay, which emphasized the seriousness of economic offences and the need for stringent measures.

5. Arguments from Both Sides:
The petitioner's counsel argued that he had no knowledge of the misappropriation, cooperated with the investigation, and that his properties were already attached. The respondent's counsel contended that the petitioner, as the Chairman of the Bank and Society, played a key role in the fraud and that his family members were also beneficiaries. The court found the respondent's arguments more compelling, noting the significant evidence of the petitioner's involvement in the misappropriation and money laundering.

Conclusion:
The court concluded that the petitioner failed to make a case for bail, given the substantial evidence of his involvement in the misappropriation of funds and money laundering. The petitioner's health condition and previous bail orders were insufficient to outweigh the severity of the allegations. The bail petition was rejected.