2023 (2) TMI 1337 - HC - Indian Laws

Seeking grant of bail - criminal breach - allegation of cheating by using forged documents - HELD THAT - It is of course true that at the stage of grant or refusal of bail, a detailed and meticulous examination of evidence and elaborate documentation of the merit of the case should not be undertaken, however, there is need to indicate sound reasoning for the order and any order devoid of any reasoning would suffer non-application of mind. It is imperative for the Court to evaluate the materials on record to checkout whether prima facie case is there against the accused applying for bail or not while granting or refusing bail and one of the dominant consideration in granting bail to prevent repetition of the crime or offence. A careful perusal of record in this case would go to disclose prima facie allegation against the petitioner for commission of economic offence and the conduct of the petitioner poses a flight risk. This Court is conscious of the principle laid down by Apex Court in Arnab Manoranjan Goswami 2020 (11) TMI 965 - SUPREME COURT , but the allegation on record against the petitioner not only discloses a prima facie allegation against the petitioner for commission of fraud and cheating by forging documents, but also the enormity of amount of embezzlement involved in this case to the tune of Rs. 109 crores add to the worries of investors and depositors of the company which assumes further significance when investigation is kept open U/S. 173(8) of Cr.P.C. The offence alleged against the petitioner are U/Ss. 406/420/467/468/471/120-B of the IPC, out of which offence U/S. 467 is punishable with up to life imprisonment and the alleged manner in which the funds received by the petitioner were credited in a number of accounts created in the names of staff of the company of the petitioner to defraud different persons which prima facie speaks against the intention of the petitioner to cheat different persons. Taking into consideration the enormity of allegations levelled against the petitioner in committing fraud involving more than Rs. 100 crores and the alleged mode and manner of cheating the investors and lenders as well as the alleged involvement of the petitioner for similar offences in five cases instituted in three different States and keeping in view the conduct of the petitioner necessitating the investigating agency to issue lookout circular and continuation of further investigation, this Court does not find any justification at present to consider the bail application of the petitioner affirmatively. The bail application of the petitioner stands rejected.

Summary

Issues Involved:
1. Nature of the dispute (civil vs. criminal).
2. Allegations of financial fraud and forgery.
3. Petitioner's conduct and risk factors.
4. Legal precedents and principles for bail consideration.

Detailed Analysis:

1. Nature of the Dispute (Civil vs. Criminal):
The petitioner argued that the dispute is an inter-corporate civil dispute, emphasizing that no general public was duped or cheated. The petitioner had informed the police about the irregularities in his company, demonstrating his bona fide conduct. He also highlighted that he had already surrendered to custody after availing interim bail and had been granted bail in similar cases in other states, suggesting that the disputes are purely civil in nature. The petitioner contended that the allegations constituted a breach of contract, which should not attract criminal liability.

However, the court found that the FIR disclosed allegations of cheating by using forged documents and committing criminal breach of trust, thus constituting a criminal offense. The court noted that the petitioner had allegedly manipulated a bank statement to secure a loan, showing dishonest intention from the beginning of the transaction. Therefore, the court concluded that the dispute could not be merely categorized as a civil dispute.

2. Allegations of Financial Fraud and Forgery:
The respondents argued that the petitioner, as the Managing Director of SFPL, had embezzled the loan amount by diverting it to other sister entities and had misappropriated funds from other financial institutions. The petitioner allegedly forged documents to show an inflated bank balance, indicating a dishonest intention to cheat. The investigation revealed that multiple bank accounts were created in the names of company staff to defraud various persons.

The court found that the allegations against the petitioner were serious, involving the embezzlement of Rs. 109 crores and the use of forged documents to secure loans. The court noted that the petitioner had a prima facie intention to cheat, as evidenced by the manipulated bank statements and the diversion of funds.

3. Petitioner's Conduct and Risk Factors:
The respondents highlighted that the petitioner had absconded to evade arrest, leading to the issuance of a lookout circular. The petitioner was apprehended near the Orissa-Chhattisgarh border while attempting to flee. There was also a reasonable apprehension that the petitioner might influence witnesses. Additionally, the petitioner had a history of traveling to 11 countries, raising concerns about flight risk. The petitioner was involved in five other cases of similar offenses in different states, indicating a pattern of fraudulent behavior.

The court considered these factors and concluded that there was a significant risk of the petitioner absconding and repeating the offense. The court emphasized the need to prevent the repetition of the crime and to ensure the petitioner's presence during the trial.

4. Legal Precedents and Principles for Bail Consideration:
The petitioner relied on several legal precedents, including cases where the Supreme Court had granted bail in economic offenses, arguing that the nature of the dispute was civil and that bail should not be refused solely based on the gravity of the offense. The petitioner cited cases like Satischandra Ratanlal Shah, P. Chidambaram, Arnab Manoranjan Goswami, and Mitesh Kumar J. Sha to support his contention.

The court, however, referred to other precedents, such as Y.S. Jagan Mohan Reddy, Nimmagadda Prasad, and Christian Michel James, which emphasized the seriousness of economic offenses and the need for a different approach in granting bail. The court considered factors such as the nature of the accusations, the severity of the punishment, the character of the accused, and the likelihood of the offense being repeated.

The court concluded that the allegations against the petitioner were serious, involving a significant amount of embezzlement and fraudulent conduct. The court found that the petitioner's conduct, including his attempt to flee and his involvement in similar offenses in other states, weighed heavily against granting bail. The court emphasized the need to prevent the repetition of the offense and to ensure the petitioner's presence during the trial.

Conclusion:
The court rejected the bail application, considering the gravity of the allegations, the petitioner's conduct, and the risk factors involved. The court emphasized the need to prevent the repetition of the offense and to ensure the petitioner's presence during the trial. The bail application was disposed of accordingly.