SUPREME COURT REJECTES BAIL OF THE RESPONDENT AS ALLEGATIONS INVOLVED MISUSE OF PUBLIC FUNDS AND SERIOUS ECONOMIC OFFENCES

In the matter of Manik Madhukar Sarve & Ors. Vs Vitthal Damuji Meher & Ors. Criminal Appeal No. 3573 of 2024 arising from Special Leave Petition (Crl.) No. 3945 of 2022, a two Judge Bench of the Hon’ble Supreme Court comprising of Justice Hima Kohli and Justice Ahsanuddin Amanullah passed a Judgment dated 28-08-2024 and observed that in cases of serious economic offences, bail and anticipatory bail ought not to be granted on conditions simpliciter, as it involves misuse of public funds.

Facts

(i)  In the present case, the Appellants including Mr. Manik Madhukar Sarve along with other aggrieved depositors filed a Complaint with the Police Station Kotwali, Nagpur against the Accused- Khemchand Meharkure, President of Jai Shriram Urban Credit Co-operative Society Limited (Society) along with the Respondent No. 1- co-Accused, who is a co-conspirator and close friend of the main Accused, thereby alleging that they misappropriated Rs. 79,54,26,963/- (Rupees Seventy-Nine Crores Fifty-Four Lakhs Twenty-Six Thousand Nine Hundred and Sixty-Three only) that were pooled in from the depositors.

(ii)  The Police had registered an FIR in Crime No. 217 / 2019 against the Accused and the Respondent No. 1- co-Accused for offences punishable under Sections 409 of the Indian Penal Code, 1860 (IPC) (Criminal breach of trust by public, servant. or by banker, merchant or agent), 420 IPC (Cheating and dishonestly inducing delivery of property), 467 IPC (Forgery of valuable security, will, etc), 468 IPC (Forgery for purpose of cheating), 471 IPC (Using as genuine a forged document or electronic record) and 120-B IPC (Punishment of criminal conspiracy) and Section 3 of the Maharashtra Protection of Interest of Depositors (in Financial Establishments) Act, 1999 (MPID Act) (Fraudulent default by Financial Establishment).

(iii) It was further alleged by the Prosecution that the Accused had withdrawn the deposits made by the Appellants from the Society Account and siphoned off the same to the co-Accused as a financial assistance for purchasing immovable properties in the name of the main Accused and other relatives for around Rs. 10 Crores.

(iv) During the investigation, the co-Accused was also arrested on 28-04-2021. However, the High Court of Bombay at Nagpur in Criminal Application (BA) No.867/2021 released him on bail under Section 439 (1) of the Code of Criminal Procedure 1973 (CrPC) (Special powers of High Court or Court of Session regarding bail), vide Order dated 13-10-2021, on the ground that the co-Accused was not a member of the Society which had committed such financial irregularities and that there was no sufficient evidence against him.

Supreme Court Observations

Aggrieved by the High Court Order dated 13-10-2021, the Appellants filed a Special Leave Petition (Crl.) No. 3945 of 2022 before the Supreme Court that was registered as Criminal Appeal No. 3573 of 2024. The Apex Court, vide Order dated 28-08-2024, made the following observations:

(1)  That while granting bail, Courts have to consider various factors such as nature of accusation, role ascribed to the accused, possibilities of tampering with evidence and/or witnesses, criminal antecedents, flight risk etc. The Court has to further look into the following factors before granting bail and anticipatory bail:

(i)  whether there is any prima facie or reasonable ground to believe that the accused had committed the offence;

(ii) nature and gravity of the accusation;

(iii)  severity of the punishment in the event of conviction;

(iv)  danger of the accused absconding or fleeing, if released on bail;

(v) character, behaviour, means, position and standing of the accused;

(vi)  likelihood of the offence being repeated;

(vii) reasonable apprehension of the witnesses being influenced; and

(viii) danger, of course, of justice being thwarted by grant of bail.’

(2)  But if there are serious allegations against the accused and the Court has ignored or overlooked the gravity of the offence or the impact of such offence on the society, in such cases, bail, if granted, may be cancelled by the same Court or revoked by a superior Court.

(3)  That the High Court in this case erred in observing that as the co-Accused was not a member of the Society, so he could not have conspired in the financial irregularities committed by the Society President i.e. the main Accused. In fact, the Chargesheet indicated materials including cash-book entries and other books of accounts showing withdrawal of funds by the Respondent No. 1 – co-Accused that were used by him to purchase immovable properties in the name of his relatives. The same would amount to misuse of deposits made by public and economic offence, if established.

(4) Further, if the High Court had to grant bail, the Court ought to have imposed strict conditions while granting the bail to the Respondent No. 1- co-Accused, but the High Court did not do so.

“In cases where the allegations coupled with the materials brought on record by the investigation and in the nature of 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 granting such bail to impose appropriately strict and additional conditions.”

The High Court merely directed him to appear before the Economic Offences Wing (EOW) as and when required, not to tamper with evidence, influence the witnesses and not to leave the country without Court’s permission. Hence, the High Court erred in law by exercising discretionary power while granting bail to the Respondent No. 1- co-Accused.

Conclusion

Thus, based on the aforesaid observations, the Supreme Court held that the High Court Order granting bail imposing usual conditions simpliciter was unsustainable, as the allegations related to serious economic offences and misuse and siphoning off of public funds. As a result, the High Court Order dated 13-10-2021 was set aside and the Trial Court was directed to proceed with the trial in accordance with law. Further, as bail has been cancelled by the Apex Court after a period of almost 3 years of the High Court Order granting bail to the co-Accused, thus, the Bench granted liberty to the Respondent No. 1 to apply for bail at a later period or in the event of a change in circumstances.

 

Harini Daliparthy

Lead Senior Associate

The Indian Lawyer