High Court
Facts
BA-2120-2024+-1- IN THE HIGH COURT OF JUDICATURE AT BOMBAYBENCH AT AURANGABADBAIL APPLICATION NO. 2120 OF 2024Bhausaheb Damodhar KuteAge 67 years, Occu. Agriculture,R/o. Niwara, Nagar Road,Ganpati Mala, Sukewadi,Taluka Sangamner,District Ahmednagar.… ApplicantVersusThe State of MaharashtraThrough Police Station Officer,Sangamner City Police Station,Sangamner, District Ahmednagar.… RespondentWITHCRIMINAL APPLICATION NO. 4851 OF 2024[seeking permission to assist APP]INBAIL APPLICATION NO. 2120 OF 20241.Prabhakar s/o Pandurang Rahane,Age : 65 years, Occ: Army Retired,R/o: 1881, Pandurang Krupa,Near Dere English Medium School,Gunjalwadi, Golden City, Sangamner,Tq. Sangamner, Dist. Ahmednagar.2.Chandrabhan s/o Raosaheb Landge,Age : 55 years, Occ: Agril,R/o: Shinde Mala, Wadgaon-Landge,Tq. Sangamner, Dist. Ahmednagar.3.Nalini w/o Chandrabhan Landge,Age : 49 years, Occ: Agril,R/o: Shinde Mala, Wadgaon-Landge,Tq. Sangamner, Dist. Ahmednagar.
Legal Reasoning
BA-2120-2024+-13- Officer [IO] on 25.08.2023. His own statement to IO shows that since1990 up to 2023 he was officiating as Founder Chairman. He hasconveyed that he being preoccupied with social work, Manager Gunjalbeing his companion, he has elevated Gunjal from the post of Clerk toManager. Thus, Manager Gunjal apparently has long association withpresent applicant since 1990 and so much was the trust that applicantgave him promotion also. Thereafter in his statement he has conveyedto the IO that for smooth functioning of the Society, he used to causesignatures on the cheque books and RTGS slips and entrust it to theManager. Therefore, his such statement itself shows that prima faciehe was also aware of the transactions for which his signatures wereobtained. He has not denied his signatures over either cheque booksor RTGS slips. Consequently, being Chairman and being signatory todocuments of above nature, he cannot escape by putting forth a casethat his trust has been misused, as Special Auditor on complete re-audit or special audit, has found present applicant to be alsobeneficiary of crores of rupees. Therefore the ground that he wasChairman, and Manager was solely dealing with the transactions, andhe is victimized, has no force. 15.The second ground which is pressed into service is that the veryvalidity of the special audit has been questioned by superior authority BA-2120-2024+-14- and therefore the conclusion drawn by Special Auditor has itself notattained finality and therefore, it is tried to be submitted that, thevery lodgement of very crime itself is premature. Even this submissionholds no substance because, though there are papers showing order ofDeputy Joint Registrar, it is an administrative order and present crimeis at the instance of the Special Auditor who was specificallyappointed to conduct re-audit and only on detection of irregularities,on authorization of very department, crime seems to have beenregistered. However, order of this Court at Bombay in WP 12604 of2024 dated 13.11.2024 itself shows that the order of Deputy JointRegistrar dated 25.06.2024 questioning the report of financialauditor, to which recourse is tried to be taken, has itself been setaside and matter is remanded back. Consequently, it cannot be saidthat crime registered on report of Special Auditor, which is now underconsideration, has itself come under shadow of doubt. SpecialAuditor’s report has details of all alleged irregularities. Resultantly,even above ground has no force. 16.Repeatedly learned counsel emphasized that in fact presentapplicant himself has lodged report, after conducting internal audit,with police on 06.07.2022, 02.08.2023 and 03.08.2023, i.e. againstManager Gunjal, and applicant has tried to project that Manager is BA-2120-2024+-15- the epicenter and solely to be blamed for the irregularities. However,he himself seems to have managed to keep himself away from thearms of police till 23.05.2024. His such conduct of requiring himselfto surrender after nine months does not reconcile with his submissionthat he is the whistle blower. For mere failure of the then PoliceInspector of concerned police station to take prompt action on his saidreport, applicant cannot derive benefits. Moreover, papers placed onrecord show that P.I. of Sangamner City Police Station conveyed tohis superior i.e. Deputy Superintendent of Police, Crime Branch on30.01.2025 about there to be no complaint in the record ofSangamner City Police Station at the instance of present applicantdated 06.07.2022. Therefore, taking the same into consideration also,it is not open for the applicant to claim himself to be a whistle blowerand therefore to consider his own conduct. 17.Learned counsel for applicant also laid much stress on theaspect that initial fraud was said to be running to over rupees eightycrores, however, now as on today, there is attrition in the quantumand amount of alleged fraud and on this point, he took this Courtthrough the consolidated balance sheet for the period from01.04.2024 to 28.01.2025. He also pointed out that charge over theproperties of applicant and his entire family members is already BA-2120-2024+-16- created. Thus, an attempt has been made to show that there arerecoveries going on and therefore, interest of investors and depositorsis projected to be protected. Again, above aspect cannot be taken intoconsideration once fraud and huge financial irregularities aredetected and there is material suggesting involvement of Chairman,Manager as well as all other office bearers who were running theSociety and whom there was entrustment of hard earned money ofseveral investors. 18.It is also tried to be impressed upon this Court that initiallycrime was registered for offences under Sections 420, 408, 409, 465,467, 468, 471, 477-A and 120-B r/w 34 of IPC, but as regards toapplicant is concerned, he has been absolved from most of the gravecharges. Moreover, applicant is behind bars since more than sevenmonths, and there being no immediate prospects of matter going fortrial and further, considering the long list of prosecution witnesses, itis his submission that trial may not get concluded in a year or so.That, Hon’ble Apex Court in the recent case of Javed Gulam NabiShaikh (supra), has clearly observed that when there is longincarceration, when trial court cannot even proceed to frame charge,then in such cases, applicant is entitled for relief of bail and therefore,according to him, this being the command of the highest court of BA-2120-2024+-17- land, here, applying the above legal proposition, he urges to grantbail. No doubt, as pointed out that as regards to present applicant isconcerned, some of the offences for which he was initially namedalong with others, on detail investigating, are shown to be dropped.However, he still stands charged for commission of offence underSection 409 which provides for imprisonment for life, coupled withSection 120-B i.e. for criminal conspiring. Considering his status andpost in the Dudhganga Nagari Co-operative Credit Society, there is nomanner of doubt that financial transactions must have taken placeright under his nose. It cannot be readily accepted that his trust hasbeen breached by his own Manager who appears to be in hisassociation for more than thirty years.19.Considering the magnanimity and nature of the economicfraud, this Court is reminded of the observations of the Hon’ble ApexCourt in the case of Tarun Kumar v. Assistant Director (supra) reliedby learned APP, and the same are borrowed and quoted as under :“21.The apprehension of the learned counsel for theappellant that the trial is likely to take long time and theappellant would be incarcerated for indefinite period, isalso not well founded in view of the observations made by BA-2120-2024+-18- this Court in case of Vijay Madanlal (supra). On theapplication of Section 436A of the Code of CriminalProcedure, 1973, it has been categorically held therein that:“419. Section 436A of the 1973 Code, is awholesome beneficial provision, which is foreffectuating the right of speedy trial guaranteed byArticle 21 of the Constitution and which merelyspecifies the outer limits within which the trial isexpected to be concluded, failing which, theaccused ought not to be detained further. Indeed,Section 436A of the 1973 Code also contemplatesthat the relief under this provision cannot begranted mechanically. It is still within thediscretion of the Court, unlike the default bailunder Section 167 of the 1973 Code. UnderSection 436A of the 1973 Code, however, theCourt is required to consider the relief on case-to-case basis. As the proviso therein itself recognisesthat, in a given case, the detention can becontinued by the Court even longer than one-halfof the period, for which, reasons are to berecorded by it in writing and also by imposingsuch terms and conditions so as to ensure thatafter release, the accused makes himself/herselfavailable for expeditious completion of the trial.” 22. Lastly, it may be noted that as held in catena ofdecisions, the economic offences constitute a class apartand need to be visited with a different approach in thematter of bail. The economic offences having deep-rootedconspiracies and involving huge loss of public funds need tobe viewed seriously and considered as grave offencesaffecting the economy of the country as a whole andthereby posing serious threat to the financial health of thecountry. Undoubtedly, economic offences have serious BA-2120-2024+-19- repercussions on the development of the country as awhole. To cite a few judgments in this regard are Y.S. JaganMohan Reddy vs. Central Bureau of Investigation (2013) 7SCC 439, Nimmagadda Prasad vs. Central Bureau ofInvestigation (2013) 7 SCC 466, Gautam Kundu vs.Directorate of Enforcement (supra), State of Bihar andAnother vs. Amit Kumar alias Bachcha Rai (2017) 13 SCC751. This court taking a serious note with regard to theeconomic offences had observed as back as in 1987 in caseof State of Gujarat vs. Mohanlal Jitamalji Porwal andAnother (1987) 2 SCC 364 as under:-“5… The entire community is aggrieved if theeconomic offenders who ruin the economy of theState are not brought to books. A murder may becommitted in the heat of moment upon passionsbeing aroused. An economic offence is committedwith cool calculation and deliberate design with aneye on personal profit regardless of theconsequence to the community. A disregard for theinterest of the community can be manifested onlyat the cost of forfeiting the trust and faith of thecommunity in the system to administer justice inan even-handed manner without fear of criticismfrom the quarters which view white collar crimeswith a permissive eye unmindful of the damagedone to the National Economy and NationalInterest…” 20.Resultantly, bearing in mind the above observations and factsin the case in hand being almost identical, in the considered opinionof this Court, when charge sheet itself shows that investigation is stillin progress and merely to meet the stipulated period of 60 days for BA-2120-2024+-20- filing charge sheet, present charge sheet has been tendered, it cannotbe said that now investigation is over and that no further recovery ordiscovery is to be made. Mere creation of charge over propertiesowned by applicant and his family members also would not entitlehim to seek relief, more particularly when prosecution points out thatthe financial source of acquisition of properties have its trail from theabove illegal transactions. Even otherwise, ground of longincarceration in view of judgment of Hon’ble Apex Court in the caseof Javed Gulam Nabi Shaikh (supra) cannot be taken aid of as, in thatcase, incarceration was for over four years. Therefore, with duerespect to the Hon’ble Apex Court, it is not open for applicant toinvoke above observations. 21.Therefore, in view of above discussion, this Court is not inclinedto grant relief as prayed for. Hence, following order :ORDERThe application is rejected. [ABHAY S. WAGHWASE, J.]vre
Arguments
BA-2120-2024+-2- 4.Sambhaji s/o Trimbakrao Deshmukh,Age : 63 years, Occ: Retired,R/o: Anand Nagar, Maldad Road,Sangamner, Tq. Sangamner,Dist. Ahmednagar.5.Vivek s/o Machindranath Sonavane,Age: 59 years, Occ: Business,R/o: Chaitanyanagar Galli No.1,Sangamner, Tq. Sangamner,Dist. Ahmednagar.… Applicants [Depositors]Versus1.The State of Maharashtra,Through Police Station Sangamner,Tq. Sangamner, Dist. Ahmednagar.2.Bhausaheb Damodhar Kute,Age : 67 years, Occ : Agril,R/o Niwara, Nagar Road,Ganpati Mala Sukewadi,Tq. Sangamner, Dist. Ahmednagar.… Respondents [R.No.2 Orig. Accused]…..Mr. Sachin S. Deshmukh h/f Mr. Shaikh Mazhar A. Jahagirdar,Advocate for the Applicant in Bail Application/2120/2024 andrespondent no.2 in Criminal Application/4851/2024.Mr. S. B. Narwade, APP for Respondent-State in both Applications.Mr. Yogesh D. Kale, Advocate for the Applicants in CriminalApplication/4851/2024...... CORAM :ABHAY S. WAGHWASE, J. Reserved on: 07.02.2025Pronounced on: 12.02.2025ORDER : 1.The applicants in Criminal Application No. 4851 of 2024,claiming to be the depositors, are seeking permission to assist learned BA-2120-2024+-3- APP in prosecuting the Bail Application. For the reasons mentioned inCriminal Application No. 4851 of 2024, the same is allowed in termsof prayer clause “B” and disposed of accordingly.2.Applicant is seeking regular bail as a result of his arrest inCrime No. 0740 of 2023 registered at Sangamner City Police Station,District Ahmednagar for offences punishable under Sections 420, 408,409, 465, 467, 471, 477-A of IPC and Sections 3, 4 and 5 of theM.P.I.D. Act.3.Learned counsel at the outset pointed out that, applicant isundisputedly a Chairman of the Society, namely Doodhganga NagariSahakari Patsanstha Maryadit, Sangamner (for short, ‘Society’). In FIRregistered on 19.08.2023, he came to be arrested on 23.05.2024 andis behind bars since then. According to learned counsel, going by theentire FIR which is at the instance of Special Auditor, primaryallegations are directed against the Manager namely, Gunjal, and hewas instrumental in even keeping present applicant in dark andmisusing the trust reposed upon him, in committing allegedirregularities and illegalities in the funds of the Society for hispersonal benefit. It is pointed out that though on above report ofSpecial Auditor, initially crime was registered for offence under BA-2120-2024+-4- Sections 420, 408, 409, 465, 471, 477-A of IPC, on in-depthinvestigation, very Investigating Officer brought down the offencesand charges against present applicant to Sections 420, 408, 409 r/w34, 120-B of IPC and under sections 3, 4, 5 of M.P.I.D. Act, andthereby he has been absolved from other offences like Sections 465,467, 471, 477-B of IPC. Consequently it is his submission that theseverity of the crime which was initially projected, is now diluted asagainst present applicant and the only allegation against him thatsurvives is of dereliction of duty. 4.It is his next submission that, present applicant beingChairman, had himself sensed and realized certain irregularitiescommitted in the Society by the said Manager and on receipts ofcomplaints to that extent from some of the depositors, presentapplicant himself got internal audit done and then lodged report withpolice authorities seeking investigation and as such, according tolearned counsel, applicant himself has become a whistle blower andhis such conduct deserves consideration. He pointed out that, hadapplicant carried any ill intentions to commit fraud or to commitmisappropriation, he would not have bothered to approach policeauthorities on his own. BA-2120-2024+-5- 5.Learned counsel further submitted that admittedly, in thecapacity of Chairman his signatures are appearing, but he furthersubmitted that, this has happened merely because he trusted theManager who used to obtain his signature in routine manner. Hepointed out that, applicant’s family members are shown to bethemselves investors in the Society and they have contributed overRupees four crores and the same are still intact. He pointed out that,even charge over the properties worth crores of rupees owned byapplicant and his family members has already been created.Therefore, amount of so called investors is secured from applicant’sside. He pointed out that, family members of the applicant arebeneficiaries of bail at the hands of the Hon’ble Apex Court.Resultantly, learned counsel submits that, even present applicantdeserves relief as prayed.6.Learned counsel very strongly and staunchly put forth that thevery validity of special audit, which is made the basis of registrationof crime, is itself rendered doubtful by higher authorities of very Co-operative Department. On this count, he took this Court through thepapers, more particularly review orders passed by Divisional JointRegistrar dated 25.06.2024. Resultantly, he submits that the veryfoundation of registration of crime has come under shadow of doubt. BA-2120-2024+-6- At this point, he also submitted that initial figures about total amountof misappropriation reported in the FIR has now been substantiallyreduced. To this extent, he relies on the consolidated balance sheet ofthe Society for the period from 01.04.2024 to 28.01.2025. He pointedout that recovery is still going on and moreover applicant’s both,movable and immovable properties, are duly attached or charge hasbeen created over the same. He submits that he has instructions thatapplicant’s own worth is not less than Rupees fifteen crores and evengoing by the figures of which depositors and investors are said to bedefrauded, the share that would come to his extent is already secured.7.Learned counsel pointed out that, applicant has surrenderedhimself on 23.05.2024. He is over 67 years of age and is alreadygripped with serious health ailments. That, charge sheet is alreadyfiled and no further recovery is shown to be made at his instance.That, even otherwise, entire investigation depends of documentaryevidence and investigating machinery is already seized with the sameand therefore he questions his continued custody thereby curtailinghis valuable right of liberty. 8.Learned counsel would emphasize that considering recent filingof charge sheet and the list of witnesses running into over 150, there BA-2120-2024+-7- are no chances of trial commencing soon or getting concluded incoming year also. Therefore, applicant being behind bars since May2024 and in view of no immediate prospects of matter going for trial,according to him, long pre trial incarceration being deprecated by theHon’ble Apex Court, more particularly in the case of Javed GulamNabi Shaikh v. The State of Maharashtra and others [Cri. Appeal No.2787/2024 decided on 03.07.2024], he urges for grant of bail on anycondition deemed fit by this Court. 9.Learned APP strongly opposed grant of bail on the ground thatapplicant is main accused along with Manager, i.e. being veryChairman of the Society. According to learned APP, submissions putforth that applicant himself was kept in dark by the Manager and thathis trust has been misused, cannot be accepted because according tolearned APP, all day to day activities were under his administrationand governance. According to learned APP, huge depositsaccumulated from hundreds and thousands of investors’ hard earnedmoney have been misappropriated by committing gross irregularities,illegalities and crores of rupees are siphoned for amassing personalwealth and property. Learned APP submitted that, above findings area product of re-audit and special audit on receipt of severalcomplaints. He pointed out that total fraud is found to be running in BA-2120-2024+-8- Rupees eighty crores and above. Present applicant was Chairman andhe colluded with Manager and other office bearers in committingeconomic fraud. That, it is a serious economic offence committed inthe co-operative sector which had distinct objectives. That, fraud hasbeen played on the investors by siphoning their hard earned earnings.That, considering applicant’s position and political links, learned APPexpresses serious concern about grant of relief of bail and finallyprays to reject the application. Learned APP seeks reliance on thefollowing rulings :1.Tarun Kumar v. Assistant Director, Directorate ofEnforcement AIR 2024 SC (Criminal) 217.2.Dattatraya Mahadev Ugale v. State of Maharashtra andothers 2024 DGLS (Bom.) 1738.3.Sayajirao Narayan Takwane v. Divisional JointRegistrar 2025 DGLS (Bom.) 336.4.Dhanraj N. Asawani v. Amarjeetsingh MohindersinghBasi and others 2023 SCC OnLine SC 991.10.Learned counsel for some of the depositors/investors whoseapplication for assisting APP is granted, also joined in stronglyopposing by pointing out that applicant is the main accused. That,whatever irregularities and illegalities are committed are apparently BA-2120-2024+-9- at his instance. He submitted that applicant and Manager havesystematically siphoned crores of rupees for their personal gain. That,Special Auditor has, on meticulous audit, reached to a finding toabove extent. That, facts and figures are reflected in the report. Evenaccording to him, serious economic fraud has been committed andtherefore, he too opposes grant of bail. 11.Heard each side extensively to their satisfaction. 12.Apparently, FIR seems to be lodged at Sangamner City PoliceStation, District Ahmednagar on 19.08.2023. As pointed out, asagainst present applicant, crime is registered for offences under penalsections i.e. Section 420 i.e. cheating, Section 408 criminal breach oftrust, Section 409 criminal breach of trust by public servant, Section34, Section 120-B punishment of criminal conspiracy as well asSections 3, 4, 5 of M.P.I.D. Act. Having heard learned counsel, it is emerging that following arethe principal grounds pressed into service for bail :Firstly, applicant is a Chairman and work of entltlement ofloan, its sanction, approval, disbursement of loans and all financialaspects are dealt by Manager. Secondly, validity of the special auditwhich is made basis of registration of crime has itself come under BA-2120-2024+-10- shadow of doubt being questioned by higher authorities of Co-operative Department. Thirdly, applicant himself was a whistleblower, but police authorities took no action. Fourthly, initial chargein FIR is brought down to mere cheating and dereliction of duty.Fifthly, apart from his own deposits being intact, charge is alreadycreated over his immovable properties which are worth crores ofrupees. Sixthly, investigation to be over and charge sheet beingalready filed and lastly, there being no immediate prospects of mattergoing for trial and there being hundreds of proposed witnesses, nochances whatsoever of trial coming to a conclusion for years together.Thus, according to learned counsel, for no justifiable reason therebeing long pre trial incarceration, applicant deserves the relief. 13.On above lines, papers are visited. It seems that presentapplicant is arraigned as accused no.7 in above crime. Beforeadverting to the entitlement of relief, it would be appropriate to givebrief account of the substance of the accusations emerging onconducting special audit by the Special Auditor. The translatedversion is as under : “During the period of the misappropriation, he was workingas a banking professional on the post of Chairman ofDudhganga Urban Cooperative Credit Society from the BA-2120-2024+-11- period year 2016 to 2021. While working in the saidresponsible position, he was legally bound to return thedeposit amount of the depositors and protect the interestsof the depositors as per the provisions of the MaharashtraProtection of Interests of Depositors Act, 1999, but hedeliberately committed the said crime for his own financialgain by hatching conspiracy and conspiring with otheraccused. The accused numbers 1 to 5 as well as the ChiefAccountant, Late Bhausaheb Santoo Gaikwad created fakerecords by forging the signatures of the depositors and havealso recorded false accounts in the computer system of thecredit society and in the records of the credit society. Whileworking on the position of Chairman, it was theresponsibility of accused number 7 to check the accountsprepared by the above-mentioned accused who wereresponsible for the daily operations and to control theirdaily operations and ensure that there is nomisappropriation and malpractice in the society, he hasdone negligence in his duty. Also, accused number 7Bhausaheb Kuthe has misused his authority by illegallysanctioning loans exceeding the maximum limit to himself,his family members, as well as the Manager and ChiefAccountant and others. Also, he has illegally and withouttaking the prior permission of the Registrar, has givenrebates to his own and related loans and misappropriate thefunds of the society. Also, by publishing personaladvertisements in the current newspaper, he hasmisappropriated by claiming personal expenses as revenueexpenses and has betrayed the trust of the members and BA-2120-2024+-12- depositors of the credit society. Therefore, he is accused ofcommitting an offense under sections 3, 4 and 5 of theMaharashtra Depositors' Interests Act, 1999, including 420,408, 409, 34, 120 (B) of the Indian Penal Code.That thorough investigation of the said crime is stillgoing on and the charge sheet/report against the otheraccused is yet to be filed as per the evidence availableagainst him. Since the accused number 07 BhausahebDamodar Kute in column number 10 has been arrestedand 60 days have passed since his arrest, we are filing thesaid supplementary charge sheet. We are filing thesupplementary and original charge sheet against theaccused mentioned in the said charge sheet and otheraccused in the crime based on the evidence found andavailable during the investigation as per section 173(8) ofthe Cr.PC. ”14.Admittedly, and even papers show that present applicant wasChairman of the above named Society. Total fraud by way ofirregularities, violations, digression, misappropriation is allegedlyrunning to over rupees eighty crores. The fundamental and foremostground put forth by learned counsel is that entire so called fraud is atthe instance of Manager Gunjal. According to him, he was solelyinstrumental in committing above financial irregularities. Presentapplicant seems to have tendered his statement to the Investigating