IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 25TH DAY OF FEBRUARY, 2019 BEFORE THE HON’BLE MR.JUSTICE B.A.PATIL CRIMINAL PETITION NO.8112/2018 BETWEEN :
T. Kanna Rao S/o Subba Rao Aged about 59 years Occupation: Business and Managing Director of M/s. Sri Krishna Stockist & Traders Private Limited, Residing at Flat No.103, Kaiyala Apartments, Prakasham Nagar, Rajamundry-533 101, Andhra Pradesh.
… Petitioner (By Sri L. Ravichander, Senior Counsel a/w Sri N.Kumar, Advocate) AND :
Central Bureau of Investigation B.S. & F.C. Cell, 2nd Floor No.36, Bellary Road, Ganga Nagar, Bengaluru-560 032.
… Respondent (By Sri P. Prasanna Kumar, Standing Counsel) This Criminal Petition is filed under Section 438 of Cr.P.C praying to enlarge the petitioner on bail in the event of his arrest in Crime No.RC-1(E)/2018- CBI/BSFC/BLR, for the offences punishable under Sections 420, 120-B of Indian Penal Code and Sections 13(2) r/w 13(1) (d) of PC Act This Criminal Petition having been heard and reserved on 13.02.2019 coming on for pronouncement of orders this day, the Court made the following:-
O R D E R This petition is filed by accused No.2 under Section 438 of Cr.P.C. to release him on anticipatory bail in Crime No.RC-1/E2018-CBI/BS&FC/BLR for the offences punishable under Sections 420, 120B of IPC and also under Sections 13(2) r/w. Section 13(1)(d) of Prevention of Corruption Act of 1988.
2. I have heard the learned Senior Counsel Sri L. Ravichander on behalf of the petitioner and Sri P.Prasanna Kumar, learned Standing Counsel for respondent-CBI.
3. Before going to consider the submissions made by the learned counsel for the parties, it is necessary to state the genesis of the case of the prosecution that complainant-Company is a financial institution, a Government of India undertaking. Accused No.1- Company is a Private Limited Company registered under the Companies Act, 1956 engaged in the business of procession and trading of agricultural commodities. Accused No.2 being the Managing Director and accused No.3 a Director of accused No.1-Company were in charge of the affairs of the said Company. It is alleged that accused Nos.2 and 3 on behalf of accused No.1-Company approached the complainant-Company for a term loan and offered 16 properties for mortgage at a distress sale value of 2.5 times of the loan having tentative market value of Rs.330.88 Crores for a loan of Rs.150 Crores. The said loan application was processed and the complainant-Company entrusted the work of evaluation of the properties to Andhra Pradesh Industrial and Technical, Consultancy Organisation Limited (APITCO) and MITCON. They evaluated the said 16 properties given by accused No.1-Company and they valued the market valuation at Rs.257.88 Crores and distress value of Rs.206.30 Crores by APITCO. So also, the MITCON has valued the said properties at a market value of Rs.253.82 Crores and distress sale value at Rs.203.06 Crores. Basing upon the valuation of accused No.1- Company, the complainant-Company sanctioned Rs.80 Crores on 23.1.2015 to accused No.1-Company which is represented by accused Nos.2 and 3. In the first instance, Rs.40 Crores was disbursed on 27.3.2015 and thereafter Rs.40 Crores was disbursed on 31.12.2015 payable in 16 equal quarterly instalments commencing from 27th month from the date of first disbursement, for the purpose of construction of storage facilities for processing, grading, standardization and storage of agricultural commodities. After sanction of the said loan, accused No.1-Company purchased three agricultural lands. These three parcels of land along with three properties out of 16 properties initially offered for mortgage were mortgaged worth security cover of 2.5 times of the loan amount. Thereafter, accused No.1- Company committed default in repayment of the said loan and as such the said loan was classified as Non- Performing Assets (NPA) by the complainant-Company. After converting and classifying the loan as NPA, the complainant-Company got valued the properties which were given as distress sale value offered as security through M/s.Spoorthi Consultancy and M/s.Lopa Verma & Associates. The first Company valued the market value at Rs.14.37 Crores and distress sale value at Rs.11.05 Crores and second Company valued the said properties at the market value of Rs.28.21 Crores and distress sale value at Rs.23.98 Crores. After coming to know the said discrepancies in the valuation of the properties by accused No.4 and 5, the complainant-Company came to know that accused Nos.1 to 3 conspiring with accused Nos.4 and 5 have made artificial inflation of the said valuation of the said properties offered as securities and got loan of Rs.80 Crores by cheating and playing fraud. On the basis of the said complaint, a case has been registered.
4. It is the submission of the learned Senior Counsel Sri L.Ravichander for the petitioner that no notice has been served on accused No.2 either for the purpose of investigation or interrogation and as such he has not gone away from the enquiry. He further submitted that for having obtained the loan, best securities have been given and best serving loan company has evaluated the properties. He further submitted that already accused No 3 has been granted bail. He further submitted that the valuation done by the earlier two Companies is in consonance with law. Only because of initiation of proceedings, again the said properties have been evaluated when loan became NPA. He further submitted that there is no chance of petitioner absconding and there is no fleeing away from justice. He further submitted that there is no intention or mala fides to cheat the complainant-Company. He further submitted that at the earliest time when the security was given, the same was accepted and no objections were raised. Under such circumstances, at this juncture, the complainant-Company cannot raise the said issue.
5. By referring to the jurisprudence on bail, learned Senior Counsel further submitted that the transactions between the complainant-Company and the Company which is held by accused No.2 are in house matters and there is no tinkering of the said documents by the accused persons and all the documents are available with the complainant-Company for the purpose of investigation and interrogation. The object of bail neither punitive nor preventive. If the accused person is willing to stand for trial when called upon, then under such circumstances, his liberty enshrined in the Constitution of India cannot be infringed and if he is detained behind the bars, it will be punishing prior to the trial. He further submitted that while exercising the discretion, the discipline already enumerated in various decisions is to be followed. He further submitted that no exceptional circumstances are brought to show that the petitioner is going to defeat the investigation or a fair trial. If no such situations are existing, the Court cannot decline the bail. He further submitted that still investigation is in progress and the petitioner is not arrayed as an accused at this juncture. In order to substantiate his contention, he relied upon the decision in the case of Sanjay Chandra, Vs. Central Bureau of Investigation, reported in (2012)1 SCC 40. By relying upon another decision in the case of Gurbaksh Singh Sibbia etc. Vs. The State of Punjab, reported in AIR 1980 SC 1632, he further submitted that the combined effect of the material must be weighed while granting or rejecting anticipatory bail and apart from the same, several other consideration must also play the role and the Court has to look into the nature and seriousness of the proposed charges. In the instant case, no such serious charges have been levelled against the petitioner. He further submitted that grant of bail is a general rule putting a person jail or in a prison or in a correction home is an exception. If the Investigating Officer does not find it necessary to arrest an accused person during the course of investigation a strong case should be made out for placing such person in a judicial custody. In order to substantiate his arguments, he relied upon the decision in the case of Dataram Singh Vs. State of Uttar Pradesh & another, reported in (2018)3 SCC 22. Further relying upon the decision in the case of Siddharam Satlingappa Mhetre Vs. State of Maharashtra and others, reported in (2011) 1 SCC 694 he submitted that the grounds which have been enumerated therein at paragraph-112 are to be considered for releasing the accused on bail. On these grounds, he prayed to allow the petition and to release the petitioner-accused No.2 on bail.
6. Per contra, the learned Standing Counsel for the respondent-CBI vehemently argued and submitted that the petitioner is involved in an economic offence which itself constitutes a separate class which needs to be visited with a different approach in consideration of bail application. He further submitted that economic offences are deep-rooted, conspiracies involving huge loss of public funds and they are considered to be grave offences which will be having impact on economy of the country as a whole. He further submitted that the valuation report issued by MITCON and APITCO in respect of two sets of immovable properties are concocted and created in collusion with accused Nos.4 and 5. The said Companies in conspiracy with accused Nos.2 and 3 have given inflated valuation though the said properties were not fetching the said valuation, which itself goes to show that the petitioner by playing fraud has obtained the loan and has not repaid and got converted into NPA. He further submitted that investigation is still in progress and suspected other employees have to be interrogated. The petitioner being the partner is highly influential person and at this juncture if he is released on bail, he may tamper with the prosecution evidence, may abscond and may not be available for trial. He further submitted that the Court while granting the bail has to keep in mind the nature of accusations, evidence and severity of the punishment and character and other circumstances. In order to substantiate the said contention, he relied upon the decision in the case of Y.S.Jagan Mohan Reddy Vs. Central Bureau of Investigation, reported in (2013) 7 SCC 439. He further submitted that even in spite of issuance of notice, the petitioner has not appeared before the Investigating Agency and has not cooperated for the reasons best known to him. The said attitude of the petitioner itself goes to show that he is intending to avoid the investigation and he may likely to tamper with the prosecution evidence. He further submitted that six times notice has been sent to the email of the petitioner and the same has been read by him and he has not responded. He further submitted that there will be a larger impact on the economy of the country. On these grounds, he prayed to dismiss the petition.
7. I have carefully and cautiously gone through the submissions made by the learned counsel for the parties and perused the material and the decisions quoted by both the sides.
8. Grant or refusal of a bail is entirely discretionary and discretion should be exercised depending upon the facts and circumstances of each case. This proposition of law has been laid down by the Hon’ble Apex Court in the case of Siddharam Satlingappa Mhetre Vs. State of Maharashtra and others (quoted supra). At paragraph-112 of the said decision, it has been observed as to what are the parameters that can be considered into while dealing with the bail application, which read thus:-
“112. The following factors and parameters can be taken into consideration while dealing with the anticipatory bail:
(i) The nature and gravity of the accusation and the exact role of the accused must be properly comprehended before arrest is made;
(ii) The antecedents of the applicant including the fact as to whether the accused has previously undergone imprisonment on conviction by a court in respect of any cognizable offence;
(iii) The possibility of the applicant to flee from justice;
(iv) The possibility of the accused’s likelihood to repeat similar or other offences;
(v) Where the accusations have been made only with the object of injuring or humiliating the applicant by arresting him or her;
(vi) Impact of grant of anticipatory bail particularly in cases of large magnitude affecting a very large number of people;
(vii) The courts must evaluate the entire available material against the accused very carefully. The court must also clearly comprehend the exact role of the accused in the case. The cases in which the accused is implicated with the help of Sections 34 and 149 of the Penal Code, 1860 the court should consider with even greater care and caution because overimplication in the cases is a matter of common knowledge and concern;
(viii) While considering the prayer for grant of anticipatory bail, a balance has to be struck between two factors, namely, no prejudice should be caused to the free, fair and full investigation and there should be prevention of harassment, humiliation and unjustified detention of the accused;
(ix) The court to consider reasonable apprehension of tampering of the witness or apprehension of threat to the complainant;
(x) Frivolity in prosecution should always be considered and it is only the element of genuineness that shall have to be considered in the matter of grant of bail and in the event of there being some doubt as to the genuineness of the prosecution, in the normal course of events, the accused is entitled to an order of bail.”
9. Admittedly, in the present case, the investigation is still pending. Though the alleged offences are not punishable with death or imprisonment for life, by taking into consideration the nature of the accusations and the petitioner has been involved in an economic offence having deep rooted conspiracies and involving huge loss of public funds, it has to be viewed seriously, that too when charge sheet has not yet been filed. This proposition of law has been supported with the decision of the Hon’ble Apex Court in the case of Y.S.Jagan Mohan Reddy Vs. Central Bureau of Investigation (quoted supra).
10. From the catena of decisions quoted by the learned counsel for the petitioner and the decisions quoted by this Court supra, it is well settled principle of law that the primary purpose of bail in criminal case is to relieve the accused of imprisonment and at the same time, to keep the accused constructively in the custody of the Court assuring that he will submit to the jurisdiction of the Court and be in attendance thereon whenever his presence is required. It is also well settled principle of law that the liberty of the accused person must also be kept into view while considering the bail application. But the Hon’ble Apex Court has also cautioned that at the time of considering the bail application, the Court has to keep in mind the accusations made as against the accused and the gravity of the offence with which he has been charged and also affecting the economy of the country as a whole and thereby posting serious threat to the financial health of the country and also the public interest has to be kept into view. Keeping in view the aforesaid proposition of law let me consider the facts of the present case. It is the submission of the learned counsel for the petitioner that the petitioner is ever ready to co-operate with the investigation. He further submitted no notices have been served on him. But the learned Standing Counsel for the respondent-CBI brought to the notice of this Court that six notices have been served through email address of the petitioner. In spite of the same, he has not appeared for the purpose of enquiry and not co-operated with the investigation. Even it is the specific case of the prosecution that the petitioner-accused No.2 on behalf of accused No.1- Company obtained a term loan for their business by offering 16 properties as a security and at the time of giving the distress sale value, they have given inflated value of the properties in collusion with accused Nos.4 and 5 when the complainant-Company entrusted the said valuation to APITCO and MITCON. It is also the specific case of the prosecution that after availing loan accused No.1-Company, represented by accused Nos.2 and 3 have not repaid the said loan and as such it has been classified as loan amount under NPA. It is the contention of the complainant-Company that the valuation of the market value assessed by APITCO in respect of the properties is Rs.257.88 Crores and in respect of the market valuation made by MITCON is 253.82 Crores, but subsequently when the said valuation was got done with M/s.Spoorthi Consultancy by the complainant-Company, the distress sale value is Rs.11.05 Crores as against Rs.257.88 Crores valued by APITCO and Rs.23.98 Crores when it is assessed by M/s.Lopa Verma & Associates in respect of the properties which have been assessed by MITCON as against Rs.253.82 Cores. On plain reading of the said records, the valuation reports given by the APITCO and MITCON appear to be on inflated side and there is a big gap with reference to valuation that itself prima facie shows that there is some suspicion about the valuation reports given by APITCO and MITCON.
11. Taking into the aforesaid facts and circumstances, if the credibility and conduct of the petitioner is taken into consideration, that itself creates a doubt. If really the accused persons were not having any intention, then under such circumstances, such an inflated valuation ought not to have been done by those two consultancy companies. All these factors prima facie disclose that accused Nos.2 and 3 on behalf of accused No.1-Company conspired with accused Nos.4 and 5 and have obtained inflated valuation report for the purpose of collateral security against the said loan. Though it is contended by the learned counsel for the petitioner that the said issue is civil in nature and the petitioner-accused No.2 is not able to pay the loan amount and the bank ought to have filed the case for recovery of the said amount, in case of economic offences, they constitute a separate class and need to be visited with different approach in the matter of bail. Even the Hon’ble Apex Court has viewed such type of offences very seriously under the present context wherein many big shots are involved in economic offences either defrauding or playing fraud who are cheating the financial institutions wherein the public interest and money is involved. If a lenient view is taken, then the people will lose the trust and they will not come forward to invest in such institutions and thereby it is considered to be threat to the financial health of the country. This aspect has also been dealt with by the Hon’ble Apex Court in the case of Y.S.Jagan Mohan Reddy Vs. Central Bureau of Investigation (quoted supra). At paragraphs-34, 35 and 36, it has been observed as under:-
“34. Economic offences constitute a class apart and need to be visited with a different approach in the matter of bail. The economic offences having deep-rooted conspiracies and involving huge loss of public funds need to be viewed seriously and considered as grave offences affecting the economy of the country as a whole and thereby posing serious threat to the financial health of the country.
35. While granting bail, the court has to keep in mind the nature of accusations, the nature of evidence in support thereof, the severity of the punishment which conviction will entail, the character of the accused, circumstances which are peculiar to the accused, reasonable possibility of securing the presence of the accused at the trial, reasonable apprehension of the witnesses being tampered with, the larger interests of the public/State and other similar considerations.
36.Taking note of all these facts and the huge magnitude of the case and also the request of CBI asking for further time for completion of the investigation in filing the charge-sheet(s), without expressing any opinion on the merits, we are of the opinion that the release of the appellant at this stage may hamper the investigation. However, we direct CBI to complete the investigation and file the charge-sheet(s) within a period of 4 months from today. Thereafter, as observed in the earlier order dated 5.10.2012, the appellant is free to renew his prayer for bail before the trial court and if any such petition is filed, the trial court is free to consider the prayer for bail independently on its own merits without being influenced by dismissal of the present appeal.”
12. The said proposition of law has been recently upheld by the Hon’ble Apex Court in the case of State of Bihar & another Vs. Amit Kumar, alias Bacha Rai reported in AIR 2017 SC 2487, wherein at paragraph- 14, it has been observed as under:-
“10. We are conscious of the fact that the accused is charged with economic offences of huge magnitude and is alleged to be the kingpin/ring leader. Further it is alleged that the respondent-accused is involved in tampering with the answer-sheets by illegal means and interfering with the examination system of Bihar Intermediate Examination 2016 and thereby securing top ranks, for his daughter and other students of Vishnu Rai College, in the said examination. During the investigation when a search team raided his place various documents relating to property and land to the tune of Rs.2.57 Cr. were recovered besides Rs.20 lakhs in cash. In addition to this, allegedly a large number of written answer-sheets of various students, letter heads and rubber stamps of several authorities, admit cards, illegal fire arm etc. were found which establishes a prima facie case against the respondent. The allegations against the respondent are very serious in nature, which are reflected from the excerpts of the case dairy. We are also conscious of the fact that the offences alleged, if proved, may jeopardize the credibility of the education system of State of Bihar.”
13. Taking into note of the ratio laid down in the aforesaid decisions and the facts of the case on hand, I am of the considered opinion that the petitioner-accused No.2 has not made out any case so as to grant him anticipatory bail, that too when he has remained silent in spite of service of repeated notices by the respondent- CBI.
With the aforesaid observations, petition is dismissed. However, liberty is given to the petitioner if he surrenders before the Investigating Agency and if he is apprehended and files a regular bail application, then under such circumstances, the trial Court without considering the aforesaid observations made by me, shall dispose of the said application in accordance with law.
*ck/-
Sd/- JUDGE