Date of judgement:
27 September 2018
Bench:
Justice M. Dhandapani
Parties:
Petitioner – Murthy V.K.
Respondent – The State By The Inspector of Police, Central Crime Branch
Subject
The following is a bank fraud case, which enshrines that bail must not be granted mechanically in such cases, but upon the facts and circumstances and the magnitude of the offence.
Overview
- The Vigilance Department of the Karnataka Bank Ltd. in 2016, conducted a surprise inspection of its jewels under the jewel loan accounts. During this, they discovered that two of its customers, namely Sriram (A1) and P. Padmanabhan (A2), who are also the respondents in this case, had pledged fake gold jewels to avail loan. Upon further enquiry, they found that 325 jewel loans were granted to 180 fictitious borrowers and A1 was the mastermind behind this fraud.
- The fraud came to be estimated at around Rs.20.55 Crores. The Bank immediately made a complaint to the police, based on which a case was registered under Section 408, 420 read with Section 120B of the IPC, against both the accused. When the case was pending before the Metropolitan Magistrate, both the accused pleaded for bail, but it was rejected.
- When the matter came before the Sessions Court, the accused asserted before the Principal Sessions Judge that they are ready to settle the amount if they are released on bail. Upon this assertion, bail was granted to them. However, even after 11 months of their release, not a single payment was made by them to clear their dues. Aggrieved by this, the Bank filed a petition to the High Court under Section 439(2) CrPC for cancellation of their bail order.
- In the High Court, the respondents argued that the court should not entertain such petitions to cancel bail unless there is a violation of any condition of bail. The counsel contended that his clients had not expressly violated any conditions imposed by the Sessions Court. He believed that if his clients are out on bail, at least they can prepare and arrange the loan amount. However, if the bail is cancelled, then it will only cause problems to the petitioner because of failure to pay the loan amount.
- The counsel for the Bank submitted that 11 months have elapsed, yet the respondents have not shown any intention to repay. They further argued that since the accused has availed the loan without legitimate security and through 180 fake persons, it will not be able to recover the loan amount by the usual procedure. Hence, they prayed to the court to cancel the bail order and also grant them the liberty to attach the property of the accused to provide adequate protection to recover the dues.
Issues
- Should the bail granted to the accused be cancelled?
Legal Provisions
- Section 408 of IPC – Criminal breach of trust.
- Section 420 of IPC – Cheating and dishonestly inducing to deliver property.
- Section 120B of IPC – Punishment for criminal conspiracy.
- Section 439(2) of CrPC – Power of High Court to order the arrest of a person released on bail by the Sessions Court.
Judgement
- The High Court stated that it generally does not interfere with bail orders already passed by the lower courts unless any supervening circumstances arise for cancellation. It also said that only if bail is cancelled and proper investigation is carried out, the innocent public money can be recovered from the respondents.
- The Supreme Court in Dolat Ram V. The State of Haryana had held that bail should not be cancelled in a mechanical manner, without considering whether any supervening circumstances have rendered it no longer conducive to a fair trial. Also, in Prakash Kadam and Ors V. Ramprasad Vishwanath Gupta, it was observed that considerations for cancellation of bail are different from the consideration for the grant of bail.
- The court opined that there is no absolute rule that once bail is granted to the accused, it shall be cancelled only if there is a likelihood of misuse of that bail. It is an integral element but various other factors have to be considered depending upon the facts and circumstances. Economic offences have deep-rooted conspiracies and involve huge losses to the public funds. Hence, it ought to be viewed seriously and considered a grave offence.
- Keeping in mind that the offence was committed by the accused by a cool calculation and deliberate design with an eye on personal profit and the fact that such bank fraud scandals are increasing at an alarming rate, the court believed it would be prudent to cancel the bail granted to the respondents, and ordered the same.
- In addition, it also directed the Deputy Commissioner of Police, Chennai to grant proper police protection to the Bank Officials for taking appropriate steps to recover the outstanding dues by searching and attaching the property, that is illegally acquired by the respondents with the fraud money.
Conclusion
Rama Narang V. Ramesh Narang is a landmark judgement in which it was held that it is imperative to punish those people who are guilty of deliberately disregarding the orders of the court in a clandestine manner so that the sanctity of the court is maintained.
In the last few years, white-collar crimes have increased. These offences have serious repercussions on the economic health and structure of the country. As a result, the wrongdoers must be punished accordingly to have a deterrent effect.
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