Important point
Supreme Court should not ordinarily save in exceptional cases, interfere with orders granting or refusing bail by High Court.

Headnote:Criminal Procedure Code, 1973—Section 439—Bail—Bank scam—Fraudulent transactions involving appellants took place which aggregated to more than Rs. 50 crores—Appellants were the Directors of bank—Charge sheet for offences u/s 409, 465, 466, 467, 468, 470, 471, 406, 420 and 120-B IPC was filed—Appellants were in custody since 24.10.2002 and even when charge-sheet had been filed on 22.1.2003, charges had not been framed and prosecution had cited 150 witnesses—Cases of appellants could not be compared with others who had been released on bail—Supreme Court should not ordinarily, save in exceptional cases, interfere with order granting or refusing bail by High Court—Having regard to huge amounts involved in the systematic fraud, there was danger of appellant absconding, if released on bail or attempting to tamper with evidence by pressurising witnesses—No reason to interfere with order refusing bail.
Held : The cases of appellants cannot be compared with the others who have been released on bail. The cases of Appellants are more serious than the case of other Directors (except the case of Chiman Sathi). Further, the State has pointed out that one or two Directors of the Bank were released on the ground of old age and medical problems; and other Directors were released on bail after they repaid their entire dues. It is also submitted that in regard to three sons of Chiman Sathi (the then Managing Director of the Bank), the High Court cancelled the bail for not honouring the undertaking and repaying the dues. The case of Rajendra Banthia (share-broker) is different and he apparently was not directly involved in defrauding the Bank. A Constitution Bench of this Court in Bihar Legal Support Society v. Chief Justice of India & Anr. [1986(4) SCC 767] has held that this Court should not ordinarily, save in exceptional cases, interfere with orders granting or refusing bail by the High Court because the High Court should normally be the final arbiter in such matters. The crime in which the petitioners are involved is very serious involving a conspiracy to cheat and defraud public institutions in a systematic manner and the punishment is likely to be severe in the event of conviction. The High Court has recorded a finding that the material shows that the petitioners are prima facie involved in the offence. Large portion of the amount advanced to Bhavika Creations (about Rs. 7.5 crores) has allegedly been diverted by appellant No. 1 for acquiring shares in Nedungadi Bank Ltd. As a result of the scam, the Bank is under liquidation from 31.7.2003. On account of the fraudulent activities of the then Managing Director and Appellant No. 1 (the then Director) and Appellants Nos. 2 and 3, nearly Rs. 23 crores is due from Bhavika Creations alone. Having regard to huge amounts involved in the systematic fraud, there is a danger of the appellants absconding, if released on bail, or attempting to tamper with the evidence by pressurizing witnesses. In the circumstances, we do not find any reason to interfere with the order refusing bail as grant of the relief sought may result in thwarting the course of justice. (Paras 6 and 7)

Judgment

Raveendran, J.—Leave granted. The appellants have challenged the order dated 15.12.2003 passed by the High Court of Gujarat at Ahmedabad, rejecting their application for bail filed under Section 439 of the Code of Criminal Procedure.

2. First appellant was one of the Directors of M/s Charotar Nagarik Sahakari Bank Limited [for short ‘the Bank’]. He became a shareholder of the bank on 18.10.99 and was appointed as a Director on the same day. It is alleged that one Chiman Sathi, Managing Director of the said bank, first appellant and other Directors of the bank siphoned off the funds of the bank by bogus loans and fictitious letters of credit in the name of their friends, relatives, associates and name-lender companies either without any security or with wholly inadequate security.

3. The wives of appellant Nos. 1 and 2 along with appellant No. 3 are the Directors of M/s Bhavika Creations which is one of the beneficiaries of the illegal and collusive loans/credit facilities given by the Bank. It is alleged that appellant Nos. 2 & 3 actively assisted and supported appellant No. 1 in several fraudulent transactions in the name of Bhavika Creations, Jayraj Multimedia, Hindustan Earthmovers Pvt. Ltd., Rahul Industries, Innovative Hydraulics (P) Ltd., Satya Sulpher (P) Ltd., Raheja Textile Industries, Bhanu Sulpher Industries Ltd., Trigon Jinco Co. etc. The State alleges that the following fraudulent transactions involving appellant Nos. 1, 2 & 3 and Chiman Sathi, which aggregate to more than Rs. 50 crores, took place in the year 2000-01:-

S.No. Transaction Amount Name of Beneficiary

1. 4 letter of credit 10.95 Appellants Nos. 1 to 3 crores and Chiman Sathi

2. Term loan to Jayraj Multimedia, 6.47 Appellant No. 1 Vadodara crores (12.6.2000)

3. Term loan to Hindustan 3 crores Appellant No. 1 Earthmovers Pvt. Ltd. (27.6.2000)

4. Letter of credit in the name of 4.956 Appellants Nos. 1 to 3 Trigon Jinco Co. in Baroda crores Peoples Cooperative Bank Limited. (6.11.2000)

5. Discounted letter of credit in the 4.67 Appellants Nos. 1 to 3 name of Rahul Industries. crores (8.11.2000)

6. Loan given to Bhavika Creations 0.50. Appellant No. 1 and (9.11.2000) crores others

7. Discounted Letter of Credit of 4.98 Appellants Nos. 1 to 3 Innovative Hydraulics Pvt. Ltd., crores Waghodia (14.11.2000)

8. Discounted Letter of Credit 2.67 Appellants Nos. 1 to 3 (12.12.2000) crores

9. Letter of credit in discounted by 3.128 Appellants Nos. 1 to 3 Himanshu Desai and his associates crores in the name of bogus company, Satya Sulpher Pvt. Ltd., (27.12.2000)

10. Bogus letter of credit discounted 2.486 Appellants Nos. 1 to 3 by Himanshu Desai in the name of crores bogus company, Raheja Textile Industry (27.12.2000)

11. In the name of Bhanu Sulpher 2.486 Appellants Nos. 1 to 3 Industries Pvt. Ltd. crores (27.12.2000)

12. Bogus Letter of Credit in NRI 7 crores Appellants Nos. 1 to 3 account of Shri Subhash Mehta and Chiman Sathi

13. Vehicle loan to Himanshu Desai 1.4 lakhs Appellant No. 1

14. Vehicle loan to Bhavika Creations. 4 lakhs Appellants Nos. 1 to 3

It is also alleged that Chiman Sathi (Managing Director) and other Directors were involved in other fraudulent transactions relating to the Bank, which are not relevant for the purpose of this Appeal.

4. In regard to the said bank scam, the bank lodged a complaint with the Police Station, Anand Town vide Criminal No. 6 of 2002 for offences punishable under sections 409, 468 and 114 of Indian Penal Code. It is stated that the Appellants voluntarily surrendered on 24.10.2002 and are in custody even since then. On completion of investigation, a charge-sheet was filed on 22.1.2003 under sections 409, 465, 466, 467, 468, 470, 471, 406, 420 and 120-B of IPC against the Directors of the Bank.

5. It is alleged that Appellants filed Criminal Misc. Appeal Nos. 747/2000, 6/2003 and 479/2003 seeking regular bail which were rejected by the Sessions Judge, Anand on 5.4.2003, 16.5.2003 and 21.11.2003 respectively. The Appellants filed Cri

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2005 Supreme(SC) 1479

Important pointSupreme Court should not ordinarily save in exceptional cases, interfere with orders granting or refusing bail by High Court.

Cases Referred (2)

Important point
Supreme Court should not ordinarily save in exceptional cases, interfere with orders granting or refusing bail by High Court.