The court held that the arrest and custodial interrogation of the accused were necessary for effective investigation and successful prosecution under the Banning of Unregulated Deposit Schemes Act, 2019.

Headnote:
Bail - Anticipatory Bail - Sections 406, 420 IPC, Sections 3, 21(2), (3), 5, 23, 25(1) Banning of Unregulated Deposit Schemes Act, 2019 - The court dismissed the anticipatory bail applications, finding that the accused were involved in a large-scale scam of illegally collecting deposits without a license, and that their arrest and custodial interrogation were necessary for effective investigation and successful prosecution under the Banning of Unregulated Deposit Schemes Act, 2019.
Fact of the Case:

The accused, who were the Managing Director and Directors of M/s. S.N. Chitty Fund and Bankers, were alleged to have illegally collected deposits from various individuals by offering high interest rates, without having a license from the Reserve Bank of India to run a finance business. They were accused of committing offenses under Sections 406 (criminal breach of trust) and 420 (cheating) of the Indian Penal Code, as well as under the Banning of Unregulated Deposit Schemes Act, 2019.
Finding of the Court:

The court found that the accused were involved in a large-scale scam of illegally collecting deposits without a license, and that their arrest and custodial interrogation were necessary for effective investigation and successful prosecution under the Banning of Unregulated Deposit Schemes Act, 2019. The court dismissed the anticipatory bail applications, directing the petitioners to surrender before the investigating officer forthwith to facilitate the investigation.
Issues: Whether the accused should be granted anticipatory bail in the cases filed against them for offenses under Sections 406 and 420 of the Indian Penal Code, and under the Banning of Unregulated Deposit Schemes Act, 2019.
Ratio Decidendi: The court held that the grant of anticipatory bail would be fatal to the investigation, as the arrest and custodial interrogation of the accused were necessary to find out the manner in which the huge amounts were misappropriated and to collect details regarding the amounts misappropriated and their use, in order to proceed under the Banning of Unregulated Deposit Schemes Act, 2019 and to effectuate the investigation.
Final Decision: The court dismissed the anticipatory bail applications, directing the petitioners to surrender before the investigating officer forthwith to facilitate the investigation.

ORDER

[Bail Appl. Nos.10271/2023, 10275/2023, 10276/2023, 10277/2023, 10293/2023, 10297/2023, 10304/2023, 10305/2023, 10309/2023, 10311/2023 & 10312/2023]

Dated this the 4th day of June, 2024 1. B.A. Nos.10309/2023 & 10293/2023 i) B.A. No.10309/2023 is an application for anticipatory bail filed by the 1st accused in Crime No.336/2023 of Thiruvalla Police Station. B.A. No.10293/2023 is also filed seeking anticipatory bail and the petitioners are accused Nos.3 to 5 in the same crime. ii) The prosecution allegation in this crime is that the 1st accused being the Managing Director and the other accused who are the Directors of M/S. S.N. Chitty Fund and Bankers offered 18% interest (Rs.1,500/- per month for Rs.1 lakh) and on the said offer jointly collected Rs.7 lakhs (Rs.4 lakh from the husband and Rs.3 lakh from the wife) in between 26.05.2019 to 17.06.2019 on assuring them that M/S. S.N. Chitty Fund and Bankers obtained licence from Reserve Bank to run finance business after suppressing the fact that they had no licence to do financial business. Accordingly, they illegally collected the above said amount and they failed to give interest along with the principal amount as agreed and thereby committed breach of trust as well as cheating punishable under Sections 406 and 420 of the Indian Penal Code ('IPC' for short hereinafter) read with 34 IPC. They also committed offences punishable under Sections Section 3 r/w 21(2), (3), 5 r/w 23, 25(1) of the Banning of Unregulated Deposit Schemes Act, 2019 (hereinafter referred to as 'BUDS Act).

2. B.A. Nos.10277/2023 & 10305/2023 i) B.A. No.10277/2023 is an application for anticipatory bail filed by the 1st accused in Crime No.234/2023 of Thiruvalla Police Station. B.A. No.10305/2023 is also filed seeking anticipatory bail and the petitioners are accused Nos.3 to 5 in the same crime. ii) The prosecution allegation in this crime is that the 1st accused, being the Managing Director and the other accused who are the Directors of M/s. S.N. Chitty Fund and Bankers jointly collected Rs.13,20,000/- from the defacto complainant offering 12% interest on assuring them that M/S. S.N. Chitty Fund and Bankers obtained licence from Reserve Bank to run finance business after suppressing the fact that they had no licence to do financial business. Accordingly, they illegally collected the above said amount and they failed to give interest along with the principal amount as agreed and thereby committed breach of trust as well as cheating punishable under Sections 406 and 420 of the Indian Penal Code (' IPC ' for short hereinafter) read with 34 . They also committed offences punishable under Sections Section 3 r/w 21(2),(3), 5 r/w 23, 25(1) of the Banning of Unregulated Deposit Schemes Act, 2019 (hereinafter referred to as 'BUDS Act).

3. B.A. Nos.10304/2023 & 10271/2023 i) B.A. No.10304/2023 is an application for anticipatory bail filed by the 1st accused in Crime No.336/2023 of Thiruvalla Police Station. B.A. No.10271/2023 is also filed seeking anticipatory bail and the petitioners are accused Nos.3 to 5 in the same crime. ii) The prosecution allegation in this crime is that the 1st accused, being the Managing Director and the other accused who are the Directors of M/s. S.N. Chitty Fund and Bankers jointly collected Rs.15,00,000/- from the defacto complainant offering 12% interest from 01.10.2017 to 23.10.2019 on assuring them that M/S. S.N. Chitty Fund and Bankers obtained licence from Reserve Bank to run finance business after suppressing the fact that they had no licence to do financial business. Accordingly, they illegally collected the above said amount and they failed to give interest along with the principal amount as agreed and thereby committed breach of trust as well as cheating punishable under Sections 406 and 420 of the Indian Penal Code (' IPC ' for short hereinafter) read with 34 . They also committed offences punishable under Sections Section 3 r/w 21(2), (3), 5 r/w 23, 25(1) of the Banning

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2024 Supreme(Online)(KER) 30474

HIGH COURT OF KERALAA. BADHARUDEEN, JK.R.SADASIVAN, – AppellantVersusSTATE OF KERALA, – RespondentBail Appl. 10311/2023

The court held that the arrest and custodial interrogation of the accused were necessary for effective investigation and successful prosecution under the Banning of Unregulated Deposit Schemes Act, 2019.

HIGH COURT OF KERALA
A. BADHARUDEEN, J
K.R.SADASIVAN, – Appellant
Versus
STATE OF KERALA, – Respondent
Bail Appl. 10311/2023