Orissa High Court
Phanendra Kumar Geddam vs Republic Of India ....... Opp. Party on 13 May, 2019
Equivalent citations: AIRONLINE 2019 ORI 66
Author: S.K. Sahoo
Bench: S.K. Sahoo
IN THE HIGH COURT OF ORISSA, CUTTACK
BLAPL NO. 2061 Of 2019
An application under section 439 of the Code of Criminal Procedure
in connection with R.C. Case No. 32(S) of 2014 corresponding to
SPE Case No. 27 of 2014 pending on the file of Special C.J.M.
(C.B.I.), Bhubaneswar.
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Phanendra Kumar Geddam ....... Petitioner
-Versus-
Republic of India ....... Opp. Party
For Petitioner: - Mr. G. Nageswara Rao
Mahes Das, A.K. Sahoo
For Opp. party: - Mr. Anup Kumar Bose
(Asst. Solicitor General)
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P R E S E N T:
THE HONOURABLE MR. JUSTICE S.K. SAHOO
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Date of Order: 13.05.2019
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S. K. SAHOO, J. The petitioner Phanendra Kumar Geddam who is an
accused in R.C. Case No. 32(S) of 2014 corresponding to SPE Case
No. 27 of 2014 pending on the file of Special C.J.M. (C.B.I.),
Bhubaneswar for offences punishable under sections 120-B, 420,
409 of the Indian Penal Code read with sections 4, 5 and 6 of the
Prize Chits and Money Circulation Schemes (Banning) Act, 1978
(hereafter '1978 Act'), has filed this application under section 439 of
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Code of Criminal Procedure seeking for bail as his bail application
has been rejected by the learned Sessions Judge, Khurda at
Bhubaneswar in Bail Application No.1544 of 2018 vide order dated
04.01.2019.
2. The present case was instituted by treating the First
Information Report of Padampur P.S. Case No. 128 of 2012 as
original F.I.R. of R.C. Case No. 32(S) of 2014 in pursuance of the
order dated 09.05.2014 of the Hon'ble Supreme Court of India
passed in W.P. (Civil) No.401 of 2013 filed by Shri Subrata Chattoraj
and W.P. (Civil) No.413 of 2013 filed by Shri Alok Jena.
The prosecution case, as per the F.I.R. lodged by
Susanta Kumar Sahu, S/o:- Bipin Bihari Sahu of Padma Pur, Ward
No.2, Bijay Nagar is that he and his brother Srikanta Kumar Sahu
and two relatives Ramnath Sahu and Khireswar Sahu were cheated
with a sum of Rs.11,00,000/- (rupees eleven lakhs only) by the
three accused persons, namely, Subash Chandra @ Subala Sahu,
Bhakta Charan Sahu and Bijay Kumar Sahu on the assurance that
invested money in the Wetell Group of Companies (hereafter
'Wetell') would be doubled within twenty months.
The investigation revealed that the Wetell was
incorporated with Registrar of Companies, Hyderabad, Andhra
Pradesh on 20.05.2004. The name of the company was changed
once in 2008 and twice in 2010. The registered office of Wetell was
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located initially at Hyderabad and subsequently changed to Banjara
Hills, Andhra Pradesh. The petitioner was one of the Directors of
Wetell from 23.11.2004 to 01.06.2010 which consists of six
companies. Funds were raised from public illegally and
unauthorizedly with false promise of high return. A large number of
agents were recruited in Bhubaneswar, Jharsuguda, Sambalpur,
Bargarh, Ganjam and Gajapati Districts to mobilize money/deposits
from the public and meetings were conducted with the agents at
Jharsuguda and the agents were motivated to collect money for the
company by assuring them payment of commission up to three
percent. The petitioner and some other Directors were instrumental
in the day-to-day functioning of the company and mobilizing
deposits from the gullible public with false promise of unusual high
return i.e. @ ten percent per month on the investment amount by
issuing Memorandum of Understanding (MOU). In order to build
confidence among the investors and agents, undated advance
cheque equal to investment amount was given to the investors with
Memorandum of Understanding under the signatures of the
petitioner and another Director and the cheques were also signed by
the petitioner and other authorised signatories. The investigation
further revealed that the petitioner and other Directors fraudulently
and dishonestly collected an amount of Rs.2,16,44,250/- (rupees
two crores sixteen lakhs forty four thousand two hundred fifty only)
from various investors of Odisha. The promise of giving interest @
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sixty percent annually to the depositors was not practically viable.
Wetell was not registered with SEBI or authorised by RBI to collect
deposits/investment from the public and therefore, such collection
was unauthorized as well as illegal. Investigation further revealed
that Wetell collected Rs.2,08,44,250/- from depositors and promise
to pay Rs.4,16,88,500/- but the depositors were paid only to the
tune of Rs.29,28,000/- as monthly return in order to build
confidence among the depositors falsely about the securities of their
deposits and accordingly, Wetell and its Directors misappropriated to
the tune of Rs.1,80,19,250/- and cheated the depositors to the tune
of Rs.3,87,60,500/-. On 31.01.2017, charge sheet was submitted
against the petitioner as well as other Directors and Wetell keeping
further investigation open under section 173(8) of Cr.P.C. to look
into larger criminal conspiracy, money trail, role of regulatory
agencies, role of other Directors as well as sister companies.
3. Mr. G. Nageswara Rao, learned counsel appearing for the
petitioner argued that the so-called money trailing to the bank
accounts of the petitioner to the tune of Rs.25,48,450/- as
contended by the C.B.I. was nothing but the salary of the petitioner.
The petitioner resigned as a Director of the company since
25.05.2010 and therefore, by the time of lodging F.I.R. on
20.08.2012, the petitioner was not attached to the company. It is
further contended that the passport of the petitioner has already
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been seized by the C.B.I. Authorities and there is no chance of
absconding of the petitioner and therefore, the bail application may
be favourably considered.
Mr. Anup Kumar Bose, learned Assistant Solicitor
General, on the other hand, contended that a sum of Rs.25,48,450/-
was transferred from the accounts of the accused company to the
personal account of the petitioner on different dates by different
modes and after submission of first charge sheet, it was found that
there has been further transfer of money to the tune of
Rs.14,30,000/- from the accounts of the accused company to the
personal account of the petitioner and therefore, the total amount
transferred to the personal account of the petitioner was
Rs.39,78,450/- which was withdrawn by the petitioner during
regular intervals and negligible credit balance of Rs.475/- is only
available in the three personal bank accounts of the petitioner as on
30.09.2017. It is contended that the first charge sheet was
submitted on 31.01.2017 showing the petitioner as an absconder
and the petitioner was arrested with much difficulty at Hyderabad on
his return to India from Uganda via Muscat and his passport was
seized by the C.B.I. which has been returned to the Regional
Passport Office, Hyderabad for impounding and the Regional
Passport Office has already impounded the passport of the
petitioner. It is contended that even though the total amount
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transferred as ascertained till date was about rupees forty lakhs but
the vital role played by the petitioner during his directorship from
23.11.2004 till 01.06.2010 in connivance with the other Directors
enabled Wetell to collect huge amount of money from gullible
investors unauthorizedly and illegally solely for the purpose of
cheating and therefore, at this stage it would not be proper to
release the petitioner on bail.
4. Before proceeding further to deal with the factual aspects
of the case, it would be better to discuss the ratio laid down by the
Hon'ble Supreme Court and by this Court relating the bail in
economic offences.
In case of Y.S. Jagan Mohan Reddy -Vrs.- CBI
reported in (2013) 55 Orissa Criminal Report (SC) 825, it is
held as follows:-
"15. 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.
16. 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
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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 public/State
and other similar considerations."
In case of State of Gujarat -Vrs.- Mohan Lal Jitamal
Torwal reported in A.I.R. 1987 S.C. 1321, it is held as follows:-
"5.........The entire community is aggrieved if the
economic offenders who ruin the economy of the
State are not brought to book. A murder may be
committed in the heat of moment upon passions
being aroused. An economic offence is committed
with cool calculation and deliberate design with an
eye on personal profit regardless of the
consequence to the Community. A disregard for the
interest of the community can be manifested only at
the cost of forfeiting the trust and faith of the
Community in the system to administer justice in an
even handed manner without fear of criticism from
the quarters which view white colour crimes with a
permissive eye unmindful of the damage done to
the National Economy and National Interest".
In the case of Nimmagadda Prasad -Vrs.- C.B.I.
reported in (2013) 55 Orissa Criminal Reports (SC) 833, it was
held that economic offences have serious repercussions on the
development of the country as a whole. Such offences constitute a
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class apart and need to be visited with a different approach in the
matter of bail. The economic offence having deep rooted
conspiracies and involving huge loss of public funds needs to be
viewed seriously and considered as a grave offence affecting the
economy of the country as a whole and thereby posing serious
threat to the financial health of the country.
In the case of Ram Chandra Hansdah -Vrs.- Republic
of India reported in (2015) 62 Orissa Criminal Reports 219, it
is held that economic offences are considered grave offences as it
affects the economy of the country as a whole and such offences
having deep rooted conspiracy and involving huge loss of public fund
are to be viewed seriously. Economic offence is committed with cool
calculation and deliberate design solely with an eye on personal
profit regardless of the consequence to the community. In such type
of offences, while granting bail, the Court has to keep in mind, inter
alia, the larger interest of public and State. The nature and
seriousness of an economic offence and its impact on the society are
always important considerations in such a case and those aspects
must squarely be dealt with by the Court while passing an order on
bail applications.
5. Keeping in view the aforesaid settled principle of law and
adverting to the contentions raised by the learned counsel for the
respective parties and on a careful scrutiny of the case records, it
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appears that the petitioner was the Director of Wetell for a period of
about five and half years and during such period without any
approval of the regulatory authorities like RBI and SEBI, collections
were made from the investors unauthorizedly and illegally giving
false assurance that the investment money in Wetell would be
doubled within twenty months. Memorandum of Understanding
under the signature of the petitioner as well as undated cheques
under the signatures of the petitioner were issued to the depositors
to build confidence and in order to mobilize the business with the
investors, the agents were assured commission up to three percent
on the collected money. The amount of misappropriation of Wetell
ascertained so far was to the tune of Rs.1,18,19,250/- which is likely
to go up during course of further investigation. What amount has
been transferred to the three bank accounts of the petitioner from
the company's account were not the sole criteria but the vital role
played by the petitioner as a Director of Wetell for a number of years
is crucial.
6. Law is well settled that while granting bail, the Court has
to keep in mind the nature of accusation, the nature of evidence in
support thereof, the severity of the punishment which conviction will
entail, the character of the accused, the circumstances which are
peculiar to the accused, reasonable possibility of securing the
presence of the accused at the trial, reasonable apprehension of the
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witnesses being tampered with, the larger interests of the
public/State and other similar considerations. It has also to be kept
in mind that for the purpose of granting bail, the Legislature has
used the words "reasonable grounds for believing" instead of "the
evidence" which means the Court dealing with the grant of bail can
only satisfy itself as to whether there is a genuine case against the
accused and that the prosecution will be able to produce prima facie
evidence in support of the charge. It is not expected, at this stage,
to have the evidence establishing the guilt of the accused beyond
reasonable doubt. (Ref:- C.B.I. -Vrs.- V. Vijay Sai Reddy
reported in (2013) 7 Supreme Court Cases 452).
7. After careful consideration of the contentions raised by
the learned counsel for the respective parties and taking into
account the nature and gravity of the accusation, strong prima facie
case available against the petitioner to show his involvement in the
economic offence committed by the Wetell Group of Companies, the
role played by the petitioner as a Director of the Company, the
manner in which huge amount of money was collected from the
investors unauthorizedly and illegally, the conduct of the petitioner
in absconding during course of investigation, likelihood of tampering
with the evidence when further investigation is under progress and
above all in the larger interest of society, I am not inclined to release
the petitioner on bail.
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Accordingly, the bail application sans merit and hence
stands rejected.
Urgent certified copy of this order be granted on proper
application.
...............................
S.K. Sahoo, J.
Orissa High Court, Cuttack The 13th May 2019/ RKM