Karnataka High Court
Mr.G.Thiruvengadam vs State Of Karnataka on 16 February, 2023
Author: Shivashankar Amarannavar
Bench: Shivashankar Amarannavar
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CRL.A No. 236 of 2023
IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 16TH DAY OF FEBRUARY, 2023
BEFORE
THE HON'BLE MR JUSTICE SHIVASHANKAR AMARANNAVAR
CRIMINAL APPEAL No. 236 OF 2023
BETWEEN:
MR.G.THIRUVENGADAM
S/O. LATE C. GUNDAPPA
AGED ABOUT 77 YEARS
RESIDING AT FLAT No.1840
34TH CROSS ROAD, 10TH MAIN ROAD
BSK IIND STAGE
BANGALORE-560 070.
...APPELLANT
Digitally signed
by SANDHYA S
Location: HIGH (BY SRI GOPI N, ADVOCATE)
COURT OF
KARNATAKA AND:
STATE OF KARNATAKA
STATE BY KEMPEGOWDANAGAR P.S.
REPRESENTED BY:
PUBLIC PROSECUTOR
HON'BLE HIGH COURT OF KARNATAKA
BENGALURU - 560 001.
...RESPONDENT
(BY SRI S VISWA MUTHRY, HCGP)
THIS CRL.A. IS FILED U/S.16 OF KARNATAKA
PROTECTION OF INTEREST OF DEPOSITORS IN FINANCIAL
ESTABLISHMENT ACT, 2004 PRAYING TO SET ASIDE THE
ORDER PASSED IN CR.No.158/2022 ON 19.01.2023 PASSED BY
PRL. CITY CIVIL AND SESSIONS JUDGE, BANGALORE (CCH-1).
AND ETC.,
THIS APPEAL COMING ON FOR ADMISSION THIS DAY,
THE COURT DELIVERED THE FOLLOWING:
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CRL.A No. 236 of 2023
JUDGMENT
Though this matter is listed for admission, with the consent of both learned counsel, it is taken up for final disposal.
2. Accused No.5 has filed this appeal seeking setting aside the order dated 19.01.2023 passed in Cr.No.158/2022 by the Principal City Civil and Sessions Judge, Bengaluru where under the bail application of appellant/accused No.5 sought in respect of crime No.158/2022 for the offences punishable under Section 406, 417, 506, 120B of IPC, Section 9 of Karnataka Protection of Interest of Depositors in Financial Establishment Act, 2004 (KPIDFE Act) and Section 22 of Banning of Unregulated Deposit Schemes Act, 2019 (BUDS Act) came to be rejected.
3. Heard the learned counsel appearing for the appellant and learned HCGP for respondent-State. -3- CRL.A No. 236 of 2023
4. The case of the prosecution is that one Pradeep.K., S/o Ganesh Bhat has filed a complaint on 21.10.2022 stating that he is a Software Engineer at Intel Company and he is a member of Kuruhinashetti Souharda Credit Cooperative Ltd, J.P.Nagar, Bengaluru (for short 'society') and he had kept fixed deposit of Rs.60 Lakhs with the said society. It is further stated that the complainant requested the society to prematurely close the fixed deposit. However, the same has not been accepted by the officials of the society. Several other account holders of the society have invested money in the form of fixed deposits in the said society.
5. It is further stated that from 2011-2016, 2016- 2021 and 2021-2026 those persons who are elected as office bearers for the aforesaid period had lent mortgage loan and different types of loans to the borrowers and that the members of the same family were also granted loan and the society officials instead of accepting the original -4- CRL.A No. 236 of 2023 title deeds for mortgage loan, have released the loan amount only based on the photocopies of the title deeds. It is further stated that the act of the Board members of the society from 2011-2016, 2016-2021 and 2021 onwards has caused total loss of Rs.90 crores to the society as on June, 2022. Subsequent to resignation of the office bearers who were elected in 2022, Administrator has now been appointed to the said society. It is further stated though the society was able to recover part of the money lent to different account holders, the office bearers instead of distributing the aforesaid sum equally to the account holders, have distributed the same to the account holders of their blood relatives and thus, have committed the offences.
6. The complaint came to be registered in crime No.158/2022 of Kempegowda Nagar Police Station for the offence punishable under Sections 120-B, 406, 420, 417, 506 of IPC, Section 9 of KPIDFE Act and Section 22 of BUDS Act. The said crime is registered against 23 accused -5- CRL.A No. 236 of 2023 persons. Appellant/accused No.5 came to be arrested on 30.12.2022 and he is in judicial custody. He filed bail application which came to be rejected by the impugned order dated 19.01.2023 which is challenged in this appeal.
7. Learned counsel for the appellant would contend that this appellant/accused No.5 was working as Chief Executive Officer for the period between 2011-2021. He had no authority to sanction loan except for processing the loan application and it is for the Directors to pass resolution for sanctioning loan. He contends that due to the efforts put forth by this appellant/accused No.5 the society would recover more than 30 crores from the loan account which were classified as Non-Performing Assets (NPA). There is no role of appellant/accused No.5 in not returning the deposit amount to the members/customers. The society could not get the deposit made with Gururaghavendra Souharda Bank and Charan Co-operative Bank. There is no fraudulent default in repayment of deposit amount by this appellant/accused No.5. The -6- CRL.A No. 236 of 2023 Board of Directors who are responsible for sanction of loans have been granted bail in Crl.A.No.2109/2022 and connected appeals by this Court. Therefore, this appellant/accused No.5 is entitled for grant of bail on the ground of parity. More so, the appellant/accused No.5 is aged 77 years and he has undergone bypass surgery. He is not required for custodial interrogation as the Investigating Officer has took him for police custody for the purpose of interrogation for the period of 15 days. The appellant/accused No.5 is ready to co-operate in further investigation. Without considering all these aspects, learned Sessions Judge has passed the impugned order which requires interference by this Court. With this, he prayed to allow the appeal and grant bail to appellant/accused No.5.
8. Learned HCGP for respondent-State would contend that the failure to repay the amount attract Section 9 of KPIDFE Act. This appellant/accused No.5 is one of the officers of the Society along with other Board of -7- CRL.A No. 236 of 2023 Directors responsible for collecting huge deposits and non-
repayment of the deposit amount to the members/customers. This appellant/accused No.5 and
other accused have not repaid the huge amount of deposit to the members/customers and committed the offence alleged against them. The Sessions Court considering the role of this appellant/accused No.5 and as the investigation is under process has rightly rejected the bail petition. There are no grounds made out for setting aside the impugned order. With this, he prayed for dismissal of the appeal.
9. Having heard the learned counsel for the appellant and learned HCGP for respondent-State, this Court has gone through the impugned order, FIR, complaint and other materials placed before this Court.
10. This appellant/accused No.5 is working as Chief Executive Officer of the Society between 2011-2021. As per the By-law of the Society, it is the duty of the appellant/accused No.5 to process the loan application and -8- CRL.A No. 236 of 2023 place with his remarks before the Board of Directors for consideration/sanction. It is the Board of Directors who has to pass resolution either for sanctioning the loan or rejecting the same.
11. There is accusation against this appellant/accused No.5 and other accused that they have not returned the deposit amount to the members and committed offence under Section 9 of KPIDFE Act and Section 22 of BUDS Act. To attract the offence under Section 9 of KPIDFE Act, the prosecution has to establish that the accused have fraudulently defaulted in repayment of deposit on maturity along with benefit in the form of interest, bonus, profit or any other form. Even for offence under Section 4 punishable under Section 22 of BUDS Act, the prosecution has to establish fraudulent default in deposit or return of the deposit on maturity or rendering any specified service promised against such deposit. There is no allegation against the Directors of the Society for misappropriation of funds of society or use of funds for -9- CRL.A No. 236 of 2023 personal use. As per the audited balance sheet, the Co- operative Society has kept deposit to the extent of Rs.14,84,68,000/- in Guru Raghavendra Souharda Bank and Rs.11,15,00,000/- in Charan Cooperative Bank. The Co-operative Society / Directors did not repay the deposit to the members of the Society as Guru Raghavendra Souharda Bank went under loss in which the huge amount is invested in fixed deposit. There is also recovery of loan amount to the extent of Rs.15 crores within a period of 11/2 months. Therefore, at this stage, it cannot be said that the accused persons fraudulently defaulted in repayment of deposit amount. It is for the prosecution to establish the same at trial.
12. Appellant/accused No.5 is in judicial custody since 30.12.2022 and he has been taken to police custody by the Investigating Officer for a period of fifteen days. Therefore, appellant/accused No.5 is not required for custodial interrogation. The appellant/accused No.5 is aged 77 years and he has undergone bypass surgery.
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CRL.A No. 236 of 2023Appellant/accused No.5 has undertaken to co-operate in further investigation. The offences alleged against this appellant/accused No.5 are not punishable with death or imprisonment for life. Without considering all these aspects, the Sessions Judge has passed the impugned order which requires interference by this Court.
13. Hence, I proceed to pass the following:
ORDER The appeal is allowed.
The impugned order dated 19.01.2023 passed in Cr.No.158/2022 by the Principal City Civil and Sessions Judge, Bengaluru is set aside. Consequently, the appellant/accused No.5 is ordered to be released on bail in respect of crime No.158/2022 of Kempegowda P.S. subject to the following conditions:
i. Appellant/accused No.5 shall execute a personal bond for a sum of Rs.5,00,000/- (Rupees Five Lakh only) with two sureties for the likesum to the satisfaction of the trial Court.
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CRL.A No. 236 of 2023ii. Appellant/accused No.5 shall cooperate with the investigation and make himself available for interrogation whenever required.
iii. Appellant/accused No.5 shall not directly or indirectly make any inducement, threat or promise to any witness acquainted with the facts of the case so as to dissuade him from disclosing such facts to the Court or to the Police Officer.
iv. Appellant/accused No.5 shall not obstruct or hamper the Police investigation and not to play mischief with the evidence collected or yet to be collected by the Police.
The trial Court shall not be influenced by any of the observations made in this judgment at trial.
Sd/-
JUDGE SSD