Bombay High Court
Avinash Nivritti Bhosale S/O Late ... vs Central Bureau Of Investigation And Anr on 17 May, 2024
Author: N. J. Jamadar
Bench: N. J. Jamadar
2024:BHC-AS:22497
1-BA2383-2023-.DOC
Santosh
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
CRIMINAL APPELLATE JURISDICTION
BAIL APPLICATION NO. 2383 OF 2023
Avinash Nivritti Bhosale s/o Late Nivritti
Ganpati Bhosale ...Applicant
Versus
Central Bureau of Investigation and anr. ...Respondents
Mr. Ashok Mundargi, Senior Advocate, a/w Abad Ponda,
Senior Advocate, Mihir Gheewala, Veerdhawal
Deshmukh, Dhawal Mehta, Abinash Pradhan, Garima
Agrawal and Yash Dedhia, i/b Wadia Ghandy & Co.,,
for the Applicant.
Mr. A. M. Chimalker, Special PP, a/w Tusshar C. Nirbhavne
and Drushti Gala, for the CBI/Respondent No.1.
Mr. Tanveer Khan, APP for the State/Respondent No.2.
CORAM: N. J. JAMADAR, J.
Reserved On: 8th APRIL, 2024
Pronounced On: 17th MAY, 2024
ORDER:-
1. The applicant, who is arraigned in FIR/RC No.219 2020 EOOO4, registered with CBI/EO-I, New Delhi, for the offences punishable under Sections 120B, 409 and 420 of the Indian Penal Code, 1860 ("the Penal Code") and Sections 7, 12 and 13(2) read with Section 13(1)(d) of the Prevention of Corruption Act, 1988 ("PC Act, 1988"), has preferred this application to enlarge him on bail.
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2. The background facts necessary for the determination of this application can be stated as under:
(a) Central Bureau of Investigation (CBI) - respondent No.1 registered FIR No.RC219 2020 E0004 against Rana Kapoor (A8), the then CEO of YES Bank Ltd., and others for the offences punishable under Sections 120B and 420 of the Penal Code and Sections 7, 12, 13(2) read with Section 13(1)(d) of the PC Act, 1988 with the allegations that reliable source information was received that during the year 2018 - 2019 Rana Kapoor (A8) entered into a criminal conspiracy with Kapil Wadhwan (A2), the then promoter of Diwan Housing Finance Ltd. (DHFL), for extending financial assistance to DHFL by YES Bank for which substantial unjust benefit in the form of bribe would enure to Rana Kapoor (A8).
(b) The substance of the allegation was that in April, 2018 YES Bank had disbursed loan worth Rs.4,733/- Crore to DHFL. Out of the said amount of Rs.4,733/- Crore, inter alia, a sum of Rs.750/- Crore was transferred to M/s. RKW Developers an entity of Kapil Wadhwan (A2) and sum of Rs.600/- Crores was transferred to M/s. DOIT Urban Ventures (India) Pvt. Ltd., a wholly owned entity of Kapoor family.
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(c) Post completion of investigation, initial charge-sheet came to be lodged against eight accused. Further investigation was underway and resulted in filing of the first supplementary charge-sheet on 20th August, 2021. During the course of further investigation the complicity of the applicant (A21) was revealed. Second supplementary charge-sheet was filed on 27th June, 2022. However, the applicant was not arrayed as an accused in those charge-sheets. In the third supplementary charge-sheet filed by CBI on 25th July, 2022, the applicant was arrayed as an accused.
(d) The gravamen of indictment against the applicant in the third supplementary charge-sheet can be summarised as under:
(i) On and after 13th April, 2018, YES Bank invested a total amount of Rs.4,733/- Crore in DHFL vide masala bonds, non-convertible debentures and loans. Out of the said amount, DHFL transferred amounts to Radius Group of Companies owned and managed by Sajay Rajkumar Chhabariaa (A15), Avinash Bhosale Group of Companies, owned and managed by the applicant, and M/s. DOIT Urban Ventures. Out of the said amount of Rs.4,733/- Crore allegedly fraudulently disbursed by 3/33 1-BA2383-2023-.DOC YES Bank to DHFL, the applicant's group fraudulently received a sum of Rs.569.22 Crores.
(ii) For the sake of convenience and clarity the amounts allegedly received by the applicant are tabulated as under:
Sr.No. Mode of Receipt of Name of Name of Amount Funds Company Beneficiary Received Disbursing Company of the Rs.
the Funds Applicant (In Crores)
1. Funds received a) REDPL a) Nibodh 317.4
from Radius Group b) REPPL Realty
Concerns as c) Radius
b) ABIL Dairy
repayment of NCD's Summer
LLC
Developers
Pvt. Ltd.
2. Funds received a) DHFL a) Metropolis 183
from DHFL as Hotels
Loan/Inter
b) ABIL
Corporate (ICD)
Infraprojects
(without any
Pvt. Ltd.
appraisal or
security)
3. Funds received as a) DHFL a) Avinash 68.82
consultancy fees for Bhosale Group
project evaluations
b) ABIL
(Commissions/Kick
Hospitality Pvt.
backs)
Ltd.
c) Arindam
Developers LLP
d) Skylark
Buildcon Pvt.
Ltd.
(iii) With regard to the first component of Rs.317.4 Crores received from Radius Group of Companies, it is alleged an amount of Rs.292.4 Crore was credited to the account of Nibodh Realty LLP and Rs.25/- Crore was credited to ABIL Dairy LLP.4/33
1-BA2383-2023-.DOC The sum of Rs.292.4 Crores was apparently paid towards repayment of incorporate deposits (ICDS). However those investments carried a high component of interest. There was an unusual component of premium payable by Radius Group to the applicant's group. Resultanlty, Sanjay Chhabariaa (A15) had paid almost three times the funds received by him from the applicant and yet the principal amount to the extent of Rs.75/- crore was shown outstanding.
(iv) Investigation revealed that Sanjay Chhabariaa (A15) deliberately and with intent to deceive, withheld the details of the payment due to the applicant's group. The applicant was allegedly aware that part of the loan sanctioned by DHFL to Radius Group was to be utilized by Sanjay Chhabariaa (A15) for paying the applicant's companies yet a farce of the loan having been sanctioned to clear the liabilities owed to YES Bank was made.
(v) With regard to the second component Rs.183 Crores, it is alleged, a sum of Rs.43 Crores was transferred to ABIL Infraproject Pvt. Ltd. on 12th April, 2018 and another sum of Rs.140 Crores to Metropolis Hotels on 15th May, 2018 as and by way of loan. Neither loan applications were submitted by the group companies nor there was any appriasal done by DHFL 5/33 1-BA2383-2023-.DOC before sanctioning the said loans. Investigation revealed that Kapil Wadhwan (A2) had instructed the concerned officer to disburse those funds shortly after YES Bank had made the investment of Rs.4,733 Crores in DHFL. No security was obtained for the said loans.
(iv) With regard to the third component of Rs.68.82 Crores, it is alleged, the said amount was transferred under the garb of Consultancy Services provided by the beneficiary companies of the applicant, with regard to three projects namely; One Mahalaxmi, Avenue 54 (developed by Sanjay Chhabariaa (A15)) and a SRA, Worli Project (developed by Sudhkar Shetty of Sahana Group) when, in fact, no such services were at all provided by the applicant and his group companies. False and fabricated contracts to show that such services were to be provided thereunder, were executed in respect of one Mahalaxmi and Avenue 54 project. Intrinsic evidence of those contracts indicates that those documents were executed to give a colour of legitimate business transaction. Investigation revealed that no consultancy services were provided and those documents were executed to facilitate payment of commission to the applicant as there was no provision of payment of commission to agent/middleman in 6/33 1-BA2383-2023-.DOC DHFL for project finance loans. The applicant was also to receive commission from YES Bank. The said component of commission was also routed through Kapil Wadhwan (A2).
3. The prosecution alleges out of the aforesaid amount of Rs.569.22 Crores fraudulently paid to the applicant, a significant portion of Rs.300 crores was diverted by the applicant to acquire a property at 5 Strand, London, at GBP 92.5 Million through a SPV namely M/s. Flora Development Ltd., floated in UK, a wholly owned subsidiary of M/s. ABIL Infraproject Pvt. Ltd. The balance amount to acquire the said property was also allegedly remitted by YES Bank directly to UK.
4. Though loan of Rs.43 Crores was repaid by the applicant yet the repayment was made through diversion of DHFL Funds itself and it was nothing but an accommodation. Likewise, the second loan/ICD of Rs.140 Crores was repaid by Metropolis Hotels on 4th May, 2019, after availing a loan of Rs.165 Crores from India Bulls Commercial Credit Ltd. It is alleged the said loan amounts were repaid after the scam was unearthed.
5. The prosecution alleges public funds were siphoned off in pursuance of a criminal conspiracy by entering into camouflaged and layered transactions. The applicant had played a major part in the conspiracy to release the funds from 7/33 1-BA2383-2023-.DOC YES Bank to DHFL and from DHFL to the various entities including the companies of Sanjay Chhabariaa (A15) and the applicant. A facade of genuine transactions was created to camouflage the fraud.
6. The applicant preferred an application for bail before the learned Additional Sessions Judge. By an order dated 23 rd June, 2023 the Special Court designated under the PMLA Act, (to which the CBI Special Case No.830 of 2021 alongwith 965 of 2021 have been transferred), was persuaded to reject the application. Hence this application for bail.
7. Mr. Mundargi, the learned Senior Advocate for the applicant, submitted that the applicant has been implicated as a confederate in the conspiracy in respect of genuine transactions entered into by the applicant with Sanjay Chhabariaa (A15) and DHFL, much prior to the registration of the FIR. More than 90% of the transactions, which the prosecution alleges were fraudulently executed, occurred in the distant past. There is no co-relation between the said transactions and the amounts which were allegedly siphoned off from YES Bank. There is voluminous material which indicates that those were genuine business transactions on the usual terms which prevail in the commercial world. The applicant has 8/33 1-BA2383-2023-.DOC been roped in by attributing motives to those transactions on the assumption that the particular terms of the transaction were not favourable to one party.
8. At any rate, according to Mr. Mundargi, criminal conspiracy cannot be alleged qua the applicant. Since the applicant is facing prosecution for the offences under Penal Code, 1860, or for that matter abetment of the offences punishable under PC Act, 1988, the allegatons based on the alleged layering, integration and projection of the funds cannot be countenanced. The parameters which apply in a case for bail under PMLA cannot thus be imported to the facts of the instant case.
9. In elaboration of the aforesaid broad submissions, Mr. Mundargi would urge that the three components of the fraud attributed to the applicant, extracted above, if subjected to a prima facie scrutiny, fall through. With regard to the first component borne out by the transactions between Radius Group of Companies and the applicant, Mr. Mundargi laid emphasis on the fact that the term sheet recording the terms of the said transaction was executed on 27 th October, 2014, between Nibodh Realty, applicant's entity and Vishwaroop Realors Pvt. Ltd. and others representing Radius Group. A 9/33 1-BA2383-2023-.DOC formal Debenture Subscription Agreement was executed on 18th December, 2014 incorporating the terms and conditions, subject to which the Nibodh had invested huge sum with Radius. Taking the Court through the terms of the said Debenture Subscription Agreement, Mr. Mundargi would urge that the investor was entitled to a right to subscribe, debenture warrants and also interest under the said agreement, apart from the refund of the principal amount. Since the said agreement was executed in the year 2014, much before the amount was transferred by YES Bank to DHFL and DHFL to Radius Group of Companies, no element of criminality can be attributed to such purely commercial transactions.
10. Mr. Mundargi would urge, as a matter of principle, it would not matter to a lender, as to how the borrower arranges the funds to discharge the debt. The fact that Sanjay Chhabariaa (A15) had utilized the amount availed from DHFL to discharge the liability towards the applicant's group companies, therefore, does not imply that the applicant was also privy to the alleged fraud. Nonetheless, there is material to indicate that the fact that the amount to be raised by Radius Group of Companies from DHFL was to be used towards repayment of existing unsecured loans including that of Nibodh Realty LLP. 10/33
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11. The transaction of acquisition of ABIL Diary was also evidenced by a MoU which was executed on 15 th January, 2016. There are documents which indicate that the first tranche of Rs.25 Crore invested by Radius Estate was accepted as an advance. Likewise, there are documents which show that when the transaction did not materialize, the advance of Rs.50 Crore came to be adjusted.
12. As regards the second component of Rs.183/- Crores received from DHFL, Mr. Mundargi urged the entire amount was repaid much before the registration of the FIR. The endeavour of the prosecution to show the said transaction as tainted by referring to the statements of the witnesses may not advance the cause of the prosecution as the entire loan stood repaid.
13. With regard to third component of Rs.68.82 Crores, Mr. Mundargi would submit that the said transactions are also evidenced by consultancy agreements. The fact that few of the agreements are not signed on behalf of DHFL does not necessarily imply that those consultancy agreements were false and fabricated. In any event, that would be a matter for adjudication at the trial.
14. Mr. Mundargi further submitted that as the investigation is complete, further detention of the applicant would be nothing 11/33 1-BA2383-2023-.DOC but a pre-trial punishment. It was also submitted that apart from the applicant, most of the rest of the accused have been enlarged on bail, regular; default or interim, on medical grounds. The applicant has been in custody for almost two years. Having regard to the punishment which the offence under Section 420, entails, with which the applicant can, at best, be charged, the applicant deserves to be enlarged on bail.
15. In opposition to this Mr. Chimalker, the learned Special PP, stoutly submitted that the applicant and the co-accused have played with the public funds for ages by entering into convulated, structured and layered transactions. Amplifying this broad submission, Mr. Chimalker would urge that though few of the transactions might have been entered into prior to the disbursal of the amount by YES Bank to DHFL and by DHFL to Radius and other entities, yet, the proximity of the transfer of the amount to the accounts of the applicant to the disbursal of the money by YES Bank and DHFL underscores a larger conspiracy. Laying emphasis on the statements of Mr. Srinivasan Govindhan and Mr. Rajendra Mirashie, who were privy to the transactions, Mr. Chimalker would urge that monies were siphoned off throwing the norms of prudent lending and banking practices overboard. Those witnesses have given a vivid 12/33 1-BA2383-2023-.DOC account of the manner in which the money was siphoned off. Therefore, according to Mr. Chimalker the applicant cannot derive any mileage from the outwardly legitimate transactions entered into between the parties, even in the distant past.
16. Mr. Chimalker made an endeavour to counter the submissions of Mr. Mundargi with regard to three components of the alleged fraudulent transfer of money to the applicant's group entities, point by point. The corelation of the said transfer to the acquisition of property by the applicant at London was sought to be established, with reference to the documents and statements of witnesses. A stark feature of the transactions, according to Mr. Chimalker, was that the loans were sanctioned to the applicant without any loan application. There was no appraisal of the credit worthiness. No processing fee was charged. Loans were sanctioned by forwarding e-mail at the instructions of Kapil Wadhwan (A2).
17. Mr. Chimalker would urge that the transfer of a huge amount of Rs.68 Crore towards the alleged consultancy services rendered by the applicants group companies is ex facie fraudulent. Interestingly, the consultancy charges were not paid by the entities to whom those services were to be provided by the lender. This stated purpose for transfer of money was 13/33 1-BA2383-2023-.DOC clearly a camouflage for the commission received by the applicant.
18. Mr. Chimalker would further urge that the repayment of the loan availed by the applicant to DHFL does not dilute the gravity of the offences. The amounts were transferred and TDS was shown, after the fraud was exposed by an article in Cobra Post. Thus, the applicant cannot be permitted to plead innocence on the said count.
19. Mr. Chimalker lastly submitted that the magnitude of the fraud deserves to be kept in view. The fraud runs into thousands of crores of rupees. It required time and effort to unravel the scam. In these circumstances, the grounds sought to be urged on behalf of the applicant to enlarge him on bail pale in significance. Therefore, the applicant does not deserve to be released on bail. Reliance was placed on the decisions of the Supreme Court in the cases of Central Bureau of Investigation vs. Ramendu Chattopadhyay1 and Tarun Kumar vs. Assistant Director, Directorate of Enforcement2.
20. I have perused the material on record and given anxious consideration to the rival submissions canvassed across the bar. In the backdrop of the nature of the accusation and keeping in 1 (2020) 14 SCC 396.
2 2023 SCC Online SC 1486.
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1-BA2383-2023-.DOC view the well recognized principle that, at this stage, meticulous evaluation of the evidence is not warranted and the Court has to take a prima facie view of the matter on the aspect of the entitlement of the accused for bail, it may be expedient to appreciate the material arrayed against the applicant in the very order in which the facts have been narrated above.
21. First component of the alleged fraud is constituted by a transfer of a sum of Rs.317.40 Crores by Radius Group to Nibodh Reality and ABIL Dairy LLP, the entitles of the applicant. The said amount formed part of the amount of Rs.4727 crores advanced by DHFL to Radius Group.
22. The transfer of the said amount of Rs.317.40 Crores to Nibodh Reality and ABIL Dairy LLP was purportedly in pursuance of the anterior transactions between the applicant and Radius Group. On 27 October 2014, a Term Sheet was executed between Vishwaroop Realtors Pvt. Ltd., the precursor of Radius, and Nibodh Reality LLP, whereby and whereunder Nibodh Reality agreed to invest a sum of Rs.225 Crores by way of purchase of 225 debentures. Debenture Subscription Agreement dated 18 December 2014 was executed among Vishwarooop, as an Issuer, Radius Infra, as the corporate promotor, Mr. Sanjay Chhabriaa and Ritu Chhabriaa, as the 15/33 1-BA2383-2023-.DOC Promotors, and Nibodh Reality, as an investor.
23. It appears, a sum of Rs.237.50 Crores was invested by the applicant's Group with Radius Group pursuant to the aforesaid agreement. The allegation is that the Inter Corporate deposits carried high component of interest. There was an unusual component of premium payable by Radius Group to the applicant. Nearly thrice the amount received was repaid by Radius Group, and, yet, there was outstanding of Rs.75 Crores.
24. On first principles, the aforesaid documents are required to be appreciated as commercial instruments executed by businessmen. Ordinarily, it is for the parties to the commercial agreements to decide as to how the mutual rights and obligations would be governed. Prima facie, in the backdrop of the fact that the Term Sheet and Debenture Subscription Agreement were executed in the year 2014, it would be difficult to attribute dishonest intent and motive to the terms recorded in those commercial instruments, in the hindsight. The assertion that the terms of the said agreements were egregiously onerous to one and disproportionately beneficial to another, may amount to construing the commercial agreement de hors the intent of the parties which can be gathered from the terms of the said agreements. 16/33
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25. Prima facie, the charge of interest @ 18% p.a., cannot be said to be exorbitant or unusual in money market. Even Section 80 of the Negotiable Instruments Act, 1881, prescribes charge of interest @ 18% p.a., when no rate of interest is specified in a negotiable instrument. Therefore, the allegation that the return on the investment made by the applicant in the Radius Group was disproportionatly exponential, is in the nature of a value judgment.
26. The broad prosecution case is that Rs.4733 Crores were disbursed by Yes Bank to DHFL during the period 18 April 2018 to 28 September 2018. The said funds were diverted to Radius Group. It would be contextually relevant to note, out of the amount of Rs.317.40 Crores, a sum of Rs.25 Crores was repaid by Radius Group on 18 January 2018.
27. The submission of Mr. Mundargi that the said amount of Rs.25 Crores was paid much before the disbursement of the funds by the Yes Bank to DHFL, was sought to be met by Mr. Chimalkar by pointing out that on 18 January 2018, another sum of Rs.80 Crores was advanced by DHFL to Radius Group.
28. A this stage, a detailed evaluation to co-relate the transfer of funds is not warranted. The Court may proceed on the premise that Rs.317.40 Crores formed part of the amount, 17/33 1-BA2383-2023-.DOC which was received by Radius Group from DHFL. Two considerations become relevant. First, whether the amounts had fallen due when Radius Group repaid the debt to the applicant. The Debenture Subscription Agreement records that the term of the NCD's was 37 months from the date of the NCDs. In paragraph 2.6 of the prosecution complaint, a chart of the repayment made by Radius Group, including the principal, interest and redemption is furnished. As against the investment of Rs.237.50 Crores, the Applicant allegedly received Rs.520.18Crores. Out of the aforesaid amount, repayment to the tune of Rs.317.40 Crores is co-related to the various disbursal by DHFL in favour of Radius Group. Prima facie, it appears that when the said amount was repaid, the liability had accrued under the terms of the agreement.
29. Second, whether there was a disclosure of the said liability to Nibodh by Radius while availing the finance from DHFL ? The project finance application submitted on behalf of Radius in comments section, under the caption 'long term borrowings', records a sum of Rs.646.55 Crores inclusive of Rs.182.00 Crores as unsecured loans from Nibodh Reality LLP and Suraksha Reality Limited, at the rate of 18% p.a. It was further disclosed, a part of the loan of Rs.2000 Crores shall be utilized towards 18/33 1-BA2383-2023-.DOC repayment of existing unsecured loans. The 360 th Finance Committee meeting of DHFL, held on 4 July 2018, seems to have approved the terms and conditions for sanctioning the project loan aggregating to Rs.2000 Crores to Radius (Rs.1100 Crores to Radius and Rs.900 Crores to Sumer Radius).
30. Evidently, there was a disclosure of the debt owed by Radius to Nibodh and the discharge of the said debt was stated to be one of the purposes for which the finance was to be availed from DHFL. At this juncture, I do not deem it necessary to delve into the correspondence exchanged between Nibodh and Radius over the redemption of the Debentures, and the adjustment of Rs.50 Crores which was transferred by Radius to ABIL Dairy LLP by way of advance on 15 January 2016 and 28 February 2019 for the acquisition of ABIL Dairy LLP.
31. Suffice to note, there is material which, prima facie, shows that the applicant has offered an explanation for the transfer of the sum of Rs.317.40 Crores by Radius Group to Nibodh and ABIL Dairy LLP, which competes in probability with that of the prosecution version. Therefore, the allegation on the first component of fraud evidenced by the transfer of Rs.317.40 Crores is a matter which warrants adjudication at the trial.
32. The second component of alleged diversion of funds of 19/33 1-BA2383-2023-.DOC Rs.182 Crores is formed by ICD of Rs.140 Crores to Metropolis Hotel on 15 May 2018 and ICD of Rs.43 Crores to ABIL on 12 April 2018. As noted above, the allegation is that there was neither any loan application, nor any appraisal by DHFL before the disbursal. Mr. S. Govindan states, he was instructed by Kapil Wadhawan (A2) to release the funds. No security was obtained. It is further alleged, the funds were actually meant for acquisition of the property at 5 Strand, London by M/s. Flora Development Limited.
33. Mr. Mundargi urged that the allegation does not hold any ground as there was no wrongful loss to the DHFL, nor wrongful gain to the applicant. Mr. Mundargi made reference to the emails which evidence the sanction of the said advance by the CMD, DHFL and the documents which evidence the repayment of the entire amount along with the accrued interest thereon.
34. Without controverting the factum of repayment of loan, Mr. Chimalkar submitted that a sum of Rs.43 Crores which was repaid by the applicant was again through diversion of DHFL Funds. Monies were transferred by DHFL to Radius Group on 28 February 2019 and the said funds were routed through 20/33 1-BA2383-2023-.DOC Sanjay Chhabriaa (A15) to the account of the applicant. It was submitted that the ICD of Rs.140 Crores was repaid by availing a loan of Rs.165 Crores from India Bulls Commercial Pvt. Ltd., on 3 May 2019. Mr. Chimalkar would urge that these circuitous transactions indicate that the applicant and co- accused played with public funds, with impunity.
35. Once the amount which was advanced by DHFL was repaid by the applicant, it would be debatable whether there was an element of criminality in the said transactions. So far as the allegation that ICD of Rs.140 Crores was returned by borrowing funds from another entity, prima facie, it would be difficult to discern any criminality.
36. The second component of 43 Crores repaid by the applicant may be co-related to the funds which were received from Sanjay Chhabriaa (A15). That would again bring to the fore the question whether the said repayment by Radius Group was in pursuance of a genuine transaction evidenced by the financial instruments between Radius and the Applicant or that was a subterfuge ?
37. The third limb of allegation of the sum of Rs.68.82 Crores having been fraudulently paid to the group companies of the applicant by way of consultancy fees for project evaluation, 21/33 1-BA2383-2023-.DOC prima facie, carries substance. Though an endeavour was made by Mr. Mundargi to urge that the consultancy services were, in fact, provided and there are documents which evidence the said transaction, yet the attendant circumstances, especially the statement of Mr. Rajendra and Mr. Govindan Srinivasan indicate that the said amounts were allegedly paid by way of commission to the applicant for having negotiated the project finance among the parties.
38. Mr. Srinivasan categorically states that Kapil Wadhawan (A2) had instructed him to pay commission to the applicant. No commission to agents/loan arrangers was provided by DHFL in project finance loans. For retail loan, commission to the extent of 0.5% was provided to direct selling agents. However, the commissions which were directed to be paid to the applicant was much higher to the extent of upto 3% of the loan amount. Mr. Srinivasan further states that the applicant was expecting commission from Yes bank as well and an arrangement was worked out between Mr. Rana Kappor (A8) and Kapil Wadhawan (A2) wherein the commission would be paid by DHFL to the companies of the applicant, in the first instance, and Yes Bank would compensate DHFL by giving adjustment/discount etc.
39. Reliance by Mr. Mundargi on the Consultancy 22/33 1-BA2383-2023-.DOC Agreements to bolster up the submission that the payments were towards the genuine transactions is required to be appreciated in the light of the clear and categorical assertion that no consultancy service, as such, were ever provided. Prima facie, apart from these consultancy agreemetns, there does not seem any material which would lend support to the contention of Mr. Mundargi.
40. The situation which thus obtains is that the allegation of the said amount of Rs.68.82 Crores having been paid to the applicant's group companies, by way of commission, prima facie, finds adequate support in the material on record. It is in this context, the prayer for bail deserves to be considered.
41. The applicant has been in custody since two years. Investigation seems to be practically complete. The applicant and the co-accused, in this case, face prosecution for the offences punishable under Sections 420, 409, 120B of IPC and Sections 7, 12 and 13(2) read with Section 13(1)(d) of the Prevention of Corruption Act, 1988. The applicability of the offence punishable under Section 409 of IPC, qua the role attributed to the applicant, appears contentious. It is not the case that there was any entrustment of the property with the Applicant. It is trite, the same act or transaction may not 23/33 1-BA2383-2023-.DOC result in an offence of cheating and criminal breach of trust, simultaneously. Whether the applicant can be roped in for having abetted commission of offences by a public servant punishable under the Prevention of Corruption Act, 1988, would be a question which deserves determination at the trial. The offence under Section 420 of IPC entails punishment which may extend to 7 years.
42. Mr. Chimalkar was justified in canvassing a submissiont that the applicant and the co-accused have indulged in economic offences involving huge money and that factor deserves to be kept in view. In the case of Ramendu Chattopadhyay (supra), on which reliance was placed by Mr. Chimalkar, the Supreme Court observed that the Supreme Court was conscious of the need to view economic offences having a deep-rooted conspiracy and involving a huge loss of investors' money, seriously.
43. In the case of Tarun Kumar (Supra), the Supreme Court adverted to the necessity of a different approach in the matter of bail in serious economic offences. Paragraph 22 of the judgment in the said case, reads as under :
"22. Lastly, it may be noted that as held in catena of decisions, the economic offences constitute a class apart and need to be visited with a different approach in the matter of bail. The economic offences having 24/33 1-BA2383-2023-.DOC 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. Undoubtedly, economic offences have serious repercussions on the development of the country as a whole. To cite a few judgments in this regard are Y.S.Jagan Mohan Reddy V/s. Central Bureau of Investigation3, Nimmagadda Prasad V/s. Central Bureau of Investigation4, Gautamn Kundu V/s. Directorate of Enforcement5 State of Bihar V/s. Amit Kumar @ Bachcha Rai6. This Court taking a serious note with regard to the economic offences had observed as back as in 1987 in the case of State of Gujarat V/s. Mohanlal Jitamalji Porwal 7 as under : -
"5. The entire community is aggrieved if the economic offenders who ruin the economy of the State are not brought to books. 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 collar crimes with a permissive eye unmindful of the damage done to the National Economy and National interest...."
(Emphasis supplied) 3 2023 SCC Online SC 1393 4 2023 SCC Online SC 455 5 (2015) 16 SCC 1 6 (2017) 13 SCC 751 7 (1987) 2 SCC 364 25/33 1-BA2383-2023-.DOC
44. At the same time, it must be noted that it is not an immutable rule of law that the accused be denied bail in serious economic offences. The parameters which govern the grant of bail in other categories of offences equally govern the case where a person is accused of an economic offence. The Court ought to be cognizant of the fact that the economic offences have serious ramifications. However where other parameters are fulfilled, bail need not be denied on the score that the person is accused of an economic offence.
45. A useful reference can be made to the decision of the Supreme Court in the case of P. Chidambaram V/s. Directorate of Enforcement8 wherein the Supreme Court dealt with the submission based on the premise that economic offences stand apart as a class. The Supreme Court enunciated the law as under :
"23. Thus from cumulative perusal of the judgments cited on either side including the one rendered by the Constitution Bench of this Court, it could be deduced that the basic jurisprudence relating to bail remains the same inasmuch as the grant of bail is the rule and refusal is the exception so as to ensure that the accused has the opportunity of securing fair trial. However, while considering the same the gravity of the offence is an aspect which is required to be kept in view by the Court. The gravity for the said purpose will have 8 (2020) 13 SCC 791 26/33 1-BA2383-2023-.DOC to be gathered from the facts and circumstances arising in each case. Keeping in view the consequences that would befall on the society in cases of financial irregularities, it has been held that even economic offences would fall under the category of "grave offence"
and in such circumstance while considering the application for bail in such matters, the Court will have to deal with the same, being sensitive to the nature of allegation made against the accused. One of the circumstances to consider the gravity of the offence is also the term of sentence that is prescribed for the offence the accused is alleged to have committed. Such consideration with regard to the gravity of offence is a factor which is in addition to the triple test or the tripod test that would be normally applied. In that regard what is also to be kept in perspective is that even if the allegation is one of grave economic offence, it is not a rule that bail should be denied in every case since there is no such bar created in the relevant enactment passed by the legislature nor does the bail jurisprudence provides so. Therefore, the underlining conclusion is that irrespective of the nature and gravity of charge, the precedent of another case alone will not be the basis for either grant or refusal of bail though it may have a bearing on principle. But ultimately the consideration will have to be on case to case basis on the facts involved therein and securing the presence of the accused to stand trial."
46. In a recent pronouncement in the case of Manish Sisodia V/s. Central Bureau of Investigation 9 again the Supreme Court enunciated the law as under :
9 2023 SCC Online 1393 27/33 1-BA2383-2023-.DOC "27. However, we are also concerned about the prolonged period of incarceration suffered by the appellant - Manish Sisodia. In P. Chidambaram V/s.
Directorate of Enforcement (supra), the appellant therein was granted bail after being kept in custody for around 49 days relying on the Constitution Bench in Shri Gurbaksh Singh Sibbia V/s. State of Punjab 10 and Sanjay Chandra V/s. Central Bureau of Investigation11, that even if the allegation is one of grave economic offence, it is not a rule that bail should be denied in every case. Ultimately, the consideration has to be made on a case to case basis on the facts. The primary object is to secure the presence of the accused to stand trial. The argument that the appellant therein was a flight risk or that there was a possibility of tampering with the evidence or influencing the witnesses, was rejected by the Court. Again in Satender Kumar Antil V/s. Central Bureau of Investigation (supra), this Court referred to Surinder Singh @ Shingara Singh V/s. State of Punjab12 and Kashmira Singh v. State of Punjab 13, to emphasise that the right to speedy trial is a fundamental right within the broad scope of Article 21 of the Constitution. In Vijay Madanlal Choudhary (supra), this Court while highlighting the evil of economic offences like money laundering, and its adverse impact on the society and citizens, observed that arrest infringes the fundamental right to life. This Court referred to Section 19 of the PML Act, for the in- built safeguards to be adhered to by the authorised officers to ensure fairness, objectivity and accountability. Vijay Madanlal Choudhary (supra), also 10 (1980) 2 SCC 565 11 (2012) 1 SCC 40 12 (2005) 7 SCC 387 13 (1977) 4 SCC 291 28/33 1-BA2383-2023-.DOC held that Section 436A of the Code can apply to offences under the PML Act, as it effectuates the right to speedy trial, a facet of the right to life, except for a valid ground such as where the trial is delayed at the instance of the accused himself. In our opinion, Section 436A should not be construed as a mandate that an accused should not be granted bail under the PML Act till he has suffered incarceration for the specified period. This Court, in Arnab Manoranjan Goswami v. State of Maharashtra and Others14, held that while ensuring proper enforcement of criminal law on one hand, the court must be conscious that liberty across human eras is as tenacious as tenacious can be."
47. In the case of Satender Kumar Antil V/s. Central Bureau of Investigation and Anr.15 the Supreme Court ruled that it is not advisable on the part of the Court to categorise all the economic offences into one group and deny bail on that basis. A reference was made to the observations in paragraph 23 of the judgment in the case of P. Chidambaram (supra), (extracted above), and Sanjay Chandra V/s. Central Bureau of Investigation16. The Supreme Court observed as under :
Economic Offences (Category D)
90. What is left for us now to discuss are the economic offences. The question for consideration is whether it should be treated as a class of its own or otherwise. This issue has already been dealt with by this Court in the case of P. Chidambaram (supra), after taking note of the 14 (2021) 2 SCC 427 15 (2022) 10 SCC 51 16 (2012) 1 SCC 40 29/33 1-BA2383-2023-.DOC earlier decisions governing the field. The gravity of the offence, the object of the Special Act, and the attending circumstances are a few of the factors to be taken note of, along with the period of sentence. After all, an economic offence cannot be classified as such, as it may involve various activities and may differ from one case to another. Therefore, it is not advisable on the part of the court to categorise all the offences into one group and deny bail on that basis.
48. Applying the aforesaid principles to the facts of the case, I am inclined to exercise discretion in favour of the applicant for the following reasons :
(1) In the light of the prima facie consideration of the prosecution case, the amount of alleged fraud attributable to the applicant gets significantly scaled down. That bears on the gravity of the allegations.
(2) Investigation is complete. Three supplementary chargesheets have been filed.
(3) The applicant cannot be prima facie roped in for the offence punishable under Section 409 of IPC which entails punishment of imprisonment for life. The offence under Sections 420 and 120B entail punishment which may extend to 7 years.
(4) The applicant has been in custody for two years. Having regard to the number of accused, the quantum of investigation resulting in filing of four chargesheets and the 30/33 1-BA2383-2023-.DOC evidence which the prosecution may be required to adduce in support of the charge, it is extremely unlikely that the trial can be concluded within a reasonable period.
(5) The applicant appears to have roots in society to tie him down to his place of abode and business. Possibility of fleeing away from justice appears to be remote.
(6) Most of the co-accused are enlarged on bail, regular, default or interim bail on medical grounds.
(7) Possibility of tampering with evidence also appears to be remote as the offences revolve around documents.
(8) In any event, the apprehension on the part of the prosecution can be taken care of by imposing conditions.
49. Hence, the following order :
:ORDER:
(i) Application stands allowed. (ii) The applicant - Avinash Nivritti Bhosale s/o Late Nivritti
Ganpati Bhosale be released on bail in FIR/RC No.219 2020 EOOO4, registered with CBI/EO-I, New Delhi, on furnishing a P.R. Bond in the sum of Rs.1,00,000/- with one or two sureties in the like amount.
(iii) The applicant shall mark his presence at the CBI/EO-I, 31/33 1-BA2383-2023-.DOC New Delhi, between 10.00 a.m. to 1.00 p.m., on first Monday of every alternate month, for the period of three years or till conclusion of the trial, whichever is earlier.
(iv) The applicant shall not tamper with the prosecution evidence. The applicant shall not directly or indirectly make any inducement, threat or promise to any person acquainted with the facts of the case so as to dissuade him from disclosing the facts to Court or any police officer.
(v) On being released on bail, the applicant shall furnish his contact number and residential address to the investigating officer and shall keep him updated, in case there is any change.
(vi) The applicant shall surrender his Passport before the trial court and shall not leave the Country without prior permission of the trial court.
(vii) The applicant shall regularly attend the proceedings before the trial Court.
(viii) By way of abundant caution, it is clarified that the observations made hereinabove are confined for the purpose of determination of the entitlement for bail and they may not be construed as an expression of opinion on 32/33 1-BA2383-2023-.DOC the guilt or otherwise of the applicant and the co-accusd and the trial Court shall not be influenced by any of the observations made hereinabove.
Application disposed.
[N. J. JAMADAR, J.] Signed by: S.S.Phadke 33/33 Designation: PS To Honourable Judge Date: 17/05/2024 20:32:00