Bombay High Court
Ritesh Bharat Jain vs State Of Maharashtra on 8 August, 2025
Author: Milind N. Jadhav
Bench: Milind N. Jadhav
2025:BHC-AS:34058
ABA.2669.22 + Group.docx
Ajay
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
CRIMINAL APPELLATE JURISDICTION
ANTICIPATORY BAIL APPLICATION NO. 2677 OF 2022
Sunil Rikabchand Jain .. Applicant
Versus
Senior Police Inspector and Anr. .. Respondents
WITH
ANTICIPATORY BAIL APPLICATION NO. 2754 OF 2022
Jairaj Vinod Bafna .. Applicant
Versus
The State Of Maharashtra .. Respondent
WITH
ANTICIPATORY BAIL APPLICATION NO. 2857 OF 2022
Priyank Nagraj Mehta .. Applicant
Versus
Senior Police Inspector and Anr. .. Respondents
WITH
ANTICIPATORY BAIL APPLICATION NO. 3537 OF 2023
Rohit Rajendra Parmar .. Applicant
Versus
State Of Maharashtra .. Respondent
WITH
ANTICIPATORY BAIL APPLICATION NO. 2723 OF 2022
Ritesh Bharat Jain .. Applicant
Versus
The State Of Maharashtra .. Respondent
AND
ANTICIPATORY BAIL APPLICATION NO. 2669 OF 2022
Urvi Milan Shah .. Applicant
Versus
The State Of Maharashtra .. Respondent
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....................
Mr. Sanjog Parab, Senior Advocate i/by Mr. Mohan Rao a/w. Ms.
Sulbha Rane, Ms. Sakshi Baadkar, Mr. Sangram Parab, Mr. Pranjal
Pandey for Applicant in Anticipatory Bail Application Nos. 2677 of
22 and 2682 of 2022.
Mr. Vishwajeet Mohite a/w. Mr. Vishalkumar Kothari and Ms.
Pranjali Jadhav, Advocates for Applicant in Anticipatory Bail
Application No.2723 of 2022.
Mr. Afsar Ansari, Advocate i/by Mr. Pramod Pandey for Applicant in
Anticipatory Bail Application No.2669 of 2022.
Mr. Vrushabh Savla, Advocate for Applicant in Anticipatory Bail
Application No.3537 of 2023.
Mr. Hrishikesh Ambre, Advocate for Applicant in Anticipatory Bail
Application No.2857 of 2022.
Mr. Niranjan Mundargi a/w. Ms. Keral Mehta, Mr. Rajiv Hingu and
Mr. Deepraj Shetye, Advocates i/by L. H. Hingu & co. For Applicant
in Anticipatory Bail Application No.2754 of 2022.
Ms. Akanksha Khedekar i/by Mr. Ganesh Singh, Advocate for
Respondent No.3 in Anticipatory Bail Application No.2677 of 2022.
Ms. Sangita E. Phad APP for Respondent - State.
PSI - Palve, Vile Parle Police Station present.
...................
CORAM : MILIND N. JADHAV, J.
DATE : AUGUST 8, 2025 P. C.:
1. Heard learned Advocates appearing for the parties.
2. This is a group of 6 Anticipatory Bail Applications. These Applications for anticipatory bail are filed under Section 438 of the Code of Criminal Procedure, 1973 (for short, "Cr.P.C."). Applicants are apprehending arrest in F.I.R. No.850 of 2022 registered with Vile Parle Police Station for the offences punishable under Sections 409, 411, 413, 420, 465, 467, 468, 479, 120B read with Section 34 of the Indian 2 of 34 ::: Uploaded on - 08/08/2025 ::: Downloaded on - 09/08/2025 00:13:45 ::: ABA.2669.22 + Group.docx Penal Code, 1860 (for short "IPC") and Sections 66(d) and 66(e) of the Information Technology Act, 2000 (for short "IT Act") by First Informant - Complainant - Anurag Shukla against 6 Accused persons namely Sunil Jain, Jairaj Bafna, Priyank Mehta, Rohit Parmar, Ritesh B. Jain and Urvi Milan Shah.
3. Briefly stated, facts germane to the present Applications are as follows:-
3.1. Artha Vriddhi Securities Limited (for short 'AVSL') was incorporated in the year 2005 by one Mr. Dhirendra Shukla and his family under the name 'Transparent Shares and Securities'. However in the year 2013 the name was changed to 'Artha Vriddhi Securities Limited'. The Company is a Registered Share Broker. 3.2. First Informant - Anurag Dhirendra Shukla was appointed as Director in March, 2021, prior to him, his father Dhirendra Shukla served as the Director since the inception.
3.3. On 25.06.2013, Applicant No.1 - Sunil Jain (Accused No.1) was appointed as the Director of AVSL. Trading accounts of clients including Blue Sea International and Manish Shah were managed by AVSL for the purpose of trading shares. 3.4. It is alleged that since the year 2015, present Applicants in connivance with each other, engaged in illegal acts of circular 3 of 34 ::: Uploaded on - 08/08/2025 ::: Downloaded on - 09/08/2025 00:13:45 ::: ABA.2669.22 + Group.docx trading and embezzlement thereby misappropriating funds from AVSL and its clients.
3.5. In October 2021, clients - Blue Sea International and Manish Shah raised complaints before the Grievance Redressal Committee (for short 'GRC') of NSE qua the irregularities in their trading accounts. On 10.11.2021 and 11.11.2021, the GRC passed orders directing AVSL to pay compensation of Rs.1,54,24,446/- and Rs.60,38,280/- respectively. On 11.11.2021, intimation for Arbitration proceedings was sent by AVSL against the GRC orders. 3.6. On 18.02.2022, an order was passed by the Member and Core Settlement Guarantee Fund Committee (MCSGFC) of NSE wherein Anurag Shukla represented AVSL qua the complaints against AVSL. He submitted that there was no misutilization of clients' funds and recorded that the two complaints were settled by AVSL and it wanted to withdraw from Arbitration.
3.7. In the interregnum, in October - November 2021, Mr. Sunil Giri - Director of Blue Sea International filed a complaint against four accused persons i.e. Anurag Shukla, Dhirendra Shukla, Jairaj Bafna and Sunil Jain. On 21.07.2022, first FIR No.755 of 2022 was registered.
4 of 34 ::: Uploaded on - 08/08/2025 ::: Downloaded on - 09/08/2025 00:13:45 ::: ABA.2669.22 + Group.docx 3.8. On 08.08.2022, co-accused No.2 - Jairaj Bafna was granted Anticipatory Bail. On 24.07.2022, other Directors alongwith First Informant - Anurag Shukla were arrested. By order dated 18.08.2022, the learned Sessions Court granted bail to all Directors including First Informant - Anurag Shukla.
3.9. On 29.08.2022, First Informant - Anurag Shukla obtained permission from the Magistrate under Section 156(3) of Cr.P.C. and pursuant thereto on 11.09.2022, the present (second) FIR No.850 of 2022 was registered against six accused persons. 3.10. It is prosecution case that Applicants were engaged in unauthorized trading activities in stock accounts managed by AVSL which came to light upon complaints made by clients of AVSL. It is alleged that Applicants were involved in a systematic and clandestine scheme of circular trading, through which they embezzled an amount of Rs.9.35 crores from AVSL and its clients. It is prosecution case that Applicants siphoned off these funds and misappropriated them for their personal gain. As a consequence, the stocks / shares of clients depleted due to reversal trade, thereby losing their quantum value. 3.11. Allegation against Accused No.1 - Sunil Jain, Head of Sales at AVSL is that he was the mastermind of the offence. It is alleged that internal email exchanges with co-accused clearly reflected 5 of 34 ::: Uploaded on - 08/08/2025 ::: Downloaded on - 09/08/2025 00:13:45 ::: ABA.2669.22 + Group.docx that offence was committed on his instructions. He is alleged to have committed the offense with the assistance of Accused Nos.2 to 4, facilitated embezzlement of Rs.9.35 crores into the accounts of Accused Nos.5 and 6 which is substantiated through their bank accounts and ledger accounts of AVSL. It is alleged that to conceal circular trading accused persons altered clients' contact numbers and email IDs and sent forged documents involving valuable securities to defraud clients. Being the custodian of AVSL's shares and properties, Accused No.1 is alleged to have committed criminal breach of trust by misappropriating client funds and shares.
3.12. Allegation against Accused No.2 - Jairaj Bafna, Business Consultant on retainer basis with AVSL is that he forged the signatures of Mr. Sunil Giri and his wife on account opening forms and assisted in altering client details to cover up fraudulent trades thereby facilitating the misappropriation.
3.13. Allegation against Accused No.3 - Priyank Mehta, Relationship Manager with AVSL is that he participated in unauthorized circular trading with co-accused persons, fabricated documents, and aided in causing wrongful loss to clients thereby contributing to the embezzlement.
6 of 34 ::: Uploaded on - 08/08/2025 ::: Downloaded on - 09/08/2025 00:13:45 ::: ABA.2669.22 + Group.docx 3.14. Allegation against Accused No.4 - Rohit Parmar, Head of IT Department is that he downloaded APPs which prevented clients from receiving updates on the status of their shares and thereby supported execution of the fraudulent scheme. 3.15. Allegation against Accused Nos.5 and 6 - Ritesh Bharat Jain and Urvi Milan Shah, investors in AVSL is that they not only received the embezzled funds but also played an active role by fabricating holding statements and aiding in unauthorized sale of First
- Informant's shares without his knowledge or consent to meet third-
party liabilities and thereby contributed to the alleged misappropriation of Rs.9.35 crores belonging to AVSL and its clients.
4. Submissions made by learned Advocates appearing for Applicants - Accused Nos.1 to 6 are as follows:
4.1. Anticipatory Bail Application No.2677 of 2022:
(i) Mr. Parab, learned Senior Advocate appearing for Applicant - Accused No.1 would submit that Applicant -
Accused No.1 is falsely implicated and made a scapegoat in the present crime. He would submit that First Informant in present FIR - Anurag Shukla, Director of AVSL, suppressed the fact that he is an accused in FIR No.755 of 2022 filed against a few Directors of AVSL. He 7 of 34 ::: Uploaded on - 08/08/2025 ::: Downloaded on - 09/08/2025 00:13:45 ::: ABA.2669.22 + Group.docx would submit that First Informant obtained order under Section 156(3) Cr.P.C. to register FIR No.850 of 2022 alleging embezzlement of Rs.9.35 crores with the sole intention to avoid his liability in FIR No.755 of 2022 due to counter pressure from the Complainant - Sunil Giri in that case.
(ii) He would submit that First Informant represented AVSL before MCSGFC, which recorded in its order dated 18.02.2022 that the shortfall of Rs.1.48 crores was due to pending investor claim of Rs.1.60 crores and not due to misappropriation. He would submit that no allegation of unauthorized trading or embezzlement was made against Applicant in those proceedings. He would submit that primary allegation of misappropriation of Rs.9.35 crores is unsubstantiated and without any relevant documentary evidence showing diversion of funds to Applicant's account or for personal gain. He would submit that the dispute raised is civil in nature as AVSL has filed Writ Petition No.2271 of 2022 in this Court and the Statutory Appeal before SAT challenging MCSGFC's findings and Arbitration Notice, which itself highlights that a civil matter is given a criminal colour.
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(iii) He would submit that all alleged share transactions were routed through NSE/BSE platforms linked to the Demat accounts of clients and consideration amounts were duly transferred to clients' accounts. Hence, no illegal funds were transferred to Applicant's account. He would submit that there is no complaint or enquiry initiated either by NSE or BSE against Applicant - Accused No.1 thereby disproving any claim of adverse findings or illegal trading practices against Applicant. He would submit that three FIRs for the same cause of action have been filed with three separate investigations undertaken. He would submit that in FIR No.755 of 2022, investigation is complete and all relevant documents and bank statements are provided by Applicant.
(iv) He would submit that no money trail has been traced or discovered linking Applicant to the alleged offense. He would submit that Applicant's and his relatives' bank accounts have been de-frozen after disclosure and investigation thereby indicating no incriminating material having been found against him.
(v) In support of his submissions, Mr. Parab, learned Senior Advocate appearing for Applicant - Accused No.1 has 9 of 34 ::: Uploaded on - 08/08/2025 ::: Downloaded on - 09/08/2025 00:13:45 ::: ABA.2669.22 + Group.docx referred to and relied upon the decision of this Court in the case of Prashant Vasant Chavan Vs. The State of Maharashtra.1. Hence, he would submit that custodial interrogation of Applicant is not necessary and therefore Application for Anticipatory Bail deserves to be allowed. 4.2. Anticipatory Bail Application No. 2754 of 2022:
(i) Mr. Mundargi, learned Advocate appearing for Applicant -
Accused No.2 would submit that Applicant - Accused No.2 is falsely implicated. He would submit that Applicant worked as Business Consultant on retainer-ship basis with AVSL. He would submit that Applicant was not an employee of AVSL and not involved in its day-to-day affairs. He would submit that his role was limited to providing customer relationship coordination and operational support. He would submit that the Trading/Demat account of Blue Sea International was opened by Relationship Managers Mr. Nilesh More and Mr. Umesh Malaye after due verification. He would submit that group chat records show Sunil Giri confirming receipt of account opening forms on 02.11.2019, thereby refuting the allegation of his forged signatures. He would submit 1 Criminal Anticipatory Bail Application No.31 of 2025, decided on 08.01.2025.
10 of 34 ::: Uploaded on - 08/08/2025 ::: Downloaded on - 09/08/2025 00:13:45 ::: ABA.2669.22 + Group.docx that transactions were carried out in the said account, with regular confirmations sent by NSE to Sunil Giri.
(ii) He would submit that the allegation regarding his sister being a beneficiary is baseless as she was a client of AVSL, she traded in minimal amounts and also incurred losses. He would submit that the assurance to repay losses was made by Accused No.1 and not this Applicant. He would submit that Applicant has been granted anticipatory bail in FIR No.755 of 2022, which incidentally arises from the same cause of action. He would submit that no money trail has been discovered linking Applicant to the alleged offense of embezzlement.
(iii) In support of his submissions Mr. Mundargi, learned Advocate appearing for Applicant - Accused No.2 has referred to and relied upon the decision of the Supreme Court in the case of Musheer Alam Vs. State of Uttar Pradesh and Another2. Hence, he would submit that custodial interrogation is not necessary, and Application for Anticipatory Bail deserves to be allowed. 2 2025 SCC OnLine SC 116.
11 of 34 ::: Uploaded on - 08/08/2025 ::: Downloaded on - 09/08/2025 00:13:45 ::: ABA.2669.22 + Group.docx 4.3. Anticipatory Bail Application No. 2857 of 2022:
(i) Mr. Ambre, learned Advocate appearing for Applicant -
Accused No.3 would submit that he is falsely implicated in the present crime. He would submit that he worked as Relationship Manager who looked after the clients and guided them. He would submit that Applicant never handled any finance or banking portfolio at AVSL. He would submit that all signing authority and control was with Dhirendra Shukla and his family members.
(ii) He would submit that Applicant was never entrusted with any share of funds to make him liable for the alleged offense under Section 409 of the IPC. He would submit that there is no transfer of funds or shares to the account of Applicant except for his salary. He would submit that Applicant was an employee of AVSL, but he resigned on 07.01.2022 and the FIR No.850 of 2022 is lodged on 11.09.2022. He would submit that First Informant - Complainant has made a vague, general, unsubstantiated and omnibus statement with regard to Applicant's role in the present offence. He would submit that there is no averment in the FIR with regard to Applicant's specific role in the alleged offense. He would submit that no 12 of 34 ::: Uploaded on - 08/08/2025 ::: Downloaded on - 09/08/2025 00:13:45 ::: ABA.2669.22 + Group.docx money trail either has been discovered linking Applicant to the alleged offense. Hence, he would submit that custodial interrogation is not necessary, and the Application for Anticipatory Bail deserves to be allowed. 4.4. Anticipatory Bail Application No. 3537 of 2023:
(i) Mr. Salva, learned Advocate appearing for Applicant -
Accused No.4 would submit that FIR No.850 of 2022 was registered on 11.09.2022, whereas the alleged offence is stated to have occurred from 01.01.2015 onwards resulting in an unexplained delay of nearly seven years in lodging the FIR. He would submit that such delay casts serious doubt on the credibility of the allegations. He would submit that Applicant merely worked as an employee of AVSL in its IT Department on a salary.
(ii) He would submit that no specific role is attributed to Applicant in the FIR. He would further submit that no cogent or documentary evidence is placed on record to substantiate Applicant's involvement in the alleged offence. Hence, he would submit that custodial interrogation is not necessary and the Application for Anticipatory Bail deserves to be allowed.
13 of 34 ::: Uploaded on - 08/08/2025 ::: Downloaded on - 09/08/2025 00:13:45 ::: ABA.2669.22 + Group.docx 4.5. Anticipatory Bail Application No. 2723 of 2022:
(i) Mr. Pandey, learned Advocate appearing for Applicant -
Accused No.5 would submit that he is falsely implicated in the present crime. He would submit that Applicant was merely an investor in AVSL and had no direct or indirect control over its business operations. He would submit that FIR did not prima facie attribute any specific role to Applicant in the alleged offence. He would submit that Accused No.1 had advanced loan to Applicant which was invested for stock trading with AVSL and the said amount was infact returned to Accused No.1 more than one year prior to registration of this FIR.
(ii) He would submit that any profit or loss in the Applicant's personal trading account pertained to a different set of shares, unrelated to those of other clients or the present offence. He would further submit that Applicant's name did not appear in the initial proceedings before the GRC of NSE. He would submit that the prosecution relied solely on bank statements already in the custody of the Investigating Officer, and there existed no direct, indirect, or circumstantial evidence connecting Applicant to the alleged offence. Hence, he would submit that custodial 14 of 34 ::: Uploaded on - 08/08/2025 ::: Downloaded on - 09/08/2025 00:13:45 ::: ABA.2669.22 + Group.docx interrogation is not necessary and the Application for Anticipatory Bail deserves to be allowed.
4.6. Anticipatory Bail Application No. 2669 of 2022:
(i) Mr. Pandey, learned Advocate appearing for Applicant -
Accused No.6 would submit that she is falsely implicated in the present crime. He would submit that Applicant was merely an investor in AVSL and had no direct or indirect control over its business operations. He would submit that FIR did not prima facie attribute any specific role to Applicant in the alleged offence. He would submit that there is nothing placed on record either to show that any misappropriated funds were received by Applicant in her account. He would submit that in the year 2018, Applicant invested Rs.8,00,000/- with AVSL however Directors of AVSL without her knowledge used her Trading Id for two years and incurred loss. However no message or email was received by her from AVSL regarding the said transactions. He would submit that in the year 2022 when Applicant enquired with Accused No.1, he from his personal account transferred the loss amount to Applicant. He would submit that Applicant had 15 of 34 ::: Uploaded on - 08/08/2025 ::: Downloaded on - 09/08/2025 00:13:45 ::: ABA.2669.22 + Group.docx given Rs.45,00,000/- to Dhirendra Shukla, however the said amount was never returned back to her till today.
(ii) He would submit that any profit or loss in the Applicant's personal trading account pertained to a different set of shares, unrelated to those of other clients. He would further submit that Applicant's name did not appear in the initial proceedings before the GRC of NSE. He would submit that the prosecution relied solely on bank statements already in the custody of the Investigating Officer, and there existed no direct, indirect, or circumstantial evidence connecting Applicant to the alleged offence. Hence, he would submit that custodial interrogation is not necessary and the Application for Anticipatory Bail deserves to be allowed.
5. PER CONTRA, Ms. Phad, learned APP for Respondent - State has vehemently opposed the 6 Applications. She would submit that Applicants are involved in a well-planned and systematic conspiracy resulting in misappropriation of approximately Rs.9.35 crores from AVSL and its clients. She would submit that allegations are grave and supported by prima facie material, including internal email correspondence, manipulated client data, forged documents, and banking records reflecting unauthorized diversion of funds. She would 16 of 34 ::: Uploaded on - 08/08/2025 ::: Downloaded on - 09/08/2025 00:13:45 ::: ABA.2669.22 + Group.docx submit that each Applicant played a distinct and active role in facilitating circular trading and fraudulent transactions to cause wrongful loss to Investors of AVSL. She would submit that delay in lodging FIR No.850 of 2022 was duly explained as it was registered pursuant to directions issued under Section 156(3) Cr.P.C. and hence does not weaken the prosecution case. She would submit that custodial interrogation of Applicants is essential for further investigation in the present crime.
5.1. In support of her submissions, Ms. Phad learned APP for Respondent - State has referred to and relied upon the decision of the Supreme Court in the case of Satender Kumar Antil Vs. Central Bureau of Investigation and Anr.3. Hence considering the nature and seriousness of the offence, quantum of public loss involved and for thorough investigation she would urge the Court to reject the Applications.
6. Ms. Khedekar, learned Advocate appearing for Respondent No.3 in Anticipatory Bail Application No.2677 of 2022 has placed on record a compilation of documents and would adopt the submissions made by Ms. Phad. She would submit that the present Application deserves to be rejected in view of the active and corroborated involvement of Accused No.1 in connivance with other 3 AIR Online 2021 SC 1017.
17 of 34 ::: Uploaded on - 08/08/2025 ::: Downloaded on - 09/08/2025 00:13:45 ::: ABA.2669.22 + Group.docx Applicants in commission of serious economic offences thereby resulting in loss to AVSL to the tune of Rs.9.35 crores. She would submit that one such fraudulent transaction is evident from the trade dated 25.02.2019 wherein Accused No.5 - Ritesh Jain received Rs.48,02,225/- through reverse trading causing a corresponding loss to AVSL, as reflected in the Summary of Reverse Trade. 6.1. She would further submit that the said transaction and the role of the Accused came to light only on 17.11.2021, when First Informant received and reviewed the bank statements of Accused Nos.5 and 6. On perusal, it was revealed that the funds used for the impugned trades by Accused Nos.5 and 6 were sourced from Accused No.1 which is corroborated by the bank entries at Flag 6 of the Convenience Compilation of Accused No.5 which clearly show that Accused No.1 transferred funds to Accused No.5, who thereafter transferred them to AVSL for the purpose of trading. She would submit that this fund flow is not incidental but demonstrates Accused No.1's direct involvement in the execution of the fraudulent trades and points to his active role in the offence.
7. She would submit that Accused No.6 - Urvi Milan Shah also received funds from both Accused Nos.1 and 5 which is corroborated by the bank statements placed at Flag 7 of the Convenience Compilation thereby reflecting structured and 18 of 34 ::: Uploaded on - 08/08/2025 ::: Downloaded on - 09/08/2025 00:13:45 ::: ABA.2669.22 + Group.docx coordinated financial movement between the accused persons. She would submit that such transactions formed part of a deliberate scheme to defraud AVSL by misusing client and proprietary accounts for personal gain. She would submit that the findings of forensic audit conducted by the NSE and report of the GRC support the First Informant's case, both recording unauthorised trading, deletion of complaint-related data, misuse of client information, and collusion among the Accused. She would further submit that Accused No.1 has previously been summoned in another complaint in April 2020, showing a pattern of repeated misconduct. Hence she would urge the Court to consider the seriousness of the economic offence and corroborative material placed on record and would submit that Accused No.1's custodial interrogation is necessary. She would therefore urge the Court to reject the Anticipatory Bail Application filed by Accused No.1
8. I have heard the learned Advocates appearing for the respective parties and with their able assistance perused the record of the case.
9. Prima facie on perusal of record, it is seen that the present FIR in question has been registered at the instance of Mr. Anurag Shukla, who is the Director of AVSL, a registered brokerage firm regulated under SEBI. The primary allegations are that 19 of 34 ::: Uploaded on - 08/08/2025 ::: Downloaded on - 09/08/2025 00:13:45 ::: ABA.2669.22 + Group.docx Applicants, being employees of AVSL, in collusion with two Investors unauthorizedly traded in client accounts, forged internal records, and misappropriated funds between 2015 and 2022, causing financial loss to AVSL and its clients.
10. At the outset, it is pertinent to note that the allegations pertain to transactions and conduct within the internal working of AVSL, involving no third-party deception at inception. The timeline and tenure of the transactions is over a period of 7 years, which on the face of record itself is humongous. First - Informant - Complainant being Director of AVSL and his family members were in full control of their client interface, back-end operations and trading platform. It is seen that the client accounts in question were opened in the regular course of business and the trades were executed over a sustained period of time. There is no allegation or prima facie material to suggest that any of the Applicants induced the company to act under a false pretence at the inception of their business relationship. It is seen that FIR is filed in 2022 despite the alleged misconduct claimed to have begun several years earlier and First Informant having access to all necessary records and surveillance systems. This unexplained delay significantly weakens the credibility of the prosecution's case.
11. It is seen that FIR No.850 of 2022 has been registered pursuant to an order under Section 156(3) Cr.P.C. obtained at the 20 of 34 ::: Uploaded on - 08/08/2025 ::: Downloaded on - 09/08/2025 00:13:45 ::: ABA.2669.22 + Group.docx instance of the First Informant - Anurag Shukla who himself is arrayed as accused in FIR No.755 of 2022 arising out of the same set of transactions and significantly over the same period of time. Present FIR therefore clearly and prima facie appears to be a counterblast to FIR No.755 of 2022 and registered nearly a year after the alleged incident which raises doubt on the prosecution case considering First Informant's conflicting roles in AVSL and transactions.
12. It needs to be noted that AVSL being a registered brokerage company is subject to statutory audits, compliance checks, and internal verifications, but however nothing was flagged contemporaneously either by external auditors, SEBI, NSE or clients for a substantial period of seven years including Mr. Giri whose trading account forms the basis of the allegations. The said client had been trading through AVSL over a long period of time and continued to receive trade confirmations and account statements with no immediate objections raised during the relevant period either. Therefore the allegations in the FIR will have to undergo the test of trial.
13. With regard to Applicant - Accused No.1 it is alleged that he was head of the sales team and issued internal emails that allegedly facilitated unauthorised trade. However, the emails relied upon do not, on the face of it, reflect any criminal conspiracy or fraudulent 21 of 34 ::: Uploaded on - 08/08/2025 ::: Downloaded on - 09/08/2025 00:13:45 ::: ABA.2669.22 + Group.docx design. There is no prima facie direct incriminating material to show that he personally committed, directed or benefited from any unauthorised or illegal activity.
14. With regard to Applicant - Accused Nos.2, 3, and 4 they are employees involved with the account servicing, client onboarding, or execution of instructions. However, investigation does not disclose any falsification of records or forged documents traceable to these individuals. The lack of forensic analysis, document examination or specific attribution of role so as to enrich themselves with the crime proceeds makes the allegations against these Applicants highly generalized.
15. Applicant - Accused Nos.5 and 6 are alleged to have placed trades in the client account in question. However it is seen that the trading system employed by AVSL required multi-layered authorisation and trades were backed by recorded terminal access and transaction logs. There is no report indicating tampering with the back-end or illegal access. Moreover, the regular audit trail, unchallenged by the First Informant - Complainant until 2022 prima facie dilutes the assertion of fraud against these clients / investors.
16. It is seen that the core allegations pertain to trading losses and share transactions between clients and AVSL which are inherently 22 of 34 ::: Uploaded on - 08/08/2025 ::: Downloaded on - 09/08/2025 00:13:45 ::: ABA.2669.22 + Group.docx civil in nature. The fact of Arbitration proceedings under the GRC of NSE and Appeal before SAT initiated and pending reinforces that a civil dispute is being given a criminal colour. Insofar as the offence under Section 420 of IPC is concerned the essential element of dishonest inducement with an intention to deceive at the inception is not evident from the record. It is seen that clients of AVSL have had a longstanding business relationship with the company and continued to trade even after the alleged transactions thereby negating the existence of dishonest inducement from the very beginning. The transactions were executed in the company's ordinary course of business and First - Informant and his family members had complete supervisory access. No act of inducement resulting in wrongful gain to the accused or wrongful loss to First Informant - Complainant at the threshold is prima facie demonstrated. However only when losses were incurred by First - Informant the said FIR came to be registered.
17. With regard to charge under Section 409 of IPC, it is seen that there must be clear entrustment and dishonest misappropriation by a public servant, banker, or agent. Applicants Nos.2 to 6 were not in fiduciary positions to warrant invocation of Section 409 of IPC. However, no prima facie incriminating material has been brought on record to show that any property or funds were entrusted to these Applicants in their personal capacity or they misappropriated any 23 of 34 ::: Uploaded on - 08/08/2025 ::: Downloaded on - 09/08/2025 00:13:45 ::: ABA.2669.22 + Group.docx funds. Rather their actions were in the ordinary cause of their employment unless disproved on evidence.
18. There is no material on record to substantiate the allegations of forgery under Sections 465, 467, 468 or 471 of IPC. No specific document is identified as having been fabricated or signed falsely by any of the Applicants. There is also no expert opinion, handwriting analysis, or digital forensic evidence indicating falsification or unauthorised alteration of any records or instruments at this stage. In absence of such concrete evidence, the allegations under the aforesaid provisions appear unsubstantiated at this stage.
19. Despite the gravity of allegations, during investigation no direct money trail linking embezzled funds to the personal accounts of Applicants is seen. However it is pertinent to note that Bank accounts of Applicants have been de-frozen and no incriminating material has surfaced. Hence allegations regarding circular trading and reverse transactions prima facie remain unsubstantiated by conclusive documentary or forensic evidence.
20. It is further relevant to note that Applicants are first-time offenders with no prior criminal antecedents. The investigation has continued over a considerable period, chargesheet has been filed and 24 of 34 ::: Uploaded on - 08/08/2025 ::: Downloaded on - 09/08/2025 00:13:45 ::: ABA.2669.22 + Group.docx material documents are already in custody of the Investigating Officer. Hence, no recovery as such is pending at the instance of Applicants.
21. While relying on the decision of the Supreme Court in the case of Ramesh Kumar Vs. State (NCT of Delhi)4 it is held that criminal proceedings are not for realisation of disputed dues and thus a criminal Court exercising jurisdiction to grant bail / anticipatory bail is not expected to act as a recovery agent to realise the dues of the First - Informant, and that too, without any trial (emphasis supplied). Supreme Court has however held that in exceptional cases where allegation of misappropriation of public money by Accused is levelled, it would be open to the concerned Court to consider whether in the larger public interest the money which is misappropriated be allowed to be deposited before application for Anticipatory Bail or Bail is taken up for consideration.
22. It is trite law that offence of cheating and criminal breach of trust cannot co-exist simultaneously. In this context reference is made to a decision of the Supreme Court in the case of Delhi Race Club (1940) Ltd. and Ors. Vs. State of Uttar Pradesh and Anr. 5 wherein in paragraph Nos.24 to 30 the Court has laid down the distinction between offence of cheating and criminal breach of trust. Paragraph Nos. 24 to 30 read thus:-
4
(2023) 7 Supreme Court Cases 461.5
Criminal Appeal No. 3114 of 2024 decided on 23.08.2024 25 of 34 ::: Uploaded on - 08/08/2025 ::: Downloaded on - 09/08/2025 00:13:45 ::: ABA.2669.22 + Group.docx "DIFFERENCE BETWEEN CRIMINAL BREACH OF TRUST AND CHEATING
24. This Court in its decision in S.W. Palanitkar & Ors. v. State of Bihar & Anr. reported in (2002) 1 SCC 241 expounded the difference in the ingredients required for constituting an of offence of criminal breach of trust (Section 406 IPC) viz-a-viz the offence of cheating (Section 420). The relevant observations read as under: -
"9. The ingredients in order to constitute a criminal breach of trust are: (i) entrusting a person with property or with any dominion over property,(ii) that person entrusted (a) dishonestly misappropriating or converting that property to his own use; or (b) dishonestly using or disposing of that property or wilfully suffering any other person so to do in violation (i) of any direction of law prescribing the mode in which such trust is to be discharged, (ii) of any legal contract made, touching the discharge of such trust.
10. The ingredients of an offence of cheating are: (i) there should be fraudulent or dishonest inducement of a person by deceiving him, (ii)(a) the person so deceived should be induced to deliver any property to any person, or to consent that any person shall retain any property; or (b) the person so deceived should be intentionally induced to do or omit to do anything which he would not do or omit if he were not so deceived; and (iii) in cases covered by
(ii)(b), the act of omission should be one which causes or is likely to cause damage or harm to the person induced in body, mind, reputation or property."
25. What can be discerned from the above is that the offences of criminal breach of trust (Section 406 IPC) and cheating (Section 420 IPC) have specific ingredients. In order to constitute a criminal breach of trust (Section 406 IPC): -
1) There must be entrustment with person for property or dominion over the property, and
2) The person entrusted: -
a) dishonestly misappropriated or converted property to his own use, or
b) dishonestly used or disposed of the property or willfully suffers any other person so to do in violation of:
i. any direction of law prescribing the method in which the trust is discharged; or ii. legal contract touching the discharge of trust (see:
S.W.P. Palanitkar (supra).
Similarly, in respect of an offence under Section 420 IPC, the essential ingredients are: -
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1) deception of any person, either by making a false or misleading representation or by other action or by omission;
2) fraudulently or dishonestly inducing any person to deliver any property, or
3) the consent that any persons shall retain any property and finally intentionally inducing that person to do or omit to do anything which he would not do or omit (see: Harmanpreet Singh Ahluwalia v. State of Punjab, (2009) 7 SCC 712 : (2009) Cr.L.J. 3462 (SC))
26. Further, in both the aforesaid sections, mens rea i.e. intention to defraud or the dishonest intention must be present, and in the case of cheating it must be there from the very beginning or inception.
27. In our view, the plain reading of the complaint fails to spell out any of the aforesaid ingredients noted above. We may only say, with a view to clear a serious misconception of law in the mind of the police as well as the courts below, that if it is a case of the complainant that offence of criminal breach of trust as defined under Section 405 of IPC, punishable under Section 406 of IPC, is committed by the accused, then in the same breath it cannot be said that the accused has also committed the offence of cheating as defined and explained in Section 415 of the IPC, punishable under Section 420 of the IPC.
28. Every act of breach of trust may not result in a penal offence of criminal breach of trust unless there is evidence of manipulating act of fraudulent misappropriation. An act of breach of trust involves a civil wrong in respect of which the person may seek his remedy for damages in civil courts but, any breach of trust with a mens rea, gives rise to a criminal prosecution as well. It has been held in Hari Prasad Chamaria v. Bishun Kumar Surekha & Ors., reported in (1973) 2 SCC 823 as under:
"4. We have heard Mr. Maheshwari on behalf of the appellant and are of the opinion that no case has been made out against the respondents under Section 420 Penal Code, 1860. For the purpose of the present appeal, we would assume that the various allegations of fact which have been made in the complaint by the appellant are correct. Even after making that allowance, we find that the complaint does not disclose the commission of any offence on the part of the respondents under Section 420 Penal Code, 1860. There is nothing in the complaint to show that the respondents had dishonest or fraudulent intention at the time the appellant parted with Rs. 35.000/- There is also nothing to indicate that the respondents induced the appellant to pay them Rs. 35,000/- by deceiving him. It is further not the case of the appellant that a representation was made, the respondents knew the same to be false. The fact that the respondents subsequently did not abide by 27 of 34 ::: Uploaded on - 08/08/2025 ::: Downloaded on - 09/08/2025 00:13:45 ::: ABA.2669.22 + Group.docx their commitment that they would show the appellant to be the proprietor of Drang Transport Corporation and would also render accounts to him in the month of December might create civil liability on the respondents for the offence of cheating."
29. To put it in other words, the case of cheating and dishonest intention starts with the very inception of the transaction. But in the case of criminal breach of trust, a person who comes into possession of the movable property and receives it legally, but illegally retains it or converts it to his own use against the terms of the contract, then the question is, in a case like this, whether the retention is with dishonest intention or not, whether the retention involves criminal breach of trust or only a civil liability would depend upon the facts of each case.
30. The distinction between mere breach of contract and the offence of criminal breach of trust and cheating is a fine one. In case of cheating, the intention of the accused at the time of inducement should be looked into which may be judged by a subsequent conduct, but for this, the subsequent conduct is not the sole test. Mere breach of contract cannot give rise to a criminal prosecution for cheating unless fraudulent or dishonest intention is shown right from the beginning of the transaction i.e. the time when the offence is said to have been committed. Therefore, it is this intention, which is the gist of the offence. Whereas, for the criminal breach of trust, the property must have been entrusted to the accused or he must have dominion over it. The property in respect of which the offence of breach of trust has been committed must be either the property of some person other than the accused or the beneficial interest in or ownership' of it must be of some other person. The accused must hold that property on trust of such other person. Although the offence, i.e. the offence of breach of trust and cheating involve dishonest intention, yet they are mutually exclusive and different in basic concept. There is a distinction between criminal breach of trust and cheating. For cheating, criminal intention is necessary at the time of making a false or misleading representation i.e., since inception. In criminal breach of trust, mere proof of entrustment is sufficient. Thus, in case of criminal breach of trust, the offender is lawfully entrusted with the property, and he dishonestly misappropriated the same. Whereas, in case of cheating, the offender fraudulently or dishonestly induces a person by deceiving him to deliver any property. In such a situation, both the offences cannot co-exist simultaneously.
23. The Supreme Court, while dealing with offence, involving conspiracy to commit economic offences of huge magnitude, in the 28 of 34 ::: Uploaded on - 08/08/2025 ::: Downloaded on - 09/08/2025 00:13:45 ::: ABA.2669.22 + Group.docx case of Y.S. Jagan Mohan Reddy Vs. C.B.I.6 laid down following parameters:-
" i) economic offences constitute a 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 grave offences affecting the economy of the country as a whole and thereby posing serious threat to the financial health of the country, and
ii) 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 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 interest of the public/State and other similar considerations."
24. Attention is drawn to the decision of the Supreme Court in the case of Sanjay Chandra Vs. Central Bureau of Investigation 7 wherein the Court has held that in economic offences while considering an application for bail, the nature of charge may be relevant but at the same the punishment to which the party may be liable, if convicted is also a significant aspect and therefore both, the seriousness of the charge and the severity of the punishment should be taken into consideration for arriving at decision of grant of bail. It further observed that deprivation of liberty must be considered a punishment unless it is absolutely necessary in the interest of justice 6 (2013) 7 SCC 439 7 (2012) 1 SCC 40 29 of 34 ::: Uploaded on - 08/08/2025 ::: Downloaded on - 09/08/2025 00:13:45 ::: ABA.2669.22 + Group.docx and that object of bail is merely to secure appearance of accused at the trial.
25. Next, in the context of the present case the decision of the Supreme Court in the case of P. Chidambaram Vs. Directorate of Enforcement 8 is also relevant. The Supreme Court observed that economic offences would fall under the category of 'grave offences' and in such circumstances while considering application for bail, the Court will have to deal with the same being sensitive to the nature of allegations made against the accused, however the term of sentence that is prescribed for the offence which is in addition to the triple test or the tripod test that would be normally applied. In that regard the Supreme Court has further held that even if the allegation is one of grave economic offence, it is not a rule that bail should be denied in every case and 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.
26. In the present case, it is seen that First - Informant did not institute any civil suit for recovery of his money allegedly misappropriated by Applicants. Considering the facts in the present case and having regard to the nature of dispute between the parties herein which is predominantly civil in nature as it underwent the 8 (2020) 13 SCC 791 30 of 34 ::: Uploaded on - 08/08/2025 ::: Downloaded on - 09/08/2025 00:13:45 ::: ABA.2669.22 + Group.docx statutory process of arbitration, mechanism, challenge being pending to the Award before the statutory Appellate Authority, process of criminal law cannot be pressed into service for settling a civil dispute in this fashion.
27. In the light of the above prima facie observations and findings, this Court is of the opinion that custodial interrogation of Applicants is neither warranted nor necessary in the facts of the present case. Prima facie the dispute between parties is of a civil nature coupled with absence of essential ingredients of the alleged Sections. Hence, I am of the opinion that the liberty of Applicants be protected. Investigation is completed and all disclosures have been made. In view of the above and looking at the nature of the issue involved in the present case, apprehension of First - Informant and prosecution can be well addressed by this Court by laying down appropriate conditions. In my opinion custodial investigation of Applicants is not required. Appropriate conditions shall be imposed on Applicants regarding participation in investigation, disclosure and to ensure that there is no impediment caused to First - Informant in the interregnum until the completion of trial.
28. In view of the above, all six Anticipatory Bail Applications are allowed, subject to the following terms and conditions:-
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(i) In the event of arrest, all six Applicants be enlarged on bail on executing P.R. Bond in the sum of Rs.50,000/- each with one or two sureties in the like amount;
(ii) Applicants shall report to the Investigating Officer at the concerned Police Station as and when called for by the Investigating Officer for investigation;
(iii) Applicants shall disclose and produce before the Investigating Officer all such relevant material with respect to documents which are finding place in the Complaint by First - Informant as also appended to Application as called for by the Investigating Officer;
(iv) Investigating Officer shall allow First - Informant to
participate in the investigation and seek
information from First - Informant with respect to any impediment that may be caused due to actions of Applicants;
(v) All Applicants shall furnish detailed particulars of their current residential and office address and mobile number to the Investigating Officer within 32 of 34 ::: Uploaded on - 08/08/2025 ::: Downloaded on - 09/08/2025 00:13:45 ::: ABA.2669.22 + Group.docx one week from today as also any change in the same in future;
(vi) All Applicants shall deposit their passports with the Trial Court within one week of this order;
(vii) Applicants shall not misuse their liberty in any manner or influence the informant, witnesses or any person concerned with the case and they shall not tamper with the evidence or create any impediment or trouble in respect of investigation;
(viii) It is directed that Applicants shall extend complete cooperation in the investigation of the instant case and shall attend the Trial Court unless exempted on all dates of hearing;
(ix) Any infraction of the above conditions shall entail revocation of this order.
29. All contentions of the parties are left open to be adjudicated at the time of trial. The observations made herein are only for the purpose of adjudication of the present Anticipatory Bail Applications and shall not influence the trial in any manner.
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30. Anticipatory Bail Application Nos.2677 of 2022, 2754 of 2022, 2857 of 2022, 3537 of 2023, 2723 of 2022 and 2669 of 2022 stand allowed and disposed in the above terms.
Ajay [ MILIND N. JADHAV, J. ]
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