Orissa High Court
Prasanta Kumar Dash vs Republic Of India on 27 April, 2016
Author: C.R. Dash
Bench: C.R. Dash
ORISSA HIGH COURT : CUTTACK.
BLAPL No. 2378 of 2015
In the matter of an application under Section 439 of the Code of Criminal Procedure, 1973.
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Prasanta Kumar Dash ....... Petitioner
Versus
Republic of India ....... Opposite Party
For Petitioner : M/s. Deepak Narendra,
B.B. Lenka.
&
M/s. Bimal Prasanna Tripathy,
K.K. Pradhan.
For Opp. Party : M/s. K. Raghavacharyulu and
V. Narasingh.
( Advocates for the C.B.I. )
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PRESENT :
THE HONOURABLE SHRI JUSTICE C.R. DASH
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Date of Order : 27.04.2016
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C.R. Dash, J.This is an application for bail under Section 439, Cr.P.C. Preliminary Charge Sheet has been filed by the C.B.I. implicating the petitioner in the offence punishable under Sections 120-B / 294 / 341 / 406 / 409 / 420 / 467/ 468 / 471 / 506 & 34, IPC and Sections 3, 4 & 5 of the Prize Chits & Money Circulation Scheme (Banning) Act, 1978, keeping the investigation open U/S. 173 (8) Cr.P.C. 2
2. Coming to the genesis of the case, as found from the impugned order, the C.B.I. took up investigation in the present case pursuant to the direction given by the Hon'ble Supreme Court in Writ Petition (Civil) No.413 of 2013 filed by one Alok Jena.
3. Initially, Crime Branch (C.I.D.), Odisha was conducting investigation on the basis of the F.I.R. filed against the petitioner on 18.07.2012. Crime Branch (C.I.D.) arrested the petitioner on 19.06.2013 and after handing over the investigation to the C.B.I., the petitioner was handed over to the C.B.I. on 10.11.2014. Preliminary Charge Sheet against the petitioner and others was filed on 07.03.2015 and cognizance of offence, as aforesaid, has already been taken by the learned Special C.J.M. (C.B.I.), Bhubaneswar in S.P.E. No.44 of 2014. It is further found from the record that, the C.B.I. registered case bearing R.C. No.49/5/2014 against the petitioner and others clubbing 22 different cases registered against the petitioner and others in different Police Stations of Odisha and also in Economic Offence Wing of Crime Branch (C.I.D.), Odisha.
4. Bail application of Sri Pravat Kumar Dash, who is none other than the brother of the present petitioner and Director of Seashore Group of Companies, has since been rejected by this Court on 12.08.2015 in BLAPL No.1289 of 2015. Hon'ble Supreme Court has in the meantime also dismissed the SLP filed by said Pravat Kumar Dash against the order of refusal of bail by this 3 Court. Bail of another co-accused Suvankar Nayak has also been rejected by this Court on 08.07.2015 in BLAPL No.950 of 2015.
5. It is further found from the record that the present petitioner is either the Director or Managing Director of 22 Companies, which form the Seashore Group of Companies. The present petitioner is also the President / Director of all the 13 Multipurpose Cooperatives of Seashore Groups. It is also found from the records and statements of witnesses that, the present petitioner was the sole signatory in all the cheques of the companies and also all the transactions of the company. As further found from the records, the Seashore Group of Companies and Co-operatives have raised the following amounts in crores from thousands and thousands of people of Odisha, as shown in the table below.
Sl. Group Companies/Co-operatives Schemes Amounts (in crores)
1. Seashore Funds Management Pvt. Ltd. Deposit 12,52,93,054.94 Agreement
2. Seashore Securities Ltd. Preference Shares 503,22,80,600.00
3. Fixed Deposit through Multi-purpose Fixed Deposit 51,64,92,241.75 Co-operatives of Seashore
4. Recurring Deposit through Multi- Recurring Deposit 11,17,94,686.62 Purpose Co-operatives of Seashore
5. Savings Deposit through Multi-purpose Savings Deposit 8,61,95,079.72 Co-operatives of Seashore
6. Daily deposit through Multi-purpose Daily deposit 13,390.00 Co-operatives of Seashore Total 587,20,69,053.03 4
6. It is further found from the statement of witnesses that the present petitioner is the Managing Director of the Seashore Group of Companies. From the statement of Sri Ritish Nandan Padhi, Branch Operation Manager, HDFC Bank, Main Branch, Bhubaneswar, it is found that, out of the collected funds of the public, a sum of Rs.10,21,72,682/- (Rupees ten crores twenty-one lakhs seventy-two thousand six hundred eighty two) was diverted to five personal Accounts of the present petitioner maintained at HDFC Bank, and such diversion is alleged to be the misappropriation of public money by the present petitioner. It is also found from the record that, without requisite permission of the SEBI & R.B.I., Seashore Group of Companies managed by the petitioner was collecting money from the public by issuing preference shares and also by accepting deposits in different Multipurpose Co-operative Societies. It is further alleged that the deposits raised by the petitioner in Multipurpose Co-operative Society of the Company was being diverted to different sister concern of the Company in violation of relevant provisions of law. It is also alleged that the Seashore Group of Companies, i.e., Seashore Securities Limited was accepting deposits from all over Odisha and issuing preference shares with guaranteed monthly dividend of 2% for a period of six years. From the statement of Sri Mihir Kumar Sahu, Chattered Accountant, it is however found that the Company had cumulative profit of only Rs.6,33,11,221/- as on 31.03.2011, which shows that the Company has no commensurating business to repay the collected amount from the public. It is alleged that the Companies, of which the petitioner is the Managing Director and 5 especially the Seashore Securities Limited, was collecting money from the public to repay the dividend of the first group and so on. So, in a pyramid structure, the petitioner being the mastermind behind all the transactions, was issuing preference shares to the depositors, luring them of high return though the Company had no sufficient fund from its profit to pay the dividend. Many other allegations have also been made to submit that the petitioner entering into conspiracy with other Directors and especially with his brother Pravat Kumar Dash, has duped large number of innocent public in a systematic way without necessary permission from the SEBI & R.B.I.
7. It is further alleged that co-accused Suvankar Nayak was the main liasoning person of the present petitioner so far as the Govt. Officials are concerned, and from the Diary seized from the possession of said Suvankar Nayak it is clear that hefty amount of money was being paid to different government officers frequently for smooth business of the Seashore Group of Companies and for other illegal gains. That part of larger conspiracy in bribing the State machinery for personal gain is yet to be ascertained and investigated. It is further alleged by the C.B.I. that presently, further investigation of the case U/S. 173 (8) Cr. P.C. is in progress, and in such a crucial stage it is to be ascertained the aspect of money trail of the Seashore Group of Companies, and the entire business of Seashore Group of Companies from April, 2011 onwards are also required to be assessed. It is also alleged by the C.B.I. that, if at this crucial stage the petitioner is favoured by an order of bail, he may flee the course of justice and 6 may tamper with the evidence by his money and muscle power, and the smooth investigation will suffer a lot.
8. Learned counsel for the petitioner relying on the case of Ram Govind Upadhyay v. Sudershan Singh & Ors., (2002) 3 SCC 598 and Kalyan Chandra Sarkar v. Rajesh Ranjan, (2005) 2 SCC 42, submits that circumstances to be considered in a prayer for bail U/S. 439 of the Code of Criminal Procedure, besides others, are :- (a) nature of evidence in support of the accusation, and (b) while considering the nature of accusation, a prima facie satisfaction of the court in respect of the charge is to be found. It is further submitted that, when a person is accused of non-bailable offence, he is also entitled to bail, if the Court concerned comes to the conclusion that the prosecution has failed to establish a prima facie case against him, and/or if the Court is satisfied by reasons to be recorded that in spite of existence of a prima facie case, there is need to release such accused on bail, where fact situations require it to do so.
9. There is no dispute about this position of law. So far as consideration of prayer for bail is concerned, first the court concerned is to find out the prima facie case from the materials on record. If prima facie case is not at all found against the accused, the accused is to be granted bail without any further consideration. If, however a prima facie case is found, the court is to proceed to find out the nature of evidence collected by the prosecution in support 7 of the charge and potency of such evidence to sustain the charge. Further, the court is required to find whether there is possibility of the petitioner to flee the course of justice and, to find out such a state of thing, the court is to take into consideration many factors like reputation of the accused in the society, his family tie and especially his root in the society. Further, the court shall proceed to find out whether there is any scope on the part of the petitioner to tamper with the evidence, if released on bail. In this regard, the court may take into consideration the nature of accusation, gravity of offence, seriousness of the charge, etc.
10. Learned counsel for the petitioner relies on the case of State of West Bengal v. Swapan Kumar Guha & Ors., (1982) 1 SCC 561 and submits that, no prima facie offence U/Ss. 3, 4 & 5 of the Prize Chits and Money Circulation Scheme (Banning) Act, 1978 is made out against the petitioner, though he had issued preference shares to make easy money by promising return of 24% dividend after six years of issuance of the preference shares. The aforesaid case of Swapan Kumar Guha (supra) can be distinguished so far as the fact of the present case of the petitioner is concerned, inasmuch as the Hon'ble Supreme Court in the aforesaid case was sitting in appeal on the civil side after trial was over and the entire evidence for scanning was available on record. So far as the present bail application is concerned, detailed documentation of the materials on record is a complete bar to find out a prima facie case. In the present case, there is allegation to the effect that (i) the petitioner had issued preference shares with 2% monthly return and 24% dividend 8 after maturity of the share on completion of six years from the date of issuance of the said share; (ii) The Chattered Accountant examined as a witness has clearly stated that, though the monthly returns are to be given to the beneficiaries from the profit of the Company, the Company had no commensurate profit as on 31.03.2011, and the petitioner had collected money in the same manner from the second batch of investors to pay the monthly return to the first batch of investors and he was running the business thus in a pyramid structure; (iii) witnesses have stated in their statements recorded U/S. 161, Cr.P.C. that luring them of higher return, the petitioner motivated them to invest money, and they were cheated in the consequence; (iv) For issuing preference share, the petitioner had neither taken necessary permission from the SEBI nor from the R.B.I. All the aforesaid facts, taking cumulatively, show that a prima facie case U/Ss. 3, 4 & 5 of the Prize Chits & Money Circulation Scheme (Banning) Act, 1978 is made out against the petitioner, and what was observed by the Hon'ble Supreme Court in Swapan Kumar Guha's case (supra), on the basis of the evidence adduced, cannot be applied to the present case.
11. It is next contended by learned counsel for the petitioner that the very applicability of the Prize Chits & Money Circulation Scheme (Banning) Act, 1978 in the State of Odisha is itself suspective inasmuch as no Rule has been framed by the State in terms of Section 13 of the said Act, and in absence of any Rule, the Act is inoperative. In this regard, reliance is placed on Mayawati v. Markendya Chand, (1998) 7 SCC 517.
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12. So far as the Rule is concerned, it prescribes the procedure to carry out the provision of the Act. It may so happen that, by the time of filing of Charge Sheet in the present case, rule may be framed to carry out the purpose of the Act and, if the offence alleged against the petitioner is the substantive offence triable by any Magistrate, there may not be requirement of any rule to be made for trial of the offence. This contention of the learned counsel for the petitioner is, therefore, also negatived.
13. It is next submitted by learned counsel for the petitioner that the Seashore Securities Limited, of which the petitioner is the Managing Director, was incorporated on 25.04.2008 and preference shares have been issued thereafter. The term of preference shares being six years, time had not yet expired for redemption of the preference shares by the time of arrest of the petitioner on 19.06.2013.
14. It is however alleged against the petitioner that, without necessary permission of the SEBI and R.B.I., the petitioner's company had issued preference shares with return of 24% dividend after six years and 2% monthly return. As discussed supra, the profits of the Company was not commensurate to pay the monthly return of the depositors, and for that reason money were raised from the market by duping other depositors in the similar fashion. It is further submitted by learned counsel for the petitioner that, if there has been infraction of any provision of the Companies Act, 1956 in issuing the preference shares, 10 recourse could have been taken to Section- 80 (6) of the said Act without initiating criminal prosecution against the petitioner.
15. There may be options on the part of the authorities to take recourse to different law. But, if the substance of the allegation makes out an offence under the I.P.C., there is no bar for initiation of a criminal proceeding on the basis of the allegation made. Besides criminal proceeding, it is further open for the authorities concerned to initiate appropriate proceeding under the relevant law.
16. Refuting the charge under Section 420, I.P.C., learned counsel for the petitioner submits that, as there is no element of deception, no offence under Section 420, I.P.C. is made out against the petitioner. As I have discussed supra, without entering into detail documentation of the materials on record, it is found from the statement of the witnesses that the petitioner raised money from the innocent public by luring them high return and he was not even able to pay the monthly return assured to them from the profit of the company. At this stage, on the basis of materials on record, it can be said that there was an element of deception in the entire transaction undertaken by the petitioner.
17. Coming to Section 409, I.P.C., learned counsel for the petitioner relies on the case of Hargovind Gangabisan v. State of Maharashtra, 1985 (2) Bom CR 759, and submits that no ingredients of Section 409, I.P.C. is made out against the petitioner from the materials collected on record. So far as the case of Hargovind Gangabisan (supra) is concerned, the petitioner had moved Hon'ble 11 Bombay High Court against refusal by the trial court to drop the charge. In that decision the Hon'ble Court has dealt with the materials on record and has come to a conclusion that charge against the petitioner under Section 409, I.P.C. is not made out.
18. The standard to find out a prima facie case at the time of framing of charge is on a higher plane than the standard to find out a prima facie case in the event of consideration of the prayer for bail. The standard that applies to discharge a person cannot be applied squarely to consider for bail, as detailed analysis of the materials on record is a complete bar at the bail stage. In view of such fact, the aforesaid decision cited by the learned counsel for the petitioner is not applicable to the facts of the present case, and from the materials on record I feel inclined to find that a prima facie case under Section 409, I.P.C. is made out against the petitioner.
19. So far as diversion of fund of the Co-operative Society is concerned, it is submitted by learned counsel for the petitioner that Section 39 of the Orissa Self-help Co-operative Act, 2001 authorizes deployment of fund by the Societies and Section 48 of the said Act authorizes the Registrar to initiate proceeding, if any offence is committed in respect of the funds of the Society. In this regard also my answer will be same, as given supra. If the substance of allegation makes out a criminal offence, a charge under the I.P.C. must stand besides any proceeding under the relevant law. In the present case, funds of the 12 Co-operative Societies have been raised for fulfillment of the objectives of the said societies. Such funds have been raised from the general public. But most of the funds of the Society, as shown in the Table supra, have been diverted to the sister concern of the Sea-Shore Group of Companies. There is nothing to show that the petitioner did his best to achieve the objectives of the societies with the fund raised by the societies.
20. In the alternative, it is submitted by learned counsel for the petitioner that, since the date of his arrest on 19.06.2013 the petitioner is suffering as an under-trial prisoner for about two years nine months, and the petitioner has co-operated throughout in the investigation of the case, and in the event of his release on bail there being no chance of his absconding or tampering with the evidence, he should be released on bail. Learned counsel for the petitioner relies on the cases of Babba v. State of Maharashtra, (2005) 11 SCC 569 and Vivek Kumar v. State of U.P., (2000) 9 SCC 443, to submit that delay in trial should be a ground for granting bail.
21. Learned counsel for the petitioner also relies on the case of Sanjay Chandra v. CBI, 2011 13 SCALE 107 to release the petitioner on bail in view of his long detention and possibility of delay in trial involving about 457 witnesses and voluminous documents, in the event of commencement of trial.
22. As per the direction of the Hon'ble Supreme Court, the C.B.I. is to investigate into the aspect of "money trail" and "larger conspiracy" so far as the 13 funds raised by Sea-Shore Group of Companies are concerned. To wriggle out of the provision of Section 167 (2), Cr.P.C., the C.B.I. has filed a preliminary charge- sheet, keeping the case open for further investigation under Section 173 (8), Cr.P.C. The "money trail" aspect is to be investigated now and further the "larger conspiracy" involving co-accused Suvankar Nayak in bribing the State machinery for illegal gain of the Sea-Shore Group of Companies is also being investigated now. A Diary has been seized from the possession of co-accused Suvankar Nayak, in which it has been reflected that on many occasions hefty amount of money has been given to many government officials of different districts of Odisha. It may so happen that the present petitioner may disown his relationship with co-accused Suvankar Nayak, and co-accused Suvankar Nayak may also disown the seized Diary. In that event, custodial interrogation of both face to face may be a necessity. For the aspect of "money trail" also the investigation process is not so easy and obviously it is a cumbersome process. Release of the petitioner on bail at this crucial stage may hamper smooth investigation of the case and may affect the larger interest of the society.
23. However, the C.B.I. is directed to adhere strictly to the direction issued by the Hon'ble Supreme Court in Special Leave to Appeal (Crl.) No.7125 of 2015 so far as completion of investigation is concerned. I am constrained to say that the investigation cannot go on for an indefinite period and the petitioner cannot be put behind the bar beyond the period of detention exceeding the sentence to be imposed under the charge. The petitioner, if so advised, may 14 renew his prayer for bail before the learned trial court after filing of complete charge-sheet by the C.B.I.
24. With the aforesaid observation, the prayer for bail is rejected and the Bail Application is dismissed.
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C.R. Dash, J.
Orissa High Court, Cuttack.
The 27th day of April, 2016.
S.K. Parida, Secretary and Subhasis Mohanty, Sr.Steno.