The Inspector of Police, Central Crime Branch, Team 1 vs Cheran Enterprises (P) Ltd.

M. Jeyapaul, J.—The petition is filed by the investigating officer invoking the provision u/s 439(2) of the Code of Criminal Procedure

seeking to cancel the bail granted to the first accused in a case in C.C.B. X.Crime No. 87/2008 registered for offences punishable under Sections

403, 406, 420, 466, 468, 471, 474, 477-A, 506(1) and 120B of the Indian Penal Code on the file of the Inspector of Police, Central Crime

Branch Team I, Egmore, Chennai.

The allegation in the complaint is that the Company by name Cheran Enterprises Private Limited kept in its account a sum of Rs. 78 crores in its

bank account in ABN Amro Bank, Chennai. The first accused siphoned off the entire money by diverting the same to the accounts of the other

accused. The first accused is supposed to utilise the funds of Cheran Enterprises Private Limited only as per the terms of the agreement dated

30.1.2004. The said agreement postulates that the first accused cannot withdraw more than a sum of Rs. 40,00,000/= from the said account

without the consent of Mr.Chandran Rathnasami, one of its Directors. The first accused also fabricated documents and records and fraudulently

misappropriated the funds of the complainant. The de facto complainant company had been stripped off its entire capital in the form of liquid cash.

He had caused wrongful loss to the Company and wrongful enrichment to himself. Therefore, the first accused is guilty of misappropriation of

property, criminal breach of trust, forgery, falsification of accounts and other related offences.

The first accused moved an application seeking bail before the Additional Chief Metropolitan Magistrate, Egmore, Chennai. He has granted bail

to the first accused with the following observations:

The first accused had already been taken police custody for about three days for interrogation. During interrogation, his specimen signatures and

statements were also obtained. Though the first accused was taken into police custody for the purpose of taking him to Coimbatore, Erode and

other places to unearth the details of transaction the first accused had with various banks, for reasons best known, the investigating officer had not

taken the first accused either to Coimbatore or to Erode or to other places. The amount had been allegedly diverted from the de facto complainant

company and deposited in a company by name SPIL. Even in connection with two other cases, the petitioner was subjected to police custody and

his specimen signature and statement were already obtained in connection therewith. The first accused had been in custody in connection with yet

another case from 31.1.2008 and in connection with the present case from 25.2.2008. The first accused is an Ex.M.P and Ex.M.L.A. He is a

respectable person in the Society. After all, the case is based on the documentary evidence. Hence, the question of tampering the evidence would

not arise.

Learned Government Advocate (Criminal Side) appearing for the State would submit that a serious allegation of misappropriation of a

whopping sum of Rs. 78 crores has been alleged in this case. The complainant also has come out with fabrication of records and forgery of

documents. The first accused never co-operated even during interrogation under police custody. The other accused are at large. The investigating

agency is groping in the dark without any co-operation from any of the accused. There is every possibility for the first accused misusing his status

he has acquired as Ex.M.P and Ex.M.L.A not only to tamper with the evidence but also to prevail upon the material witnesses in this case. A sum

of Rs. 78 crores which was diverted from the complainant company could not be traced by the investigating agency. If the first accused is released

on bail, there is every possibility for him to completely hide the said amount. He may also abscond from justice as a case of this magnitude has

been booked as against him.

Learned Senior Counsel appearing for the de facto complainant would vehemently submit that the Trial Court had not chosen to consider the

relevant points for grant of bail. The duration of custody cannot at all be a criterion for releasing an accused on bail more especially when the

accused is facing such a serious charge. The criminal antecedents of the first accused had not been taken into consideration by the Trial Court. The

accused had been in custody just for about 22 days. But, quite unfortunately, even during the pendency of the material part of the investigation, the

learned Additional Chief Metropolitan Magistrate, Egmore, Chennai was pleased to enlarge the first accused on bail. If the core accused in this

case is released on bail, the investigating agency may not be in a position to detect the whopping amount of Rs. 78 crores diverted against the

agreement entered into between the parties. Therefore, he would submit that the bail granted to the first accused will have to be cancelled to enable

the investigating agency to thoroughly investigate the case and track down the sum of Rs. 78 crores siphoned off by the first accused.

Learned Senior Counsel appearing for the accused who was granted bail by the Additional Chief Metropolitan Magistrate, Egmore, Chennai

would contend that the material aspects necessary for granting bail have been thoroughly discussed by the learned Additional Chief Metropolitan

Magistrate. This is not a case of siphoning off the amount, but, it is a case of diversion of funds to some other company against the terms of the

agreement. The Additional Chief Metropolitan Magistrate has rightly considered the duration of custody of the first accused and the investigation

embarked upon by the investigating officer by taking the first accused into police custody. The accused had also made a fixed deposit in the name

of the complainant company. At any rate, this Court, u/s 439(2) of the Code of Criminal Procedure cannot decide whether it is a fit case for grant

of bail. At the most, this Court can set aside the order of the Additional Chief Metropolitan Magistrate if there is any supervening event which goes

against the accused.

The Supreme Court in Niranjan Singh and Another Vs. Prabhakar Rajaram Kharote and Others, has held as follows:

Detailed examination of the evidence and elaborate documentation of the merits of the case should be avoided while passing orders on bail

applications. No party should have the impression that his case has been prejudiced.

The ratio laid down by the Supreme Court in State Vs. Amarmani Tripathi, reads as follows:

It is well settled that the matters to be considered in an application for bail are (i)whether there is any prima facie or reasonable ground to believe

that the accused had committed the offence; (ii)nature and gravity of the charge; (iii)severity of the punishment in the event of conviction; (iv)danger

of the accused absconding or fleeing, if released on bail; (v)character, behaviour, means, position and standing of the accused; (vi)likelihood of the

offence being repeated; (vii)reasonable apprehension of the witnesses being tampered with; and (viii)danger, of course, of justice being thwarted

by grant of bail.

In a graver nature of charge alleged against the accused, the court, which takes up an application for bail, shall consider the application in the

aforesaid angles stipulated by the Supreme Court.

The Supreme Court in Rajesh Ranjan Yadav @ Pappu Yadav Vs. CBI through its Director, has observed that there is no absolute rule that bail

must be granted on account of the long incarceration of the accused.

The Supreme Court in Puran v. Rambilas 2001 SCC (Cri) 1124 has authoritatively rejected the plea of the accused that the High Court could

not sit in appeal or revision over a Sessions Court''s order u/s 439(2) of the Code of Criminal Procedure. The High Court has got powers to go

into the merits and demerits of the plea for bail in the light of the order passed by the court below.

Coming to the gravity of the offence alleged as against the first accused, it is found that the de facto complainant has come out with a case of

rank cheating, misappropriation of Rs. 78 crores, breach of trust, forgery and fabrication of records. The court finds that the punishments

contemplated for these offences are really severe. The joint venture agreement produced before this Court would contemplate development of two

properties of 6th accused Cheran Properties Limited and 7th accused Vasantha Mills Limited. The said agreement further reads that any

expenditure more than Rs. 40,00,000/= can be incurred only by way of Board Resolution and also with the approval of ORE representative. The

de facto complainant has established that the de facto complainant company had a deposit of Rs. 78 crores. The bank account would disclose that

the entire amount had been withdrawn or taken away by the first accused. There is a serious charge of fabrication of the documents for the

purpose of misappropriating the said funds by the first accused.

It is found that the first accused is an Ex.M.P and Ex.M.L.A. The investigating agency has come out with a revelation that the first accused,

though acquired some status, was involved in many a criminal case. In fact, the petitioner was remanded to judicial custody with regard to this is a

case when he was in judicial custody relating to some other case.

Except another accused, who was recently arrested and taken to police custody for the ongoing investigation, no other core accused was

arrested by the investigating agency. All of them are at large. All those accused are, in one way or other, closely connected with the business

transactions of the first accused. If the first accused is enlarged on bail at the stage where the investigation is at a crucial stage, there is every

possibility, as apprehended by the investigating officer, for tampering with those witnesses. The investigating agency has come out with a case that

the first accused never co-operated during the course of interrogation in police custody. Therefore, there had been no occasion for the investigating

agency to take the accused either to Coimbatore or to Erode or to any other place where the amount misappropriated had been deposited. The

investigating agency has to zero in on the destination of the whopping amount of Rs. 78 cores allegedly siphoned off by the first accused.

The obtention of specimen signature and the specimen writing of the first accused do not complete the process of investigation, more especially

when the first accused has failed to co-operate for the purpose of investigation. It has been demonstrated before the court that only a small portion

of the amount was diverted and deposited in a company by name SPIL and in fixed deposit for a short while. The Supreme Court has laid down

that the duration of custody of an accused cannot be a material ground for releasing an accused when he has been alleged of graver offence. It is

found that the antecedents of the first accused was not taken note of by the Additional Chief Metropolitan Magistrate, Egmore, Chennai. The

major part of the case would hinge on documentary proof. But, it is seen that material documents could not be retrieved from the first accused

while he was in police custody during the course of investigation.

The investigating agency is virtually groping in the dark in the absence of co-operation from any of the accused. In a case of such magnitude, if

the accused is released on bail, as rightly contended by the investigating agency, there is also every possibility for the first accused to flee from

justice. The criminal antecedents projected by the investigating agency and the de facto complainant cannot be ignored by this Court. The first

accused had been in judicial custody only for about 22 days at the time when the bail was granted by the Additional Chief Metropolitan

Magistrate. Considering the amount involved in this case, a lot of materials to be collected by the investigating agency and the abscondence of

other accused in this case, the court finds that the investigating agency will definitely take some more time for completion of the investigation. The

release of the first accused at this crucial stage will definitely deal a deathblow to the investigation embarked upon by the investigating agency. The

Additional Chief Metropolitan Magistrate has not considered the gravity of charge, criminal antecedents of the first accused, the fact that the

amount alleged to have been misappropriated is yet zeroed in on and the pendency of the investigation beforeever considering positively the plea

for bail emanated from the first accused. In view of the above, the court finds that it is a fit case where the order of bail granted by the Additional

Chief Metropolitan Magistrate, will have to be cancelled.

Therefore, the order passed by the Additional Chief Metropolitan Magistrate in Crl.M.P. No. 611 of 2008 granting bail to the first accused

stands cancelled. The connected Miscellaneous Petition stands closed.