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CASE NO.: Appeal (crl.)  1526 of 2005

PETITIONER: Himanshu Chandravadan Desai & Ors.

RESPONDENT: State of Gujarat

DATE OF JUDGMENT: 16/11/2005

BENCH: S. B. Sinha & R. V. Raveendran

JUDGMENT: J U D G M E N T [Arising out of SLP (Crl.) No.1818 of 2004]

RAVEENDRAN J.,

       Leave granted. The appellants have challenged the order  dated 15.12.2003 passed by the High Court of Gujarat at  Ahmedabad, rejecting their application for bail filed under Section  439 of the Code of Criminal Procedure.  

2.      First appellant was one of the Directors of M/s Charotar  Nagarik Sahakari Bank Limited [for short ’the Bank’]. He became  a shareholder of the bank on 18.10.99 and was appointed as a  Director on the same day. It is alleged that one Chiman Sathi,  Managing Director of the said bank, first appellant and other  Directors of the bank siphoned off the funds of the bank by bogus  loans and fictitious letters of credit in the name of their friends,  relatives, associates and name-lender companies either without  any security or with wholly inadequate security.   

3.      The wives of appellant Nos. 1 and 2 along with appellant  No.3 are the Directors of M/s Bhavika Creations which is one of  the beneficiaries of the illegal and collusive loans/credit facilities  given by the Bank. It is alleged that appellant nos. 2 & 3 actively  assisted and supported appellant no. 1 in several fraudulent  transactions in the name of Bhavika Creations, Jayraj Multimedia,  Hindustan Earthmovers Pvt. Ltd., Rahul Industries, Innovative  Hydraulics (P) Ltd., Satya Sulpher (P) Ltd., Raheja Textile  Industries, Bhanu Sulpher Industries Ltd., Trigon Jinco Co. etc.  The State alleges that the following fraudulent transactions  involving appellant nos. 1, 2 & 3 and Chiman Sathi, which  aggregate to more than Rs.50 crores, took place in the year 2000- 01 :-  

S. No. Transaction  Amount  Name of Beneficiary  

1. 4 letter of credit

 10.95  crores Appellants Nos. 1 to 3

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and Chiman Sathi 2. Term loan to Jayraj Multimedia,  Vadodara  (12.6.2000)

6.47  crores Appellant No. 1 3. Term loan to Hindustan  Earthmovers Pvt. Ltd. (27.6.2000)

3 crores  Appellant No. 1

4. Letter of credit in the name of  Trigon Jinco Co. in Baroda Peoples  Cooperative Bank Limited.  (6.11.2000)

4.956  crores Appellants Nos. 1 to 3 5. Discounted letter of credit in the  name of Rahul Industries. (8.11.2000) 4.67  crores Appellants Nos. 1 to 3 6. Loan given to Bhavika Creations (9.11.2000)

0.50  crores Appellant No. 1 and  others 7. Discounted Letter of Credit of  Innovative Hydraulics Pvt. Ltd.,  Waghodia (14.11.2000)

4.98  crores Appellants Nos. 1 to 3 8. Discounted Letter of Credit (12.12.2000)

2.67  crores Appellants Nos. 1 to 3 9. Letter of credit in discounted by  Himanshu Desai and his associates  in the name of bogus company,  Satya Sulpher Pvt. Ltd., (27.12.2000)

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3.128  crores Appellants Nos. 1 to 3 10. Bogus letter of credit discounted  by Himanshu Desai in the name of  bogus company, Raheja Textile  Industry (27.12.2000)

2.486  crores Appellants Nos. 1 to 3 11. In the name of Bhanu Sulpher  Industries Pvt. Ltd. (27.12.2000) 2.486  crores Appellants Nos. 1 to 3 12. Bogus Letter of Credit in NRI  account of Shri Subhash Mehta 7 crores Appellants Nos. 1 to 3  and Chiman Sathi

13. Vehicle loan to Himanshu Desai

1.4 lakhs Appellant No. 1 14. Vehicle loan to Bhavika Creations.  4 lakhs Appellants Nos. 1 to 3

It is also alleged that Chiman Sathi (Managing Director) and other  Directors were involved in other fraudulent transactions relating to  the Bank, which are not relevant for the purpose of this Appeal.  

4.      In regard  to the said bank scam,  the bank lodged a  complaint with the Police Station, Anand Town vide Criminal No.6  of 2002 for offences punishable under sections 409, 468 and 114  of Indian Penal Code. It is stated that the Appellants voluntarily  surrendered on 24.10.2002 and are in custody even since then.  On completion of investigation, a charge-sheet was filed on  22.1.2003 under sections 409, 465,466, 467, 468,470, 471, 406,  420 and 120-B of IPC against the Directors of the Bank.  

5.      It is alleged that Appellants filed Criminal Misc. Appeal Nos.  747/2000, 6/2003 and 479/2003 seeking regular bail which were  rejected by the Sessions Judge, Anand on 5.4.2003, 16.5.2003  and 21.11.2003 respectively. The Appellants filed Criminal Misc.  Appeal Nos. 6523/2003 and 6520/2003 before the High Court of  Gujarat which were withdrawn. After rejection of Criminal Misc.  Appeal No. 479/2003 by the Sessions Judge, the appellants  moved a regular bail application (Criminal Misc. Application No.  10003 of 2003) in the High Court of Gujarat. The High Court after  referring to the clandestine and fraudulent nature of the  transactions rejected the application. The said order is challenged  in this appeal, urging the following contentions :-

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a)      The Chairman, Vice-Chairman and other Directors of  the Bank who were also allegedly involved in the said  offence have been released on regular bail. [Reliance  is placed on order of this Court dated 14.7.2003 in  Criminal Appeal No. 802 of 2003 granting bail to one  Rajendra Kumar Dhanraj Banthia, a share broker who  according to appellants was the real beneficiary and  took the siphoned money from the bank]  

b)      Even though the charge-sheet has been filed as long  back as on 22.1.2003, charges have not been framed.  The investigation is completed. The prosecution has  cited as many as 150 witness. The trial is likely to be  protracted and therefore, appellants should be  released on bail. It is contended that failure to do so  would amount to detention by way of punishment.  

c)      Even if a prima facie case is established, where  presence of the accused would readily be available for  trial and there was no likelihood of the accused  tampering with the evidence in view of completion of  the investigation, the accused should not be detained,  particularly when the accused has been long  incarcerated and the trial is likely to consume long  time \026 vide Bhagirath Singh vs. State of Gujarat  [1984 (1) SCC 284].  

6.      The cases of appellants cannot be compared with the others  who have been released on bail. The cases of Appellants are more  serious than the case of other Directors (except the case of  Chiman Sathi). Further, the State has pointed out that one or two  Directors of the Bank were released on the ground of old age and  medical problems; and other Directors were released on bail after  they repaid their entire dues. It is also submitted that in regard to  three sons of Chiman Sathi (the then Managing Director of the  Bank), the High Court cancelled the bail for not honouring the  undertaking and repaying the dues. The case of Rajendra Banthia  (share-broker) is different and he apparently was not directly  involved in defrauding the Bank.  

7.      A Constitution Bench of this Court in Bihar Legal Support  Society v. Chief Justice of India & Anr. [1986 (4) SCC 767]  has held that this Court should not ordinarily, save in exceptional  cases, interfere with  orders granting or refusing bail by the High  Court because the High Court should normally be the final arbiter  in such matters. The crime in which the petitioners are involved is  very serious involving a conspiracy to cheat and defraud public  institutions in a systematic manner and the punishment is likely to  be severe in the event of conviction. The High Court has recorded  a finding that the material shows that the petitioners are prima  facie involved in the offence. Large portion of the amount  advanced to Bhavika Creations (about Rs. 7.5 crores) has  allegedly been diverted by appellant No.1 for acquiring shares in  Nedungadi Bank Ltd. As a result of the scam, the Bank is under  liquidation from 31.7.2003. On account of the fraudulent activities  of the then Managing Director and Appellant No.1 (the then  Director) and Appellants Nos. 2 and 3, nearly Rs.23 crores is due  from Bhavika Creations alone. Having regard to huge amounts  involved in the systematic fraud, there is a danger of the  appellants absconding, if released on bail, or attempting to  tamper with the evidence by pressurizing witnesses. In the  circumstances, we do not find any reason to interfere with the  order refusing bail as grant of the relief sought may result in  thwarting the course of justice. The appeal is, therefore,

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dismissed.