REPORTABLE

IN THE SUPREME COURT OF INDIA

CRIMINAL APPELLATE JURISDICTION

CRIMINAL APPEAL NO.     1374             OF 2009 (Arising out of SLP (Crl.) No.4129 of 2004)

M.M. Cooperative Bank Ltd. … Appellant

Versus

J.P. Bhimani & Anr. … Respondents

J U D G M E N T

S.B. Sinha, J.

1. Leave granted.

2. Appellant-Madhavpura Mercantile Cooperative Bank Ltd. (the bank)  

is a banking organisation incorporated and registered under the Maharashtra  

Co-operative  Societies  Act.   It  is  now under  a  reconstruction  scheme as  

contemplated by Section 15(b) of the Multi State Cooperative Societies Act,  

1984 (for short, the ‘1984 Act’) since repealed and replaced by the Multi  

State Cooperative Societies Act, 2002.  The said reconstruction scheme was

framed  as  directed  by  the  Ministry  of  Agriculture,  Department  of  

Agriculture and Cooperation of the Government of India.

3. The  bank  at  present  is  managed  by  a  Board  of  Management  

constituted in terms of the said scheme.  Indisputably, the Board of Directors  

of the bank was superseded and an Administrator was appointed by an order  

dated 15.3.2001 in terms of Sub-section (7) of Section 58 of the 1984 Act.  

Allegedly, the Administrator, after his appointment unearthed a large scale  

scam  and  defalcation  of  money  made  by  several  persons  including  the  

respondents herein by committing fraud of an unprecedented scale to the  

tune of crores of rupees.

A criminal complaint registered as C.R.8 of 2003 was filed, inter alia,  

against the respondents alleging siphoning of the funds by the accused in  

conspiracy  with  each  other  and,  thus,  they  are  said  to  have  committed  

offences punishable under Sections 406, 409, 420, 467, 471 and 120B of the  

Indian Penal Code.  The amount involved in the aforementioned complaint  

is said to be Rs.8 crores.   

Respondent was arrested on 22.7.2003.  He filed an application for  

grant of bail before the learned Sessions Judge.  An affidavit was affirmed  

on  behalf  of  the  appellant  opposing  the  said  application  wherein  it  was  

alleged that the amount involved was Rs.60 crores and not 8 crores.  It was  

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alleged that several other complaints have also been filed against the first  

respondent.  Before the learned Sessions Judge, an offer was made on behalf  

of the first respondent to make payment of some dues.   

The  learned  Sessions  Judge,  however,  rejected  the  said  prayer  for  

grant of bail, inter alia, opining that as the first respondent in association  

with the other accused cheated the bank and committed misappropriation,  

they cannot be directed to be released on bail, stating :

“Due to this reason the academic future of several  students  was  endangered,  and  many  marriages  were  held-back,  auspicious  functions  were  held- up, the treatment of several persons was held-up,  there  were  difficulties  in  several  families.   The  senior  citizens  and  widowed  women  were  dependant on the interest from the Bank and were  maintaining  their  families,  their  plain  bread  got  snatched from them.  Several families came under  grave  difficulties.   Even at  very  old  age  several  persons were compelled to start work afresh with  new energies, they were subjected to such difficult  times, or that those persons who could not work  they  become  helpless  and  dependant.   The  sole  cause behind all this was that the Bank Chairman,  Manager, Managing Director, a handful of Officers  and  a  handful  of  investors  of  the  Madhavpura  Bank for  satisfying  their  own financial  interests,  conspired  and  misappropriated  the  bank  funds.  Due to their financial greed, and because of their  acts  so  many  people  have  become  paupers.   In  these circumstances, the cheating of large amount  is  done  and  are  involved  in  the  conspiracy  of  misappropriation of the bank funds, if such persons  involved in such acts are released on bail then if on  

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release on bail  there would definitely be adverse  on the Society.”

4. The first respondent thereafter filed an application for grant of bail  

before the High Court.  A learned Single Judge of the said Court upon taking  

into consideration the readiness and willingness on his part to make payment  

of Rs.2384 lacs allowed the said application stating that at that stage, it was  

difficult to positively infer any conspiracy with the Management considering  

the past transactions.  It was, however, noticed :

“However, it would be appropriate to note at this  stage  that  learned  advocate  Mr.  Lakhani,  after  obtaining the instructions from his client, has made  a  statement  at  the  Bar  that  the  applicant  shall  within a week from the date of his release deposit  an amount of Rs.50 lakhs with MMCB.  He also  states that an amount of Rs.150 lakhs will be paid  in monthly installments of Rs.30 lakhs each.  The  first  installment  is  to  be  payable  on  15th April,  2004 with a grace period of 5 days.  The last such  installment would be payable on 15th August, 2004  with  a  grace  period  of  5  days,  that  is  by  20th  August,  2004.   Mr.  Lakhani  also  states  that  the  mortgaged property worth Rs.150 lakhs would be  sold out by the applicant with the consent of the  bank  and  the  sale  proceeds  would  be  deposited  with  MMCB  directly  within  four  months  from  today.   He  also  states  that  the  applicant  shall,  within  eight  weeks  from the  date  of  his  release,  tender  a  list  of  freehold  properties  held  by  third  parties (not being the borrowers of the bank) along  with their consent and title clearance report and the  bank would be free to deal with such properties in  the manner bank likes for the recovery of the dues  and  the  applicant  shall  extend  cooperation  in  

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dealing with such properties.  Mr. Lakhani stated  that  so far as  rest  of  the amount nearing Rs.805  lakhs  approximately  would  be  repaid  by  the  applicant  in  minimum  monthly  installments  of  Rs.10  lakhs  after  initial  period  of  six  months  is  over,  which  would  commence  from  September,  2004.  He, however, states that the applicant will  also  make  all  his  endeavour  to  repay  the  banks  dues as early as possible.  Mr. Lakhani has stated  that he has made this statement on the basis of the  instructions which he has received from his client  and the applicant shall file his undertaking on this  line within one week from the date of his release.”

A large number of conditions, however, were attached by the High  

Court for grant of bail in favour of the first respondent which are as under :

“(a) The  applicant  shall  file  an  undertaking  on  the  lines  of  the  statement  made  by  the  learned  advocate  Mr.  Lakhani  before  this  court within one week from the date of his  release  and  shall  abide  by  the  said  undertaking;

(b) The applicant shall surrender his passport, if  he is holding it, to the Court;

(c) The  applicant  shall  not  influence  the  witnesses or tamper with any documents;

(d) The applicant shall remain present and mark  his presence at the Prevention of Economic  Offences  Cell,  CID  (Crime),  Gandhinagar  Zone Police Station, on every 2nd Sunday of  even  number  English  Calendar  month  between 9 am to 2 pm;

(e) At the time of execution of the bonds, the  applicant  shall  furnish  his  address  to  the  

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investigating officer and the court concerned  and shall  not  change  his  residence  till  the  final  disposal  of  the  case  or  till  further  orders in that regards;

(f) The applicant  shall  not  leave the  limits  of  India  without  the  prior  permission  of  this  Court;

(g) The applicant shall not directly or indirectly  make any inducement, threat or promise to  any person acquainted with the fact  of the  case so as to dissuade him from disclosing  such  facts  to  the  court  or  to  any  police  officer;

(h) The  applicant  shall  not  do  any  act  prejudicial to the interest of the Prosecution.

(i) The  applicant  shall  deposit  an  amount  of  Rs.50 lakhs with MMCB within a period of  one  week from the  date  of  his  release,  as  already stated by him.

(j) The  aforesaid  amounts  are  ordered  to  be  deposited without prejudice to the rights of  the parties and the same shall be subject to  the final outcome in the Lavad Suit(s).

(k) The  applicant  shall  abide  by  the  above  conditions  scrupulously  and  in  case  of  violation  of  any  other  conditions,  the  complainant  bank  would  be  at  liberty  to  move this court for cancellation of bail.”

5. Mr. R.F. Nariman, learned senior counsel appearing on behalf of the  

appellant, would contend that the High Court committed a serious error in  

releasing  the  first  respondent  on  bail  in  so  far  as  it  failed  to  take  into  

consideration that as the total amount involved in the scam is huge viz. to  

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the tune of 107 crores of rupees.  It was urged that in any event, keeping in  

view the offer made by the appellant, he should at least be directed to pay a  

sum of  Rs.41  crores.   Our  attention,  in  this  behalf,  has  been  drawn  to  

Annexure-A/1 appended to the affidavit in reply filed by the appellant bank  

which reads as under :

“(Rs. in crores) Amount of  

principal dues

Amount of principal dues claimed by  MMCB as per affidavit Less : (I) A/cs not pertaining to Jayesh  Bhimani Group

(a) Sahyog Chemicals (b) Kishanlail Verma  

(II) Excess amount shown in one of  Group A/c.M/s Doshi Chemical Industries  (13  reported  instead  

of 10)

Correct position of Principal Dues

0.40 0.70 1.10

3.00

45.78

4.10 _____

41.68

Total amount of principal dues

Less  :  Interest  paid  out  of  increased  limit  in  various  Group  concerns  of  Bhimani Group  Amount  paid  after  suspension  of  MMCB

15.84

2.00

41.68

17.84_ Amount  actually  parted  with  by  MMCB

23.84  ”   

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6. Mr.  I.H.  Syed,  learned  counsel  appearing  on  behalf  of  respondent  

No.1, on the other hand, would contend that the respondent had been granted  

bail  after  remaining behind the  bar  for about  eight  months.   The present  

complaint,  it  was urged,  merely involving 8 crores  of  rupees and in any  

event,  even if  the advances  to  the other  concerns of  the  respondents  are  

taken  into  consideration,  the  same  would  come  to  Rs.23.84  crores,  this  

Court, thus, should not exercise its discretionary jurisdiction in interfering  

with the impugned judgment, particularly, when the respondent No.1 had  

made payments in terms of the directions of the High Court.

We may at the outset notice that the High Court issued the directions  

on the basis of the offer made on behalf of the respondent No.1 which reads  

as under :

“The learned advocate Mr. Lakhani appearing for  the applicant submitted that a picture is sought to  be drawn by the prosecution that the applicant has  been  transacting  the  bank  since  1977  and  has  indulged  in  irregular  transactions  from  the  beginning  throughout  the  period  but  the  fact  is  otherwise  and  he  tried  to  demonstrate  the  same  from  the  papers  of  the  prosecution  itself.   Mr.  Lakhani  submitted  that  the  applicant  is  a  businessman and a regular loanee of the Bank.  He  has been regulating repaying the dues to the bank.  Mr. Lakhani,  of course,  in all  fairness, conceded  that there appear to be come procedural lapses but,  there are no intentional violations of the banking  rules at the hands of the applicant.  He submitted  that the charge sheet does not indicate any forgery  

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to  have  been  committed  by  the  applicant.   Mr.  Lakhani  submitted  that  the  applicant  has  no  criminal  antecedents.   The  trial  is  likely  to  take  time.   The  bank  would  not  be  benefited  and  consequently the depositors of the bank would not  be benefited by keeping the applicant behind the  bars.   The  interest  would  go  on  mounting.  Recovery  would  be  delayed  and  probably  may  become impossible.   Mr.  Lakhani  submitted  that  the  applicant  is  a  businessman  who  had  a  reasonably large business of roughly Rs.100 crores  of rupees turn over in a year and if he is permitted  to be out of jail pending the trial, he will be able to  recover his dues from his debtors and in turn, pass  them  over  to  the  bank.   The  applicant  is  also  prepared to make repayment of reasonable amount  up front and some amount by way of installments.  The applicant is also prepared to sell the property  mortgaged  to  the  bank  and  submit  the  sale  proceeds  to  the  bank.   He  submitted  that  the  applicant  would  also  tender  details  of  freehold  property of third parties with their consent letters  and title clearance report to the bank and put those  properties at the disposal of the bank, which can be  dealt with by the bank and the applicant mutually  cooperates  for  recovery  of  the  money.   Mr.  Lakhani submits that the applicant will undertake  to recover the money from his debtors and repay it  to the bank in a minimum of monthly deposit of  Rs.10 lakhs, after initial period of six months, as  has been indicated in the affidavit,  sworn by the  applicant  before  notary  and  produced  before  the  notary and produced before the trial court, which is  forming  part  of  this  application  as  Annexure-D.  Mr. Lakhani submitted that the applicant is not in  any  way  hardened  criminal.   Mr.  Lakhani  submitted that the charge sheet relates to only one  firm,  namely  M/s.  Prabhudas  Mohanlal  Bhimani  for an amount of Rs.800 lakhs.  The offer is being  made by the applicant to take care of the firms or  companies with which the applicant is concerned.  

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As indicated in the affidavit of Deepakrai Parekh  in the table in Annexure-C except item No.9 and  10 and part of item No.4”

A further affidavit was affirmed by the respondent to the said effect.

7. We may furthermore notice that a large number of civil litigations are  

also pending including the ones forming the subject matter of awards passed  

by the Arbitrators in different arbitrations proceedings, the details whereof  

are as under :

Sr Company  name

Lavad  Suits

Status Arbitration  Disputes

Status Civil  Application

Status

1. Shah  Bhimani  Chemical  Pvt. Ltd.

2568/02 Withdrawn  by bank

79/03 Award  Declared  (18.08.06)

567/06 Pending  with  competent  court

2. Doshi  Chemical  Industries

-- -- 208/03 Award  Declared  (25.07.06)

434/06 Pending  with  competent  court

3. Prabhuda s  Mohanlal  Bhimani

-- -- Award  Declared  (18.08.06)

568/06 Pending  with  competent  court

4. Jinal  Chem Pvt.  Ltd.

2566/02 Withdrawn  by bank

96/2005 Award  Declared (9.10.06)

40/07 Pending  with  competent  court

5. Parin  Chemicals

1695/02 Matter  pending  for  cross  examination

-- -- -- --

6. Shah  Bhimani  Petro  Terminals  Pvt. Ltd.

639/02 640/02

Matter  pending  for  cross  examination

-- -- -- --

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8. The impugned judgment of the High Court was passed on 9.3.2004.  

Respondent No.1, indisputably, substantively complied with the directions  

issued by the High Court.  He had deposited a sum of Rs.50 lakhs.  He had  

also deposited installments of Rs.30 lakhs each per month.  The respondent  

No.1 was to tender a list of properties held by third parties not being the  

borrowers of the bank along with their consent and support and the bank was  

free to deal with such properties in the manner it likes for recovery of the  

amount.  It furthermore appears that the first respondent sold his residential  

house with his brother as well as his officer whereafter a deposit of Rs.150  

lakhs in addition of the amounts mentioned in para 2 and 3 of the further  

affidavit was made.  

9. The  bank,  as  noticed  hereinbefore,  had  also  instituted  civil  

proceedings by filing arbitration suits for recovery of total dues against the  

first respondent.   

10. The power of the superior courts to enlarge an accused on bail is not  

in dispute.  The High Court while enlarging the first respondent on bail,  

taking  into  consideration  the  materials  on  record,  had  issued  stringent  

conditions.  It is not the case of the appellant that such conditions have been  

contravened by the first respondent.  Even if some contraventions have been  

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made, the same could be brought to the notice of the High Court.  The fact  

that the first respondent has substantively complied with the directions of the  

High Court is also not in dispute.   

11. Submissions  of  Mr.  Nariman  that  the  first  respondent  should  be  

directed to pay at least a sum of Rs.41 crores cannot be accepted.  Subject  

matter of the first information report was only Rs.8 crores.  Other complaint  

petitions  as  also civil  litigation are  pending.   In  absence of  any material  

brought on record before us to show that respondent No.1 has not complied  

with  the  conditions  imposed on him by the High Court,  it  is  difficult  to  

interfere  with  the  impugned  judgment.   The  Court,  while  granting  bail  

cannot  impose unreasonable  conditions.  {See  Fida Hussain Bohra v.  The  

State of Maharashtra [2009 (3) SCALE 419]; Ramathal & Ors. v. Inspector  

of Police & Anr. [2009 (3) SCALE 550]; and I. Glaskasden Grace & Ors. v.  

Inspector of Police & Anr. [2009 (3) SCALE 554]}.

12. Furthermore, the impugned judgment having been passed in the year  

2004, in our opinion, it is not a fit case where this Court should exercise its  

jurisdiction under Article 136 of the Constitution of India.

13. For the reasons aforementioned, there is no merit in the appeal.  It is  

dismissed accordingly.  However, in the facts and circumstances of this case,  

there shall be no order as to costs.

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……………………………….J. [S.B. Sinha]

..…………………………..…J.  [Cyriac Joseph]

New Delhi; July 31, 2009

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