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Synopsis

The Supreme Court has held that court is required to impose appropriately strict and additional conditions in granting bail to an accused in a case of economic offences which affected a large number of people.

The apex court on August 28, 2024 cancelled the bail granted to a man accused of siphoning off funds to the tune of crores of rupees from a cooperative society in connivance with other accused.

A bench of Justices Hima Kohli and Ahsanuddin Amanullah set aside the Bombay High Court's single judge bench order, also noting it just imposed usual conditions upon the accused Vitthal Damuji Meher, in the case related to financial irregularities involving deposits by the people with meagre income.

The court said in cases where the allegations coupled with the materials brought on record by the investigation and in the nature of economic offence affecting a large number of people reveal the active role of the accused seeking anticipatory or regular bail, it would be fit for the court granting such bail to impose appropriately strict and additional conditions. In the present case, even that has not been done as the High Court has imposed usual conditions simpliciter, it pointed out.

"The High Court, we have no hesitation in saying so, erred in law. Ergo, for reasons recorded and upon circumspect consideration of the attendant facts and circumstances, we hold that the discretion exercised by the single judge of the High Court to grant bail to the respondent no 1 was not in tune with the principles that conventionally govern exercise of such power," the bench said.

The court opined the High Court has completely lost sight of the fact that the deposits in/to the Society were made by people having meagre earnings without anything else to fall back upon. 

"Tentatively speaking, it seems that the President of the Society systematically siphoned off these funds, with the aid of other office-bearers as also through respondent no 1. We consciously refrain from elaborately discussing/detailing the evidence or our views thereon," the bench said.

The court allowed an appeal filed by some of the depositors, who purportedly fell victim to Jai Shriram Urban Credit Co-operative Society Limited, against the single judge bench order of October 13, 2021.

According to the prosecution that the respondent no 1, Meher was a co-conspirator and a close friend of the alleged mastermind, Khemchand Meharkure. It was alleged he deposited an amount of Rs 2,38,39,071 with the society in his name and in the names of his family members. As per the charge sheet, he was paid an amount of Rs 9,69,28,500, upon the directions of the alleged mastermind. It was also alleged he purchased five immovable properties for approximately Rs 10,00,00,000 in the mastermind.

The appellants depositors contended the HC should not have ordered the release of the accused as he majorly benefitted from the scam. They said the High Court ought to have appreciated that the chances of the respondent no 1, as also the other co-accused enlarged on bail, influencing material witnesses such as the Society’s staff etc cannot be ruled out. 

Denying the charges, the counsel for the respondents submitted that the main accused/President of the Society has been released on bail by the High Court on August 22, 2022. The High Court had raised doubts on the existence of material evidence relating to charge of criminal conspiracy, they said.

The statements of witnesses could not be treated as gospel truth, as there was no electronic evidence, they claimed. 

After hearing the counsel, the apex court said the exercise of discretion by the High Court in granting bail to the accused cannot be sustained.

While granting bail are required to consider relevant factors such as nature of the accusation, role ascribed to the accused concerned, possibilities/chances of tampering with the evidence and/or witnesses, antecedents, flight risk et al, the bench said.

The court pointed out the single judge has simply proceeded on the premise that there were only allegations made by some persons against the respondent no 1 and he was not a member of the Society which had committed such financial irregularities. 

"Moreover, we find that the single judge, whilst noting that “no positive finding need be recorded on the sufficiency of the said material to establish conspiracy, which issue will be addressed by the trial court, after the evidence is adduced”, has without any basis thought it fit to record that in his “prima facie opinion, it is extremely debatable whether such material is sufficient to establish conspiracy”," the bench said.

The court also noted the HC's order goes on to state that respondent no 1 was not involved in the affairs of the Society nor was he responsible for the irregularities alleged, though the charge sheet indicated of withdrawal of Rs nine crore.

"We bear in mind the submission that respondent no 1 was a close associate of the President of the Society with regular business/other dealings between the two. Investigation also indicates that out of the monies withdrawn from the Society’s account by the respondent no 1, investments were later made in property in the name of his relatives," the bench said.

Moreover, though respondent no 1 had already suffered incarceration for a period of about six months at the time when bail was granted, yet in view of the nature of the alleged offence, his release on bail can seriously lead to dissipation of the properties where investments have allegedly been made out of Society funds. At the end of the day, the interests of the victims of the scam have also to be factored in, the bench said.

The court directed the accused to surrender within a period of three weeks with liberty to apply for bail on change in circumstances, given the peculiar facts that the bail was being cancelled almost three years after.

The court had on May 7, 2024 dismissed petitions filed against bail to two other accused, when it had reserved the order in the instant matter.