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A Supreme Court bench of Justices Chandrachud and Surya Kant today granted bail to a person named Jainam Rathod who is under investigation for misappropriating an amount of Rs. 223.77 crores, for alleged purchase of Suit Lengths (Cloth) by a Co-operative Society from 27 Companies. Rathod is also under investigation for misappropriating Rs. Rs.90.03 Crores all of it during the time of demonetisation.

A complaint was lodged against Rathod under provisions of companies act and Indian Penal Code in Gurugram. He was subsequently arrested on 28th August 2018. He had sought for a bail from the Punjab and Haryana High Court which was declined in 2019. He had subsequently approached the Supreme Court in 2020, the court declined to entertain his bail application.

He approached the Single Judge of the High Court in 2021 again seeking bail, the single judge dismissed his plea on the ground that his case was devoid of merits and that he cannot be granted bail just because other accused have been granted bail. When the matter came up for hearing today, Kapil Sibal, Sr.Adv, appearing for Rathore submitted that

1. He has been appearing before the SFIO;
2. The arrest was made after the complaint was lodged;
3. Appellant has been in custody for 2 years and 8 months ;
4. There are a total 187 accused and there is no likelihood of trial to be completed;
5. While main accused are in jail, some other accused have been entertained.

Additional Solicitor General KM Natraj opposed it on the ground that

1. Conditions spelt out in companies act have not been fulfilled and that there can be no parity . Rathod is on investigation found to have been involved in granting accommodation entries to main accused.
2. As regards the progress of the trial, all the accused except 27 persons have appeared before Special Court and that the Special Court has in the case of 27 persons has published proclamation.

The court on hearing the parties noted that the facts indicate that Rathod has been in custody since August 28, 2019 and that the total number of accused involved is 187. The court further noted that it is evident that as regards the balance 27 accused who have not appeared as yet proclamation are to be initiated. The court further noted that in the absence of the reasonable time line for conclusion of a trial, it is the duty of the court to protect Rathod’s personal liberty . The court further noted “we grant bail on the ground since he has been under custody since 2019.”

About Adarsh Co-operative Society Scam:

A multilevel Co-operative Society was registered by one Mukesh Modi and family in the name of Adarsh Credit Co-operative Society Ltd. That Co- operative Society collected deposits from about 22 lakh investors. In the process about Rs.5000Crores were collected from investors from general public; which remained unreturned to the investors and, accordingly an amount of approximately Rs.9253Crores, including interest, is reflected in the accounts of the Society ACCSL, as payable to the investors. After collecting this money from the public, Mukesh Modi and family created a large number of Companies under the aegis of Adarsh Group of Companies Ltd. (AGCL), with their associates and relatives as the Directors. Subsequently these companies were shown having been advanced the loans of about Rs.1700Crores by the Co-operative Society ACCSL. Loans were required to be returned to the Co-operative Society by these Companies with interest, as per the alleged agreements of advancement of money. However, the same were not returned by the Companies. Therefore the money of the Co-operative Society was allegedly, being siphoned off through the Companies created by Adarsh Group of Companies Limited. 

Case title: Jainam Rathod Vs State of Haryana