Delhi High Court grants Bail to accused linked to Crores Bank Loan fraud arrested by ED under PMLA [Read Order]

Delhi High Court - bail - bank loan fraud - ED - PMLA - Taxscan

The Delhi High Court granted bail to the accused linked to bank loan fraud arrested by the Enforcement Directorate under the Prevention of Money Laundering Act, 2002 (PMLA).

This case is one of a kind, dealing with a bail application from the accused, Sai Chandrasekhar for fraud with the company. The facts of the case are that an FIR was registered by Economic Offence Wing (EOW) on the complaint about the offence under section 409/420 and 120B IPC of deliberately manipulating/falsifying stocks, inventories of M/s Bush Foods Pvt. Ltd which resulted in huge account fraud of approximately Rs.1000 crore.

It was further found that M/s Bush Foods has availed material working capital loan facility from various public Sector banks under the consortium agreement dated 19.10.2012 executed between company and consortium banks consisting of banks Bank of India, Allahabad Bank, Bank of Baroda, Central Bank of India, PNB, Exim Bank, Standard Chartered Bank, DSB and HSBC Bank. The loan has been availed on the strength of inventory as available with M/s Bush Foods and verification by banks and secured by hypothecation, charge on the stock of rice to the consortium bank. The Complainant has been informed that the current outstanding amount under the credit facility was over 714 crore which exceeds the sanctioned amount of Rs.700 crore.

Mr. Tanveer Ahmed Mir, the counsel for the petitioner submitted that the complaint pursuant to the investigation already stands filed and the investigation is complete. The council stated that further investigation cannot be a ground for continued incarceration and rejection of bail. It is further submitted that none of the evidence has tampered ever since 2013 and the evidence in the present case is documentary in nature and has seized all the documents, digital devices like computers, hard drives, mobiles, etc. which cannot be now tampered as they are in the possession of the respondent.

On the other hand, the counsel for the respondent has said that the petitioner had conspired with other rival companies to cheat the company in question. It is noted that the petitioner had a key role in negotiations and personally monitored the inventory verification.

The counsel for the respondent also tried to bring the fact to the fore that the petitioner overruled the questionnaire prepared for the distributor’s due diligence exercise on his understanding that the distributors were genuine and carried out amendments in a distributor survey. All these actions prove that he had an intention to commit fraud and manipulate the stock. It was pleaded that the court shall observe how the present case involves the commission of the grave economic offense of laundering of the proceeds of crime.

The single-judge bench of Justice Rajnesh Bhatnagar noted that since the twin conditions for bail in section 45 of the PML Act have been struck down by the Supreme Court and the same are neither revived nor resurrected by the Amending Act, therefore, as of today, there is no rigor of said two conditions under original Section 45(l)(ii) of the PML Act for releasing the Petitioner on bail. The provisions of section 439 of Cr. P.C and the conditions therein will only apply in the case of the Petitioner for grant of bail.

The court observed that the petitioner in the instant case is in custody since October 27, 2020, and nothing has been placed on record to show that the petitioner is a flight risk and according to the counsel for the petitioner, the petitioner was granted permission to go to Sri Lanka for two weeks and thereafter he returned, the fact which has not been denied by the respondent. As far as the question of tampering is concerned, the evidence is documentary in nature and the documents and digital evidence are in the custody of the prosecuting agency.

Therefore, the court allowed the bail to the petitioner on his furnishing personal bond in the sum of Rs. 1,00,000/- with one surety of the like amount to the satisfaction of the Trial Court, subject to the condition that he shall not leave the country without the permission of the Special Court, the passport if already not deposited, shall be deposited with the Special Court, he shall join the investigation as and when required by the prosecuting agency and he shall not tamper with the evidence and influence the witnesses in any manner.

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