Karnataka High Court grants Bail to person accused of Misusing the Public Funds and Reinvesting Money in Other Businesses [Read Order]

Karnataka HC - Bail- Public Funds - taxscan

The Karnataka High Court granted the bail to the  person accused of misusing the Public Funds and reinvesting money in other businesses.

The petitioner, Nanjundaiah is allegedly the Founder/Director of Kanva Souhardha Co-operative Credit Limited and has filed the Bail Application on the ground he has not at all committed any offence except he is a Founder/Director of the Society.

He has admitted that he collected funds and investments from the Society members, but not from the public. Out of the amount collected from the persons, the Society was lending money to others and getting interest and then used to repay the same to the members of the Society. He himself borrowed a loan by pledging the documents, which is nothing but a mortgage and out of that amount, he has reinvested some amount in some other businesses like health care, fashion garments, resorts and land development and other business. He is also involved in the development of the properties and selling the same to the purchaser. Out of the profit, he has to pay the interest to the Society and in turn the Society used to repay the same. Due to some loss in the business by that time, the complaint came to be lodged by some investors. But there is no intention of the petitioner to cheat any of the investors. He has invested the money for the purpose of business of the properties which were attached by the State under the KPID Act and also by the ED. The accounts were also freezed.

Kiran Javali, counsel appearing for the petitioner contended that absolutely, there is no intention of cheating any of the investors. He is ready to repay the amount to the investors by selling the properties. Therefore, his presence is necessary by coming out of the jail.

However, P.Prasanna Kumar, counsel appearing for ED, objected to the bail petition and contended that the petitioner is involved in cheating more than 13,000 investors who are the members of the Society. He has not repaid the amount. He has borrowed the loan out of the invested amount and re-invested in his other businesses. He has pledged the immovable properties and raised loans for more than Rs.250 crores. He has mis-used the funds of the public and re-invested the money in other businesses like Club, Garments, Resorts, Health Care etc. A public Interest Litigation petition is also pending before the Division Bench.

The single bench of Justice K.Natarajan directed to release the petitioner, Nanjundaiah on bail registered by the Directorate of Enforcement for the offence punishable under Section 4 of PML Act, pending on the file of Special Court at Bengaluru and in Crime registered by the Hosakote Police Station for the offences punishable under Sections 409 and 420 of IPC and Section 9 of the KPID Act, pending on the file of Principal Sessions Judge, Bengaluru Rural District subject to the various conditions.

Firstly, petitioner shall execute a personal bond for a sum of Rs.10,00,000 each with two sureties for the likesum to the satisfaction of the trial Courts (both cases separately). The trial Court shall ascertain the whereabouts of the sureties before accepting the surety bonds.

Fourthly, the petitioner shall regularly appear before the trial Court till conclusion of the trial.

Thirdly, petitioner shall not tamper with the evidence and threaten the witnesses.

Fourthly, petitioner shall surrender the passport, if any. Petitioner shall not leave the jurisdiction without prior permission of the Court.

Fifthly, petitioner shall not alienate any of the properties either in his name or in the name of his family without permission of the Court;

Lastly, petitioner shall co-operate with the Administrator appointed by the Division Bench / and also Competent Authority appointed under the KPID Act.

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