Telangana HC Grants Pre-Arrest Bail in Alleged ₹167 Lakh Misappropriation Linked to IBC Liquidation [Read Order]

In a recent ruling, the Telangana High Court granted pre‑arrest bail to a former director of G.S. Biotech Limited, who was accused of misappropriating ₹167 lakh in government compensation after the company entered liquidation under the Insolvency and Bankruptcy Code (IBC).

The case originated from a complaint filed by the Liquidator of G.S. Biotech Limited, alleging that Makhariya misrepresented himself as an authorised signatory and operated a bank account in the company’s name without authority. The funds, awarded by the Government of Maharashtra for the acquisition of company land, were allegedly misappropriated by the petitioner.

Appearing for the petitioner, Advocate E. Sudhanshu Rao argued that the dispute was civil in nature, arising out of liquidation proceedings under the Insolvency and Bankruptcy Code. He contended that the bank account was opened before liquidation and that the case was based entirely on documentary evidence, making custodial interrogation unnecessary. Rao also pointed to the delay in lodging the FIR as a ground for bail.

Opposing the plea, M. Ramachander Reddy submitted that the petitioner had dishonestly represented himself despite being divested of authority after liquidation commenced, thereby committing serious economic offences. He argued that the investigation was at a crucial stage and custodial interrogation might be required to trace the misappropriated funds.

After hearing both sides, Justice K. Sujana observed that the dispute primarily concerned the management of company assets during liquidation and was largely documentary in nature. The Court noted that custodial interrogation did not appear necessary at this stage and granted pre-arrest bail subject to conditions.

The court held that the petitioner was directed to surrender before the Station House Officer, CCS (DD) Police Station, Hyderabad, within two weeks and be released on bail upon executing a personal bond of ₹25,000 with two sureties. He must cooperate with the investigation and appear before the Investigating Officer every Wednesday between 9 a.m. and 5 p.m. for eight weeks or until the charge sheet is filed, whichever is earlier.

Accordingly, the Criminal Petition was allowed.

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