Granting Anticipatory Bail In Economic Offences Cases Will Frustrate Investigating Agency's Ability To Interrogate Accused: Kerala HC Rejects Bail Of Kandala Co-operative Bank Officials

Noting that the grant of anticipatory bail could impede the investigating agency's ability to thoroughly interrogate the accused, the Kerala High Court recently observed that providing anticipatory bail in cases related to economic offences would hinder the effectiveness of the ongoing investigation.

The Single Judge Bench of Justice Mohammed Nias C.P. was dealing with the anticipatory bail applications filed by the President and Secretary of the Kandala Co-operative Bank, facing charges under Sections 420 and 409 of the Indian Penal Code, along with Section 34, pertaining to cheating, deceiving depositors, and misappropriating substantial amounts of money running into crores of rupees.

Advocate P.V. Baby appeared for the Petitioners while Public Prosecutor M.C. Ashi along with Advocate Bencilal B.S appeared for the Respondents. 

Background: A complaint was filed against the Petitioners alleging that with the intent to deceive, they induced the complainant to invest Rs. 21,00,000 in Kandala Co-operative Bank, promising higher interest rates. Despite multiple demands, the Petitioners failed to pay the promised amounts after the investment tenure, constituting an offence under the IPC for cheating and deceiving. On November 21, 2023, the Enforcement Directorate apprehended the duo.

The Petitioners before the High Court contended that the bank holds approximately Rs.112 crores in deposits and has outstanding loans exceeding Rs.70 crores. They further apprised the Court that under the Monthly Deposit Scheme (MDS), over Rs.34 crores are yet to be paid and the Bank has initiated 250 arbitration cases and 204 execution cases in the 2022-23 fiscal year, aiming to recover substantial amounts. 

On the other hand, the defacto complainant submitted that Petitioners are responsible for not getting their deposits back as the accused had misused their funds for oblique purposes.

Considering the submissions, the High Court noted that against the petitioners, an enquiry has been conducted under the provisions of the Kerala Co-operative Societies Act and Rule and in such a case, an in-depth enquiry is certainly warranted. The High Court also emphasized the need to treat economic offences distinctly, given their involvement in intricate conspiracies leading to significant financial losses.

The High Court in its order observed, "As held by the Supreme Court, the cases concerning economic offences must be treated as separate by their very nature. The grant of anticipatory bail will frustrate the investigating agency in interrogating the accused and collecting useful information and materials that might have been concealed. Success in such interrogation would delude the accused knows that an order of court protects him. Grant of anticipatory bail, therefore, in such economic offences would certainly hamper an effective investigation."

The Court further went on to observe that, "The charges being multiple, I do not think that this is a case where section 438 Cr.p.c can be invoked. Such economic offences always involve a deeprooted conspiracy, including huge loss of funds, and they cannot be treated at par with the other offences. The apprehension of evidence being tampered with and witnesses being influenced/intimidated are all factors against the petitioners herein."

Accordingly, noting that responsibility in collecting deposits and misappropriating the same could not be treated lightly, the Court refused to allow the applications.

"Since the details of the amount collected, where the money has been parked, etc., are inevitable parts of an impartial investigation, to lead to a meaningful prosecution, granting anticipatory bail in these cases would certainly defeat that objective. I do not find any merit in the applications and the applications will stand dismissed", noted the Court. 

Cause Title: N. Basurangan and Anr. v. State of Kerala and Anr. [BAIL APPL. NO. 5661 OF 2023]

Click here to read/download the Order