Anil O. Khandelwal v. State Of Maharashtra

Ajay IN IN THE THE HIGH HIGH COURT COURT OF OF JUDICATURE JUDICATURE AT AT BOMBAY BOMBAY CRIMINAL APPELLATE JURISDICTION CRIMINAL APPELLATE JURISDICTION CRIMINAL BAIL APPLICATION NO. 4875 OF 2024 Anil O. Khandelwal .. Applicant

Versus

The State of Maharashtra .. Respondent ....................

 Mr. Ashok Mundargi, Senior Advocate a/w. Mr. Subir Sarkar i./by Ms. Dhruti Chheda and Mr. Ankit Pandey, Advocates for Applicant.  Ms. Megha S. Bajoria, APP for Respondent - State.  API Mr. Sarang Chavan, for EOW present.

....................

CORAM

: MILIND N. JADHAV, J.

DATE : MARCH 11, 2025.

P.C.:

1.

Heard Mr. Mundargi, learned Senior Advocate for Applicant and Ms. Bajoria, learned APP for Respondent - State. 2.

The present Bail Application is filed under Section 439 of the Code of Criminal Procedure, 1973 by Applicant - Anil O. Khandelwal seeking Regular Bail in connection with C.R. No.36 of 2020 wherein he is arraigned as accused alongwith several other co-accused registered by Economic Offences Wing1, Banking - 2 Unit - 10, Mumbai for offences under Sections 406, 409, 420, 465, 467, 468, 471, 477A readwith 120-B of Indian Penal Code2. Applicant is incarcerated since 02.03.2021 i.e. 4 years and 8 days. Investigation of the matter is completed and Charge-sheet has been filed. Complainant is Axis Bank. For short 'EOW'

For short 'IPC'

3.

Applicant is the Chief Financial Officer3 of the Company called Cox and Kings Limited4. CKL borrowed huge amounts as capital loan from Axis Bank and defaulted in repayment. Complainant is Mr. Prakash Prabhakar Rao, Assistant Vice President of Axis Bank. Complaint dated 12.11.2020 is filed against CKL, Anthony Bruton Good, Urshila Kerkar, Ajay Ajit Peter Kerkar, Pesi S. Patel, Mahalinga Narayanan, Subhash Nautiyal, Sagar Deshpande and other connected accused persons in connection with default and non-repayment of the loan amount of Rs. 1056.25 crores received by CKL from Axis Bank as working capital loan during the period between December 2011 to 2019.

4.

Briefly stated prosecution case is that CKL borrowed similar substantial amounts and loan towards working capital between 2011 and 2019 from Complainant Bank, Lakshmi Vilas Bank, HDFC Bank, Yes Bank, Tourism Finance Corporation Limited, Kurlon Enterprises Limited, Indusind Bank in different denominations running into several hundred crores of Rupees. Complaint is lodged by Axis Bank for cheating and criminal breach of trust due to default by the said Company CKL in repayment of the loan amount advanced. It is seen that post 2019, CKL failed to repay the loan amount to Complainant Bank. It also defaulted on statutory payments including payment For short 'CFO'

For short 'CKL'

towards GST5 and TDS6. Record shows that on 27.06.2019 CKL filed a disclosure with the Stock Exchange informing that it had defaulted in repayment of commercial papers aggregating various denominations pertaining to Banks from which they had obtained loan and could not repay the same. Record shows that on 15.07.2019 a Steering Committee was formed of Indusind Bank, Lakshmi Vilas Bank, Yes Bank and State Bank of India (some of the Complainant Banks whose loans were defaulted by CKL). Record shows that in August 2019, Steering Committee appointed a Forensic Auditor i.e. Price Waterhouse Cooper to conduct audit of the accounts of CKL. In October 2019, proceedings were initiated before the National Company Law Tribunal against CKL for recovery of claims to the extent of Rs.270 crores.

Forensic Auditor submitted interim report in December 2019 and it was followed by a final report thereafter which prima facie indicated widespread diversion of monies which were given to CKL as financial facilities. Prima facie it was stated that these monies received as loan were diverted to various other entities owned and operated by the accused persons in the present crime including the Applicant. It is in this context that present FIR was filed, registered and investigated. 5.

Investigation of the crime is completed and charge-sheet has been filed in May 2021.

Goods and Services Tax Tax Deducted at Source

6.

The alleged role attributed to Applicant is of falsification of accounts with co-accused Naresh T. Jain who was the Internal Auditor of CKL. It is alleged in the charge-sheet that certain amounts were paid to them which could be said to be the amounts received by them for having indulged in the illegal activity of falsification of accounts. It is alleged that Applicant diverted funds to companies in which he alongwith his brother was director and further the funds were transferred to various bank accounts of bogus companies brought into existence by them.

7.

Mr. Mundargi, learned Senior Advocate for the Applicant has at the outset drawn my attention to the fact that the main accused namely Ajay Ajit Peter Kerkar has been granted bail vide order dated 29.08.2024 passed by the Supreme Court7 as also co-accused Naresh T. Jain has been granted bail vide order dated 28.11.2024 passed by this Court (Coram: Manish Pitale, J.). He would next draw my attention to the orders dated 13.08.2024 and 25.02.2025 passed by this Court granting bail to present Applicant in connection with other FIRs wherein similar allegations are levelled against the Applicant. He would therefore persuade the Court to consider these orders as well as the order passed by the Supreme Court granting bail to the main Accused namely Ajay Ajit Peter Kerkar as also co-accused Naresh T. Jain being enlarged by this Court and claim parity with them for grant Criminal Appeal arising out of SLP (Crl) Nos.10471-10478 of 2024

of bail considering his long incarceration and submit that his further judicial custody is unwarranted as he has fully co-operated in the investigation.

7.1.

Next, he would submit that Applicant has been granted bail by the learned PMLA Special Court vide order dated 30.04.2024 on the ground of delay in commencement of trial and his long incarceration which is an additional ground which the Court should be considered. Hence he would urge the Court to consider the facts in the present case and enlarge the Applicant on bail.

8.

Ms. Bajoria, learned APP would vehemently oppose grant of bail to the Applicant. She would submit that Applicant is indicted for an economic offence which is considered to be an offence against the economy of the nation and affects the financial fabric of the society at large. She would submit that role of the Applicant as highlighted and endorsed in the charge-sheet is of falsification of accounts to depict a healthy picture of the financial health of the Company CKL as being financially sound for the purpose of obtaining loans / capital loans and it thus forms the basis of the crime in question. She would submit that such falsification of accounts form the basis of inducement to the Complainant - Bank in question to part with huge sums of public money as borrowings / loan amount which is ultimately defaulted by the Company. She would thus emphasize that role of Applicant has to

be categorized as a major role in submitting falsified accounts to Complainant Bank on the basis of which substantial loan is procured by the Company CKL with the intention of defaulting on the same on the basis of falsified documents like balance sheets etc. which has come true in the present case. However on taking instructions she would submit that considering parity and long incarceration the Court may pass appropriate order rather than delving on the issue of merits since the same would be determined in the trial. 9.

I have considered the rival submissions advanced at the bar and perused the record with the able assistance of the learned Advocates appearing for the parties.

10.

Prima facie it is seen that offences under Section 409 and 467 of IPC are the major offences as they provide for punishment of imprisonment of more than 7 years and contemplate maximum sentence of life imprisonment. Therefore if Applicant is able to demonstrate that the said offences prima facie cannot be said to be made out against then then Court would be inclined to grant bail particularly in the light of his long incarceration as argued by his Advocate and investigation being completed.

11.

Since the Prosecution Advocate has persuaded me to consider the case of Applicant on parity and long incarceration as also the fact that the main principal accused Ajay Ajit Peter Kerkar as also

co-accused Naresh T. Jain having been granted bail, adhering to the submissions of the Prosecution, I have considered the above grounds for deciding these Application.

12.

This Court is further informed that Applicant has been granted bail by the PMLA Special Court in the proceedings initiated against him under the provisions of the Prevention of Money Laundering Act, 2002. This is also a factor that needs to be taken into consideration. Regarding allegations of monies received by the Applicant and routed to various other bogus or fictitious Companies, undoubtedly that will be a case for trial if proved on the basis of evidence.

13.

In the case of Javed Gulam Nabi Vs. State of Maharashtra and Anr8, the Supreme Court, after referring to the earlier judgements in the case of Union of India Vs. K. A. Najeeb9, and Satender Kumar Antil Vs. Central Bureau of Investigation10, held that Constitutional Courts ought to exercise power to enlarge accused under-trials on bail, who have suffered substantial incarceration and there is remote possibility of trial being completed within the reasonable period of time. The Supreme Court has emphasized upon right to speedy trial being a facet of Article 21 of the Constitution of India. 2024 SCC OnLine SC 1693 (2021) 3 SCC 713 10 (2022) 10 SCC 51

14.

This Court is of the opinion that this position of law also enures to the benefit of the Applicant.

15.

While considering the case of Applicant for grant of bail, it is seen that the principal case of Complainant is that there is a default in repayment of loan amount advanced by the banks to the Company i.e. CKL. What intrigues the Court's mind is the fact that when Public and Private Sector Banks holding public money advance large amounts of monies as loan or working capital to a borrower, what is the nature of security that the said Banks take from the Borrower in order to secure the loan amount. In the present case borrower is CKL. In general context if a common man approaches a Public Sector Bank or a Private Sector Bank for loan, in order to secure the loan amount the common man is required to give more than adequate security without which no loan is ever approved or sanctioned to him.

When an Application for loan is made, Banks follow a rigorous regime of compliances to be undertaken by the borrower as required by the Bank only after which if complied the loan is sanctioned. This procedure and process for compliance is generally called as due diligence to be undertaken by the Bank which advances the loan amount. Whether this procedure was followed by the Complainant Bank in the present case with CKL is the question before the Court? Because Bank is the Complainant in the present case.

16.

Prima facie it is seen that Complainant Bank alleges that when the Company CKL approached the Bank, it placed on record its balance sheet which was prima facie looking very healthy and based upon which the Complainant Bank advanced huge amounts of money as loan. It should not be forgotten that these monies which are / were advanced as loan by the Complainant Bank are / were public monies. Therefore even if the borrower Company i.e. CKL presented and relied upon its balance sheet for procuring the loan amount which runs into Crores in most of the cases before me, it was the duty of the Complainant Bank to undertake appropriate due diligence. In this context attention is invited to Bank's due diligence to be followed before giving loan to a borrower Company on the basis of its balance sheet only.

It is seen that Banks have to perform a variety of due diligence checks before giving loan to a Company on the basis of its balance sheet. In the case of a Company submitting its balance sheets, Banks not only have to review the Company's balance sheet but also its income statements and cash flow statements. Banks are required to assess the Company's risk profile and monitor the Company's performance throughout the tenure of loan. In the present case, it is prima facie seen that loan was given to CKL by Complainant Bank over a tenure of 8 years beginning from December 2011 to 2019.

Crores of public money as loan it would involve and indicate a much higher risk so as to ensure that the money borrowed is returned back. Such enhanced due diligence would have helped the Complainant Bank to mitigate the risk factors as also to meet all regulatory requirements and avoid reputational, operational, legal and concentration risks. It is seen that in order to prevent the Banks and other Financial Institutions from being used as a channel for money laundering and to ensure the integrity and stability of the financial system efforts are continuously being made both internationally and nationally by way of prescribing various rules and regulations. In India Reserve Bank of India has been at the forefront in taking steps through various Regulations and Notifications.

In India, Prevention of Money Laundering Act, 2002 and Prevention of Money (Maintenance of Record) Rules 2005 form the legal framework of anti-money laundering and countering financing of terrorism. In that view all regulated entities are required to follow certain customer identification procedures and prescriptions while undertaking transactions either by establishing an account based relationship or otherwise and monitor transactions.

17.

It is seen that in the present case over a period of more than 8 years, Complainant Bank advanced substantial amounts running into thousand crores of rupees to CKL. CKL has not been in a position to repay the said amount from 2019 onwards. The question therefore

that would arise in the mind of the Court is whether the Complainant Bank had carried out due diligence appropriately in the context of the procedure required to be followed by any Public or Private Sector Bank while advancing large sums of monies which are not secured adequately. For example in the case of the Complainant before me it is stated that they were deceived by falsified accounts and balance sheets which were submitted to them for borrowing the amounts by CKL. Still 8 year period over which amounts were advanced is reasonably a long period for the Complainant Bank to complete appropriate due diligence and ensure that the real status of the borrower Company is known to the Complainant - Bank.

18.

Needless to state that complicity of the accused persons in the present crime in question will be determined in the trial on adjudication. Before me is the case of the Chief Financial Officer of CKL. Undoubtedly his complicity and role will be determined in the ensuing trial. However, considering the period of long incarceration and my above prima facie observations and findings, I am of the opinion that the Applicant has made out a case for bail. 19.

As delineated herein above, Applicant has already been granted bail by orders dated 13.08.2024 and 25.02.2025 passed by this Court in other Bail Applications. Keeping that in view, Bail Application is allowed on the following terms and conditions:-

(i) Applicant is directed to be released on bail on furnishing P.R. Bond of Rs. 1,00,000/- (Rupees One Lakh only) with one or two sureties of the like amount;

(ii) Applicant shall be released forthwith on provisional cash bail of Rs. 1,00,000/- (Rupees One Lakh only) and is permitted to furnish sureties as directed within a period of 4 weeks after his release from prison; (iii) Applicant shall report to the Investigating Officer of EOW as and when called for by the Investigating Officer;

(iv) Applicant shall co-operate with the conduct of trial and attend the Trial Court on all dates, unless specifically exempted and will not take any unnecessary adjournments, if he does so it will entitle the prosecution to apply for cancellation of this order; (v) Applicant shall not leave the State of Maharashtra without prior permission of the Trial Court;

(vi) Applicant shall surrender his passport, if any, within 2 weeks from his release, with the Trial Court; (vii) Applicant shall not influence any of the witnesses or

tamper with the evidence in any manner;

(viii) Applicant shall keep the Investigating Officer informed of his current address and mobile contact number and / or change of residence or mobile details, if any, from time to time, as applicable; and (ix) Any infraction of the conditions shall entail prosecution to apply for cancellation of bail granted to the Applicant.

20.

It is clarified that the above observations in this order are limited only for the purpose of granting bail and the trial shall proceed uninfluenced by the present order. The trial shall be adjudicated on its own merits and evidence and determined strictly in accordance with law.

21.

Bail Application is allowed and disposed.

[ MILIND N. JADHAV, J. ] Ajay by RAVINDRA MOHAN AMBERKAR Date:

2025.03.11 20:23:17 +0530 RAVINDRA MOHAN AMBERKAR