R.M. Manjunatha Gowda vs The State of Karnataka

Budihal R.B

This petition is filed by the petitioner/accused No. 15 u/s 439 of Cr.P.C. seeking his release on bail of the offences punishable under Sections 406, 408, 409, 420, 120B read with Section 34 of IPC registered in respondent-police station Crime No. 325/2014.

Heard the arguments of the learned Senior Counsel appearing for the petitioner/accused No. 15 and also the learned High Court Government Pleader appearing for the respondent-State.

Learned Senior Counsel for the petitioner during the course of his arguments submitted that looking to the complaint averments and also the other materials collected by the Investigating Officer during investigation, so far, there is no allegation as against the petitioner that he has misappropriated the said amount. The allegation against the petitioner is that though audit objections were raised in the audit reports for the previous periods, the petitioner being the President of the DCC Bank has not placed those audit reports particularly, the audit objections in the Annual General meetings and no steps have been taken to remedy the objections. The learned Senior Counsel submitted on this ground, the allegation is made against the petitioner that he has conspired with other accused persons and misappropriated the amount of the Bank. It is not the individual responsibility of the petitioner as a President of the Bank but the liability is on the Board of Directors. In this connection, learned Senior Counsel drew the attention of this Court to the provisions of Sections 27, 28C, 29F, 29g(4) and (f) Section 63(7) and Rule 14A(j)(iv) of the Karnataka Co-operative Societies Act and submitted that every year General Body meeting was held, the audit reports were placed before the said meeting and appropriate decisions were taken. He has further submitted that even after receiving the anonymous letters, without wasting any time, the petitioner as a President of the Bank immediately directed the Managing Director in writing to take all necessary steps. He submitted that when the note was put up on the basis of the anonymous letters, he has also endorsed on the anonymous letters to convene the meeting of the branch advisory committee and directed the Managing Director to take a decision in the matter. The learned Senior Counsel submitted that the petitioner was required to attend the meetings at Bangalore, Kochi and Ahmedabad and hence, he left the place immediately thereafter. He has attended those meetings and returned back to Shimoga on 21.07.2014. The learned Senior Counsel submitted that only on that basis, it cannot, be assumed that petitioner has committed misappropriation of the bank funds. It is the Board of Directors having the supervisory and administrative control and petitioner alone is not personally liable for the said misappropriation. He further submitted that the petitioner appointed the Nodal Officers for every branch to look after the affairs of the said branches. The learned Senior counsel drew the attention of this Court to document dated 21.04.2014 produced at page 122 of the file and submitted that the petitioner has taken all necessary steps by calling urgent meeting at 4.45 p.m. on 07.07.2014 itself and taken the decision on the anonymous letter and the same was read before the committee. He further took a decision that all the loans for non-agricultural purposes are to be stopped immediately and with regard to the gold loan, it is to be verified properly and Sri N.G. Nagabhushan was appointed to submit a report. The learned senior counsel further draws the attention of this Court to the document produced at page 134 regarding the meetings attended, date wise, by the petitioner.

It is the further contention of the learned Senior (Counsel that looking to the prosecution materials, the petitioner has been arrested only on the basis of statements made by the co-accused persons, which is not binding on him at this stage. The allegations against him are that he failed in his supervisory duty to exercise effective control over the branches and to rectify the short comings. The learned Senior Counsel submitted that since from the date of arrest, the petitioner is in custody. Interrogation has been completed by taking him to police custody. The alleged offences are triable by the magistrate Court and hence, the petitioner may be admitted to bail by imposing reasonable conditions. In support of his contentions, learned Senior Counsel has relied upon the following decisions:

Jayendra Saraswathi Swamigal Vs. State of Tamil Nadu,

Sanjay Chandra Vs. CBI,

Shri Gurbaksh Singh Sibbia and Others Vs. State of Punjab,

State of Gujarat Vs. Mohammed Atik and others,

Bhagirathsinh Judeja Vs. State of Gujarat,

As against this, learned HCGP appearing for the respondent, during the course of his arguments submitted that looking to the prosecution materials, it shows that it is not only the amount as mentioned in the complaint that has been misappropriated but the materials also show that the amount to the extent of Rs. 63.00 Crores is said to be misappropriated by all the accused persons. The investigation of the case is still going on. The petitioner if at all, released on bail, being an influential person, may tamper the witnesses and put hurdles in the further investigation of the case. He has also submitted that the materials also show that at the instruction of the petitioner, the 2.5 kg. Gold was kept in the Bank and the loan of Rs. 50,00,000/- was taken to patch up the deficiency. He further submitted that during investigation, ten cheques have been seized from the house of the petitioner. As the materials collected by the investigating Officer uptill now prima-facie makes out the case about the involvement of the petitioner also. Hence, submitted that petitioner is not entitled to be granted with bail and submitted to reject the petition.

I have perused the averments made in the bail petition, FIR, complaint, order passed by the lower court on the bail application and the materials produced by the petitioner along with the petition so also the file produced by the learned HCGP containing investigation materials.

One Naghabhushan N.G. filed a complaint dated 17.07.2014 alleging that the Principal Office of DCC Bank Shimoga is situated at Balaraj Urs Road in Shimoga city having 28 branches through out the District. The Principal office is having the administrative control over all the branches. The Mangers of the concerned branches were looking after the affairs of the said branches and all the 28 branches are working as per the provisions of Co-operative Societies Act. Each branch has to give the information about the transaction of cash to the Principal office everyday and they were giving the information over phone. Since March 2014, as Core-banking system was introduced, the Bank is having the entries with regard to credit and debit and also the balance amount. Every year, the Bank will be audited from the auditors, who were on the panel and who are going to be appointed in the General Meeting of the said Bank. Those auditors, every year, will conduct audit in respect of all 28 branches so also the Central Office and submitting the audit report. They submitted such reports upto 2012-13 and the audit for the year 2013-14 is still going on Recently, an anonymous letter was received by the Managing Director of DCC Bank informing that there is misappropriation of amount in respect of the City Branch, which is at B.H. Road on Kamaliya Hotel at Shimoga. Immediately, the Managing Director brought the same to the notice of the President and the Administrative Committee. Immediately, on behalf of the Administrative Committee, the President issued a direction to the Managing Director to conduct an enquiry. On 07.07.2014 itself, under the leadership of Managing Director, along with the staff of the Bank went for verification and continuously conducted such verification upto 15.07.2014 and noticed that in the balance amount, the amount to the tune of Rs. 1,79,20,235.58 was less. When it was enquired with the Manager of the Bank and the Cashier, they did not give the satisfactory answer and gave the false information and the team, which came from the Principal office, when verified the documents, noticed that in the balance amount, the amount to the tune of Rs. 1,79,20,235.58 was less. In this connection, the Branch Manager, Smt. B. Shoba W/o Jagadish and Cashier Sri V. Ravindra S/o Venkatesh have not at all gave the correct information and suppressed the truth and as the materials confirm that there is misappropriation of the amount to the tune of Rs. 1,79,20,235.58, criminal case be registered against the said persons. Accordingly, on the basis of the said complaint, case has been registered against Smt. B. Shoba arraying as accused No. 1 and Sri. V. Ravindra as accused No. 2 for the alleged offences. During the course of investigation, petitioner has been arrayed as accused No. 15 and the complainant has been arrayed as accused No. 16.

Looking to the investigation materials and the statement of witnesses, they show that petitioner worked as President of DCC Bank from 12.01.1996 to 10.01.1997, from 11.01.1997 to 17.04.1998, 01.04.1999 to 25.10.2010 and from 01.10.2011 to till now i.e., for about 17 years he worked as President of DCC Bank Shimoga. During his tenure of 17 years in the said Bank, many of the officers and officials of the said bank were appointed by the petitioner. The prosecution materials show that on the basis of the voluntary statement given by the petitioner, the Investigating Officer has collected the information about the statutory audit reports for the periods 2012-13 and 2013-14 and Investigating Officer has also recorded the state merits of auditors.

The Investigating Officer has enquired with the witnesses namely Veerabhardappa, Ravi Kumar, Vasa, Chilu and during the said enquiry, they have stated that in the transaction pertaining to Chillur Petrol Bunk. Accused No. 1 through one Rudresh got Rs. 37.00 Lakhs for the said transaction and they came to know that the said amount is collected illegally. The said witnesses have also stated that during the last year, the petitioner called those persons to the bank office and made panchayath about the said transaction. The prosecution materials also show that about Rs. 37.00 Lakh was illegally collected by accused No. 1 for purchasing the Chillur petrol bunk. Though the petitioner knows that said amount was illegally collected, even then, he has not taken any action in that regard. But, he supported accused No. 1 in respect of the said transaction. The materials further show prima-facie that petitioner is also having share in the said transaction. The investigation materials also show that the Investigating Officer on enquiring the petitioner, came to know that the petitioner in collusion with accused No. 1 in the illegal transaction of the Bank used an amount of Rs. 29.00 Crore and even though the said aspect is mentioned in the audit report for the year 2012-13, the petitioner has not at all brought this fact to the notice of the Board and intentionally suppressed it and committed the alleged offences. The materials show that the Investigating Officer has collected the audit reports from the petitioner for the years 2010-11, 2011-12 and 2012-13. Looking to the statement of another witness one Mahabal Giri, an Auditor, it also show that as per the instructions of the petitioner, he brought Rs. 10.00 Lakh from Kodachadri Co-operative Bank and gave the same to accused No. 1 and it is in connection with the transaction for having a sale deed registered in the name of one Nageshan, the younger brother of the petitioner from the father of the accused No. 1 out of Sy. No. 149/3 of Bommanakatti Village. The statement of one Krishnegowda, a member of the Zilla Panchayat was also recorded by the Investigating Officer. In his statement, said Krishnegowda has stated that during assembly elections, as per the instruction of the petitioner got Rs. 5,00,000/- from accused No. 1 from the city branch through driver Shivakumar. The investigation materials also show that during his tenure, the petitioner has appointed the other accused persons namely Shoba, Ravindra, Shashidhar, Malathesh, Shivakumar, Rudresh, Geetha and Naghbhushan and they are under the influence of the petitioner. The materials also show that the petitioner posed the life threat to the witnesses that if, they reveal truth before the police, he will remove them from their post. The materials also show that a criminal case is registered against the petitioner and others in the Jayanagar Police Station in Crime No. 144/2014 for the offences u/s 447, 448, 504, 506 read with 34 of IPC alleging that they made an attempt to threaten the witnesses. The materials collected during investigation also show that though it is mentioned in the audit reports that against the by-laws of the DCC bank into the name 80 fictitious account holders, more than loan amount of Rs. 10 Lakhs is mentioned, which totally amounting to Rs. 29,27,60,971/- and about this the petitioner with an intention to commit fraud and to cheat the other members of the bank purposely not mentioned in the Annual Report to be placed before the Committee. There is also material that the petitioner with an intention to use the bank amount for his personal use, had conspired with accused No. 1 and out of the said amount, purchased the properties in the name of his family members. The materials also show that in the Executive Committee Meeting, a decision was taken for sanction of loan to the younger brother of the petitioner even before the filing of the application seeking the loan. The prosecution materials further show that one G. Ramachandra, Manager, Principal Office, during his enquiry has stated that petitioner and General Manager Naghabhushan came to the City Branch personally and told him about misappropriation of amount from the City Branch and therefore, they all together have to rectify the said misappropriation; and asked him to show Rs. 50,00,000/- credit entry to the City Branch and accordingly, on 16.07.2014, under Challan No. 4, he has shown that Rs. 50,00,000/- was credited. The materials also show that said G. Ramachandra made the statement before the police that Jagadish, husband of accused No. 1, brought 2.5 Kg of Gold on 17.07.2014 and as per the instruction of the petitioner, he has illegally kept it in the bank and the same was seized and subjected to P.F. No. 166/2014 and submitted before the Court. The investigation materials also show that from the misappropriated amount of City branch, the petitioner has purchased the properties at different places and if, he is released on bail, he may sell those properties.

The materials establish that during investigation, it is transpired that there is a misappropriation to the extent of 63 Crores, wherein the petitioner alleged to be directly involved in the said misappropriation and investigation is still going on in the case.

It is no doubt true, when the complaint was filed there is an allegation that misappropriation to the extent of Rs. 1,79,20,235.58 in the City Branch at Shimoga and the FIR was registered against accused Nos. 1 and 2. During the course of investigation many other accused were arrayed as accused persons in the case and the petitioner is arrayed as accused No. 15. The alleged misappropriation is also stated to be to the tune of Rs. 63 Crores, uptill now and the matter is still under investigation.

Perusing the investigation materials, it is not only on the voluntary statement of other accused, petitioner has been arrested, but there are statement of independent witnesses also recorded by the Investigating Officer during investigation. FIR is not an encyclopedia, all the further details are to be collected by the prosecution during the course of investigation.

I have also perused the decisions and the principles enunciated in the decisions relied upon by the learned counsel for the petitioner, which are referred above. But in the case on hand, investigation is not completed and charge sheet is yet to be filed.

It is the contention of the prosecution that it is only after completing the investigation, the exact amount, which is said to be misappropriated will be ascertained and not at this stage. It is also the contention of the prosecution that Investigating Officer has to ascertain the involvement of any other persons in the alleged offences. When the prosecution materials are to the effect that many of the employees of the said bank are appointed during the tenure of the petitioner and the petitioner is in a dominating position over the will of the other accused and also the employees of the bank, at this stage, it may not be proper for this Court to allow the petition and to release the petitioner on bail. However, after completing the investigation and filing of the charge sheet the petitioner can renew his request for his release on bail.

With these observations, for the present, petition is disposed of.