NCS - Bail Application No.28 of 2014
Bail Application of NCS Sugars Pvt. Ltd. who is a NSEL Defaulter with rs. 58.85 Crores trading in sugar.
Content
1
BA No.28 of 2014
BEFORE DESIGNATED COURT UNDER M.P.I.D.
ACT AT
BOMBAY CITY CIVIL & SESSIONS COURT, AT
MUMBAI.
BAIL APPLICATION No.28 OF 2014.
IN
MPID SPECIAL CASE No.1 OF 2014
IN
C.R.NO.89 OF 2013 LODGED AT EOW UNIT V.
Narayan Nageshwar Rao,
Age 58 years, Occu. Business,
Residing at Plot No.10,
Road No.2, Banjara Hills Hyderabad,
Andhra Pradesh500 034.
…
Applicant/Accused.
…
Respondent.
V/s.
The State of Maharashtra,
Through
Economic Offence Wing
Unit V, CB CID, Mumbai.
Adv. A.B. Dikshit & Adv. Yadav for Applicant.
SPP Adv. Avhad for State.
Adv. Karnik for Informant/Intervener.
2
BA No.28 of 2014
Coram : His Honour Judge
Shri D.P. Surana.
Dated : 11th September, 2014.
O R A L O R D E R
Applicant, who was came to be arrested on 11.08.2014 in
EOW Crime No.89/2013 for the offence u/sec.409, 465, 467,
468, 471, 474, 477A r/w sec.120B of the I.P. Code and sec.3 of
the Maharashtra Protection of Interest of Depositors (In
Financial Establishments) Act, 1999 (in short MPID Act), by this
application u/sec.439 r/w 437 the Cr.P.C. has prayed to enlarge
him on bail.
2]
It is the case of prosecution that, NSEL provided
electronic platform to buyers and sellers for entering into pair
contract T+2 and T+25. That, on the NSEL platform the buyers
and sellers who resides far away from each other and don't
know each other can trade in different commodities. That one
who intend to sell his commodity/s has to deposit his goods at
warehouses operated by NSEL, wherein quality, quantity etc., of
goods were checked. Electronic warehouse receipts were
generated by NSEL. One who intend to purchase the goods, so
deposited in NSEL warehouses, is required to deposit margin
3
BA No.28 of 2014
money and on purchase, copy of electronic warehouses receipt
is issued to him.
It is alleged that the NSEL, which was supposed to trade in
sale and purchase, deviated from its business module. That
without there being actual physical stock of the commodities,
NSEL officials in collusion with there 25 borrowers / brokers,
appointed by NSEL itself, generated false and bogus warehouse
receipts, without there being actual stock of the commodities.
Whereas in all 13,000 investors were induced for higher returns
by the NSEL and were duped to the tune of Rs.3,500 Crores,
and thereby undertaken financial transaction, on the garb of
sale and purchase. That these 13,000 investors were
fraudulently defrauded and defaulted by the NSEL in collusion
with his member borrowers.
3]
It is alleged that, applicant accused is the Managing
director of M/s. NCS Sugars Pvt. Ltd. who as a member of NSEL
was trading in sugar. The default amount of this company is
58.85 Crores. The expected stock of 17055 MT of sugar was not
there in the NSEL accredited warehouse although the applicant
accused gave offer letters of that quantity to the NSEL. He
utilized this money for repayment of Letter of Credit and NPA
account with Andhra Bank and Indian Overseas bank. He also
4
BA No.28 of 2014
used some funds towards payment to the farmers. He entered
into settlement agreement with NSEL and agreed to pay an
amount of Rs.50 Crores in 12 months from February 2014.
However, he failed to execute his commitment and paid Rs.5.25
Crores only.
4]
Heard, Ld. counsel for applicant, Ld. SPP and Ld.
counsel for intervener.
Counsel for applicant contended that amongst 25
borrowers, few borrowers are already released on bail either by
Hon'ble Bombay High Court or by this court. He further
submitted that the amount due on M/s. N.K. Proteins Ltd., one
of the borrower company, is around Rs.969.89 Crores, which is
much more then the amount due as against the applicant,
whereas the director of M/s. N.K. Proteins Ltd. namely Nilesh
Keshavlal Patel is ordered to be released on bail by Hon'ble
Bombay High Court. He further submitted that other borrowers
Arun Kumar Sharma Director of M/s. Lotus Refineries Pvt. Ltd.,
(LRPL), having outstanding due amount of 250 Crores +,
Surendra Gupta incharge of M/s. P.D. Agro Processors Pvt. Ltd.,
Surendra Agrawal, Rajesh Mehta, Sanjeev Bhesin and
Indersingh Bal are also ordered to be released on bail. According
to him, applicant, whose alleged due amount towards the NSEL
5
BA No.28 of 2014
is too less than that of released accused by Hon'ble High Court,
is also entitled to be released on bail on the Law of parity.
He also submitted that the applicant's immovable
properties are attached which are valued for 200% of the
amount due against the applicant. That due to crises in sugar
industries applicant was unable to deposit the amount agreed
amount, whereas applicant is ready to deposit Rs.1 Crore
immediately in NSEL ESCROW account and will continue to pay
Rs.50 lacs per month.
He further submitted that though chargesheet is not filed,
Investigation is mostly completed. Since long applicant is
behind the bars and no purpose will be served in keeping him
behind the bars.
5]
As against this SPP, I.O. & counsel for intervener in
one voice opposed the application on following grounds
a.
Investigation is still in progress and amount as agreed by
the applicant is to be recovered from him, whereas applicant has
paid only Rs.5.25 Crores. The applicant in collusion with NSEL
officials has generated false and bogus warehouse receipts,
without there being such stock of the commodity.
b.
The accused deliberately concealed the facts with I.O. and
6
BA No.28 of 2014
has not cooperated in investigation.
c.
Applicant has utilized the amount of investors for
repayments of his bank dues and tried to mislead the
investigation agency.
d.
If the applicant accused is released on bail, he may
abscond and will not be available for investigation, as he is not
resident of Mumbai.
e.
The accused never cooperated in the investigation and
failed to provide requisite books of accounts and date in spite of
repeated notices.
f.
The accused may influence the prosecution witnesses.
g.
The applicant accused has not come before the court with
clean hands and the repayment proposal submitted by him is
merely eyewash, as he has not deposited due amount in the
ESCROW Account to prove his credentials & bonafides.
h.
The law of parity will not be applicable in favor of the
applicant, as the coaccused released on bail were after filing of
chargesheet and those who are released on bail pending
chargesheet were not the member borrowers of NSEL.
6]
After hearing all the sides, I have Perused
application, documents filed alongwith it, reply filed by I.O. and
the chargesheet papers filed against the coaccused.
7
7]
BA No.28 of 2014
Applicant is in custody since 11/08/2014.
Applicability of the offence punishable of forgery as against the
applicant needs serious consideration. I.O. could not satisfy as
to for what reason the further custody of the applicant is
needed. Coaccused borrowers of the NSEL, whose due amount
is much more then that of the present applicant, and the
arrested officials of NSEL are already released on bail.
Irrespective of the fact that they were released after filing of the
chargesheet and chargesheet is not filed against the applicant,
prosecution was unable to satisfy as to what investigation as
regards the present applicant is pending, even after the laps of
considerable period from their arrest, which can be done only
while applicant will be behind the bars or to say for which his
custody is necessary. Applicant is a businessmen, having
permanent abort. As such, I do not find that there is possibility
of his absconding. The prosecution was unable to satisfy as to
how applicant would tamper with the prosecution witnesses and
will flee away from justice. To have a check on the applicant, so
as to avoid possibility of tampering of prosecution witnesses,
strict conditions can be imposed on him while releasing him on
bail.
8
8]
BA No.28 of 2014
So also, the fact that the properties of the applicant
is secured till date is not disputed either by applicant nor by the
I.O. The property secured are alleged to be of much much more
value then the amount due. The counsel for the applicant has
made statement for and on behalf of the applicant that he has
no objection if his secured movable and immovable properties
are being sold. Applicant has also filed Xerox copies of the
demand drafts for Rs.1 Crore in the name of NSEL Final
settlement Account. In the affidavit Exh.3, filed by the applicant,
he has undertaken to deposit the amount of Rs.50 lacks per
month till the amount due is being paid. The undertaking of the
applicant is accepted. Applicant has already deposited an
amount of Rs.5.25 Crores in persuence to the settlement with
NSEL. The act of applicant seems to be bonafide.
9]
Moreover, the prosecution case rests mainly on the
documentary evidence, which are almost seized by the EOW
investigation agency, as chargesheet is filed against some of the
coaccused including some of the borrowersmembers of NSEL
and also against some of the key officials of NSEL. Nonarrest of
son of the applicant cannot be a ground to reject the application
of bail of the applicant. I.O. has not disputed that applicant is
9
BA No.28 of 2014
being interrogated even from prior to filing of chargesheet
against the coaccused. Most of the investigation as regards the
applicant might have completed or mostly completed. The
Hon'ble High Bombay Court on dtd.22/08/2014 while releasing
coaccused Jignesh Shah in CRIMINAL BAIL APPLICATION No.
1263/14 has made certain observations, which are required to
be taken into consideration
“15.
What, however, is significant is that though these illegalities or
this 'fictitious trading' is sought to be highlighted as material against the
applicant, the real grievance of the First Informant – and even of the other
investors – is not with respect to the fact that such fictitious trading was
taking place. Their grievance is that their money has been lost. A big uproar
has been created by them, and for showing the magnitude of the alleged
offences, it is termed as a 'scam of about Rs. 5600 crores'. In this connection,
certain basic aspects of the matter cannot be lost sight of. The persons whose
monies are lost, including the First informant, are apparently, not the genuine
traders for whom NSEL was supposed to provide a platform. The very fact
that these persons are, as also the Investigating Agency is, freely using the
terms as the 'investors', 'borrowers', indicates that, that the transaction in
question were not genuine transactions of sale or purchase was well known to
the socalled buyers also, who now choose to describe themselves as
'investors'. It is clear that from their point of view, it was only an investment
yielding high returns for their money. These investors are not middle class or
lower class people, but are themselves businessmen. The transactions in
question were being entered through brokers who had knowledge of the
10
BA No.28 of 2014
commercial market. Going by the broad probabilities of the case, it cannot be
accepted that the persons who are now crying foul, were not aware of the fact
that their translations were not genuine. They were looking at these
transactions clearly as an investment of their monies yielding safe returns.
Their estimate or belief about the safety of the transactions has been proved
to be wrong, and that is the reason for the uproar which is now being made
by pointing out the illegalities in the transactions undertaken by NSEL.
Undoubtedly, these wrongs appear to have taken place, and undoubtedly, it
can not be suggested that those who permitted such fictitious trading have
not committed serious offenses, still, the fact remains that the persons who
are raising the grievance about such fictitious tradings were themselves not
genuine traders, and had entered into the transactions purely as financial
investments. There is every reason to believe that a sizable number of socalled
'investors' whose transactions were being entered into through brokers,
actually did not bother about the fictitious trades, and knowingly participated
in such illegal activities, without raising any issue of illegality thereof.
16.
There is great substance in the contentions advanced by the
learned counsel for the applicant that the brokers through whom the so
called trade transactions were entered into, do have their own legal team and
a full knowledge of how the market operates. The legalities of the transactions
were quite expected to be known to the brokers and the traders who do not
hesitate to term themselves as 'investors', and they were expected to assess the
legalities of the transactions. The brokers being quite experienced, and the
investors being informed persons, it is apparent that the issue of illegality of
the transactions raised by them is not out of their concern to adhere to
legalities, but in order to project the applicant as the main offender, rather
11
BA No.28 of 2014
than the defaulting parties.
17.
It may be observed in this context, that the legality of the
application of the provisions of the MPID Act to this case is not free from
doubt. Whether the monies paid by the buyers for purchasing the commodities
would amount to 'deposit' as defined in clause (c) of section 2 of the MPID
Act, would need serious consideration. Whether NSEL can be termed as a
'financial establishment' as defined under clause (d) of section 2 of the MPID
Act, would need equally serious consideration. Since I am dealing only with a
Bail Application it would be neither necessary nor proper to go deeper into
this aspect, but what needs to be said it that the 'investors' in this case are not
the type of persons for whose protection MPID Act has been enacted, as
reflected from the statements of objects and reasons behind the said
enactment.
24.
All said and done, there is no change in the legal principle that
pretrial detention can never be authorized as and by way of infliction of
punishment.”
10]
As such, relaying and accepting the undertaking of
the applicant, I am of the view that with strict conditions to be
imposed on applicant, applicant is entitled to be released on
bail, as no purpose will be served in keeping him behind the
bars, on the contrary his release may facilitate the recovery or
sale of the secured properties which applicant has given no
objection to be sold. In the result, I proceed to pass following
12
BA No.28 of 2014
order.
O R D E R
Criminal bail application no.28/14 is hereby
allowed.
Applicant Narayan Nageshwar Rao is ordered to be
released on bail in EOW Crime No.89/2013 for the offence
u/sec.409, 465, 467, 468, 471, 474, 477A r/w sec.120B of the
I.P. Code and sec.3 of the MPID Act, on his executing PR bond of
Rs.20 Lakhs with one or more sureties to make up the like
amount with following conditions
1. that applicant shall mark his presence at concern police
station with investigating officer on alternate Sunday
between 10 am to 1 pm. till filing of chargesheet against
him and thereafter on coming 4 last Sunday of each
month between 10 am to 12 noon.
2. that applicant shall surrender his passport with I.O., if
he possess, and shall not leave India without the previous
permission of this court.
3. that applicant shall not directly or indirectly make any
inducement, threat or promise to any person acquainted
with the facts of the case so as to dissuade him from
13
BA No.28 of 2014
disclosing any facts to any police officer or court.
4. that applicant shall not alienate or disposed off, in any
manner, any of his movable or immovable properties
without the previous permission of this Hon'ble Court.
5. The applicant to adhere strictly on the undertaking
given by him and shall hand over the demand drafts
immediately to NSEL ESCROW committee to be deposited
in said account.
Date : 11.09.2014
(D.P. Surana)
Special Judge, M.P.I.D. Act. &
Addl. Sessions Judge,
City Civil & Sessions Court,
At Bombay.
14
BA No.28 of 2014
BA No.28 of 2014
BEFORE DESIGNATED COURT UNDER M.P.I.D.
ACT AT
BOMBAY CITY CIVIL & SESSIONS COURT, AT
MUMBAI.
BAIL APPLICATION No.28 OF 2014.
IN
MPID SPECIAL CASE No.1 OF 2014
IN
C.R.NO.89 OF 2013 LODGED AT EOW UNIT V.
Narayan Nageshwar Rao,
Age 58 years, Occu. Business,
Residing at Plot No.10,
Road No.2, Banjara Hills Hyderabad,
Andhra Pradesh500 034.
…
Applicant/Accused.
…
Respondent.
V/s.
The State of Maharashtra,
Through
Economic Offence Wing
Unit V, CB CID, Mumbai.
Adv. A.B. Dikshit & Adv. Yadav for Applicant.
SPP Adv. Avhad for State.
Adv. Karnik for Informant/Intervener.
2
BA No.28 of 2014
Coram : His Honour Judge
Shri D.P. Surana.
Dated : 11th September, 2014.
O R A L O R D E R
Applicant, who was came to be arrested on 11.08.2014 in
EOW Crime No.89/2013 for the offence u/sec.409, 465, 467,
468, 471, 474, 477A r/w sec.120B of the I.P. Code and sec.3 of
the Maharashtra Protection of Interest of Depositors (In
Financial Establishments) Act, 1999 (in short MPID Act), by this
application u/sec.439 r/w 437 the Cr.P.C. has prayed to enlarge
him on bail.
2]
It is the case of prosecution that, NSEL provided
electronic platform to buyers and sellers for entering into pair
contract T+2 and T+25. That, on the NSEL platform the buyers
and sellers who resides far away from each other and don't
know each other can trade in different commodities. That one
who intend to sell his commodity/s has to deposit his goods at
warehouses operated by NSEL, wherein quality, quantity etc., of
goods were checked. Electronic warehouse receipts were
generated by NSEL. One who intend to purchase the goods, so
deposited in NSEL warehouses, is required to deposit margin
3
BA No.28 of 2014
money and on purchase, copy of electronic warehouses receipt
is issued to him.
It is alleged that the NSEL, which was supposed to trade in
sale and purchase, deviated from its business module. That
without there being actual physical stock of the commodities,
NSEL officials in collusion with there 25 borrowers / brokers,
appointed by NSEL itself, generated false and bogus warehouse
receipts, without there being actual stock of the commodities.
Whereas in all 13,000 investors were induced for higher returns
by the NSEL and were duped to the tune of Rs.3,500 Crores,
and thereby undertaken financial transaction, on the garb of
sale and purchase. That these 13,000 investors were
fraudulently defrauded and defaulted by the NSEL in collusion
with his member borrowers.
3]
It is alleged that, applicant accused is the Managing
director of M/s. NCS Sugars Pvt. Ltd. who as a member of NSEL
was trading in sugar. The default amount of this company is
58.85 Crores. The expected stock of 17055 MT of sugar was not
there in the NSEL accredited warehouse although the applicant
accused gave offer letters of that quantity to the NSEL. He
utilized this money for repayment of Letter of Credit and NPA
account with Andhra Bank and Indian Overseas bank. He also
4
BA No.28 of 2014
used some funds towards payment to the farmers. He entered
into settlement agreement with NSEL and agreed to pay an
amount of Rs.50 Crores in 12 months from February 2014.
However, he failed to execute his commitment and paid Rs.5.25
Crores only.
4]
Heard, Ld. counsel for applicant, Ld. SPP and Ld.
counsel for intervener.
Counsel for applicant contended that amongst 25
borrowers, few borrowers are already released on bail either by
Hon'ble Bombay High Court or by this court. He further
submitted that the amount due on M/s. N.K. Proteins Ltd., one
of the borrower company, is around Rs.969.89 Crores, which is
much more then the amount due as against the applicant,
whereas the director of M/s. N.K. Proteins Ltd. namely Nilesh
Keshavlal Patel is ordered to be released on bail by Hon'ble
Bombay High Court. He further submitted that other borrowers
Arun Kumar Sharma Director of M/s. Lotus Refineries Pvt. Ltd.,
(LRPL), having outstanding due amount of 250 Crores +,
Surendra Gupta incharge of M/s. P.D. Agro Processors Pvt. Ltd.,
Surendra Agrawal, Rajesh Mehta, Sanjeev Bhesin and
Indersingh Bal are also ordered to be released on bail. According
to him, applicant, whose alleged due amount towards the NSEL
5
BA No.28 of 2014
is too less than that of released accused by Hon'ble High Court,
is also entitled to be released on bail on the Law of parity.
He also submitted that the applicant's immovable
properties are attached which are valued for 200% of the
amount due against the applicant. That due to crises in sugar
industries applicant was unable to deposit the amount agreed
amount, whereas applicant is ready to deposit Rs.1 Crore
immediately in NSEL ESCROW account and will continue to pay
Rs.50 lacs per month.
He further submitted that though chargesheet is not filed,
Investigation is mostly completed. Since long applicant is
behind the bars and no purpose will be served in keeping him
behind the bars.
5]
As against this SPP, I.O. & counsel for intervener in
one voice opposed the application on following grounds
a.
Investigation is still in progress and amount as agreed by
the applicant is to be recovered from him, whereas applicant has
paid only Rs.5.25 Crores. The applicant in collusion with NSEL
officials has generated false and bogus warehouse receipts,
without there being such stock of the commodity.
b.
The accused deliberately concealed the facts with I.O. and
6
BA No.28 of 2014
has not cooperated in investigation.
c.
Applicant has utilized the amount of investors for
repayments of his bank dues and tried to mislead the
investigation agency.
d.
If the applicant accused is released on bail, he may
abscond and will not be available for investigation, as he is not
resident of Mumbai.
e.
The accused never cooperated in the investigation and
failed to provide requisite books of accounts and date in spite of
repeated notices.
f.
The accused may influence the prosecution witnesses.
g.
The applicant accused has not come before the court with
clean hands and the repayment proposal submitted by him is
merely eyewash, as he has not deposited due amount in the
ESCROW Account to prove his credentials & bonafides.
h.
The law of parity will not be applicable in favor of the
applicant, as the coaccused released on bail were after filing of
chargesheet and those who are released on bail pending
chargesheet were not the member borrowers of NSEL.
6]
After hearing all the sides, I have Perused
application, documents filed alongwith it, reply filed by I.O. and
the chargesheet papers filed against the coaccused.
7
7]
BA No.28 of 2014
Applicant is in custody since 11/08/2014.
Applicability of the offence punishable of forgery as against the
applicant needs serious consideration. I.O. could not satisfy as
to for what reason the further custody of the applicant is
needed. Coaccused borrowers of the NSEL, whose due amount
is much more then that of the present applicant, and the
arrested officials of NSEL are already released on bail.
Irrespective of the fact that they were released after filing of the
chargesheet and chargesheet is not filed against the applicant,
prosecution was unable to satisfy as to what investigation as
regards the present applicant is pending, even after the laps of
considerable period from their arrest, which can be done only
while applicant will be behind the bars or to say for which his
custody is necessary. Applicant is a businessmen, having
permanent abort. As such, I do not find that there is possibility
of his absconding. The prosecution was unable to satisfy as to
how applicant would tamper with the prosecution witnesses and
will flee away from justice. To have a check on the applicant, so
as to avoid possibility of tampering of prosecution witnesses,
strict conditions can be imposed on him while releasing him on
bail.
8
8]
BA No.28 of 2014
So also, the fact that the properties of the applicant
is secured till date is not disputed either by applicant nor by the
I.O. The property secured are alleged to be of much much more
value then the amount due. The counsel for the applicant has
made statement for and on behalf of the applicant that he has
no objection if his secured movable and immovable properties
are being sold. Applicant has also filed Xerox copies of the
demand drafts for Rs.1 Crore in the name of NSEL Final
settlement Account. In the affidavit Exh.3, filed by the applicant,
he has undertaken to deposit the amount of Rs.50 lacks per
month till the amount due is being paid. The undertaking of the
applicant is accepted. Applicant has already deposited an
amount of Rs.5.25 Crores in persuence to the settlement with
NSEL. The act of applicant seems to be bonafide.
9]
Moreover, the prosecution case rests mainly on the
documentary evidence, which are almost seized by the EOW
investigation agency, as chargesheet is filed against some of the
coaccused including some of the borrowersmembers of NSEL
and also against some of the key officials of NSEL. Nonarrest of
son of the applicant cannot be a ground to reject the application
of bail of the applicant. I.O. has not disputed that applicant is
9
BA No.28 of 2014
being interrogated even from prior to filing of chargesheet
against the coaccused. Most of the investigation as regards the
applicant might have completed or mostly completed. The
Hon'ble High Bombay Court on dtd.22/08/2014 while releasing
coaccused Jignesh Shah in CRIMINAL BAIL APPLICATION No.
1263/14 has made certain observations, which are required to
be taken into consideration
“15.
What, however, is significant is that though these illegalities or
this 'fictitious trading' is sought to be highlighted as material against the
applicant, the real grievance of the First Informant – and even of the other
investors – is not with respect to the fact that such fictitious trading was
taking place. Their grievance is that their money has been lost. A big uproar
has been created by them, and for showing the magnitude of the alleged
offences, it is termed as a 'scam of about Rs. 5600 crores'. In this connection,
certain basic aspects of the matter cannot be lost sight of. The persons whose
monies are lost, including the First informant, are apparently, not the genuine
traders for whom NSEL was supposed to provide a platform. The very fact
that these persons are, as also the Investigating Agency is, freely using the
terms as the 'investors', 'borrowers', indicates that, that the transaction in
question were not genuine transactions of sale or purchase was well known to
the socalled buyers also, who now choose to describe themselves as
'investors'. It is clear that from their point of view, it was only an investment
yielding high returns for their money. These investors are not middle class or
lower class people, but are themselves businessmen. The transactions in
question were being entered through brokers who had knowledge of the
10
BA No.28 of 2014
commercial market. Going by the broad probabilities of the case, it cannot be
accepted that the persons who are now crying foul, were not aware of the fact
that their translations were not genuine. They were looking at these
transactions clearly as an investment of their monies yielding safe returns.
Their estimate or belief about the safety of the transactions has been proved
to be wrong, and that is the reason for the uproar which is now being made
by pointing out the illegalities in the transactions undertaken by NSEL.
Undoubtedly, these wrongs appear to have taken place, and undoubtedly, it
can not be suggested that those who permitted such fictitious trading have
not committed serious offenses, still, the fact remains that the persons who
are raising the grievance about such fictitious tradings were themselves not
genuine traders, and had entered into the transactions purely as financial
investments. There is every reason to believe that a sizable number of socalled
'investors' whose transactions were being entered into through brokers,
actually did not bother about the fictitious trades, and knowingly participated
in such illegal activities, without raising any issue of illegality thereof.
16.
There is great substance in the contentions advanced by the
learned counsel for the applicant that the brokers through whom the so
called trade transactions were entered into, do have their own legal team and
a full knowledge of how the market operates. The legalities of the transactions
were quite expected to be known to the brokers and the traders who do not
hesitate to term themselves as 'investors', and they were expected to assess the
legalities of the transactions. The brokers being quite experienced, and the
investors being informed persons, it is apparent that the issue of illegality of
the transactions raised by them is not out of their concern to adhere to
legalities, but in order to project the applicant as the main offender, rather
11
BA No.28 of 2014
than the defaulting parties.
17.
It may be observed in this context, that the legality of the
application of the provisions of the MPID Act to this case is not free from
doubt. Whether the monies paid by the buyers for purchasing the commodities
would amount to 'deposit' as defined in clause (c) of section 2 of the MPID
Act, would need serious consideration. Whether NSEL can be termed as a
'financial establishment' as defined under clause (d) of section 2 of the MPID
Act, would need equally serious consideration. Since I am dealing only with a
Bail Application it would be neither necessary nor proper to go deeper into
this aspect, but what needs to be said it that the 'investors' in this case are not
the type of persons for whose protection MPID Act has been enacted, as
reflected from the statements of objects and reasons behind the said
enactment.
24.
All said and done, there is no change in the legal principle that
pretrial detention can never be authorized as and by way of infliction of
punishment.”
10]
As such, relaying and accepting the undertaking of
the applicant, I am of the view that with strict conditions to be
imposed on applicant, applicant is entitled to be released on
bail, as no purpose will be served in keeping him behind the
bars, on the contrary his release may facilitate the recovery or
sale of the secured properties which applicant has given no
objection to be sold. In the result, I proceed to pass following
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order.
O R D E R
Criminal bail application no.28/14 is hereby
allowed.
Applicant Narayan Nageshwar Rao is ordered to be
released on bail in EOW Crime No.89/2013 for the offence
u/sec.409, 465, 467, 468, 471, 474, 477A r/w sec.120B of the
I.P. Code and sec.3 of the MPID Act, on his executing PR bond of
Rs.20 Lakhs with one or more sureties to make up the like
amount with following conditions
1. that applicant shall mark his presence at concern police
station with investigating officer on alternate Sunday
between 10 am to 1 pm. till filing of chargesheet against
him and thereafter on coming 4 last Sunday of each
month between 10 am to 12 noon.
2. that applicant shall surrender his passport with I.O., if
he possess, and shall not leave India without the previous
permission of this court.
3. that applicant shall not directly or indirectly make any
inducement, threat or promise to any person acquainted
with the facts of the case so as to dissuade him from
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disclosing any facts to any police officer or court.
4. that applicant shall not alienate or disposed off, in any
manner, any of his movable or immovable properties
without the previous permission of this Hon'ble Court.
5. The applicant to adhere strictly on the undertaking
given by him and shall hand over the demand drafts
immediately to NSEL ESCROW committee to be deposited
in said account.
Date : 11.09.2014
(D.P. Surana)
Special Judge, M.P.I.D. Act. &
Addl. Sessions Judge,
City Civil & Sessions Court,
At Bombay.
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