The High Court granted anticipatory bail to auditors accused of fraud under Sections 409, 420, 120B IPC. The court held that since audits were conducted after the financial year ended, no collusion could be prima facie inferred.
Release on bail on executing personal bond of Rs.25,000/each with sureties subject to conditions in Section 438(2) CrPC.
This page shows the compact analysis of this judgement. The full analysis — procedural history, issue-by-issue holdings with ratio and obiter, advocates, and paragraph-level evidence for every claim — is being added to the record in batches and will appear here when this judgement has been through it.
IN THE HIGH COURT OF JUDICATURE AT BOMBAY CRIMINAL APPELLATE JURISDICTION
CRIMINAL APPLICATION NO. 3125 OF 2009
WITH
CRIMINAL APPLICATION NOS. 3126, 3127, 3153 AND 3154 OF 2009.
Manjusha Shete, Kisan Dhondiba Gargote, Pradeep Popatlal Dakle Pranjali Deepak Thite, Babasaheb Babanrao Mane ..... ..... ...Applicants V/s The State of Maharashtra & Anr. ..... ..... ...Respondents
Mr.A.P.Mundargi, Sr. Adv. i/by Revati P. Mohite-Dere, Adv. for the applicants Mr.H.J.Dedhia, APP for the respondents.
CORAM: A.P.DESHPANDE, J. 28th July, 2009.
PC:
On account of misappropriation of huge amount of Rs.1,12,17,669/over a period from the year 1999 to 2007 of Pune District Judiciary Employees Cooperative Credit Society a complaint came to be filed by Special Auditor Class II of Cooperative Societies, Pune on 23.3.2009. According to the said complaint the afore stated amount has been mis appropriated by the office bearers and employees of the society. By colluding with one another false and forged documents came to be prepared, incorrect amounts are filled in in the counter foils and the copies and false loan entries are taken in the records. According to the prosecution the very fact that every year though substantially large amounts were siphoned out of funds of the society and as no employee or the office bearers of the society raised any voice or objected to the same it is indicative of collusion between the office bearers and the employees who were in charge of the administration during the year 1999 to 2007. In the FIR
1
names of seven persons find place who were office bearers, employees, internal auditors of the society as persons responsible for the misappropriation of the amount. At later point of time various other persons as well came to be arrayed as accused including the present applicants. The present applicants are admittedly persons who have carried out the special audit in successive years during 1999 to 2007 pursuant to the directions issued by the District Deputy Registrar of the Cooperative Societies. It is seen from the scheme of Maharashtra Cooperative Societies Act that after completion of the financial year the accounts of the societies are audited at the hands of the auditors nominated/appointed by the District Deputy Registrar. Such yearly audit known as statutory audit is carried out by the present applicants. In the said audit which is a test audit the applicants did not detect or notice any misappropriation or embezzlement of funds and thus did not bring it to the notice of any one. Along with office bearers, employees and the internal auditors the present applicants are accused of commission of offence punishable under sections 409, 420, 406, 465, 467, 468, 477A and 120B of IPC. Learned senior counsel appearing for the applicants Mr.Mundargi has submitted that none of the applicants have ever had any contact with any of the office bearers or employees of the society prior to the commission of offence and thus in the absence of any agreement between the present applicants and other accused in regard to commission of offence the present applicants cannot be held liable for the offence under sections 409, 420, 406, 465, 467, 468, 477A. It is not the case of the prosecution that the present applicants had colluded with the office bearers of the society and/or its employees prior to or at the time of the commission of offence by those accused by forging the documents and falsifying the accounts. According to the applicants they had appeared on the scene only after the offence was committed and when accounts were audited. The present applicants have
2
carried out the special audit year after year. It is also the case of the applicants that only after completion of the financial year the District Deputy Registrar nominates/appoints different special auditor to carry out audit for the year ending on 31st March of a particular year. Thus the audit is post commission of the offence. None of the auditors wold be aware about the societies to which they would be deputed to carry out the audit. It is only when District Deputy Registrar passes an order and serves the same on a particular auditor then only he comes to know that he has to carry out the audit of that particular society. If this be the mechanism of performing audit then prima facie it cannot be said that any of the applicants could be said to have agreed with the other co accused for commission of offfence which is a requirement of section 120B. Some of the applicants are Chartered Accountants having practiced over many years and are said to be persons having good reputation and roots in the society. It is submitted that interim order is operating in favour of the applicants and in the event if anticipatory bail is not granted unnecessary embarrassment would be caused to the applicants. There is no need for the custodial interrogation. Nothing is to be recovered from the applicants and lastly it is submitted that the applicants could be put to terms. Per contra, learned APP has submitted that huge amount has been misappropriated and auditors should have noticed the defalcation. Assuming that the applicants could be said to be in know of the commission of said offence when accounts came to be audited still they cannot be prim facie held to be conspirators in the commission of offence. Having regard to the totality of facts and circumstances I am of the view that the applicants are entitled to be released in the event of their arrest. In the result I pass the following order:
In the event of arrest of the applicants or any of them in CR No.66/2009 registered with Shivajinagar Police station for offences punishable u/ss. 406,
3
409, 420, 467, 468, 477-A, 120B read with section 34 of IPC the applicant/s shall be released on bail on executing personal bond in the sum of Rs.25,000/each together with one or two sureties in the like amount. The applicants shall abide by conditions stipulated in section 438(2) of the Code of Criminal Procedure. Applications stand disposed of.
28.7.2009.
4
1 issue framed by the court
Whether auditors appointed post-offence to conduct special audits can be held liable as conspirators under Section 120B IPC for misappropriation discovered during audit.
3 provisions across 2 enactments
Manjusha Shete
The State of Maharashtra
A.P.Deshpande
As recorded by the court registry
Judgements on the same questions, provisions and authorities, from every court
