Allowed

Thirukumar Vedanayagam, v. the Inspector of Police

Madras HC8 Feb 2013CRL OP(MD)/1409/2013

Case brief

AI extract

What is this about?

The Madurai Bench granted anticipatory bail to six accused facing charges of criminal conspiracy, breach of trust, and cheating under IPC sections 120(b), 409, and 420. The court held that the challenged Board resolution regarding a bank's One Time Settlement was a commercial decision immune to criminal investigation, making it a fit case for bail.

What did the court decide?

Petitions allowed; petitioners shalt be released on bail upon execution of bond with sureties, appearance as required, and scrupulous following of Section 438 Cr.P.C.

Thirukumar Vedanayagam, Vs the Inspector of Police — Company and Corporate | Madras HC (2013)

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BEFORE THE MADURAI BENCH OF MADRAS HIGH COURT ( Criminal Jurisdiction )

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Friday, the Eighth day of February Two Thousand Thirteen

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PRESENT

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The Hon`ble Ms.Justice K.B.K.VASUKI

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Crl.O.P.(MD)Nos.1409, 1077, 1078 & 1079 of 2013

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THIRUKUMAR VEDANAYAGAM : PETITIONER/ACCUSED - 6 IN CRL.O.P.NO.1409/13 B.PRABAHARAN : PETITIONERS/ACCUSED - 3 & 4 P.YESUDASAN IN CRL.O.P.NO.1077/13 SUNDAR : PETITIONER/ACCUSED - 5 IN CRL.O.P.NO.1078/13 S.ANNAMALAI : PETITIONER/ACCUSED – 1 & 2 S.MAHESWARAN IN CRL.O.P.NO.1079/13 R.SELLAPRASAD : INTERVENOR IN ALL THE PETITIONS

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Vs. THE STATE REP.BY THE INSPECTOR OF POLICE, TUTICORIN CENTRAL POLICE STATION, TUTICORIN. (CR.NO.22 OF 2013) : RESPONDENT/COMPLAINANT IN ALL THE PETITIONS For Petitioner : M/S. R.SHANMUGA SUNDARAM Senior Counsel in Crl.O.P.(MD)No.1409/13 for MR.S.RAVI Advocate For Petitioner in Crl.O.P.(MD) Nos.1077, 1078 & 1079/13 : M/S. R.SHANMUGA SUNDARAM Senior Counsel for MR.G.MARIAPPAN Advocate

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For Respondent : MR.P.KANNITHEVAN Govt. Advocate (Crl.Side) in all the petitions For Intervenor : M/S. V.KATHIRVELU Senior Counsel in all the petitions for MR.R.VIJAYAKUMAR Advocate

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PETITION FOR ANTICIPATORY BAIL Under Sec. 438 Cr.P.C.

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ORDER : The Court Made the following order :-

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https://hcservices.ecourts.gov.in/hcservices/ The petitioners/Accused Nos.1 to 6 in Crime No.22 of 2013 on the file of the respondent police, have, by apprehending arrest for the alleged offences punishable under Sections 120(b), 409 & 420 IPC,

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approached this Court for an order for their release on anticipatory bail under Section 438 of the Code of Criminal Procedure.

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Heard the submissions made by the learned senior counsel appearing for the petitioners, the learned Government Advocate (Criminal side) appearing for the State and the learned counsel appearing for the defacto complainant/intervenor.

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The petitioners in all these petitions are arrayed as accused 1 to 6 in Crime No.22 of 2013, registered for the offences under Sections 120(b), 409 & 420 IPC, on the basis of the complaint given by one Sellaprasad, dated 12.01.2013. The said Sellaprasad is one of the share holders having one share of the Tamil Nadu Mercantile Bank Limited. This complaint is filed against the collective commercial decision taken by Board of Directors on 07.01.2011 in the Board meeting for allowing one time settlement proposal of M/s.Asian Granites Exporters, having one Aathiban Bose S/o.Subash Chandra Bose as its proprietor, who incurred liability towards the Bank in the course of trading and export of granites. While the liability towards principal is Rs.96,73,983/-, the amount borrowed on 09.08.1991 was Rs.1,95,00,000/- and the account became NPA on 09.12.1991. and the mirror balance is Rs.4,16,81,692/-. It is not in dispute that the proceedings are initiated for recovery of amount before DRT. A3 to A6 are directors and A1 & A2 are non directors of the Bank. Out of four directors i.e., A3 to A6, two of them are exbank officials. The meeting held on 30.12.2010, in which OTS proposal was approved by the Directors, was attended by 10 directors, whereas the complaint is lodged against few directors only.

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The loan is secured one, granted on the security of immovable properties and the shares of proprietor of the company and also the shares of the guarantor numbering 1346 and 2131 shares respectively and the properties are also attached through Court. Though originally the securities were attached, there were proceedings in respect of shares by the third parties and the same was subsequently settled before Lok Adalath and one time proposal was recommended by bank official and the same was placed before the Board of Directors for decision and for approval and the Board of Directors in the meeting held on 30.12.2010, accepted the proposal for Rs.2,71,19,139/- with simple interest at 14.50% from the date of NPA upto 31.03.2011, plus suit and future expenses by waiving the interest to the tune of Rs.1,54,08,297/-. Thereafter, as per one time settlement, the amount was paid and DRT proceedings were closed on the strength of one time settlement and payment.

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Much thereafter, one of the share holders has come forward with a complaint on 03.06.2012 against the above six accused, as if one time settlement is approved in favour of borrowers by way of criminal conspiracy, among 1 to 6 accused and one deceased Ashok, contrary to the RBI guidelines and one time settlement policy, and one time settlement is accepted only to benefit one private company by name Shenbagam Investment Private Limited, belonging to the family members of A1 & A2, by purchasing the shares of the borrowers and guarantors for lesser value, thereby the accused 1 to 6 have https://hcservices.ecourts.gov.in/hcservices/ committed an act of breach of trust and an act of cheating the bank, share holders and depositors. After the complaint was lodged, no progress was made in the complaint, as such the complainant

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approached this Court for direction and this Court issued a direction on 27.12.2012, thereby directed the concerned Police to verify the contents of the complaint, dated 03.06.2012 and to proceed further in the matter, if any cognizable offence is made out and if it is a fit case to be investigated, to register the case and to proceed further with the complaint, in accordance with law. When the said order is in force, the present complaint came to be filed on 12.01.2013 and the same is registered as FIR No.22 of 2013.

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While, according to the defacto complainant, the approval of the OTS scheme by the directors on 07.01.2011 is due to conspiracy between the accused 1 to 6, particularly, the accused A3 to A6 under the influence of A1 & A2, only to benefit the private company belonging to the family of A1 and A2 by purchase of the shares of the borrowers for lesser price and in order to cheat the share holders, depositors and the public, according to the petitioners, the decision taken is a collective commercial decision of all the Directors and based on the recommendation of the bank officials, after taking into account the norms for eligibility of OTS and the principal amount due and the securities available and the long pendency of the civil suit for recovery of the amount, and the amount arrived at in the OTS is by waiving the interest portion and not the principal amount and the same is done in a transparent manner and the decision taken is in the commercial wisdom of the Directors which cannot be questioned before any court of law by the share holders, who has no locus standi to interfere into day-to-day administration and affairs of the bank. The petitioners have also produced the copy of the authorities of the Supreme Court reported in 2004 (9) SCC 438 (Hindustan Lever and another Vs. State of Maharashtra and another) and 2010 (6) SCC 719 (Umesh Kumar Sinha Vs. State of Bihar and others) for the legal proposition that the Court has neither expertise nor jurisdiction to dwelve deep into the commercial wisdom exercised by the creditors and the members of the company and the right of a shareholders or minority shareholder collectively to seek enquiry/investigation into the affairs of the company under Sections 397 and 398 in cases of mismanagement and oppression do not confer any locus standi on the share holders to question business prudence or business decision of a company in dealing with third parties. It is contended by the learned senior counsel for the petitioners that the decision taken by the Board of Directors to approve OTS proposal is one such business decision of the company and as such, it cannot be questioned in Court of law.

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This Court, considering the circumstances under which the decision is taken i.e., based on the recommendations of the bank officials and OTS proposal and the parameters set out for different categories of borrowers, having different value of securities either over and above or less than the value of the outstanding and different mode of settlement set out in the OTS policy and the nature and extent of the waiver given and the subsequent proceedings and the delay in lodging the complaint and the allegations raised therein, and the authority of the board of Directors to take such a decision and their status during the relevant point of time in the company, is of the view that it is a fit case wherein the petitioners can be https://hcservices.ecourts.gov.in/hcservices/ granted anticipatory bail.

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8.In the result, these petitions are allowed and it is hereby directed that the petitioners shall be released on bail in the event of their arrest or on their surrender before the Court concerned within 15 days from the date of receipt of this order copy, subject to the following conditions:

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(i) The petitioners shall execute a bond for a sum of Rs.10,000/(Rupees ten thousand only) each with two sureties each for a like sum to the satisfaction of the Judicial Magistrate No.II, Tuticorin;

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(ii) The petitioners shall appear before the respondent-police as and when required and shall co-operate fully with the respondent Police in the matter of investigation; and

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(iii) The petitioners shall follow Section 438 Cr.P.C. scrupulously.

Sd/-

08/02/2013

/ TRUE COPY /

Sub-Assistant Registrar (C.S.)

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Madurai Bench of Madras High Court,