Dismissed

Phanendra Kumar Geddam v. Republic of India(Cbi)

Orissa HC13 May 2019BLAPL/2061/2019

Case brief

AI extract

What is this about?

The High Court of Orissa rejected a bail application filed by Phanendra Kumar Geddam, accused of economic offences under ICCPR and the Prize Chits Act. The court held that the accused's crucial role as a director in facilitating massive illegal fund collection, coupled with his prior absconding and the gravity of the financial loss to the public, precluded bail.

What did the court decide?

Bail application rejected.

Phanendra Kumar Geddam Vs Republic of India(Cbi) — Corruption | Orissa HC (2019)

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IN THE HIGH COURT OF ORISSA, CUTTACK

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BLAPL NO. 2061 Of 2019

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An application under section 439 of the Code of Criminal Procedure in connection with R.C. Case No. 32(S) of 2014 corresponding to SPE Case No. 27 of 2014 pending on the file of Special C.J.M. (C.B.I.), Bhubaneswar.

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Phanendra Kumar Geddam ……. Petitioner -VersusRepublic of India ……. Opp. Party For Petitioner: - Mr. G. Nageswara Rao Mahes Das, A.K. Sahoo For Opp. party: - Mr. Anup Kumar Bose (Asst. Solicitor General) ---------------------------------

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P R E S E N T:

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THE HONOURABLE MR. JUSTICE S.K. SAHOO

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-------------------------------------------------------------------------------------------------------Date of Order: 13.05.2019 --------------------------------------------------------------------------------------------------------

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S. K. SAHOO, J . The petitioner Phanendra Kumar Geddam who is an

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accused in R.C. Case No. 32(S) of 2014 corresponding to SPE Case No. 27 of 2014 pending on the file of Special C.J.M. (C.B.I.), Bhubaneswar for offences punishable under sections 120-B, 420, 409 of the Indian Penal Code read with sections 4, 5 and 6 of the Prize Chits and Money Circulation Schemes (Banning) Act, 1978

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(hereafter ‘1978 Act’), has filed this application under section 439 of

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Code of Criminal Procedure seeking for bail as his bail application has been rejected by the learned Sessions Judge, Khurda at Bhubaneswar in Bail Application No.1544 of 2018 vide order dated 04.01.2019.

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The present case was instituted by treating the First Information Report of Padampur P.S. Case No. 128 of 2012 as original F.I.R. of R.C. Case No. 32(S) of 2014 in pursuance of the order dated 09.05.2014 of the Hon’ble Supreme Court of India passed in W.P. (Civil) No.401 of 2013 filed by Shri Subrata Chattoraj and W.P. (Civil) No.413 of 2013 filed by Shri Alok Jena.

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The prosecution case, as per the F.I.R. lodged by Susanta Kumar Sahu, S/o:- Bipin Bihari Sahu of Padma Pur, Ward No.2, Bijay Nagar is that he and his brother Srikanta Kumar Sahu and two relatives Ramnath Sahu and Khireswar Sahu were cheated with a sum of Rs.11,00,000/- (rupees eleven lakhs only) by the three accused persons, namely, Subash Chandra @ Subala Sahu, Bhakta Charan Sahu and Bijay Kumar Sahu on the assurance that invested money in the Wetell Group of Companies (hereafter ‘Wetell’) would be doubled within twenty months.

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The investigation revealed that the Wetell was incorporated with Registrar of Companies, Hyderabad, Andhra Pradesh on 20.05.2004. The name of the company was changed once in 2008 and twice in 2010. The registered office of Wetell was

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located initially at Hyderabad and subsequently changed to Banjara Hills, Andhra Pradesh. The petitioner was one of the Directors of Wetell from 23.11.2004 to 01.06.2010 which consists of six companies. Funds were raised from public illegally and unauthorizedly with false promise of high return. A large number of agents were recruited in Bhubaneswar, Jharsuguda, Sambalpur, Bargarh, Ganjam and Gajapati Districts to mobilize money/deposits from the public and meetings were conducted with the agents at Jharsuguda and the agents were motivated to collect money for the company by assuring them payment of commission up to three percent. The petitioner and some other Directors were instrumental in the day-to-day functioning of the company and mobilizing deposits from the gullible public with false promise of unusual high return i.e. @ ten percent per month on the investment amount by issuing Memorandum of Understanding (MOU). In order to build confidence among the investors and agents, undated advance cheque equal to investment amount was given to the investors with Memorandum of Understanding under the signatures of the petitioner and another Director and the cheques were also signed by the petitioner and other authorised signatories. The investigation further revealed that the petitioner and other Directors fraudulently and dishonestly collected an amount of Rs.2,16,44,250/- (rupees two crores sixteen lakhs forty four thousand two hundred fifty only) from various investors of Odisha. The promise of giving interest @

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sixty percent annually to the depositors was not practically viable. Wetell was not registered with SEBI or authorised by RBI to collect deposits/investment from the public and therefore, such collection was unauthorized as well as illegal. Investigation further revealed that Wetell collected Rs.2,08,44,250/- from depositors and promise to pay Rs.4,16,88,500/- but the depositors were paid only to the tune of Rs.29,28,000/- as monthly return in order to build confidence among the depositors falsely about the securities of their deposits and accordingly, Wetell and its Directors misappropriated to the tune of Rs.1,80,19,250/- and cheated the depositors to the tune of Rs.3,87,60,500/-. On 31.01.2017, charge sheet was submitted against the petitioner as well as other Directors and Wetell keeping further investigation open under section 173(8) of Cr.P.C. to look into larger criminal conspiracy, money trail, role of regulatory agencies, role of other Directors as well as sister companies.

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Mr. G. Nageswara Rao, learned counsel appearing for the petitioner argued that the so-called money trailing to the bank accounts of the petitioner to the tune of Rs.25,48,450/- as contended by the C.B.I. was nothing but the salary of the petitioner. The petitioner resigned as a Director of the company since 25.05.2010 and therefore, by the time of lodging F.I.R. on 20.08.2012, the petitioner was not attached to the company. It is further contended that the passport of the petitioner has already

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been seized by the C.B.I. Authorities and there is no chance of absconding of the petitioner and therefore, the bail application may be favourably considered.

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Mr. Anup Kumar Bose, learned Assistant Solicitor

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General, on the other hand, contended that a sum of Rs.25,48,450/was transferred from the accounts of the accused company to the personal account of the petitioner on different dates by different modes and after submission of first charge sheet, it was found that there has been further transfer of money to the tune of Rs.14,30,000/- from the accounts of the accused company to the personal account of the petitioner and therefore, the total amount transferred to the personal account of the petitioner was Rs.39,78,450/- which was withdrawn by the petitioner during regular intervals and negligible credit balance of Rs.475/- is only available in the three personal bank accounts of the petitioner as on 30.09.2017. It is contended that the first charge sheet was submitted on 31.01.2017 showing the petitioner as an absconder and the petitioner was arrested with much difficulty at Hyderabad on his return to India from Uganda via Muscat and his passport was seized by the C.B.I. which has been returned to the Regional Passport Office, Hyderabad for impounding and the Regional Passport Office has already impounded the passport of the petitioner. It is contended that even though the total amount

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transferred as ascertained till date was about rupees forty lakhs but the vital role played by the petitioner during his directorship from 23.11.2004 till 01.06.2010 in connivance with the other Directors enabled Wetell to collect huge amount of money from gullible investors unauthorizedly and illegally solely for the purpose of cheating and therefore, at this stage it would not be proper to release the petitioner on bail.

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Before proceeding further to deal with the factual aspects of the case, it would be better to discuss the ratio laid down by the Hon’ble Supreme Court and by this Court relating the bail in economic offences.

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In case of Y.S. Jagan Mohan Reddy -Vrs.- CBI reported in (2013) 55 Orissa Criminal Report (SC) 825 , it is held as follows:-

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"15. Economic offences constitute a class apart and need to be visited with a different approach in the matter of bail. The economic offences having deep rooted conspiracies and involving huge loss of public funds need to be viewed seriously and considered as grave offences affecting the economy of the country as a whole and thereby posing serious threat to the financial health of the country.

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While granting bail, the Court has to keep in mind the nature of accusations, the nature of evidence in support thereof, the severity of the

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punishment which conviction will entail, the character of the accused, circumstances which are peculiar to the accused, reasonable possibility of securing the presence of the accused at the trial, reasonable apprehension of the witnesses being tampered with, the larger interests of public/State and other similar considerations."

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In case of State of Gujarat -Vrs.- Mohan Lal Jitamal

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Torwal reported in A.I.R. 1987 S.C. 1321 , it is held as follows:-

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"5………The entire community is aggrieved if the economic offenders who ruin the economy of the State are not brought to book. A murder may be committed in the heat of moment upon passions being aroused. An economic offence is committed with cool calculation and deliberate design with an eye on personal profit regardless of the consequence to the Community. A disregard for the interest of the community can be manifested only at the cost of forfeiting the trust and faith of the Community in the system to administer justice in an even handed manner without fear of criticism from the quarters which view white colour crimes with a permissive eye unmindful of the damage done to the National Economy and National Interest".

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In the case of Nimmagadda Prasad -Vrs.- C.B.I.

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reported in (2013) 55 Orissa Criminal Reports (SC) 833 , it was held that economic offences have serious repercussions on the development of the country as a whole. Such offences constitute a

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class apart and need to be visited with a different approach in the matter of bail. The economic offence having deep rooted conspiracies and involving huge loss of public funds needs to be viewed seriously and considered as a grave offence affecting the economy of the country as a whole and thereby posing serious threat to the financial health of the country.

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In the case of Ram Chandra Hansdah -Vrs.- Republic of India reported in (2015) 62 Orissa Criminal Reports 219 , it is held that economic offences are considered grave offences as it affects the economy of the country as a whole and such offences having deep rooted conspiracy and involving huge loss of public fund are to be viewed seriously. Economic offence is committed with cool calculation and deliberate design solely with an eye on personal profit regardless of the consequence to the community. In such type of offences, while granting bail, the Court has to keep in mind, inter alia, the larger interest of public and State . The nature and seriousness of an economic offence and its impact on the society are always important considerations in such a case and those aspects must squarely be dealt with by the Court while passing an order on bail applications.

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Keeping in view the aforesaid settled principle of law and adverting to the contentions raised by the learned counsel for the respective parties and on a careful scrutiny of the case records, it

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appears that the petitioner was the Director of Wetell for a period of about five and half years and during such period without any approval of the regulatory authorities like RBI and SEBI, collections were made from the investors unauthorizedly and illegally giving false assurance that the investment money in Wetell would be doubled within twenty months. Memorandum of Understanding under the signature of the petitioner as well as undated cheques under the signatures of the petitioner were issued to the depositors to build confidence and in order to mobilize the business with the investors, the agents were assured commission up to three percent on the collected money. The amount of misappropriation of Wetell ascertained so far was to the tune of Rs.1,18,19,250/- which is likely to go up during course of further investigation. What amount has been transferred to the three bank accounts of the petitioner from the company’s account were not the sole criteria but the vital role played by the petitioner as a Director of Wetell for a number of years is crucial.

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Law is well settled that while granting bail, the Court has to keep in mind the nature of accusation, the nature of evidence in support thereof, the severity of the punishment which conviction will entail, the character of the accused, the circumstances which are peculiar to the accused, reasonable possibility of securing the presence of the accused at the trial, reasonable apprehension of the

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witnesses being tampered with, the larger interests of the public/State and other similar considerations. It has also to be kept in mind that for the purpose of granting bail, the Legislature has used the words "reasonable grounds for believing" instead of "the evidence" which means the Court dealing with the grant of bail can only satisfy itself as to whether there is a genuine case against the accused and that the prosecution will be able to produce prima facie evidence in support of the charge. It is not expected, at this stage, to have the evidence establishing the guilt of the accused beyond reasonable doubt. ( Ref:- C.B.I. -Vrs.- V. Vijay Sai Reddy reported in (2013) 7 Supreme Court Cases 452 ).

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After careful consideration of the contentions raised by the learned counsel for the respective parties and taking into account the nature and gravity of the accusation, strong prima facie case available against the petitioner to show his involvement in the economic offence committed by the Wetell Group of Companies, the role played by the petitioner as a Director of the Company, the manner in which huge amount of money was collected from the investors unauthorizedly and illegally, the conduct of the petitioner in absconding during course of investigation, likelihood of tampering with the evidence when further investigation is under progress and above all in the larger interest of society, I am not inclined to release the petitioner on bail.

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Accordingly, the bail application sans merit and hence

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stands rejected.

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Urgent certified copy of this order be granted on proper

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application.

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….……………………… S.K. Sahoo, J.

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