NANJUNDAIAH Vs. UNION OF INDIA

JUDGEMENT

(1.) Criminal Petition No.45/2021 is filed by the petitioner accused No.1 under Section 439 of Cr.P.C., for granting bail in Special Criminal Case No.846/2020 registered by the Directorate of Enforcement (for short ED ) for the offence punishable under Section 4 of the Prevention of Money Laundering Act, 2002 (for short PML Act ) pending on the file of XXXII Additional City Civil and Sessions Judge and Special Judge for CBI and PMLA cases, Bengaluru (CCH-34).

(2.) Heard the arguments of Sri Kiran Javali, learned counsel appearing for Sri K.Chandrashekhara, learned counsel for the petitioner and Sri P.Prasanna Kumar, learned counsel for the Directorate of Enforcement (ED) and also learned High Court Government Pleader appearing for respondent assisted by Sri Madhukar Deshpande, learned counsel for the victim.

(3.) The case of the prosecution is that in Crl.P.No.45/2021, the Directorate of Enforcement filed a complaint in ECIR No.BGZO/20/2020 registering the case on 09.03.2020 by taking investigation in respect of the case registered by the Basaveshwaranagar Police Station, Vijayanagar Sub-Division for the offence punishable under Section 420 of IPC which came to be transferred to the CCB, F & M, Bengaluru on 19.12.2019. It is alleged that petitioner-Nanjundaiah is the Founder/Director of Kanva Souhardha Co-operative Credit Limited (hereinafter referred to as Society ) situated at No.861, Kanva Sri, Modi Hospital Road, West of Chord Road, Bengaluru. The case came to be registered on the report received from the office of Registrar of Co-operative Societies, Ali Askar Road, Bengaluru in letter No.RCS:RSR/SOU/142/2019- 20,dated 20.02.2020 along with a copy of the FIR No.341/2019, dated 31.10.2019 registered by the Basaveshwaranagar Police Station, Vijayanagar SubDivision, Bengaluru and along with the Observation Report, which was conducted based on the public complaint and observed the major lapses and serious irregularities. It is alleged that the petitioner being the Founder/Director of the Kanva Souhardha Co-operative Credit Limited has collected Rs.650.00 crores deposits from the members and the public by assuring high rate of interest through commission agents, without maintaining required liquidity, Prepaid instruments, issued to deposit holders without prior permission from the RBI and it is not able to re-pay the matured amounts. It is further alleged that the Society has advanced Rs.702.00 crores of loan out of deposits, working capitals, shares, reserves etc., Out of which Rs.442.00 crores is advanced to its associated 13 companies without getting any security. It is further alleged that out of 15 Directors, 10 Directors have taken loan amounting to Rs.15.58 crores and all are defaulters. 90% of the loanees are defaulters. No efforts were made to recover the loan. It is further alleged that the Society has not maintained proper accounts for paying Income Tax, GST etc., and the RBI has not authorised to issue prepaid instruments. It is further alleged that crime Nos.340/2019, 341/2019 and 342/2019 were registered by the Basaveshwaranagar Police Station on 31.10.2019 against this petitioner for the offence punishable under Section 420 of IPC. The assessment of proceeds of the crime reveals that the petitioner registered the Society under the provisions of the Karnataka Souharda Sahakari Act, 1997 and collected multiple crores of deposits from the members and public by assuring high rate of interest. The petitioner-Nanjundaiah, the founder of Kanva Souhardha Co-operative Credit Limited allegedly diverted the deposits from the Financial Institutions to his other businesses. Multiple FIRs have been registered against this petitioner and the offence under Section 420 of IPC is a scheduled offence under PML Act and he has committed the offence under Sections 3 and 4 of the PML Act. Accordingly, the petitioner has been arrested and he was remanded to the judicial custody.