BA 63­15
1
BEFORE THE DESIGNATED COURT UNDER M.P.I.D. ACT
AT BOMBAY CITY CIVIL & SESSION COURT, MUMBAI.
BAIL APPLICATION NO.63 OF 2015
IN
C.R.NO.89 OF 2013
Mesineni Sampath Rao,
….

Applicant.

….

Respondents.

V/s.
The State of Maharashtra,
Through EOW Unit V, CB, CID,
C.R. No.89/13.

CORAM : D.P. SURANA (C.R. NO.36)
DATE : 19th NOVEMBER, 2015.
Appearance :
Adv. Kotian for Applicant/Accused
SPP Adv. Avinash Avhad for State.
Adv. Sandip Karnik for Intervener/Informant.
ORAL ORDER
Applicant who was came to be arrested on 18.10.2015 in C.R.
No.89 of 2013 registered with EOW for the offence punishable under
sec.409, 465, 467, 468, 471, 474, 477(A), 120 B of the I.P. Code and
sec.3 of the Maharashtra Protection of Interest of Depositors (In
Financial Establishments) Act, 1999, by this application u/sec.439 of
the Cr.P.C. is seeking bail.
2.

It is the case of prosecution that, National Spot Exchange Ltd. (in
short NSEL) provided electronic platform to the buyers and sellers for
entering into pair contract T+2 and T+25 wherein, T­2 is the pay in
date and T­25 is pay out date. That, on the NSEL platform the buyers
2
BA 63­15
and sellers who resides far away from each other and don not 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
intends to purchase the goods, so deposited in NSEL accredited
warehouses, is required to deposit margin money and on purchase, copy
of electricity warehouses receipt is issued to him.
It is alleged that the NSEL, which was supposed to trade in sale
and purchase of commodities, deviated from its business module. That
without there being actual physical stock of the commodities, NSEL
officials in collusion with there 25 borrowers and the brokers, appointed
by NSEL itself, generated false and bogus warehouse receipts, without
there being actual stock of the commodities. Whereas in all around
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 and brokers.
3.

It is alleged against the applicant accused that he is proprietor of
MSR Foods Processing, a Warangal based firm, engaged in trading of
paddy rice, which became member of NSEL in March, 2012. The firm
started trading on the platform of NSEL immediately after becoming
member of NSEL in the month of April, 2012. When the trading of NSEL
was stopped in July, 2013 there should have been a stock of 8993 MT of
paddy in the NSEL designated warehouses of the company, however
when checked no stock was found. Liability of the firm is Rs.9.05 crores
which has not yet settled. The accused failed to attend office of EOW
3
BA 63­15
inspite of several call letters and was running away from investigation
agency. His books of accounts could not be verified till date because of
his non cooperation.
4.

Adv. Kotian for applicant submitted that the applicant is
sufficiently interrogated by the investigation agency and is ready to co­
operate. That all the relevant documents are provided to the I.O.
Nothing is left to be interrogated from the applicant. That, all the
offence leveled against the applicant prescribes punishable for
imprisonment upto 7 years only. He further submitted that all other
member borrowers of NSEL who were arrested are granted bail. The
role of the released co­accused is similar to that of the present
applicant. Their alleged outstanding amount is much more then the
applicant. Adv. Kotian submitted that the applicant has bonafides on his
part his friend has surrendered for attachment one property and has
also given undertaking. Adv. Kotian contended that no purpose will be
served in keeping the applicant under further incarceration.
5.

As against this SPP Adv. Avhad, I.O. and Adv. Karnik for informant
intervener submitted that there is prima­facie case maid out against the
applicant. That the investigation shows a link established between the
NSEL, its officials and the applicant, which shows that the crime was
perpetrated in conspiracy. That applicant has tie up between NSEL key
Management persons and the accused persons. The accused has
siphoned of Rs.9.05 crores received from NSEL. That the applicant
accused had been absconding for last 2 years and has not co­operated in
investigation. Because of this his non availability books of accounts of
his firm could not be verified. Investigation of this case still in progress
and the applicant accused is an influential person. He is likely to tamper
4
BA 63­15
with the evidence. The accused is resident of Warangal District of
Telangana and if released on bail, he will definitely abscond and will
not be available for further investigation. As such, they prayed that
applicant may not be granted bail at the most till the filing of charge­
sheet.
6.

After going through the rival contentions, I have perused the
documents relied by parties and the police case papers.
7.

At the out set I would like to mention here that it is not disputed
by the applicant he is a proprietor of MSR Foods Processing and was a
member of NSEL. It is also not disputed that there was trading of huge
amount between him and NSEL. Whereas, it is pertinent to note here
that applicant is interrogate by the I.O. The alleged liability as against
the applicant is for Rs.9.05 Crores. Whereas, the applicant is disputing
the said liability and admits liability of Rs.5.5 Crores only. Whereas,
applicant has already alleged to have paid an amount of Rs.1.24 Crores.
The friend of the applicant K. Ravindra Reddy (identified by Adv.
Kotian) was present in the court. He filed affidavit Exh.4 and thereby
voluntarily surrendered his 2 properties for attachment in the said crime
under the MPID Act as against the alleged liability of the applicant. K.
Ravindra Reddy also filed the valuation of the said properties. Adv.
Kotian also made statement on the instructions of his applicant client
that if the the properties are sold for less amount then for Rs.
1,63,35,000/­ then the applicant will deposit the renaming difference
amount within 30 days. Adv. Kotian also made statement on the
instructions of his applicant client that the applicant undertakes to
deposit cash amount of Rs.5 laks within a week. The property and the
undertaking given by the applicant and his friend K. Ravindra Reddy is
5
BA 63­15
accepted. Applicant to abide by the undertaking given. Adv. Kotian also
filed the title deeds of the properties surrendered K. Ravindra Reddy.
The undertaking given by the applicant or on his behalf by K. Ravindra
Reddy is definitely a bonafide attempt on the part of applicant towards
the repayment of his liability.
8.

So also, the co­accused in the crime, already released on
bail, has much much less alleged liability than the applicant. As such, I
am of the view that the applicant accused is entitle to be released on
bail on the law of parity too. It is not satisfactory shown as to really for
what purpose the applicant’s custody is necessary for the further
investigation. Irrespective of the fact that charge­sheet is not filed as
against the applicant or further investigation as against him is pending,
I do not find that he is required to be continued behind the bars. Only
because the applicant has not come with a suitable proposal to repay
the entire amount of his liability, alleged to be due as against his, when
he is disputing the amount due as against him, he cannot be detained
behind the bars.
9.

The accused applicant is in custody since 18.10.2015. There is no
material to show that only if the applicant is kept behind the bars the
further investigation will be facilitated and other wise not. As such, the
grounds put­forth by the prosecution opposing the application of bail of
the applicant are not sufficient enough to refuse bail to the applicant.
10.

The allegation of the I.O. of tampering or absconding are general
in nature. The co­accused, who was released on bail are not alleged to
be absconding or has tampered with any witnesses or the evidence. The
applicant’s address is also not disputed by the I.O.

6
11.

BA 63­15
Most of the investigation is based on documentary
evidence, which are already in the possession of I.O. The documents
relating to applicant are also seized in the crime. To have an
opportunity to the I.O. to further interrogate the applicant, pending
investigation, conditions can be imposed on him, so as to have an
opportunity to I.O. to complete investigation smoothly. In the result, I
am of the view that, applicant is entitle to be released on bail with strict
conditions to be imposed. As such, I proceed to pass following order.
ORDER
Criminal bail application no.63/2015 is hereby allowed.
Applicant Mesineni Sampath 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. Five 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 coming 10 alternate Wednesday
between 10 am to 1 pm. and as and when called by I.O.
2. that applicant shall not leave India without the 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 disclosing any facts to
any police officer or court.
4. that applicant shall not alienate or disposed off, in any manner,
any of his immovable properties without the permission of court.
Date : 19.11.2015
( D.P. Surana )
Special Judge, M.P.I.D. Act.
City Civil & Sessions Court, Gr. Bombay.