Mumbai, Maharashtra – Manickam Velayutham Udaiyar, identified as Accused No. 2 in a large-scale investment fraud case, has been denied bail by the Designated Court under the Maharashtra Protection of Interest of Depositors (MPID) Act. The order, issued on September 21, 2024, by His Honour Judge N. P. Mehta (Court Room no. 7), highlighted Udaiyar’s alleged role in collecting and diverting substantial sums of depositors’ money, along with concerns about potential tampering with evidence.
Udaiyar, a 40-year-old businessman residing in Andheri (West), Mumbai, is currently lodged at Arthur Road Jail. He had sought regular bail under Section 439 of The Code of Criminal Procedure, 1973, in connection with C.R. No. 59 of 2024 (originally C.R. No. 398 of 2024 registered with Varsova Police Station), now being investigated by the D.C.B. C.I.D. Police Station. The charges against him include offenses under Sections 201 (causing disappearance of evidence), 406 (criminal breach of trust), 409 (criminal breach of trust by public servant, or by banker, merchant or agent), 420 (cheating and dishonestly inducing delivery of property), 506(2) (criminal intimidation), read with Section 120-B (criminal conspiracy) of the Indian Penal Code, 1860, as well as Sections 3 and 4 of The Maharashtra Protection of Interest of Depositors Act, 1999.
The Allegations: A Web of Deception and Diverted Funds
The prosecution, represented by Ld. SPP Suryawanshi, presented a detailed account of the alleged fraud. The case revolves around a primary accused, Ashish Shah, who allegedly induced numerous depositors by promising high returns on investments in the share market through “Samaryash Trading Society,” later referred to as “Samaryash Traders LLP,” purportedly registered with SEBI.
The informant in the case initially invested ₹10 Lakhs in cash with Ashish Shah on September 1, 2022, after being impressed by a promised 84% per annum interest. Subsequently, the informant’s wife transferred ₹3 Lakhs to Shah’s ICICI Bank account on November 28, 2022. Over time, the informant, along with friends and relatives, collectively invested staggering amounts: ₹42,06,371, ₹17,46,615, ₹14,95,000, ₹60,000, ₹27,91,559, ₹2,55,000, ₹50,35,500, and a massive ₹9,63,36,763 on various dates.
The fraud came to light when Ashish Shah allegedly avoided returning the invested money, and on May 23, 2024, reportedly attempted to flee with the depositors’ funds.
Manickam Velayutham Udaiyar’s role, as per the prosecution, was that of an “agent” for Ashish Shah. He is accused of actively accepting “huge deposits from various investors by showing rosy picture of handsome return” and then defrauding them for his “own use.” During interrogation, it reportedly came to light that Udaiyar had wrongfully gained from the depositors’ money, with no legitimate source of business income to explain the vast sums. He allegedly purchased properties in Ashish Building, JTH Society, Andheri, Shivshakti Society, Anna Nagar, and even 4 kg of gold.
The investigation further revealed that Udaiyar collected money from various depositors and diverted an aggregate amount of ₹16.11 Crores into his and his wife’s bank accounts. The investigating officer is currently collecting details of money transferred to his relatives’ bank accounts. Bank statements presented in court showed credit and debit transactions running into crores of rupees from Udaiyar’s account, with the firm in his wife’s name showing no discernible nature of business. Witness statements indicated that Udaiyar induced them to deposit money with Ashish Shah and provided his own bank account number for transfers.
Defense Plea and Court’s Rejection
Ld. Advocate Vinod P. Sangvikar, along with Ld. Advocate Yuvraj A. Tajane, argued for Udaiyar, submitting that Ashish Shah was the main accused, and Udaiyar was merely an agent. They relied on the Hon’ble Supreme Court’s judgment in Sanjay Chandra’s case (2012(2) SCC (Cri) 26), typically cited for emphasizing personal liberty and the principle that bail should be the rule, not the exception.
However, Judge Mehta, after considering the submissions, found that the investigation was still ongoing and that it was undisputed that Udaiyar was an agent of Ashish Shah. The court noted that Udaiyar was tasked with convincing depositors and collected money for which he received commission, depositing it into his and his wife’s accounts. Crucially, Udaiyar “failed to account for huge money which came to be diverted in his account.” The court emphasized the need to ascertain to whom Udaiyar subsequently diverted the money received from Ashish Shah.
Given that the investigation is still in progress, the court expressed apprehension that Udaiyar “may pressurize witnesses not to approach Investigating Officer.” Therefore, the bail application was rejected.
The order formally states:
- The present Bail Application No.668 of 2024 filed by the Applicant Manickam Velayutham Udaiyar in connection with C.R. No.59 of 2024 is registered with D.C.B. C.I.D. Police Station (C.R. No.398 of 2024 registered with Varsova Police Station) against the present Applicant for the offence punishable under Sections 201, 406, 409, 420, 506(2) r/w Section 120-B of the Indian Penal Code, 1860 as well as Sections 3 and 4 of The Maharashtra Protection of Interest of Depositors Act, 1999 is hereby rejected.
- The present Bail Application No.668 of 2024 stands disposed of accordingly.
The decision underscores the judiciary’s cautious approach in cases involving financial fraud, especially when the investigation is ongoing and there are concerns about the accused’s potential influence on witnesses or further dissipation of ill-gotten gains. Udaiyar will remain in judicial custody as the investigation into the multi-crore scam continues.