Mumbai, Maharashtra – A Special Judge for the Central Bureau of Investigation (CBI) for Greater Bombay, Shri Jayendra C. Jagdale, has granted regular bail to Mr. Prafful Prakash Sawant, an officer with Punjab National Bank (PNB), who was implicated in a multi-crore Letter of Undertaking (LOU) fraud case. The bail order, for Bail Application No. 957 of 2018, was pronounced on January 18, 2019.

Sawant, identified as original accused no. 4, was arrested on December 18, 2018, in connection with R.C. No. BSM/2018/E/0004-CBI/BS & FC/Mumbai. He faces charges under Section 120-B (criminal conspiracy) read with Sections 409 (criminal breach of trust by public servant, or by banker, merchant or agent) and 420 (cheating and dishonestly inducing delivery of property) of the Indian Penal Code, 1860, along with Section 13(2) read with Section 13(1)(c) & (d) of the Prevention of Corruption Act, 1988. These charges were registered by the CBI’s Bank Securities & Fraud Cell (BS & FC), Mumbai.

Background of the Case

Mr. Prafful Prakash Sawant, aged 29 at the time of the application and residing in Navi Mumbai, was working in the Junior Management Grade (Officer) in the Forex Department of Punjab National Bank, Mid Corporate Branch, Brady House, Mumbai, from August 5, 2015, to September 11, 2017.

The CBI’s complaint, lodged on March 9, 2018, by Shri Avneesh Nepalia, DGM, PNB Zonal Office, Mumbai, alleged that during April 2017, Shri Gokulnath Shetty (then Dy. Manager) and Shri Manoj Hanumant Kharat (Single Window Operator) of PNB, Brady House, conspired with Shri Aditya Rasiwasia and Shri Ishwardas Agarwal, Directors of M/s. Chandri Paper & Allied Products Pvt. Ltd., Mumbai, and other unknown individuals. This conspiracy led to the dishonest and fraudulent issuance of two LOUs for USD 560444.44 and USD 860867.38, totaling USD 1421311.82 (equivalent to Rs. 9,09,63,956.48). These LOUs were purportedly issued in favor of SBI, Antwerp, Belgium, without any sanctioned credit limit to M/s. Chandri Paper & Allied Products Pvt. Ltd., and without the required 110% margin. The bank officials allegedly transmitted these LOUs to overseas banks without obtaining necessary applications, documents, or approvals, and without making entries in the bank’s internal system.

The prosecution specifically alleged that Mr. Sawant “dishonestly and deliberately did not comply with office order dated 07/02/2017 & 14/03/2017 issued by accused Bechu Tiwari, Chief Manager, to submit compliance report in respect of SWIFT Monitoring on daily basis and checking of all SWIFT messages except MT-103 & MT-202,” thereby facilitating the commission of the offense. The CBI argued that he abused his official position as a public servant, improperly performing his duties and thereby facilitating the fraud.

Defense and Prosecution Arguments

Mr. Aabad H.H. Ponda, the learned advocate for the applicant, argued that Sawant was arrested after nine months of ongoing investigation. He asserted that the offenses do not carry a death penalty. The defense claimed Sawant’s role was limited to routine operations related to exports and inward remittances, and assisting the segment head. It was contended that unlimited power was vested in accused Gokulnath Shetty, which was only discovered by PNB’s top management in February 2018 after another LOU scam came to light, leading to a circular on February 12, 2018, establishing user-based limits for LOU issuance.

The defense emphasized the absence of a proper system of checks and balances for SWIFT messages. It was strongly argued that the investigation, as far as Sawant was concerned, was complete, and no evidence or documents proved that he issued or approved any fraudulent LOU. Since the case was based solely on documents, and nothing was recovered or discovered at Sawant’s instance, and he was not a beneficiary of the crime proceeds, the defense maintained that no criminal liability could be fastened against him based on mere suspicion.

The prosecution, represented by Ld. S.P.P. Mr. Omprakash, strongly objected to the bail, arguing that the case was at a crucial stage of investigation. They expressed apprehension that if released, Sawant would resort to thwarting the investigation by tampering with remaining evidence and influencing witnesses, which they considered “highly detrimental to the case.”

Court’s Rationale and Decision

The court, after perusing the application, documents, and the prosecution’s reply, referred to the Supreme Court’s observations in the case of Nimmagadda Prasad v/s. Central Bureau of Investigation, which outlines key considerations for granting bail, including the nature of accusations, evidence, severity of punishment, character of the accused, possibility of securing presence at trial, apprehension of witness tampering, and larger public/State interests.

Applying these criteria, Judge Jagdale noted that the prosecution had not raised any difficulty in securing the accused’s presence at trial nor any specific concerns regarding the larger interests of the State. The court found the prosecution’s statement regarding tampering with evidence and influencing witnesses to be “vague allegations”, stating that “no details have been given by the prosecution as to which witnesses, the applicant/accused may influence and what kind of evidence, the applicant/accused may tamper.”

Crucially, the court observed that the investigation against Mr. Prafful Prakash Sawant was complete, and a charge-sheet had already been filed against him. The court concluded that on the basis of such vague allegations, the “personal liberty of applicant/accused can not be curtailed.” It found no proper reason to keep the applicant in judicial custody indefinitely, especially since the charge-sheet had been filed.

Consequently, the court granted bail to Mr. Prafful Prakash Sawant, subject to several conditions:

• He is to be released on executing a Personal Recognizance (P.R.) Bond of Rs. 50,000/-.
• He must furnish one or more sureties of the like amount within two months.
• He is not to leave India without prior court permission.
• Until furnishing surety, he must surrender his passport, if any, with CBI.
• He must furnish his permanent address and contact numbers to the CBI.
• He must furnish addresses and contact numbers of two relatives to the CBI.
• He is directed not to tamper with prosecution evidence and to assist in the disposal of the trial.
• He shall not commit any offense while on bail.
• He is directed to remain present before the investigating officer every Tuesday between 10:00 AM and 4:00 PM until further order.
• Breach of any of these conditions will lead to the cancellation of bail.
• He is allowed to be released provisionally after furnishing cash bail of Rs. 50,000/- temporarily for a period of two months, pending the submission of surety.

The bail application stands disposed of accordingly.