Mumbai: In a significant development in the sprawling National Spot Exchange Limited (NSEL) scam, the Designated Court under the Maharashtra Protection of Interests of Depositors (In Financial Establishments) Act, 1999 (MPID Act) at the Mumbai City Civil & Sessions Court has granted bail to accused Rajeev Mahavirprasad Todi. Special Judge D.P. Surana (C.R. No. 36) ordered Todi’s release on December 7, 2015, on a personal recognizance (PR) bond of Rs. 5 lakhs with one or more sureties of a like amount, citing principles of parity with co-accused already granted bail and finding no compelling reason for his continued incarceration. Todi, a businessman from Ahmedabad, was arrested on October 9, 2015, in connection with EOW C.R. No. 89/2013, facing charges under Sections 409, 465, 467, 468, 471, 474, 477A, 120B of the Indian Penal Code (IPC) and Section 3 of the MPID Act.
The NSEL scam, which defrauded an estimated 13,000 investors of Rs. 5,600 crores, revolved around NSEL providing an electronic platform for buyers and sellers in T+2 and T+25 pair contracts. The prosecution’s case, initiated by informant Pankaj Ramnaresh Saraf, alleges that NSEL, its directors, FTIL (Financial Technologies (India) Ltd.), their directors, 25 borrowing companies, and brokers engaged in a criminal conspiracy involving forgery and criminal breach of trust. It is alleged that NSEL deviated from its core business, promising assured returns of 14% per annum, and in collusion with 25 borrowers and brokers, generated false and bogus warehouse receipts without actual physical stock of commodities. This fraudulent scheme, masquerading as legitimate trading, reportedly duped investors to the tune of Rs. 3,500 crores.
Against Rajeev Mahavirprasad Todi, specific allegations include his involvement with M/s. Swastik Overseas Corporation, one of the 25 defaulting companies, with an outstanding amount of Rs. 102.98 crores. Although Falguni Rajesh Mehta was the proprietor, her husband, Rajesh Mehta (already arrested), held her power of attorney. Todi was a director of M/s. N.K. Industries Ltd. (NKP) from 1998 to 2013 and was instrumental in enrolling NKP as an NSEL member. NKP’s total liability is a staggering Rs. 969.89 crores. Todi is also accused of introducing M/s. Swastik Overseas Corporation to NSEL, which then received Rs. 102.98 crores. A crucial allegation is that Todi was instrumental in diverting Rs. 68.56 crores from Swastik Overseas Corporation to his own companies, Krishna Horticulture and Mannan Agro, which are family-owned. Rajesh Kumar Mehta, an arrested co-accused, is a director in Mannan Agro with a 30% stake. The prosecution alleged that Todi and Rajesh Mehta, in connivance with NSEL officials, issued bogus stock offer letters to NSEL, leading to the generation of bogus warehouse receipts. By July 31, 2013, a stock of castor seed valued at Rs. 102.98 crores should have been present as per the offer letters, but it was missing from NSEL-accredited warehouses. Further, Todi, as a director of M/s. Shriram Horticulture Developers and Processors Pvt. Ltd. (whose other director is his son, Umang Todi), oversaw the transfer of Rs. 2.15 crores from Swastik Overseas Corporation to this entity. Personal fund transfers from Swastik Overseas Corporation also allegedly went to Todi himself (Rs. 1.80 crores), his wife Suchita (Rs. 3.09 crores), his son (Rs. 2.33 crores), and his daughter (Rs. 1.03 crores), with a total of Rs. 10.70 crores transferred to his relatives and friends. The prosecution painted Todi as a “key person” orchestrating the entire affair, with Rajesh Mehta being a mere “puppet.”
Advocate Pasbola, representing Rajeev Todi, argued that his client is a permanent resident of Ahmedabad and was not absconding, having filed an anticipatory bail application (ABA). He contended there was no possibility of Todi tampering with evidence or witnesses, as Todi had already been thoroughly interrogated and had provided names of individuals to whom payments were made, with inquiries ongoing. The defense highlighted that Todi’s bank accounts were frozen, and title deeds of his flat were with the bank due to a loan. Advocate Pasbola pointed out that the charge sheet in the crime was filed on January 6, 2014, and Todi was not named in it. He further stated that Todi was alleged to have borrowed Rs. 68.56 crores, with a settlement for Rs. 77.08 crores, and that Rs. 32 crores went to Mannan Agro for land investment in Madosa, Gujarat, with farmers acknowledging receipt of payments and willingness to repay. He clarified that Todi was not a direct borrower of NSEL, but Falguni Mehta, wife of Rajesh Mehta of Swastik Corporation, was. Crucially, the defense emphasized that other co-accused, including Rajesh Mehta, had already been granted bail, and keeping Todi incarcerated would serve no further purpose.
SPP Advocate Avinash Avhad and the Investigating Officer (IO) vehemently opposed the bail application, asserting that Todi had been absconding for a prolonged period and had not cooperated with the investigation, failing to provide information on the utilization of vast sums received from NSEL. They stressed that a huge amount needed to be recovered at Todi’s instance, and he held key information regarding cash withdrawals, identification of assets purchased from crime proceeds, and the preparation of fund flow statements. The prosecution argued that documents related to Todi’s investments in acquiring assets needed to be recovered. They also expressed concerns that Todi, being an Ahmedabad resident, might threaten witnesses and abscond if released, citing his past record. Advocate Karnik, appearing for the informant/intervener, also opposed the bail, highlighting Todi’s directorship in NKP, the largest defaulter, and his prima facie involvement in siphoning funds, with him and his family being beneficiaries. Karnik contended that Todi had not proposed any suitable plan to deposit the admitted liability and argued that while other accused were granted bail after charge sheet filing, no charge sheet had yet been filed against Todi.
However, the court, in its oral order, acknowledged that while Todi was a director of NKP, the largest defaulting member, other co-accused directors of NKP and NSEL office bearers had already been released on bail, and these bail orders had not been challenged. The court found it unsatisfactory that the prosecution could not demonstrate why Todi’s continued custody was necessary for further investigation, especially since he was arrested on October 9, 2015, and the 60-day period for filing a charge sheet was nearing its end. Judge Surana concluded that Todi was entitled to bail on the “law of parity.” The court also dismissed the argument that Todi should be detained merely because he had not offered a suitable proposal to repay his alleged liability.
The court noted that Todi had been in custody since October 9, 2015, and there was no material to suggest that his continued detention would uniquely facilitate further investigation. The IO had not even sought permission to interrogate Todi in jail during his judicial custody. The court found the prosecution’s grounds for opposing bail insufficient. The IO had not disputed that Todi paid amounts to some farmers for land purchases, and properties of NKP in the crime were already secured. Todi’s flat title deeds were with banks. The court observed that the IO had not specifically pinpointed any remaining properties or documents to be seized from Todi or detailed any specific non-cooperation. Allegations of tampering or absconding were deemed “general in nature,” especially since no released co-accused had reportedly absconded or tampered with witnesses or evidence. Todi’s address was undisputed.
The court further highlighted that most of the investigation relied on documentary evidence, which was already in the IO’s possession. Finding none of the prosecution’s arguments sufficient to keep Todi behind bars, and noting that all documents related to the applicant had already been seized, the court decided to impose strict conditions to allow the IO opportunity for smooth investigation. The bail application was thus allowed, with Rajeev Mahavirprasad Todi ordered to be released on the aforementioned bail terms.
The conditions for bail include: marking presence at the concerned police station with the investigating officer on ten alternate Saturdays between 10 AM and 1 PM, and whenever called by the IO; not leaving India without court permission; not directly or indirectly inducing, threatening, or promising any person acquainted with the case facts to dissuade them from disclosing information to police or court; and not alienating or disposing of any immovable properties without court permission. The order was signed on December 8, 2015, and uploaded on December 10, 2015.