Bengaluru, January 30, 2023: In a significant development, the LXIII Additional City Civil and Sessions Judge (CCH-64) in Bengaluru, Sri. A.V. Patil, granted anticipatory bail to two petitioners accused of criminal conspiracy, cheating, forgery, and criminal breach of trust in connection with a bank loan fraud case. The order was passed on January 30, 2023, concerning Criminal Miscellaneous Petition No. 539/2023.

The petitioners, Amruth Shetty (40), the primary borrower, and Mohan Rao B. (55), identified as the guarantor, had approached the court under Section 438 of the Code of Criminal Procedure, 1973, seeking release on bail in the event of their arrest. They are linked to Crime No. 362/2022, registered at the Kumaraswamy Layout Police Station, under various sections of the Indian Penal Code, including 406 (Criminal Breach of Trust), 419 (Cheating by Personation), 420 (Cheating and Dishonestly Inducing Delivery of Property), 463 (Forgery), 464 (Making a False Document), 468 (Forgery for Purpose of Cheating), and 120A (Definition of Criminal Conspiracy).

Allegations of Fabrication and Cheating

The case was initiated based on a complaint lodged by Sri. P.V. Sambasiva Rao, the Chief Manager of Karur Vysya Bank Ltd. The complaint detailed a conspiracy involving five accused individuals. Petitioner No. 1, Amruth Shetty, as the proprietor of M/s Nigmetha Info Tech, applied for a home loan to purchase a residential flat for a negotiated price of Rs. 1,80,88,000/-. He sought and was sanctioned a loan of Rs. 1,44,00,000/- by the complainant Bank in 2019-20. Petitioner No. 2, Mohan Rao B., acted as the guarantor, while a third accused was identified as a Tax Consultant.

The core of the prosecution’s allegation is that the accused individuals conspired to defraud and cheat the bank. The bank alleged that Amruth Shetty and Mohan Rao B. had produced false and created Income Tax (IT) Returns and other related documents to establish eligibility and induce the bank to sanction the huge loan amount. The loan account subsequently became a Non-Performing Asset (NPA) on March 23, 2021, which led to the discovery of the alleged fraud. The bank contended that the accused committed criminal breach of trust and furnished fabricated documents to cheat the financial institution.

Petitioners’ Defence and Court’s Considerations

The petitioners’ counsel, Sri. Yogananda Raju M.D., argued that the petitioners are innocent and have been falsely implicated. They maintained that the bank officials had sanctioned the loan only after thoroughly verifying all the documents produced in 2019. They claimed they have been paying monthly EMIs and that any irregularity in payments was due to the adverse economic impact of the Covid-19 pandemic. They also emphasized that the alleged offences are primarily based on documentary evidence, are not punishable with death or life imprisonment, and are triable by the Court of Magistrate. They assured the court of their willingness to cooperate with the investigation and abide by any imposed conditions.

The learned Public Prosecutor opposed the application, arguing that the materials collected during the investigation prima facie disclosed the commission of the alleged offences, necessitating custodial interrogation.

However, the court, in its detailed reasoning, gave precedence to several factors in favour of the petitioners:

• Non-Heinous Nature of Punishment: The court noted that while offences like Section 406, 420, and 468 of the IPC are non-bailable, they are not punishable with death or life imprisonment.
• Reliance on Documentary Evidence: The case primarily relies on documentary evidence (Income Tax Returns, Title Deeds, loan papers), which are already in the possession of the bank or the police.
• Need for Trial: The court stated that the involvement of the petitioners is yet to be proved and the truth must be ascertained during the course of the trial.
• Delay in Filing Complaint: The court observed that the loan was sanctioned in 2019-20, and although the loan became NPA on March 23, 2021, the complaint was filed much later, suggesting a delay that warranted consideration.
• Jurisdiction: The alleged offences are triable by the Court of Magistrate, indicating a lesser gravity in the judicial hierarchy compared to offences triable by a Sessions Court.
• Permanent Residents: The petitioners are permanent residents of Bengaluru, which reduces the apprehension of them absconding.

Conditional Grant of Bail

Weighing the gravity of the offences and the punishment prescribed against the rights of the petitioners and the nature of the evidence, the court found that the apprehension of the prosecution could be adequately addressed by imposing suitable conditions.

The court allowed the petition and granted anticipatory bail, directing the Investigating Officer (I.O.) to release the petitioners on bail in the event of their arrest in Crime No. 362/2022.

Each petitioner is required to execute a personal bond for Rs. 70,000/- with one surety for the like sum. The grant of bail is subject to the following key conditions:

1. The petitioners shall appear before the respondent Police within 20 days from the date of the order.
2. They shall not tamper with the prosecution witnesses in any manner.
3. They shall appear before the Court during trial and cooperate for the disposal of the case.
4. They shall not commit similar offences.
5. They shall appear before the I.O. as and when called for investigation.
6. They must furnish the attested copy of their respective Aadhaar card and present residential address proof to the I.O.

The order explicitly states that the grant of anticipatory bail does not limit or restrict the rights and duties of the police or the investigating agency to investigate the charges against the petitioners.