A City Civil and Sessions Court in Bengaluru has granted anticipatory bail to 25-year-old Kumari K.R. Sai Sinchana, who was named as the second accused in a case involving alleged financial irregularities and loan default at the Vysya Co-operative Bank. The court’s decision, delivered by Sri R. Ravi, the LXI Additional City Civil and Sessions Judge, emphasized that the nature of the dispute appears to be primarily civil and that the apprehension of arrest in such matters warrants protection for the petitioner.
The legal proceedings arose from a complaint filed by the City Market Police Station under Sections 406 (criminal breach of trust) and 420 (cheating), read with Section 34 of the Indian Penal Code. The case involves allegations that the petitioner and other co-accused borrowed a substantial sum of Rs. 3,67,00,000 for the construction of an apartment complex but failed to adhere to the repayment terms.
Allegations of Breach of Trust and SARFAESI Proceedings
According to the First Information Report (FIR), the accused persons pledged properties in Chickpet, specifically Municipal No. 24/1-1 and 33-235 in Sourashtrapete, to secure the multi-crore loan. The bank alleged that after failing to pay the Equated Monthly Installments (EMIs), the accused sold the apartments constructed on the land without obtaining a No Objection Certificate (NOC) from the lending institution. The bank discovered the alleged sale when officials visited the site to affix a notice under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest (SARFAESI) Act.
The prosecution argued that the accused intentionally defrauded the bank by liquidating the collateral while the mortgage was still active. They contended that granting anticipatory bail would hinder the investigation, as the accused might abscond or attempt to influence witnesses.
Defense Cites COVID-19 Hardships and Civil Nature of Dispute
Represented by advocate Sri P.H. Nagaraj, the petitioner argued that she is a young woman from a respectable family with no prior criminal record. The defense clarified that the accused were regular in their payments until the COVID-19 pandemic caused significant financial disruption during the 2020-2021 period.
Furthermore, the petitioner contended that she was merely a co-borrower and was not personally involved in the management of the construction project or the alleged sale of units. Crucially, it was noted that the investigating officer’s report indicated the flats were given on rent rather than being sold, contradicting the bank’s initial claim. The defense argued that since the bank had already initiated recovery proceedings under the SARFAESI Act, the matter should be treated as a civil dispute regarding loan recovery rather than a criminal act of cheating.
Court Analysis and Precedents
In his reasoning, Judge R. Ravi observed that the offences under Sections 406 and 420 of the IPC are not punishable by death or life imprisonment. The court noted that the bank’s interests are already protected through the SARFAESI proceedings initiated against the mortgaged property.
The court relied on a Supreme Court ruling which establishes that when a matter is inherently civil in nature, continuing criminal proceedings can be an abuse of the process of law. Given that the petitioner provided permanent address proof via her Aadhar Card, the court found no merit in the prosecution’s claim that she would abscond.
Detailed Bail Conditions
While allowing the petition for anticipatory bail, the court imposed strict conditions to ensure the petitioner’s cooperation with the City Market Police:
- Bond and Surety: In the event of an arrest, the petitioner must be released on a personal bond of Rs. 1,00,000 with one surety of a like sum.
- Investigation Cooperation: The petitioner is directed to appear before the Investigating Officer within 30 days of the order and must cooperate whenever summoned.
- Monthly Attendance: She must mark her attendance at the respondent police station on the second Saturday of every month until the charge sheet is filed.
- Witness Protection: The petitioner is strictly prohibited from threatening the complainant or tampering with prosecution witnesses.
- Jurisdictional Restrictions: She cannot leave the court’s jurisdiction without prior permission.
- Regular Court Appearance: The petitioner must appear before the trial court regularly upon receipt of summons.
The court concluded that the violation of any of these conditions would lead to the automatic cancellation of the bail order. This ruling provides a safeguard for the petitioner against custodial detention while allowing the police to proceed with the technical investigation into the bank’s financial claims.