The LXII Additional City Civil and Sessions Court in Bengaluru has granted anticipatory bail to Shivakumar B.M. and his wife, Devika T.V., who were accused of involvement in a financial fraud case involving The Hanumantha Co-operative Bank Ltd. The court, presided over by Sri. A. Earanna, delivered the order on January 30, 2023, observing that the dispute appeared to be civil in nature and that the alleged offences were triable by a Magistrate.

The petitioners, residents of Kumaraswamy Layout, approached the court seeking protection from arrest under Section 438 of the Code of Criminal Procedure, 1973, after the Hanumanthanagar Police Station registered a First Information Report against them in Crime Number 314/2022.

Background of the Loan Fraud Allegations

The criminal case was initiated following a complaint lodged by the Managing Director of The Hanumantha Co-operative Bank Ltd. The prosecution alleged that Shivakumar B.M. and Devika T.V. had obtained loans amounting to 25,00,000 rupees each from the society on April 11, 2017.

According to the prosecution, the petitioners, in collusion with other bank officials (Accused Nos. 2 to 6), created forged documents and fabricated the signature of an advocate to facilitate the sanctioning of these loans. The bank claimed that the accused individuals acted with common intention to cheat the financial institution, leading to charges under several sections of the Indian Penal Code, 1860.

Specifically, the FIR included Section 120B (Punishment of criminal conspiracy), Section 409 (Criminal breach of trust by public servant, or by banker, merchant or agent), and Section 420 (Cheating and dishonestly inducing delivery of property) read with Section 34 (Acts done by several persons in furtherance of common intention) of the Indian Penal Code, 1860.

Arguments Presented in Court

The counsel for the petitioners, Sri. Ramakrishna S, argued that Shivakumar and Devika were innocent and had been falsely implicated in a criminal case based on a baseless complaint. He contended that the bank had sanctioned the loans after following due process and considering the property documents provided at the time. The defense emphasized that the petitioners were permanent residents of Bengaluru with deep roots in the society and were willing to cooperate with the investigation.

Furthermore, the defense highlighted that the offences alleged were not punishable with death or imprisonment for life and were triable by the Court of a Magistrate. They argued that the dispute was essentially a financial transaction gone sour, which should be handled through civil litigation rather than criminal prosecution.

The Public Prosecutor strongly opposed the bail petition, filing an objection based on the report of the Investigating Officer. The state argued that the petitioners had committed serious economic offences and that granting them anticipatory bail could lead to the tampering of evidence, intimidation of prosecution witnesses, or the possibility of the accused fleeing from justice.

The Court’s Reasoning and Decision

In evaluating the petition, the court looked into the nature of the transaction. The judge noted that the society had a structured hierarchy involving a President and 11 directors who sanctioned the loans after evaluating the collateral property. The court observed that the core of the prosecution’s case rested on the allegation that documents and legal signatures were forged to obtain the credit.

Judge A. Earanna stated that upon perusal of the records, the matter appeared to be a civil dispute between the bank and its borrowers. The court noted that mere allegations are not sufficient grounds to deny liberty, especially when the offences are not of the highest severity. The judge remarked that keeping the petitioners in judicial custody before a trial could amount to “pre-trial conviction.”

The court cited a precedent from the Hon’ble Supreme Court of India in the case of Central Bureau of Investigation Vs. V. Vijay Sai Reddy (2013), which established that while granting bail, courts must consider the nature of the accusation, the severity of the punishment, and the reasonable possibility of securing the presence of the accused at trial.

Conditions for Anticipatory Bail

The court allowed the petition and directed that in the event of their arrest, the respondent police must release Shivakumar B.M. and Devika T.V. on bail upon the execution of a personal bond of 1,00,000 rupees each with one surety for a like sum. The court imposed the following stringent conditions to safeguard the interests of the investigation:

1. The petitioners must appear before the Investigating Officer within 30 days of the order and co-operate with the investigation.
2. They must mark their attendance at the Jurisdictional Police Station once every 30 days, specifically on the second Saturday, until the final report (charge sheet) is filed.
3. They are strictly prohibited from holding out threats to the complainant or tampering with prosecution witnesses, either directly or indirectly.
4. The petitioners must provide valid residential address proof for themselves and their sureties.
5. They must not involve themselves in similar types of offences in the future.
6. They must appear before the trial court regularly upon receipt of summons.

The court warned that any failure to comply with these conditions would lead to the automatic cancellation of the bail order. This ruling underscores the judicial trend of protecting individuals from arrest in commercial or financial disputes that have strong indicators of being civil in nature.