Mumbai, Maharashtra – A Special Judge for cases under the Prevention of Corruption Act, 1988, S.B. Joshi (C.R. No. 46), has rejected the bail application of Mohammed Farooq Mohammed Hanif Shaikh, 45, who is implicated as a “main culprit and mastermind” in a massive GST refund fraud amounting to over Rs. 175 crore. The order for Bail Application No. 635 of 2024 was issued on October 11, 2024.
Shaikh, a resident of Dongri, Mumbai, sought bail in connection with Crime No. 07 of 2024, registered with the Anti-Corruption Bureau (ACB), Mumbai. The charges against him include sections 7, 13(1)(A) read with 13(2) of the Prevention of Corruption Act, 1988, and sections 403, 409, 420, 465, 467, 468, and 471 of the Indian Penal Code, along with section 483 of The Bharatiya Nagarik Suraksha Sanhita, 2023.
Details of the Alleged Fraud
The prosecution’s case alleges that a co-accused, Anilkumar Babulal Runthala, a Senior Tax Officer (STO) in the Ghatkopar Division, during his tenure from 2020-2021, failed to follow standard operating procedures (SOPs). Despite being authorized to handle GST refunds up to Rs. 10 lakh, he allegedly processed bills for 16 bogus companies, facilitating GST refunds totaling Rs. 1,75,93,12,622/-.
An inquiry conducted by a four-member Special Investigation Team (SIT) revealed that another co-accused, Amit Lalge, was instrumental in granting these fraudulent GST refunds to the aforementioned 16 claimants. The list of these bogus companies and their proprietors/directors/partners, along with the colossal refundable amounts, was presented in court.
Following these findings, the Additional Commissioner, Mazgaon, Mumbai, directed the filing of a First Information Report (FIR) against the culprits, including the co-accused and individuals associated with the 16 bogus companies.
Applicant’s History and Arguments for Bail
Mohammed Farooq Mohammed Hanif Shaikh’s counsel, Advocate Mr. Vikram Chaudhari, informed the court that his client’s custody in this crime was transferred from another case (CBI FIR No. 06820170004) where he was arrested on April 23, 2024. He also highlighted that Shaikh was arrested by the Enforcement Directorate (ED) on April 23, 2018, in ECIR No. ECIR/MBZO/03/2017.
Shaikh’s legal history includes a rejected anticipatory bail application on June 29, 2024. His previous bail application rejection by the Hon’ble Bombay High Court in August 2018 led him to the Supreme Court. Although the Apex Court denied regular bail in December 2018, it granted him liberty to seek interim bail from the trial court, which was also initially rejected. Later, the Bombay High Court permitted him to attend to his ailing wife in June 2019, an order which the Supreme Court subsequently extended until further notice in July 2019, placing him under judicial custody at his home with police supervision. He was later granted bail in a PMLA case on December 5, 2023, by the Hon’ble High Court.
In the current bail application, Shaikh argued that the entire case relies on documentary evidence, thus eliminating any risk of tampering with documents or influencing witnesses, who are primarily officials. He claimed that his name does not appear in the list of accused in a similar case filed before the Metropolitan Magistrate Court, which also investigated GST returns with the same company transactions. He asserted that nothing was recovered from him during police custody in this crime, and no money has been attributed to him. He maintained that his implication is based solely on the statements of other co-accused, which he argued are inadmissible. He further denied any nexus or WhatsApp communication with any co-accused to substantiate the allegations. He expressed his willingness to cooperate with the ongoing investigation.
His counsel additionally argued that the remand applications of co-accused Farooq Contractor and Kiran Bhanushali indicated GST transactions of companies in which Shaikh is neither a director nor a beneficiary. Given his permanent residence in Mumbai, the possibility of his abscondence is low, and he vowed not to tamper with the investigation. He requested regular bail and permission to furnish cash bail instead of a surety.
Prosecution’s Opposition and Court’s Decision
Mr. Jaysingh Desai C.P.P. and Mr. Lade, the learned Additional Public Prosecutors, along with the Investigating Officer, vehemently opposed the bail application. They submitted that Shaikh is the “main culprit and master-mind” behind the crime, involving a huge government amount of Rs. 175 crore. They stated that the investigation is ongoing, with many more culprits expected to be traced. They highlighted Shaikh’s criminal antecedents, citing his involvement in CBI and ED cases, labeling him a “habitual offender.”
The prosecution contended that if Shaikh were released on bail, the investigation into this large-scale misappropriation of government funds would be severely hampered. They also emphasized the risk of tampering with witnesses and that the substantial amount involved is yet to be recovered. They particularly noted that Shaikh allegedly committed the current acts while he was already under house arrest in a previous matter. Furthermore, a wanted accused, Faizan alias Nadeem Ansari, is still at large, and Shaikh’s release could impede his arrest. The investigating authorities are conducting inquiries across Mumbai, Ahmedabad, and Surat.
The court, after hearing arguments from both sides and reviewing the case documents, presented its findings. It acknowledged that the bail applications of other co-accused had already been rejected and that the charge-sheet is voluminous. The court observed that the investigation is indeed ongoing regarding other culprits who are yet to be arrested.
The judge highlighted that the allegations pertain to cheating the government of Rs. 175 crore, and the transactions involve online activities, fraudulent documents, opening accounts, and registering bogus companies. The court’s perusal of witness statements from Kiran Bhanushali (co-accused), Ajay Kumar Nishad, Zabirurrehman Salmani, Satish Gaikwad (Branch Manager, Karnataka Bank), and Vinayak Narayan Kankhare (police official) prima facie indicated Shaikh’s involvement in the alleged transactions and the participation in forging fabricated documents.
The court concluded that there was a clear case of involvement in the preparation of forged and fabricated documents and that the allegations prima facie related to economic offenses involving the misappropriation of a huge public fund. The court reiterated the strict approach required for such economic offenses, which pose a serious threat to the financial health of the country.
Considering the “enormous amount of material placed on record in respect of various transactions” and the ongoing investigation, the court found that releasing Shaikh would “hamper the investigation pending against other culprits” and could lead to “influencing the witnesses and tampering with the material evidence.” It also noted that his release would create a “hurdle in getting arrested the absconding accused.”
Based on the gravity of the allegations, the nature of the offenses, and the involvement of significant public money, the court found no justifiable grounds to grant bail. Consequently, Bail Application No. 635 of 2024 was rejected, and the application stands disposed of.