[Cites 21, Cited by 0]
Bombay High Court
Chandrabhan S/O Maroti Aapurkar And ... vs State Of Maharashtra, Thr. Pso Ps ... on 26 February, 2026
2026:BHC-NAG:4259-DB
18.apl.10.2021 + 2. Judgment.odt
(1)
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
NAGPUR BENCH : NAGPUR
CRIMINAL APPLICATION (APL) NO.10 OF 2021
1.
Deleted as per
Laxman s/o Ramdhan Rathod, Court's order
Aged about 54 Years, dt. 18.02.2026
Occupation : Headmaster (Service),
R/o. Ward No.2, Khaparkheda,
Tahsil Saoner, District Nagpur.
2. Namdeo s/o Dhanrajji Gedam,
Aged about 53 years,
Occupation : Agriculturist,
R/o. Khaparkheda,
Tahsil Saoner, District Nagpur. .... APPLICANTS
// VERSUS //
1. State of Maharashtra,
Through Police Station Officer,
Khaparkheda, District Nagpur.
2. Vivek s/o. Kamlakarrao Huddar,
Aged 52 Years,
Occupation : District Divisional Registrar,
Co-op Society, Nagpur,
R/o. Plot No.202, Ramnagar,
Nagpur. ....NON-APPLICANTS
-------------------------------------------
Mr. Manyak Yadhav Advocate h/f Mr. M. V. Rai, Advocate for
applicants.
Mr. A. M. Joshi, APP for non-applicant No.1/State.
------------------------------------------
WITH
CRIMINAL APPLICATION (APL) NO.750 OF 2021
1. Chandrabhan s/o Maroti Aapurkar,
Aged about 63 Years,
Occupation : Retired,
R/o. Ward No.3, Khaparkheda,
Tahsil Saoner, District Nagpur.
18.apl.10.2021 + 2. Judgment.odt
(2)
2. Shrawan s/o. Ramchandra Wasad,
Aged about 68 Years,
Occupation : Retired,
R/o. Plot No.1422, Ward No.3,
Near Hanuman Temple,
Khaparkheda,
District Nagpur. .... APPLICANTS
// VERSUS //
1. State of Maharashtra,
Through Police Station Officer,
Khaparkheda, District Nagpur.
2. Vivek s/o. Kamlakarrao Huddar,
Aged 52 Years,
Occupation : District Divisional Registrar,
Co-op. Society, Nagpur,
R/o. Plot No.202, Ramnagar,
Nagpur. ....NON-APPLICANTS
-------------------------------------------
Mr. Manyak Yadhav Advocate h/f Mr. M. V. Rai, Advocate for
applicants.
Mr. A. M. Joshi, APP for non-applicant No.1/State.
------------------------------------------
WITH
CRIMINAL APPLICATION (APL) NO.4 OF 2021
1. Kusumtai w/o Vithalrao Akotkar,
Aged about 54 Years,
Occupation : Household,
R/o. Ward No.3, Chicholi,
Kharperkhera,
Tahsil Saoner, District Nagpur. .... APPLICANT
// VERSUS //
1. State of Maharashtra,
through Police Station Officer,
Khaperkheda, Tahsil Saoner,
District Nagpur.
2. Vivek s/o. Kamlakar Huddar,
(Govt. Auditor)
Aged 52 Years,
18.apl.10.2021 + 2. Judgment.odt
(3)
Occupation : Service,
R/o. Plot No.202, Ramnagar,
Nagpur. ....NON-APPLICANTS
-------------------------------------------
Mr. S. G. Karmarkar, Advocate for applicant.
Mr. A. M. Joshi, APP for non-applicant No.1/State.
------------------------------------------
CORAM : URMILA JOSHI-PHALKE, J.
DATED : 26/02/2026
ORAL JUDGMENT :
1. Heard learned counsel for the applicants and learned
APP for the State. Admit. Heard finally by consent.
2. By these applications, the applicants are seeking
quashing of FIR in connection with Crime No.301/2020 registered
for offences under Sections 403, 406, 409, 420, 467, 468, 471,
477-A, 120-B read with Section 34 of the Indian Penal Code and
3 and 4 of The Maharashtra Protection of Interest of Depositors
(in Financial Establishments) Act, 1999 (the 'MPID Act') and
consequent proceeding arising out of the same bearing Special
MPID Case No.26/2022.
3. Facts of the case in brief are as under:
The crime is registered on the basis of an Audit Report
of the year 2001-2018. The applicants were the Directors of
"Shri Santaji Nagari Sahakari Pat Sanstha Limited" (the said
Society) which is a Registered Cooperative Society. The said
Society is running Credit Cooperative Business. As per
18.apl.10.2021 + 2. Judgment.odt
allegations in the FIR, during the period of 2001-2018, during
the Audit, it revealed that various irregularities and illegalities
are committed by the Directors and Managers as well as
Accountant. As per allegations, loans were disbursed without
following due process and without obtaining approval from the
entire body of the Directors. The "deposits" accepted from
various investors are not returned back to them and the said
"deposits" were transferred to other bank accounts. No action
was taken for recovery of the amounts also and thereby loss is
caused to the said Society to the tune of Rs.1,31,29,059/-.
On the basis of the said report, the police have
registered the crime against the applicants and other co-accused.
4. Learned counsel for the applicants submitted that the
applicant in Criminal Application (APL) No.10/2021 namely
Laxman Ramdhan Rathod and Namdeo Dhanrajji Gedam were
Director. Laxman Rathod is already reported to be dead and
Namdeo Gedam was inducted as a Director on 26.09.2011 and
continued to be Director till 2017. Whereas, the applicant in
Criminal Application (APL) No.4/2021 Kusumtai Vithalrao Akotkar
was inducted as Director on 23.03.2017 and the applicants in
Criminal Application (APL) No.750/2021 namely Chandrabhan
Maroti Aapurkar and Shrawan Ramchandra Wasad were inducted
as Directed on 23.02.2017. They submitted that there are no
18.apl.10.2021 + 2. Judgment.odt
specific allegations that they were looking after day-to-day
affairs of the said Society and responsible to disburse the loan
amount and transfer amount either in their accounts or accounts
of their relatives. The general allegations is levelled against all
the Directors. In fact, the applicants are not responsible for the
day-to-day affairs of the said Society. Though Audit Report
shows that there are various irregularities, by no stretch of
imagination, it can be said that offence is committed under
Sections 409 or 406 of the IPC. Therefore, no offence is made
out against the present applicants. In view of that, the
applications deserves to be allowed.
5. Per contra, learned APP for the State strongly opposed
the said contentions and invited my attention towards various
activities conducted in the said Society. He submitted that public
money involved in the said transactions was misused by the
Board of Directors. Admittedly, the amounts were entrusted by
various investors with the said Society and the said amounts
were not returned to the investors, which is sufficient to disclose
that there is criminal breach of trust.
He invited my attention towards the Audit Report and
submitted that in the Audit Report various irregularities are
pointed out Eg. (i) entries were not taken as to "deposits," (ii)
daily "deposits" and loans were not disbursed by following due
18.apl.10.2021 + 2. Judgment.odt
process, (iii) and no steps are taken to recover the said amounts.
The various statements of witnesses disclose that they have
deposited amounts which were not received by them. Thus, the
entire Audit Report discloses that the entire Body of the Directors
is responsible for the loss of the public money, which is sufficient
to attract offences under Sections 403, 406, and 409 of the IPC.
He submitted that, at this stage, there is a sufficient
material to proceed against the applicant and, therefore, the
application deserves to be rejected.
6. On hearing both the sides and perusing the entire
investigation papers, it reveals that involvement of the applicants
is in economic offence.
7. Before adverting to the rival contentions, with
reference to the application under Section 482 of the CrPC, it
would be appropriate to refer legal principles in respect of scope
of exercise of powers under Section 482 of the CrPC.
8. In the case of Paramjeet Batra vs. State of
Uttarakhand and ors, reported in (2013)11 SCC 673, the
Hon'ble Apex Court held, as under:
"While exercising its jurisdiction under Section 482 of
the Code the High Court has to be cautious. This power
is to be used sparingly and only for the purpose of
preventing abuse of the process of any court or
otherwise to secure ends of justice. Whether a
complaint discloses a criminal offence or not depends
18.apl.10.2021 + 2. Judgment.odt
upon the nature of facts alleged therein. Whether
essential ingredients of criminal offence are present or
not has to be judged by the High Court. A complaint
disclosing civil transactions may also have a criminal
texture. But the High Court must see whether a dispute
which is essentially of a civil nature is given a cloak of
criminal offence. In such a situation, if a civil remedy is
available and is, in fact, adopted as has happened in
this case, the High Court should not hesitate to quash
criminal proceedings to prevent abuse of process of
court."
9. In the decision in the case of State of Haryana and
ors vs. Bhajan Lal and ors, reported in 1992 Suppl.(1) SCC
335, after considering various decision and statutory provisions,
the Hon'ble Apex Court has laid down following principles:
"(i) where the allegations made in the First Information
Report or the complaint, even if they are taken at their
face value and accepted in their entirety do not prima
facie constitute any offence or make out a case against
the accused;
(b) where the allegations in the First Information Report
and other materials, if any, accompanying the F.I.R. do
not disclose a cognizable offence, justifying an
investigation by police officers under Section 156(1) of
the Code except under an order of a Magistrate within
the purview of Section 155(2) of the Code;
(c) where the uncontroverted allegations made in the
FIR or 'complaint and the evidence collected in support
of the same do not disclose the commission of any
offence and make out a case against the accused;
(d) where the allegations in the FIR do not constitute a
cognizable offence but constitute only a non-cognizable
offence, no investigation is permitted by a police officer
18.apl.10.2021 + 2. Judgment.odt
without an order of a Magistrate as contemplated under
Section 155(2) of the Code;
(e) where the allegations made in the FIR or complaint
are so absurd and inherently improbable on the basis of
which no prudent person can ever reach a just
conclusion that there is sufficient ground for proceeding
against the accused;
(f) where there is an express legal bar engrafted in any
of the provisions of the Code or the concerned Act
(under which a criminal proceeding is instituted) to the
institution and continuance of the proceedings and/or
where there is a specific provision in the Code or the
concerned Act, providing efficacious redress for the
grievance of the aggrieved party; and
(g) where a criminal proceeding is manifestly attended
with mala fide and/or where the proceeding is
maliciously instituted with an ulterior motive for
wreaking vengeance on the accused and with a view to
spite him due to private and personal grudge".
10. In the light of the above principles, if facts of the
present case are taken into consideration, it shows that the
applicants were the Directors of the said Society, which is a
registered cooperative institute. It is alleged that during the
Audit Report of the year 2001-2018, the Directors and the
Managers, in connivance with each other, have committed
irregularities and illegalities. As per the allegations, the
transactions regarding the loan repayment, were not recorded
properly. The entries regarding the "deposits", accepted through
agents against daily "deposits", are not maintained. It further
revealed that the "deposits" deposited by the various investors,
18.apl.10.2021 + 2. Judgment.odt
even after maturity period, were not returned to the investors
and the same amounts were misappropriated. It further revealed
during the Audit Report that various illegalities are committed by
transferring amounts in accounts of investors and, thereafter,
the said amounts were misappropriated. Thus, during the Audit,
it revealed that total amount of misappropriation is
Rs.1,31,29,059/-. During the investigation, the investigating
officer has recorded various statements of witnesses. The
statement of Auditor i.e. informant shows that he has specifically
stated manner in which the misappropriation is committed by the
Body of Directors, Managers, and Accountant.
The statement of Sangpal Telang also corroborates the
same and it specifically states that as the Directors have not kept
proper control on the transactions, the Manager, Cashier, and
various Directors have misappropriated the amounts and caused
loss to the said Society.
The statements of various investors are also recorded,
which also show that though they have invested the amounts in
Fixed Deposits, on maturity period, when they have demanded
the amounts, the amounts were not received by them and they
have lost their amounts. Their statements specifically show that
the Board of Directors and the employees of the said Society
have misappropriated the said amounts.
18.apl.10.2021 + 2. Judgment.odt
11. Thus, involvement of the applicants in the alleged
incident appears to be there.
12. At this stage, a mini trial is not to be conducted.
13. What is required to be seen is that, whether there is a
sufficient material to force the applicants to face trial.
14. The Audit Report and various statements of witnesses
including statement of Auditor disclose involvement of all the
Directors.
15. Learned counsel for the applicants submitted that
provisions of Sections 3 and 4 of the MPID Act are not applicable
as allegations levelled against the applicants nowhere show that
the "deposits" with the said Society are misappropriated.
16. Clause(c) of Section 2 of the MPID Act defines 'deposit'
as under :
"(c) "Deposit" means the deposit of money either in
one lump sum or by installments made with the
Financial Establishment for a fixed period for interest
or for return in any kind or for any service and
includes and shall be deemed always to have
included any receipt of money or acceptance of any
valuable commodity by any Financial Establishment
to be returned after a specified period or otherwise,
either in cash or in kind or in the form of specified
service with or without any benefit in the form of
interest, bonus, profit, or in any other form, but does
not include--
(i) amount raised by way of share capital or by any
way of debenture, bond or any other instrument
18.apl.10.2021 + 2. Judgment.odt
covered under the guidelines given, and regulations
made, by the SEBI, established under the Securities
and Exchange Board of India Act, 1992 (15 of
1992) ;
(ii) amounts contributed as capital by partners of a
film;
(iii) amounts received from a Scheduled bank or
Shraddha Talekar PS Co-operative Bank or any other
banking company as defined in clause (c) of Section 5
of the Banking Regulation Act, 1949 (10 of 1949);
(iv) any amount received from--
(a) the Industrial Development Bank of India;
(b) a State Financial Institution;
(c) any financial institution specified in or under
section 6-A of Industrial Development Bank of India
Act, 1964 (18 of 1964) ; or
(d) any other institution that may be specified by the
Government in this behalf;
(v) amounts received in the ordinary course of
business by way of -
(a) security deposit;
(b) dealership deposit; and
(c) earnest money;
(vi) any amount received from an individual or a firm
or an association or individuals not being a body
corporate, registered under any enactment relating to
money lending which is for the time being in force in
the State; and
(vii) any amount received by way of subscriptions in
receipt of a Chit.
18.apl.10.2021 + 2. Judgment.odt
Explanation I -- "Chit" has the meaning as assigned to
in clause (b) of Section 2 of the Chit Funds Act, 1982
(40 of 1982);
Explanation II .-- "Any credit given by a seller to a
buyer on the sale of any property (whether movable or
immovable) shall not be deemed to be a deposit for
the purposes of this clause."
Whereas clause (d) of Section 2 defines "Financial
Establishment" as:
"(d) Financial Establishment" means any person
defined under clause (c) of Section 5 of the Banking
Regulation Act, 1949 (10 of 1949)." accepting deposit
under any scheme or arrangement or in any other
manner but does not include a corporation or a co-
operative society owned or controlled by any State
Government or the Central Government or a banking
company defined under clause (c) of Section 5 of the
Banking Regulation Act, 1949 (10 of 1949)."
17. Thus, definitions of 'deposit' and 'financial
establishment' are rather expansive. The inclusive definition of
'deposit' covers any receipt of money or acceptance of any
valuable commodity, except those amounts which have been
specifically excluded by sub-clauses (i) to (vii) thereof. Thus, any
person accepting deposits under any scheme or in any other
manner satisfies the description of financial establishment except
a corporation or a co-operative society owned or controlled by
any State Government or the Central Government or a banking
company defined under the Banking Regulation Act.
18.apl.10.2021 + 2. Judgment.odt
18. In the present case, admittedly, the said Society, a
cooperative institute, registered under the Cooperative Societies
Act, is running a financial establishment and statements of
witnesses disclose that they have collected "deposits."
19. Learned counsel for the applicants submitted that the
entire controversy revolves around question as to whether loan
amounts given to various investors are within the definition of
"deposit."
20. The Hon'ble Apex Court, in the case of State of
Maharashtra vs. 63 Moon Technologies Limited, reported in
(2022)9 SCC 457, dealt with the scope and ambit of "deposit"
and "financial establishment" and held as under:
"(i) the expression 'deposit' is conspicuously broad in
its width and ambit for it includes, not only any receipt
of money but also the acceptance of any valuable
commodity by a financial establishment under any
scheme or arrangement;
(ii) the money or commodity must be liable to be
returned. However, such return need not necessarily be
in the form of cash or kind but also in the form of a
service, with or without any benefit such as interest;
(iii) it is not necessary that the return should be with
the benefit of interest, bonus or profit. Therefore, if the
financial establishment is obligated to return the
deposit without any increments, it shall still fall within
the purview of Section 2(c) of the MPID Act, provided
that the deposit does not fall within any of the
exceptions;
18.apl.10.2021 + 2. Judgment.odt
(iv) the phrase 'valuable commodity' cannot be
restricted to only mean precious metals. Agricultural
commodities which NSEL trades in will fall within the
purview of the term, and
(v) the definition is broadly worded to include even the
possession of the commodities for a limited purpose."
Thus, expression 'deposit' is conspicuously broad in its
width and ambit for it includes, not only any receipt of money
but also the acceptance of any valuable commodity by a financial
establishment under any scheme or arrangement. The
expression 'any' is used in the substantive part of the definition
of the expression 'deposit' on five occasions namely;
"i) Any receipt of money;
(ii) Any valuable commodities;
(iii) By any financial establishment;
(iv) With or without any benefit; and
(v) In any other form.
The Hon'ble Apex Court further explains that there is
nothing in the definition of the term "deposit" to mean that the
acceptance of the commodity should be accompanied by a
transfer of title to the commodity. Even if the financial
establishment is only in "custody" of the commodity, it would still
fall within the purview of the phrase "acceptance of commodity".
According to the second ingredient of Section 2(c), the
money or commodity must be liable to be returned. However,
such return need not necessarily be in the form of cash or kind
18.apl.10.2021 + 2. Judgment.odt
but also in the form of a service, with or without any benefit such
as interest. It needs to be recalled that clause (v) of Section 2(c)
states that a deposit of money or commodity made as a security
deposit, dealership deposit or an advance amount is excluded
from the definition of the phrase "deposit".
21. On going through the entire record and investigation
papers, especially statements of witnesses, it reveals that
various investors have deposited the amounts. Admittedly, the
said amounts are to be returned on maturity period. It reveals
that daily deposits are also accepted by the said Society, which
are also, admittedly, to be returned back to the investors.
22. Thus, the entire investigation papers show that
amounts are obtained by way of "deposits" from the various
investors and, therefore, the same are required to be repaid by
the said Society. Therefore, it would amount to "deposit" within
the meaning and for the purpose of MPID Act.
23. The object of the MPID Act is only to protect the
interests of small depositors from fraud perpetrated on
unsuspecting investors, who entrusted their life's savings to
unscrupulous and fraudulent persons and who ultimately
betrayed their trust. The said enactment was enacted to protect
the interests of small depositors from fraud. The nature of
legislation is to protect the interests of small depositors, who
18.apl.10.2021 + 2. Judgment.odt
invest their life's earnings and savings in schemes for making
profit floated by unscrupulous individuals and companies, both
incorporated and unincorporated which needs to be kept in mind
while testing the provisions of the MPID Act.
24. On going through the definition of "financial
establishment", admittedly, the applicants, who were the
Director and responsible for the day-to-day affairs of the Society,
accepted the amounts from the various investors and disbursed
the loan amount which is public money and has not taken steps
to recover the same. It is not a simple breach of trust but it is an
offence under breach of trust contemplated under Section 403 of
the IPC.
25. For the criminal breach of trust, the property must
have been entrusted to the accused or he must have dominion
over it. The property in respect of which the offence of breach of
trust has been committed must be either the property of some
person other than the accused or the beneficial interest in or
ownership' of it must be of some other person. The accused must
hold that property on trust of such other person. Although the
offence, i.e. the offence of simple breach of trust and the offence
of criminal breach of trust, there is a distinction. To attract the
offence of criminal breach of trust, there has to be entrustment
of the property and the same being dishonestly misappropriate.
18.apl.10.2021 + 2. Judgment.odt
In other words, in case of criminal breach of trust, the
offender/accused is lawfully entrusted with property and they
have dishonestly misappropriated the same.
26. Admittedly, the amounts invested with the said
Society of which the applicants were the Directors are the public
money. The involvement of the applicants appears to be there in
misappropriation of the public money.
27. The Hon'ble Apex Court, in the case of State of
Gujarat vs. Mohan Lal Jitamalji Porwal, reported in (1987)2
SCC 364 held as follows:
"5. ....The entire community is aggrieved if the
economic offenders who ruin the economy of
the State are not brought to book. A murder
may be committed in the heat of moment upon
passions being aroused. An economic offence is
committed with cool calculation and deliberate
design with an eye on personal profit regardless
of the consequence to the community. A
disregard for the interest of the community can
be manifested only at the cost of forfeiting the
trust and faith of the community in the system
to administer justice in an even-handed manner
without fear of criticism from the quarters which
view white collar crimes with a permissive eye
unmindful of the damage done to the national
economy and national interest....."
28. The Hon'ble Apex Court, while dealing with offence,
involving conspiracy to commit economic offences of huge
18.apl.10.2021 + 2. Judgment.odt
magnitude, in the case of Y.S.Jagan Mohan Reddy vs. CBI,
reported in (2013)7 SCC 439 laid down following parameters:
"i) economic offences constitute a class apart
and need to be visited with a different approach
in the matter of bail. The economic offence
having deep rooted conspiracies and involving
huge loss of public funds needs to be viewed
seriously and considered as grave offences
affecting the economy of the country as a whole
and thereby posing serious threat to the
financial health of the country, and
ii) while granting bail, the court has to keep in
mind the nature of accusations, the nature of
evidence in support thereof, the severity of the
punishment which conviction will entail, the
character of the accused, circumstances which
are peculiar to the accused, reasonable
possibility of securing the presence of the
accused at the trial, reasonable apprehension of
the witnesses being tampered with, the larger
interest of the public/State and other similar
considerations."
29. By applying the principles laid down by the Hon'ble
Apex Court to the present case, while quashing the FIR, a prima
facie material is there to connect the applicants with the alleged
crime and, therefore, this is not a fit case wherein powers under
Section 482 of the CrPC are to be exercised.
30. For the above reasons mentioned, the applications
deserve to be rejected and the same are rejected.
18.apl.10.2021 + 2. Judgment.odt
The applications are rejected.
(URMILA JOSHI-PHALKE, J)
Sarkate.
Signed by: Mr. A.R. Sarkate
Designation: PA To Honourable Judge
Date: 13/03/2026 19:07:19
