Kerala High Court

Gafoor. K.M vs The Assistant Director on 13 March, 2025

Author: P.V.Kunhikrishnan

Bench: P.V.Kunhikrishnan

B.A.Nos.741 & 1032 of 2025
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                                                                2025:KER:21061

              IN THE HIGH COURT OF KERALA AT ERNAKULAM
                                      PRESENT
           THE HONOURABLE MR. JUSTICE P.V.KUNHIKRISHNAN
THURSDAY, THE 13TH DAY OF MARCH 2025 / 22ND PHALGUNA, 1946
                             BAIL APPL. NO. 741 OF 2025
  CRIME NO.ECIR/KZSZO/01/2023 OF ENFORCEMENT DIRECTORATE,
                                KOZHIKODE, KOZHIKODE
          AGAINST       THE     ORDER/JUDGMENT   DATED    IN   BAIL   APPL.
NO.10264 OF 2024 OF HIGH COURT OF KERALA
PETITIONER(S):

               ANTONY SUNNY
               AGED 40 YEARS
               S/O SUNNY V.A., VELLARA HOUSE, NAYARANGADI,
               JAMANANGAD, VADAKKEKAD, THRISSUR, PIN - 679563

               BY ADVS.
               P.SANJAY
               A.PARVATHI MENON
               BIJU MEENATTOOR
               PAUL VARGHESE (PALLATH)
               KIRAN NARAYANAN
               RAHUL RAJ P.
               MUHAMMED BILAL.V.A
               MEERA R. MENON
               BASILA BEEGAM


RESPONDENT(S):

      1        ENFORCEMENT DIRECTORATE
               REP. BY THE ASST. DIRECTOR, DIRECTORATE OF
               ENFORCEMENT, GOVERNMENT OF INDIA, MINISTRY OF
               FINANCE, DEPARTMENT OF REVENUE, KOZHIKODE SUB
               ZONAL OFFICE, KOZHIKODE., PIN - 673002

      2        CHANDRAN
               AGED 59 YEARS
 B.A.Nos.741 & 1032 of 2025
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                                                      2025:KER:21061

               S/O T CHOYI, THEKKAN HOUSE, CHEPPANOOL, MUYYAM,
               KANNUR RURAL, KERALA -670142 (IS IMPLEADED AS
               THE ADDITIONAL SECOND RESPONDENT AS PER ORDER
               DATED 28.01.2025 IN CRL MA 1/2025 IN BA
               741/2025).


               BY ADVS.
               SRI. RAJIT
               SRI.JAISHANKAR V. NAIR, SC, ED


        THIS BAIL APPLICATION HAVING COME UP FOR ADMISSION
ON 04.03.2025, ALONG WITH Bail Appl..1032/2025, THE COURT
ON 13.03.2025 DELIVERED THE FOLLOWING:
 B.A.Nos.741 & 1032 of 2025
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                                                       2025:KER:21061



              IN THE HIGH COURT OF KERALA AT ERNAKULAM
                                   PRESENT
           THE HONOURABLE MR. JUSTICE P.V.KUNHIKRISHNAN
THURSDAY, THE 13TH DAY OF MARCH 2025 / 22ND PHALGUNA, 1946
                         BAIL APPL. NO. 1032 OF 2025
   CRIME NO.1/2023 OF ENFORCEMENT DIRECTORATE, KOZHIKODE,
                                  KOZHIKODE
          AGAINST THE ORDER/JUDGMENT DATED 04.12.2024 IN CRMC
NO.3 OF 2025 OF ADDITIONAL DISTRICT COURT (SPECIAL COURT
FOR TRIAL FOR MARADU CASES) KOZHIKODE
PETITIONER(S)/3RD ACCUSED:

               GAFOOR. K.M,
               AGED 46 YEARS
               S/O MOIDEEN, KUNNATH PEEDIKAYIL, VARAVOOR (PO),
               THRISSUR DISTRICT, PIN - 680585


               BY ADVS.
               M.ANUROOP
               M.DEVESH
               JYOTHIS MARY
               MURSHID ALI M.
               HASSAN M.K



RESPONDENT(S)/COMPLAINANT:

      1        THE ASSISTANT DIRECTOR,
               DIRECTORATE OF ENFORCEMENT, GOVERNMENT OF INDIA,
               MINISTRY OF FINANCE, DEPARTMENT OF REVENUE,
               KOZHIKODE SUB ZONAL OFFICE, KOZHIKODE,
               PIN - 673001

      2        CHANDRAN,
               AGED 59 YEARS, S/O T CHOYI, THEKKAN HOUSE,
 B.A.Nos.741 & 1032 of 2025
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                                                      2025:KER:21061

               CHEPPANOOL, MUYYAM, KANNUR RURAL, KERALA (IS
               IMPLEADED AS R2 VIDE ORDER DATED 28-1-25 IN CRL
               MA 1/25)


               BY ADVS.
               SRI. RAJIT
               SRI.JAISHANKAR V. NAIR, SC, ED


        THIS BAIL APPLICATION HAVING COME UP FOR ADMISSION
ON 04.03.2025, ALONG WITH Bail Appl..741/2025, THE COURT
ON 13.03.2025 DELIVERED THE FOLLOWING:
 B.A.Nos.741 & 1032 of 2025
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                                                              2025:KER:21061



                      P.V.KUNHIKRISHNAN, J
                    --------------------------------
                    B.A.Nos.741 & 1032 of 2025
                     -------------------------------
                Dated this the 13th day of March, 2025


                                 ORDER

These Bail applications filed under Section 483 of the

Bharatiya Nagarik Suraksha Sanhita, 2023 are connected

and therefore, I am disposing of these cases by a common

order.

2. Petitioners are accused Nos. 1 and 3 in Crime

No.ECIR/KZSZO/01/2023 of Enforcement Directorate,

Kozhikode. The above case is registered alleging

commission of offence of Money Laundering as defined

under Section 3 of the Prevention of Money Laundering

Act, 2002 (for short 'Act 2002'), which is punishable under

Section 4 of Act 2002.

3. The prosecution case in brief is like this:

The accused in the above crime were the B.A.Nos.741 & 1032 of 2025

2025:KER:21061

promoters of a company by name, 'Kannur Urban Nidhi

Limited' (KUNL), which is offering 12 to 12.5% interest on

fixed deposits. The company had accepted fixed deposits

from several investors. According to the prosecution, the

accused diverted those funds for the establishment and

running of another company by name, 'Anytime Money

Pvt. Ltd.' (ATM) and to the personal accounts of the

petitioners and other accused. According to the

prosecution, the accused embezzled around Rs.40 Crores

by cheating the investors. So many cases are registered

against the accused by the Crime Branch of Kannur and

Kasaragod units. Hence, it is alleged that the accused also

committed the offence under Section 4 of the Act, 2002.

Hence, the present case is filed. The petitioners in B.A.

No. 1032/2025 and B.A No. 741/2025 were arrested on

27.11.2024 and 29.11.2024, respectively.

4. Heard the learned counsel appearing for the

petitioners and the learned Standing Counsel appearing for B.A.Nos.741 & 1032 of 2025

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the Enforcement Directorate.

5. Adv. P. Sanjay, who appeared for the petitioner

in B.A. No.741/2025 raised several contentions. The first

and foremost contention raised by the counsel is that the

petitioner is entitled to statutory bail because the

investigation is not completed within the statutory period.

Thereafter, Adv. Sanjay argued the matter on merit also.

Adv. Sanjay submitted that there is absolutely no evidence

against the petitioner to implicate him in this case. It is

the specific case of the petitioner in B.A. No.741/2025 that

he was never a shareholder or director of KUNL. Counsel

for the petitioner took me through Annexure-A9 produced

in B.A. No.741/2025, which is the copy obtained from the

Registrar of Companies, and submitted that Jaseena,

Sabna and Muhammed are the Directors of the company.

The counsel also took me through the relevant pages of

Annexure-A9 and submitted that his client is not even a

shareholder of the company. It is submitted that the B.A.Nos.741 & 1032 of 2025

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shareholders of the company are Jameela, Subash, Gafoor,

Abdulrazak, Jaseena, Sabna and Muhammed. According

to the petitioner, he had some financial transactions with

one Gafoor. Counsel for the petitioner submitted that the

petitioner entrusted some national permit lorries owned by

him to the above-mentioned Gafoor, and certain amount

was credited to the account of the petitioner by Gafoor. It

is also submitted that Gafoor cheated the petitioner in B.A.

No.741/2025 and Annexure-A2 is the complaint filed by

the petitioner to the Assistant Commissioner of Police,

Thrissur. The counsel took me through the averments in

the Annexure-A2 complaint. The counsel also takes me

through Annexure-A11 to show that there is a payment to

the account of the petitioner from the account of Gafoor.

Counsel for the petitioner submitted that the above case is

registered without any basis and materials. The counsel

also submitted that the respondents are relying on the

statement given under Section 50 of the Act 2002, which B.A.Nos.741 & 1032 of 2025

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is inadmissible. Adv. Sanjay also submitted a note &

compilation to support his contentions. He relied on

Annexures-1 and 2 judgments produced along with the

note & compilation to show that the statement under

Section 50 cannot be relied on. The counsel also submitted

that the petitioner has three minor daughters and a family

consisting of aged parents. Therefore, he does not pose a

flight risk. For that purpose, he relied on paragraph No.25

of Annexure-4 order passed in B.A. No.2339/2024,

produced along with the note & compilation. The counsel

appearing for the petitioner in B.A. No.1032/2025 also

submitted that the petitioner is entitled to statutory bail.

In addition to that, the counsel submitted that there are

no materials to connect the petitioner to the case except

the statement under Section 50 of the Act 2002.

6. The learned Standing Counsel appearing for the

Enforcement Directorate replied to all the contentions

submitted by the petitioners. The Standing Counsel B.A.Nos.741 & 1032 of 2025

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submitted that, in light of the judgment of this Court in

Vimal K. Mohanan v. State [2023 KHC 9028], the

contention of the petitioners that they are entitled to

statutory bail is not sustainable. The Standing Counsel

also submitted a compilation of judgments showing the

validity of the statements under Section 50 of Act 2002.

The Standing Counsel also made available the complaint

filed by the Enforcement Directorate and took me through

the specific allegations against the petitioners. The

Standing Counsel submitted that, in addition to the

statements under Section 50 of the Act 2002, there are

materials against the petitioners and, therefore, Section

45 of the Act 2002 is squarely applicable. The Standing

Counsel also submitted that this Court may not grant bail

to the petitioners.

7. This Court considered the contentions of the

petitioners and the Standing Counsel appearing for the

Enforcement Directorate. First, I will consider whether the B.A.Nos.741 & 1032 of 2025

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petitioners are entitled to statutory bail or not.

Admittedly, the complaint in Crime No.

ECIR/KZSZO/01/2023 was already filed on 24.01.2025.

Counsel for the petitioners submitted that the complaint

was returned with certain defects, and the defects noted

by the learned Judge are fatal, and therefore, the

complaint filed by the Enforcement Directorate on

24.01.2025 is incomplete. Even if the complaint was re-

presented, the same will not cure the defects, and the

petitioners are entitled to statutory bail. When such a

contention was raised, this Court passed the following

order on 10.02.2025:

"The Registry will get a report from the jurisdictional Court about the following:-

i) When exactly the final report is filed in Crime No.ECIR/KZSZO/01 of 2023.

ii) Whether the final report was returned, and if it is returned the reasons for returning the final report.

iii) Whether the final report is represented after curing the defects.

B.A.Nos.741 & 1032 of 2025

2025:KER:21061

Post on 14.02.2025."

8. Based on the same, a report was submitted by

the Special Judge (PML Act Cases), Kozhikode, on

13.02.2025. As per the report, it was stated that the

complaint was filed on 24.01.2025 and after scrutiny, the

complaint was returned on 27.01.2025 for curing the

defects noted in Sl. Nos. 1 to 15 thereon. The complaint

was re-presented on 29.01.2025 and was taken on file u/s

4 of the Act 2002 on 05.02.2025 and was forwarded to the

Sessions Court for assigning Sessions Case number. The

following are the defects noted by the Special Judge first

while returning the complaint on 27.01.2025:

"1) All the suspected persons shown in the ECIR is not seen made a party to the complaint.

2) No application is seen filed for deleting suspected persons who were not made a party to the complaint.

3) Certified copy of FIR registered as scheduled cases u/s 420 IPC, 409IPC r/w 34 IPC are not seen submitted.

4) Retention order by Deputy Director dated B.A.Nos.741 & 1032 of 2025

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31.01.2024 not produced.

5) Retention order by Deputy Director dated 25.10.2024 not produced.

6) Order of the Adjudication Authority in OA 1374/24 not produced.

             7)    Documents No. 3 & 4 not certified.
             8)    No photo affixed on Doc. No. 21.
             9)    No proforma attached with Doc. 27.

10) No photo affixed on Doc. No. 28, 30 and 33.

11) No proforma attached with Doc. No. 29.

12) Transcript of A/c only produced as Doc. No. 43.

No certificate.

13) A/c No. differs in certificate u/s 24 in Doc. No. 63.

14) In Doc. No. 80, date of Doc. No. 3324/13 SRO Vadakkanchery is incorrect.

15) Date of DOC No. 694/08 of SRO Vadakkanchery is incorrect."

9. The reply submitted by the department to the

above defects is also forwarded by the learned Special

Judge. This Court perused the above report and reply in

the light of the dictum laid down by this Court in Vimal

K. Mohanan's case (supra). It will be better to extract

the relevant portion of Vimal K. Mohanan's case

(supra):

B.A.Nos.741 & 1032 of 2025

2025:KER:21061

"8. As discussed earlier, the criteria for deciding the entitlement for default bail is completion of the investigation and not filing of the final report. The word 'final report' is not mentioned in S.167. Therefore, when faced with the Public Prosecutor's application seeking extension, or that of the accused demanding statutory bail, the court's consideration should be whether the final report was filed after completing the investigation. If the final report is found to have been filed after completing the investigation in all respects, minor defects in the report, by itself, will not confer the accused with any right to be enlarged on default bail. On the other hand, if the final report is filed without completing the investigation, in order to stultify the mandate of S.167(2) and later returned to the investigating officer for completing the investigation, that would definitely entitle the accused to demand that he be released on default bail, if the final report, after completing the investigation and curing the defects, is not re - submitted in court before the 180th day. In Saharath v. State of Kerala [2021 (4) KLT 621], this Court has held that if the charge sheet was returned as defective, it implies permission to cure defects. Once the defects are cured and the charge sheet represented, it cannot be said that the proviso to S.167(2) CrPC would get attracted." (Underline supplied).

10. After going through the defects noted by the

Special Judge and the reply to it by the respondents, I am B.A.Nos.741 & 1032 of 2025

2025:KER:21061

of the considered opinion that those are minor defects,

and therefore, based on the same, the petitioners are not

entitled to default bail. The standing counsel for the

respondents submitted that the investigation against the

petitioners were over at the time of filing the complaint.

Hence the petitioners are not entitled default bail. Hence,

that point is decided against the petitioners.

11. The counsel appearing for the petitioners raised

contentions on merit also. Before considering the

contentions on merit, this Court has to consider the

jurisdiction of the court to grant bail in Act 2002 cases.

Section 45 of Act 2002 deals with the circumstances in

which bail can be granted. It will be better to extract

Section 45 (1) of Act 2002:

"45. Offences to be cognizable and non-bailable.

(1)Notwithstanding anything contained in the Code of Criminal Procedure, 1973 (2 of 1974), no person accused of an offence under this Act shall be released on bail or on his own bond unless--

(a) every offence punishable under this Act shall B.A.Nos.741 & 1032 of 2025

2025:KER:21061

be cognizable;

(b) no person accused of an offence punishable for a term of imprisonment of more than three years under Part-A of the Schedule shall be released on bail or on his own bond unless:-

(i) the Public Prosecutor has been given an opportunity to oppose the application for such release; and

(ii) where the Public Prosecutor opposes the application, the Court is satisfied that there are reasonable grounds for believing that he is not guilty of such offence and that he is not likely to commit any offence while on bail:

Provided that a person, who, is under the age of sixteen years, or is a woman or is sick or infirm, or is accused either on his own or along with other co-accused of money-laundering a sum of less than one crore rupees may be released on bail, if the Special Court so directs:

Provided further that the Special Court shall not take cognizance of any offence punishable under section 4 except upon a complaint in writing made by--

(i) the Director; or

(ii) any officer of the Central Government or a State Government authorised in writing in this behalf by the Central Government by a general or special order made in this behalf by that Government."

12. A perusal of the above Section would show that, B.A.Nos.741 & 1032 of 2025

2025:KER:21061

no person accused of an offence punishable for a term of

imprisonment of more than three years under Part-A of the

Schedule shall be released on bail or on his own bond

unless the Public Prosecutor has been given an opportunity

to oppose the application for such release; and where the

Public Prosecutor opposes the application, the Court is

satisfied that there are reasonable grounds for believing

that he is not guilty of such offence and that he is not

likely to commit any offence while on bail. Therefore, the

question to be decided is whether there are reasonable

grounds for believing that the petitioners are not guilty of

the offences alleged and that they are not likely to commit

any offence while on bail.

13. The first contention raised by the petitioners is

that there are only statements filed under Section 50 of

Act 2002 to prove the case. In Vijay Madanlal

Choudhary and Others v. Union of India and Others

[2023 (12) SCC 1], the Apex Court considered the B.A.Nos.741 & 1032 of 2025

2025:KER:21061

admissibility of Section 50 of Act 2002 in detail. The Apex

Court observed that, at the stage of the issue of

summons, the person cannot claim protection under

Article 20(3) of the Constitution. However, if his/her

statement is recorded after a formal arrest by the ED

official, the consequences of Article 20(3) or Section 25 of

the Evidence Act may come into play to urge that the

same, being in the nature of confession, shall not be

proved against him. Further, it would not preclude the

prosecution from proceeding against such a person,

including for consequences under Section 63 of Act 2002

on the basis of other tangible material to indicate the

falsity of his claim. But the Apex Court also observed that,

it would be a matter of rule of evidence. After discussing

the matter in detail, the Apex Court observed like this:

"449. In other words, there is stark distinction between the scheme of the NDPS Act dealt with by this Court in Tofan Singh and that in the provisions of the 2002 Act under consideration. Thus, it must follow that the B.A.Nos.741 & 1032 of 2025

2025:KER:21061

authorities under the 2002 Act are not Police Officers. Ex- consequenti, the statements recorded by authorities under the 2002 Act, of persons involved in the commission of the offence of money- laundering or the witnesses for the purposes of inquiry/investigation, cannot be hit by the vice of Article 20(3) of the Constitution or for that matter, Article 21 being procedure established by law. In a given case, whether the protection given to the accused who is being prosecuted for the offence of money-laundering, of Section 25 of the Evidence Act is available or not, may have to be considered on case-to-case basis being rule of evidence."

14. The Apex Court in the Union of India through

the Assistant Director v. Kanhaiya Prasad [2025 SCC

OnLine SC 306] considered the matter again. It will be

better to extract the relevant portion of the above

judgment:

"18. Though it was sought to be submitted by learned senior Advocate Mr. Ranjit Kumar for the respondent that the appellant had relied upon the statements of the respondent recorded under Section 50 of the Act which were inadmissible in evidence, the said submission cannot be accepted in view of the position of law settled by this Court in Vijay Madanlal (supra) in B.A.Nos.741 & 1032 of 2025

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which it has been held inter alia that the person summoned under Section 50(2) is bound to attend in person or through authorized agents before the authority and to state truth upon any subject concerning which he is being examined or is expected to make statements and to produce the documents as may be required by virtue of sub-section (3) of Section 50. It has been further observed that Article 20(3) of the Constitution would not come into play in respect of the process of recording statement pursuant to such summon issued under sub- section (2) of Section 50. The phrase used in Article 20(3) is "to be a witness" and not to "appear as a witness". It follows that the protection afforded to an accused insofar as it is related to the phrase "to be a witness" is in respect of testimonial compulsion in the court room, and it may also extend to compelled testimony previously obtained from him. It is available therefore to a person against whom a formal accusation relating to the commission of an offence has been levelled, which in the normal course may result in a prosecution."

15. Keeping in mind the above principles, this Court

considered the prosecution case. The contention of the

petitioners is that there are only statements under Section

50 of Act 2002 against the petitioners. A perusal of the B.A.Nos.741 & 1032 of 2025

2025:KER:21061

complaint would show that those statements were

recorded after the arrest of the petitioners. If that is the

only evidence, it is a matter to be considered whether the

same is admissible in light of the dictum laid down in

Vijay Madanlal Choudhary's case (supra) and in

Kanhaiya Prasad's case (supra). But the Standing

Counsel submitted that, in addition to the same, there are

other materials also against the petitioners. A short note

is submitted by the Standing Counsel in which the

materials against the petitioners are mentioned

specifically. It will be better to extract the relevant portion

of the same:

"IV. EVIDENCES AGAINST ANTONY SUNNY (A3):

1. Statements of Witnesses Under Section 50 of PMLA:

 Employees of KUN and ATM, including Shanoj K.P., Sudheep Punathil, Sugesh Karathan, and Ajeesha V.S., testified that the company was run under the directions of Antony Sunny, Shoukkathali, and Gafoor and that funds were misappropriated. B.A.Nos.741 & 1032 of 2025

2025:KER:21061

 Firos P.I., driver of Gafoor K.M. and caretaker of Antony Sunny's resort, confirmed cash withdrawals on the directions of Antony Sunny and others.

2. Antony Sunny's Own Statement Under Section 50 of PMLA:

 He admitted receiving Rs. 17.5 crores from KUN and ATM, stating that some of it was used for purchasing/renovating his house and other personal expenses.

 He confirmed that KUN and ATM were co-managed by him and others.

 He was confronted with multiple statements from other accused and witnesses, where he denied allegations against him but admitted to fund transfers.

3. Financial Transactions and Property Acquisition:

 Evidence shows large sums transferred to Antony Sunny's firms and family accounts, including Rs. 7 crores from KUN and ATM  Properties were allegedly acquired using funds originating from KUN, including a commercial land and resort in Guruvayur.

V. EVIDENCES AGAINST GAFOOR K.Μ (Α3):

B.A.Nos.741 & 1032 of 2025

2025:KER:21061

1. Statements of Witnesses Under Section 50 of PMLA:

 Employees confirmed that KUN and ATM were operated under the directions of Gafoor, with funds being misappropriated and used for personal expenses.

 Abdul Razack, a shareholder, stated that he was unknowingly made a shareholder and later learned that Gafoor and Antony Sunny controlled KUN.  Firos P.I. (driver of Gafoor) confirmed that cash withdrawals were made under Gafoor's instructions.

2. Gafoor's Own Statement Under Section 50 of PMLA:

 He admitted that Kannur Urban Nidhi Ltd was started by himself, Antony Sunny, and Shoukkathali to fund Anytime Money Pvt. Ltd.  He acknowledged that salaries, office rent, and expenses of ATM were paid from KUN, effectively admitting diversion of investor funds.  He initially denied awareness of cash withdrawals but later admitted that funds were used for personal and business needs, including his Arecanut business.

 Evidence including documentary evidences shows that Rs. 9.4 crores were transferred to Gafoor's firms/accounts from ATM and KUN.

 Large sums were withdrawn in cash and given to B.A.Nos.741 & 1032 of 2025

2025:KER:21061

Gafoor, allegedly for illegal lending in the Arecanut business.

 Funds were transferred to his wife's bank account and used for purchasing properties."

16. A perusal of the same would show that, in

addition to the statements under Section 50 of Act 2002,

there are materials against the petitioners. I am not in a

position to neglect the materials made available by the

prosecution. It cannot be said that there are only

statements under Section 50 of the Act 2002. Based on

the above materials mentioned above, I am not in a

position to say that there are reasonable grounds for

believing that the accused are not guilty and that they are

not likely to commit any offences. It is true that the

counsel for the petitioner in B.A.No. 741 of 2025 argued

based on Annexure A11. Even if the same is admitted,

there are more amounts came to the account of that

petitioner is the case of the prosecution. Except Annexure

A11, no other documents are produced by the petitioner.