9. The unauthorised appointments of his
henchmen without the sanction of Co-
operative Registrar, diversion of funds,
issuance of multiple loans on single
collaterals, non-recovery of dues from loanees
and monthly deposit scheme defaulters are
revealed from the part of Petitioner during
enquiry.
14. Interrogation is highly necessary to
unravel the complete chain of transactions
associated with Kandala Service Co-operative
bank. As the economic offences involve a deep
routed conspiracy, including huge loss of
funds the presence of accused is inevitable for
investigation."
6. On perusal of the prosecution allegation in the
present case, the allegation is confined to ₹1,01,00,67,858
(Rupees One hundred and one crore sixty-seven thousand
eight hundred and fifty-eight only) and the prosecution case
specifically is that the accused persons collected and
siphoned money to his relatives and friends without proper
collateral securities and without obtaining sanction from the
Registrar of Co-operative Society. It is alleged further that
in this case, the accused and other accused persons diverted
₹85 Lakh to Maranalloor Milk Co-operative Society where
the 1st accused has been holding the post of President
without sanction from the competent authorities. Enquiries
conducted under Sections 65 and 68(1) of the Kerala Co-
operative Societies Act, 1969 (for short, 'the Act, 1969'
hereinafter) revealed wide spread corruption,
misappropriation, nepotism and diversion of funds.
7. Similarly, after the enquiry under Sections 65 and
68(1) of the Act, 1969, it was found that due to wrongful
actions and inaction on the part of the petitioner, a loss of
₹51,11,3621.64 (Rupees Fifty-one crore eleven lakh three
thousand six hundred twenty-one and sixty-four paise only)
is found as the liability of the petitioner. It is also alleged
that unauthorized appointments of henchmen were made
without the sanction of the Registrar of Co-operative
Society, funds were diverted, multiple loans were issued on a
single collateral, dues were not recovered from loanees, and
defaults occurred in the monthly deposit scheme. In such a
case, accused Nos.3 and 5 have been arrested and are in
custody, but others are yet to be arrested.
8. It is noticeable from the report of the
Investigating Officer that in six crimes, the Hon'ble Apex
Court granted anticipatory bail to the petitioner, as
submitted by the learned counsel for the petitioner.
Annexure II is the order of the Hon'ble Apex Court.
9. Here, the allegations specifically is that
₹1,01,00,67,858 (Rupees One hundred and one crore sixty-
seven thousand eight hundred and fifty-eight only) were
misappropriated and the allegations are very serious. As
held in the decision in Serious Fraud Investigation
Office v. Aditya Sarda reported in [2025 INSC 477],
economic offences are a class apart and require custodial
interrogation/investigation and should not routinely attract
anticipatory bail. Paragraph Nos.18 to 23 of the said decision
read as follows:
"18. Now, so far as anticipatory bail is concerned,
this Court has consistently emphasized that
anticipatory bail should not be granted as a matter
of routine, particularly in serious economic
offences, involving large scale fraud, public money
or complex financial crimes. In P.
Chidambaram vs. Directorate of
Enforcement, it was observed as under: -
Grant of anticipatory bail in exceptional
cases
69. Ordinarily, arrest is a part of procedure of
the investigation to secure not only the
presence of the accused but several other
purposes. Power under Section 438 CrPC is an
extraordinary power and the same has to be
exercised sparingly. The privilege of the pre-
arrest bail should be granted only in
exceptional cases. The judicial discretion
conferred upon the court has to be properly
exercised after application of mind as to the
nature and gravity of the accusation;
possibility of the applicant fleeing justice and
other factors to decide whether it is a fit case
for grant of anticipatory bail....
70. .....................................
71. Article 21 of the Constitution of India states
that no person shall be deprived of his life or
personal liberty except according to procedure
prescribed by law. However, the power
conferred by Article 21 of the Constitution of
India is not unfettered and is qualified by the
later part of the Article i.e. "...except according
to a procedure prescribed by law". In State of
M.P. v. Ram KishnaBalothia [State of M.P. v.
Ram Kishna Balothia, (1995) 3 SCC 221: 1995
SCC (Cri) 439] , the Supreme Court held that
the right of anticipatory bail is not a part of
Article 21 of the Constitution of India and held
as under: (SCC p. 226, para 7)
7. ... 'We find it difficult to accept the
contention that Section 438 of the Code
of Criminal Procedure is an integral part
of Article 21. In the first place, there was
no provision similar to Section 438 in the
old Criminal Procedure Code. The Law
Commission in its 41st Report
recommended introduction of a
provision for grant of anticipatory bail.
It observed:
We agree that this would be a
useful advantage. Though we
must add that it is in very
exceptional cases that such power
should be exercised.
In the light of this recommendation,
Section 438 was incorporated, for the
first time, in the Criminal Procedure
Code of 1973. Looking to the cautious
recommendation of the Law
Commission, the power to grant
anticipatory bail is conferred only on a
Court of Session or the High Court. Also,
anticipatory bail cannot be granted as a
matter of right. It is essentially a
statutory right conferred long after the
coming into force of the Constitution. It
cannot be considered as an essential
ingredient of Article 21 of the
Constitution. And its non-application to
a certain special category of offences
cannot be considered as violative of
Article 21.
(emphasis supplied)
72. We are conscious of the fact that the
legislative intent behind the introduction of
Section 438 CrPC is to safeguard the
individual's personal liberty and to protect him
from the possibility of being humiliated and
from being subjected to unnecessary police
custody. However, the court must also keep in
view that a criminal offence is not just an
offence against an individual, rather the larger
societal interest is at stake. Therefore, a
delicate balance is required to be established
between the two rights--safeguarding the
personal liberty of an individual and the
societal interest. It cannot be said that refusal
to grant anticipatory bail would amount to
denial of the rights conferred upon the
appellant under Article 21 of the Constitution of
India.
73. to 76....................................
77. After referring to Siddharam Satlingappa
Mhetre [Siddharam Satlingappa Mhetre v.
State of Maharashtra, (2011) 1 SCC 694 : (2011)
1 SCC (Cri) 514] and other judgments and
observing that anticipatory bail can be granted
only in exceptional circumstances, in Jai
Prakash Singh v. State of Bihar [Jai Prakash
Singh v. State of Bihar, (2012) 4 SCC 379 :
(2012) 2 SCC (Cri) 468] , the Supreme Court
held as under: (SCC p. 386, para 19)
19. Parameters for grant of anticipatory
bail in a serious offence are required to be
satisfied and further while granting such
relief, the court must record the reasons
therefor. Anticipatory bail can be granted
only in exceptional circumstances where
the court is prima facie of the view that
the applicant has falsely been enroped in
the crime and would not misuse his
liberty. (See D.K. Ganesh Babu v. P.T.
Manokaran [D.K. Ganesh Babu v. P.T.
Manokaran, (2007) 4 SCC 434: (2007) 2
SCC (Cri) 345], State of Maharashtra v.
Mohd. Sajid Husain Mohd. S. Husain
[State of Maharashtra v. Mohd. Sajid
Husain Mohd. S. Husain, (2008) 1 SCC
213: (2008) 1 SCC (Cri) 176] and Union of
India v. Padam Narain Aggarwal [Union
of India v. Padam Narain Aggarwal,
(2008) 13 SCC 305: (2009) 1 SCC (Cri)
1].)
Economic offences
78. Power under Section 438 CrPC being an
extraordinary remedy, has to be exercised
sparingly; more so, in cases of economic offences.
Economic offences stand as a different class as they
affect the economic fabric of the society. In
Directorate of Enforcement v. Ashok Kumar Jain
[Directorate of Enforcement v. Ashok Kumar Jain,
(1998) 2 SCC 105: 1998 SCC (Cri) 510], it was held
that in economic offences, the accused is not entitled
to anticipatory bail.
19. In Y.S. Jagan Mohan Reddy vs. Central
Bureau of Investigation, it was observed as
under: -
34. Economic offences constitute a class apart
and need to be visited with a different
approach in the matter of bail. The economic
offences having deep-rooted conspiracies and
involving huge loss of public funds need 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.
35. 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 interests of the public/State and other
similar considerations.
20. In Nimmagadda Prasad vs. Central
Bureau of Investigation, it was observed as
under: -
23. Unfortunately, in the last few years, the
country has been seeing an alarming rise in
white-collar crimes, which has affected the
fibre of the country's economic structure.
Incontrovertibly, economic offences have
serious repercussions on the development of
the country as a whole. In State of Gujarat v.
Mohanlal Jitamalji Porwal [(1987) 2 SCC 364:
1987 SCC (Cri) 364] this Court, while
considering a request of the prosecution for
adducing additional evidence, inter alia,
observed as under: (SCC p. 371, para 5)
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 whitecollar
crimes with a permissive eye unmindful
of the damage done to the national
economy and national interest.
21. Recently in Srikant Upadhyay and Others
vs. State of Bihar and Another, a very pertinent
observations have been made with regard to the
powers of the Court to grant anticipatory bail under
Section 438 of CrPC. It has been observed that -
9. It is thus obvious from the catena of
decisions dealing with bail that even while
clarifying that arrest should be the last
option and it should be restricted to cases
where arrest is imperative in the facts and
circumstances of a case, the consistent view
is that the grant of anticipatory bail shall be
restricted to exceptional circumstances. In
other words, the position is that the power to
grant anticipatory bail under Section 438,
Cr. PC is an exceptional power and should be
exercised only in exceptional cases and not
as a matter of course. Its object is to ensure
that a person should not be harassed or
humiliated in order to satisfy the grudge or
personal vendetta of the complainant. (See
the decision of this Court in HDFC Bank Ltd.
v. J.J.Mannan & Anr.4).
10. When a Court grants anticipatory bail
what it actually does is only to make an
order that in the event of arrest, the arrestee
shall be released on bail, subject to the terms
and conditions. Taking note of the fact the
said power is to be exercised in exceptional
circumstances and that it may cause some
hindrance to the normal flow of investigation
method when called upon to exercise the
power under Section 438 Cr.PC, courts must
keep reminded of the position that law aides
only the abiding and certainly not its
resistant. By saying so, we mean that a
person, having subjected to investigation on
a serious offence and upon making out a
case, is included in a charge sheet or even
after filing of a refer report, later, in
accordance with law, the Court issues a
summons to a person, he is bound to submit
himself to the authority of law. It only means
that though he will still be at liberty, rather,
in his right, to take recourse to the legal
remedies available only in accordance with
law, but not in its defiance. We will dilate
this discussion with reference to the factual
matrix of this case. However, we think that
before dealing with the same, a small
deviation to have a glance at the scope and
application of the provisions under Section
82, Cr.PC will not be inappropriate.
11 to 24..............................
25. We have already held that the power to
grant anticipatory bail is an extraordinary
power. Though in many cases it was held
that bail is said to be a rule, it cannot, by
any stretch of imagination, be said that
anticipatory bail is the rule. It cannot be the
rule and the question of its grant should be
left to the cautious and judicious discretion
by the Court depending on the facts and
circumstances of each case. While called
upon to exercise the said power, the Court
concerned has to be very cautious as the
grant of interim protection or protection to
the accused in serious cases may lead to
miscarriage of justice and may hamper the
investigation to a great extent as it may
sometimes lead to tampering or distraction
of the evidence. We shall not be understood
to have held that the Court shall not pass an
interim protection pending consideration of
such application as the Section is destined to
safeguard the freedom of an individual
against unwarranted arrest and we say
that such orders shall be passed in
eminently fit cases. At any rate, when
warrant of arrest or proclamation is issued,
the applicant is not entitled to invoke the
extraordinary power. Certainly, this will
not deprive the power of the Court to grant
pre-arrest bail in extreme, exceptional cases
in the interest of justice. But then, person(s)
continuously, defying orders and keep
absconding is not entitled to such grant.
22. In Prem Shankar Prasad vs. State of
Bihar and Another, this Court, disapproving the
Order passed by the High Court granting
anticipatory bail to the accused though the
proceedings under Section 82/83 CrPC were
initiated, observed as under: -
10.......................................
10.1.....................................
10.2. Despite the above observations on
merits and despite the fact that it was brought
to the notice of the High Court that
Respondent 2- accused is absconding and even
the proceedings under Sections 82/83CrPC
have been initiated as far back as on 10-1-
2019, the High Court has just ignored the
aforesaid relevant aspects and has granted
anticipatory bail to Respondent 2-accused by
observing that the nature of accusation is
arising out of a business transaction. The
specific allegations of cheating, etc. which
came to be considered by the learned
Additional Sessions Judge has not at all been
considered by the High Court. Even the High
Court has just ignored the factum of initiation
of proceedings under Sections 82/83CrPC by
simply observing that "be that as it may". The
aforesaid relevant aspect on grant of
anticipatory bail ought not to have been
ignored by the High Court and ought to have
been considered by the High Court very
seriously and not casually.
10.3.....................................
11. Thus, the High Court has committed an
error in granting anticipatory bail to
Respondent 2- accused ignoring the
proceedings under Sections 82/83 Code of
Criminal Procedure.
ANALYSIS:
23. In view of the above settled legal position, it is no
more res integra that economic offences constitute a
class apart, as they have deep rooted conspiracies
involving huge loss of public funds, and therefore such
offences need to be viewed seriously. They are
considered as grave and serious offences affecting the
economy of the country as a whole and thereby posing
serious threats to the financial health of the country.
The law aids only the abiding and certainly not its
resistants. When after the investigation, a chargesheet
is submitted in the court, or in a complaint case,
summons or warrant is issued to the accused, he is
bound to submit himself to the authority of law. If he is
creating hindrances in the execution of warrants or is
concealing himself and does not submit to the authority
of law, he must not be granted the privilege of
anticipatory bail, particularly when the Court taking
cognizance has found him prima facie involved in
serious economic offences or heinous offences. In such
cases when the court has reason to believe that the
person against whom the warrant has been issued has
absconded or is concealing himself so that warrant
could not be executed, the concerned court would be
perfectly justified in initiating the proclamation
proceedings against him under Section 82 Cr.P.C. The
High Courts should also consider the factum of issuance
of non-bailable warrants and initiation of proclamation
proceedings seriously and not casually, while
considering the anticipatory bail application of such
accused."
10. Economic offences of this nature are of special
significance, and the specific need of the prosecution and the
investigating agency to conduct custodial interrogation of
the petitioner for the purposes espoused is significant, as
stated in paragraph 14 of the statement filed by the
Investigating Officer. Most importantly, the facts of this
particular case would prima facie show misappropriation of
more than Hundred Crores, where the petitioner is the
prime accused. If the prime accused involved in a huge
scam/economic offence is granted anticipatory bail, effective
investigation could not be materialised, as apprehended by
the prosecution.
11. In such a case, the grant of anticipatory bail
would definitely hamper the investigation. In view of the
particular facts of the case, this Court is not inclined to grant
anticipatory bail to the petitioner, since the same would
destroy the investigation. Therefore, this petition is liable to
fail and is accordingly dismissed.
There shall be a direction to the petitioner to surrender
before the Investigating Officer forthwith, and on failure to
do so, the Investigating Officer shall proceed against the
petitioner in accordance with law to effectuate meaningful
investigation with a view to accomplish successful
prosecution.
Sd/-
A. BADHARUDEEN
JUDGE
Bb
