P.S. Sundaram vs. State Of Telangana
Held
The Court held that the grant of pre-arrest bail is an exception and requires exceptional circumstances. Applying the guidelines from Siddharam Satlingappa Mhatre vs. State of Maharashtra, the Court considered the nature and gravity of the accusation, the petitioner's role as an agent, and the alleged misappropriation of crores of rupees. The diversion of funds without the company's consent, prima facie, amounts to a breach of trust. The retention of a significant amount (over six crores) is a strong circumstance supporting the belief of misappropriation. The Court found prima facie material to connect the petitioner with the offenses under Sections 409 and 420 IPC. Given that the investigation is not complete and considering the gravity of the offense, the Court concluded that it is not a fit case to grant pre-arrest bail. The petition was dismissed.
Facts
The petitioner, an agent for Maruti Cottex Ltd., was appointed to procure job orders from the Tamil Nadu Government. The company opened an account in Indian Overseas Bank, Erode, authorizing the petitioner to operate it for petty expenses. The company secured a work order for Rs. 25 crores and received Rs. 21,60,32,377/-. The prosecution alleges that the petitioner, with dishonest intent, diverted Rs. 6,61,13,556/- from the company's account, misappropriating the funds. The petitioner claims the retained amount is towards his 6% commission (Rs. 1,38,18,240/- plus 18% GST) and that the diversion was at the company's instruction due to outstanding dues to other companies. He also offered to return the bank guarantee. A criminal case was registered under Sections 409 and 420 of the IPC. The petitioner had previously obtained interim bail from the Madras High Court.
Key Issues
1. Whether the dispute is purely civil in nature, warranting pre-arrest bail under Section 438 of the CrPC, considering the pending civil litigation and alleged outstanding commission? (Section 438 CrPC, Sections 409 & 420 IPC) Petitioner's arguments: The dispute is civil, not criminal, as it concerns commission and outstanding dues. Civil suits are pending, and the amount retained is towards legitimate commission and GST. Diversion of funds was at the company's behest due to their own liabilities to other entities. Therefore, pre-arrest bail should be granted. Revenue's arguments: The investigation is not complete, and pre-arrest bail should not be granted as a matter of course. The allegations of misappropriation and diversion of substantial funds constitute serious offenses, and the court should not interfere at this stage.
Sections Cited
Section 438, Section 409, Section 420
AI-generated summary — verify with the full judgment below
THE HON’BLE SRI JUSTICE M.SATYANARAYANA MURTHY
CRIMINAL PETITION No.3089 OF 2018
ORDER:
This criminal petition, under Section 438 of the Code Of Criminal Procedure, 1973 (for short ‘CrPC), is filed by the petitioner/ Accused to grant pre-arrest bail directing the Station House Officer, Choutuppal Police station, Rachakonda District, Telangana, to release him in the event of his arrest in connection with Crime No.18 of 2018 registered for the offence punishable under Sections 409 and 420 of the Indian Penal Code, 1860 (for short ‘IPC’), apprehending his arrest in connection with the above crime.
The case of the prosecution is that the de facto complainant initially appointed the petitioner as an employee to give job orders of Tamil Nnadu State for processing fabric and accordingly the de facto complainant doing business with the petitioner till the end of January 2016. In January 2017 the company appointed the petitioner as an agent to procure orders from Tamil Nadu Government on its name and also authorized the petitioner to open an account in Indian Overseas Bank, Tamil Nadu Erode for the purpose of depositing the cheques received by the company
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Reproduced from the public record of the Telangana High Court. Verify against the court's own copy before relying on it. Income tax judgments are on bharattax.net.