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1
IN THE SPECIAL COURT FOR CBI AT GREATER BOMBAY
BAIL APPLICATION NO. 253 OF 2018
IN
RA No. 244 OF 2018
Bishnubrata Bhiranand Mishra
}
Age;62 years,
}
R/o. 302, Kumud Tower, 101,
}
Surya Nagar, Bhubaneshwar­751 003}
(Odisha)
}… Applicant/Accused
Versus
}
In the matter of
The State ­ CBI/Bank Securities &
Fraud Cell, Mumbai
}
}
}…Complainant
CORAM:
DATED:
HIS HONOUR JUDGE
SHRI S.R. TAMBOLI
(COURT ROOM NO.47)
05.05.2018
Appearance:
SPP Mr. Sharma for the CBI, BS and FC.
Advocate Mr. Aditya Mithe for the applicant/accused.
ORDER
In the instant application, applicant/accused has prayed for bail
as per section 439 of Cr. P.C. He has been arraigned as an accused in
FIR bearing RC No.01/E/2018 for the offence under section 120­B r/w.
Section 420, 409 of Indian Penal Code, 1860 and under section 13(2)
r/w. Section 13(1)(d) of Prevention of Corruption Act, 1988.
2.

Ld. counsel for applicant submitted that, from November 2011 to
October 2015, the applicant was posted as the Chief Internal Auditor of
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PNB, Brady House MCB(”Branch”). He retired in October 2015. It is
alleged in the FIR that Mr. Nirav Modi and his associates being Mr.
Nishal Modi, Mrs. Ami Nirav Modi, Mr. Mehul Chinubhai Chokshi all
partners of M/s. Diamonds R US, M/s. Solar Exports and M/s. Stellar
Diamonds alongwith two officials of PNB bearing Mr. Gokulnath Shetty,
Deputy Manager(Retired) and Mr. Manoj Kharat, Single Window
Operator played fraud upon PNB to cause pecuniary advantage to M/s.
Diamonds R Us, M/s. Solar exports and M/s. Stellar Diamonds and
cused loss to PNB to the tune of Rs.280 Crores.
3.

He further submitted that, during the time when the applicant
was employed with the PNB, the Bank did not have straight through
processing from CBS for trade finance transactions such as Letters of
Credit/Comfort/Undertaking etc. and the same had to be entered into
the system manually. This led to the initiation of a LOU without
reflection of transaction in the CBS which posed serious inherent risk.
This led to the RBI issuing guidelines vide circular dated November 25,
2016 on Cyber security Controls­ SWIFT wherein the RNI inter alia
asked the banks to set up a straight through processing between CBS
and SWIFT messaging system so as to avoid potential fraudulent
messages. However, all of these guidelines came into effect only in 2016
i.e., after the applicant’s retirement. Co­accused Mr. Shetty and Mr.
Kharat prepared and dispatched the allegedly illegal LOUs without
following due procedure and without entering the said LOUs in the CBS
System in order to avoid detection. He further submitted that LOUs
were deliberately not entered in the CBS system. Applicant could not
detect any irregularities/illegalities in the LOUs. As per the systems of
PNB, in order to send out a SWIFT message a specific password was
required which was not with the applicant. Applicant neither had the
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authority to generate a SWIFT message nor had access to enter the
same in the CBS system of PNB. As a Internal Auditor, the applicant had
restricted access only to the CBS and that too only for reviewing the
same. The applicant had absolutely no access or authority to make
alterations/changes to the information entered int the CBS system.
Therefore, if a SWIFT message had been generated without the same
being entered into the CBS, the applicant would not have been able to
detect any anomalies. Even if the prosecution’s allegations in the FIR are
taken at face value, it appears that the alleged fraud in question was
entirely perpetrated(inside the PNB Branch) by co­accused Mr. Shetty
and Mr. Kharat. Applicant (as the Chief Internal Auditor) of the Branch
had no role to play in the alleged fraud. No money trail in the above
fraud leads to the applicant. Custodial interrogation of the applicant is
unnecessary. Applicant has several prevalent medical issues including
severe diabetics, high blood pressure, high cholesterol. Continued
detention of the applicant may cause irreparable damage and harm to
his health. Applicant has a permanent place of residence in India. He
has deep roots in the society. He will not tamper the evidence. He will
not abscond. Hence, he prayed that accused be released on bail.
4.

Per contra Ld. PP for CBI, BS and FC submitted that, FIR bearing
RC No.01/E/2018 came to be registered with CBI, BS&FC branch,
Mumbai on 31.01.2018 on the complaint received from Mr. Avneesh
Nepalia, DGM, Punjab National Bank, Zonal Office, Mumbai, against
Mr. Nirav Modi (A­1), Mr. Neeshal Modi (A­2), Smt. Ami Nirav Modi
(A­3), Mr. Mehul Chinubhai Choksi (A­4), all partners of M/s Diamond
R US, M/s Solar Exports and M/s Stellar Diamonds, Mr. Gokulnath
Shetty (A­5), Deputy Manager (retd.)Punjab National Bank, Mr. Manoj
Hanumant Kharat (A­6), SWO Punjab National Bank and other
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unknown persons for cheating and for also abuse of official position by
public servants of Punjab National Bank to cause undue pecuniary
advantage to M/s Diamond R US, M/s Solar Exports and M/s Stellar
Diamonds and wrongful loss of Rs.280.70 crores to Punjab National
Bank during 2017. It is alleged in the FIR that Mr. Gokulnath Shetty,
Deputy Manager (retd.), PNB and Mr. Manoj Hanumant Kharat, Single
Window operator(SWO) posted in Forex Department at Mid Corporate
Branch, Brady House, Mumbai fraudulently issued 8LOUs total
amounting to USD 44225812.10, equivalent to Rs.280,70,12,293.98 on
09.02.2017, 10.02.2017 and 14.02.2017 in favour of Allahabad Bank,
Hong Kong and Axis Bank, Hong Kong, without following prescribed
procedure by obtaining required request applications, documents and
approval of the authorities thereto and without making entries in the
Bank system. The funds so raised for payment of import bills have not
been utilized for such purposes in many cases.
5.

He further submitted that, during investigation, it revealed that
applicant was working as Chief Internal Auditor, Punjab National Bank,
Brady House, Fort Branch, Mumbai. During the period
2011
to
October 2015, he allowed Mr. Gokulnath Shetty, Dy. Manager to
continue issuing LoUs without following existing banking procedure,
policy guidelines of the Bank and RBI guidelines. During the tenure of
applicant, more than 700 LOUs were issued on behalf of Diamond R
US, Stellar Diamond and Solar Exports. The Bank has not collected the
legitimate commission from these customers for issuing LOUs and
thereby caused undue loss of Rs.230 crores to Punjab National Bank
and corresponding wrongful gain to the aforesaid firms. As Chief
Internal Auditor, he deliberately did not check the LOUs issued by Mr.
Gokulnath Shetty on the request of the said firms for availing Buyer’s
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Credit from Allahabad Bank, Axis Bank, Hong Kong and Bank of India.
Further, the funds received from the foreign banks towards Buyers
Credit were allowed to be utilised for settling the liabilities on account
of earlier Buyers Credit availed by the aforesaid firms. It was the
responsibility of the Internal Chief Auditor to protect the interest of the
bank and point out the illegal activities happening in the branch. The
activity of issuance of fraudulent LOUs started from 2011 onwards,
during which period the applicant was the Internal Chief Auditor. The
investigation is going on and voluminous documents are required to be
scrutinized, compiled, collated. Therefore, the applicant cannot be
released on bail. There is every possibility that he may influence the
witness and tamper with the evidence. Since most of the witnesses are
from Punjab National Bank. They are colleagues of the applicant. There
is every possibility that he may influence the witness and tamper with
the evidence. There is a prima­facie case against accused. Hence, he
prayed to reject the application.
6.

This court has given thoughtful consideration to the various
contentions raised at the hands of counsel of both the parties. It is
undisputed that the applicant was serving as Chief Internal Auditor
during the period from year 2011­2015. Prosecution is coming with the
case that various LOUs were issued at the instance of the accused
company during his tenure without collecting legitimate commission.
7.

Applicant is relying on the circular of RBI (Exh.C annexed with
the application). Relying on the circular, he contends that applicant was
not aware as the entry was not made in CBS system.
8.

However, being the Chief Internal Auditor, it was his duty to veify
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the daily transaction and report the irregularities. It specific case of the
prosecution that there was record of buyers credit in the bank. Funds
raised from foreign account came to be utilized for setting earlier buyers
credit account. Hence, it cannot be said that applicant was not aware
about the transaction.
9.

Applicant is claiming that co­accused Mr. Manoj Kharat and Mr.

Gokulnath Shetty are responsible for the offence. However, proecution
is coming with the case that there was conspiracy of the present
applicant with co­accused Mr. Manoj Kharat and Mr. Gokulnath Shetty.
Role of the present applicant is under investigation.
10.

Applicant was serving as Chief Internal Auditor. His role is under
investigation. Investigation is at crucial stage. There is every likelihood
that he may influence the witnesses who were working with him. The
possibility of detection of the major role of the applicant can not be
ruled out. It prima­facie appears that accused is involved in the offence.
At this juncture of this case, it is not proper to release the accused on
bail.
11.

There is a prima­facie allegations of fraud and conspiracy agaisnt
the applicant. Conspiracy is under investigation. Hence, application
lacks any merit. In the result, this court pass following order:
ORDER
Application is dismissed.
05.05.2018
Dictated on
: 05.05.2018
Transcribed on : 05.05.2018
Signed on
: 05.05.2018
(S.R. TAMBOLI)
Special Judge(CBI)
Gr. Bombay
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“CERTIFIED TO BE TRUE AND CORRECT COPY OF THE ORIGINAL
SIGNED JUDGEMENT/ORDER”
UPLOAD DATE
05.05.2018
Name of the Judge
TIME
2.00 pm.

Date of Pronouncement of
Judgement/Order.
Judgement/order signed by P.O on
Judgement/order uploaded on
NAME OF STENOGRAPHER
Mrs. R. S. Bhor
HHJ Shri S.R. Tamboli
(CR No.47)
05.05.2018
05.05.2018
05.05.2018