Mumbai, August 5, 2022 – Balwant Shankar Sable, the proprietor of M/s Kanchan Enterprises, has been denied bail by the Sessions Court for Greater Bombay in connection with a Rs. 20 crore bank fraud. Additional Sessions Judge S.M. Menjoge rejected the bail application, citing Sable’s active participation in the fraudulent activities and the risk of him absconding.

Sable was arrested in connection with Crime No. 51/2020, registered by the Economic Offences Wing (EOW) of the Mumbai Police (originally Crime No. 346/2020 at BKC Police Station). He was charged with offenses punishable under Sections 420 (cheating), 465 (forgery), 467 (forgery of valuable security), 468 (forgery for purpose of cheating), 471 (using as genuine a forged document), and 120(B) (criminal conspiracy)¹ of the Indian Penal Code.

The Allegations and Prosecution’s Case

The complainant, Rakesh Kothari, Vice President of CITY Bank Mumbai, alleged that Anil Kapoor, Managing Director of M/s ABK Industries, defrauded the bank of Rs. 20 crore by submitting false invoices, bills of exchange, and other documents without making any actual purchases from M/s Kanchan Enterprises, owned by Sable.

The prosecution argued that Sable actively participated in the fraud by:

• Preparing false bills, bills of exchange, invoices, lorry receipts, and tax receipts in favor of M/s ABK Industries, despite not conducting any business.
• Allowing eight Letters of Credit (LCs) to be issued in the name of M/s Kanchan Enterprises, despite knowing they were false and not backed by actual purchases.
• Receiving the LC amounts into the account of M/s Kanchan Enterprises at ICICI Bank and subsequently transferring the funds to the account of M/s Trimp Industries, owned by his wife.
• Operating M/s Kanchan Enterprises and M/s Trimp Industries from the same address, which was found to be a slum area with no actual business operations.
• Aiding Anil Kapoor of M/s ABK Industries, to defraud CITI bank of Rs. 10,26,78,723/-.

Defense Arguments and Court’s Observations

Sable’s defense, led by Advocate N.M. Sangle, argued that he was innocent and not a party to the loan agreement between M/s ABK Industries and CITI Bank. They also claimed that the bank had already taken action against the primary accused, Anil Kapoor, under the SARFAESI Act. The defense further argued that the investigating officer had violated the law by not properly issuing notices under Sections 41 and 41A of the Criminal Procedure Code.

However, the court rejected these arguments, stating that:

• Sable was the proprietor of M/s Kanchan Enterprises, which was directly involved in the fraudulent transactions.
• The false documents were prepared and used with Sable’s knowledge and consent.
• The funds were transferred to his wife’s account, indicating his direct involvement.
• Regarding the notice under 41 and 41A of the CrPC, the wife of the accused was present in court and stated that a notice was recieved, and that it was given to the accused, and that the accused had appeared before the police.
• The business address was non existent, and in a slum area, indicating a risk of flight.

Reasons for Denying Bail

The court cited the following reasons for denying bail:

• Active Participation: Sable actively participated in the fraud by creating and using false documents and facilitating the transfer of funds.
• Risk of Absconding: Given his residence in a slum area and the seriousness of the offense, there was a risk that Sable could abscond if granted bail.
• Seriousness of the Offense: The fraud involved a substantial amount of money and had a significant impact on the bank.

Implications and Future Proceedings

The denial of bail highlights the court’s strict stance on economic offenses and its emphasis on preventing financial frauds. Sable will remain in custody as the investigation continues. The case will proceed to trial, where the prosecution will present its evidence, and the defense will have the opportunity to challenge the allegations. This decision reflects the courts careful consideration of facts and circumstances in criminal proceedings, especially those involving large scale fraud.