Mumbai, October 1, 2024 – The Designated Court under the Maharashtra Protection of Interest of Depositors (MPID) Act, at the City Civil & Sessions Court, Gr. Bombay, has granted bail to Prakash Aitappa Kotian, a 56-year-old businessman, who was arrested in connection with a multi-crore fraud perpetrated by the Malayaka Multi State Co-operative Credit Society. The order was passed by His Honour Judge Shri N.G. Shukla (Court No. 20) in Bail Application No. 762 of 2024.

Kotian was arrested in Crime No. 752 of 2021 registered at the Mulund Police Station for offences punishable under Sections 406 (criminal breach of trust), 409 (criminal breach of trust by public servant, or by banker, merchant or agent), and 420 (cheating)¹ read with Section 34 (acts done by several persons in furtherance of common intention) of the Indian Penal Code (IPC), and Sections² 3 and 4 of the MPID Act.

The prosecution’s case alleged that Kotian, being a director of the Malayaka Multi State Co-operative Credit Society, along with the chairman Gilbert Paustine Baptis and other directors, misrepresented to 71 investors, inducing them to invest money in the society. The investors allegedly did not receive their invested money with the promised interest, leading to a total fraud of ₹8,46,28,334/-.

Ld. Adv. Mr. Ravi Kotian, representing the applicant, argued that his client was merely an employee and not actively involved in deceiving or inducing investors. He contended that the allegations of siphoning funds were primarily against accused No. 1 (the chairman), his wife, and accused No. 2. Mr. Kotian also brought to the court’s attention a previous order from the Hon’ble High Court dated November 6, 2023, granting bail to the applicant in a similar crime arising from the same society’s transactions at the Mira Road police station. The High Court had reportedly observed that no specific role of deception or inducement was attributed to Prakash Kotian in that case.

Ld. APP. Mrs. Chaitrali Panshikar, representing the Respondent/State-EOW, opposed the bail application, asserting that Kotian was a director and thus responsible for the return of the investors’ money. She highlighted the significant amount of money involved and the number of defrauded investors, arguing that releasing Kotian could lead to tampering with evidence.

After considering the submissions and perusing the police’s reply, Judge N.G. Shukla noted that while the chargesheet named Kotian as a wanted accused and alleged he was a director, it did not attribute any specific role to him in the deception, actual collection of money from investors, or the misappropriation of funds. Such specific roles were attributed to accused No. 1, his wife, and accused No. 2.

The court also took cognizance of the Hon’ble High Court’s previous order granting bail to Kotian in a related case, where a similar lack of specific allegations against him was noted. Judge Shukla observed that in the present case as well, beyond the general allegation of being a director, no concrete actions of deceiving or inducing investors were attributed to Kotian.

Furthermore, Judge Shukla made a significant observation regarding the applicability of Sections 406 and 409 of the IPC. He opined that the primary allegation was of misrepresentation to induce investment with the promise of high returns, which falls more appropriately under Section 420 (cheating) rather than criminal breach of trust. He cited the recent ruling of the Hon’ble Supreme Court in Delhi Race Club & Ors. Vs. State of Uttar Pradesh & Anr. (dated August 23, 2024), which reiterated the distinction between these offences, emphasizing that cheating does not necessarily involve the entrustment of property.

Considering the lack of specific allegations of deception and inducement against Kotian, and the potential applicability of a less severe charge (Section 420 IPC, with a maximum punishment of six years under the MPID Act), Judge Shukla concluded that Kotian was entitled to bail. He deemed that imposing conditions would be sufficient to prevent tampering of evidence and ensure his presence during the trial.

Consequently, the court passed the following order:

1. Bail Application 762 of 2024 is allowed.
2. Applicant/accused Prakash Aitappa Kotian is to be released on bail upon executing a personal bond of ₹50,000/- (Rupees Fifty Thousand Only) with one or two solvent sureties of the like amount in Crime No. 752 of 2021 registered at Mulund Police Station.
3. Kotian must attend every hearing of the case and appear at the Mulund Police Station every second Saturday between 10:00 am and 11:00 am to ensure his presence during the trial.
4. He is prohibited from leaving India without prior permission from the court and must deposit his passport with the investigating officer.
5. Within two weeks of his release, Kotian must submit proof of his residential address and contact mobile numbers to the investigating officer and update this information whenever it changes.
6. He is forbidden from threatening or influencing prosecution witnesses or hampering further investigation.
7. Kotian is also barred from alienating any of his immovable property without the court’s prior permission.
8. Bail Application 762 of 2024 stands disposed of accordingly.

This order highlights the court’s emphasis on specific roles and allegations against an accused, even in cases involving financial irregularities where the accused holds a position of responsibility. The court’s observation regarding the appropriate IPC sections also underscores the importance of accurately framing the charges based on the nature of the alleged offences.