Mumbai, July 30, 2022 – In a significant setback for the accused, the Additional Sessions Judge Anand Pandurang Kanade (C.R. 60) rejected the bail application of Ramesh Vitthal Shirgaonkar, the former Chief Executive Officer (CEO) of City Co-operative Bank Ltd., in connection with a massive Rs. 96 crore loan fraud case. The court cited Shirgaonkar’s direct involvement in the alleged fraudulent activities and the substantial public interest involved in the case.
Background of the Case:
Ramesh Vitthal Shirgaonkar was arrested on May 16, 2022, and subsequently placed in judicial custody on May 25, 2022, in connection with Crime No. 14 of 2020 registered at the Economic Offences Wing (EOW). The case pertains to allegations of cheating, criminal breach of trust, and criminal conspiracy under Sections 420, 409, and 120-B read with Section 34 of the Indian Penal Code (IPC).
The case originated from a report filed by Anandrao Vithoba Adsul, the chairman of City Co-operative Bank Ltd., alleging illegal loan transactions during Shirgaonkar’s tenure as CEO from November 10, 2010, to May 31, 2015, along with Mr. Vinayak Joshi, the then General Manager.
Prosecution’s Allegations:
The prosecution alleged that Shirgaonkar and Joshi abused their positions to recommend loan proposals to the bank’s directors, despite knowing that the borrowers lacked repayment capacity. These loans eventually turned into non-performing assets (NPAs), causing significant financial loss to the bank.
A special audit conducted by Ramrao Shirke revealed numerous irregularities, including the failure to verify Know Your Customer (KYC) details, recommend loans without assessing borrowers’ repayment capacity, and extend additional ad-hoc limits without informing the Board of Directors. It was also alleged that Shirgaonkar brought in takeover loans from Maratha Co-operative Bank Ltd. using bogus stock and book debts.
The audit report further indicated that Shirgaonkar and other bank officials colluded with authorized valuers and borrowers, resulting in a loss of Rs. 96,45,47,785 to the bank.
Arguments Presented:
Shri. Waghmare, the advocate representing Shirgaonkar, argued that his client was innocent and had merely supervised the work, claiming that he could not scrutinize every loan proposal. He asserted that loan proposals were initiated by branch managers and approved by the Board of Directors, limiting his role. He also pointed out the 10-year delay in lodging the complaint, Shirgaonkar’s age (79 years) and health issues, and the lack of recoveries at his instance.
Smt. Seema Deshpande, the Additional Public Prosecutor (APP), and the Investigating Officer (IO) opposed the bail application. They argued that Shirgaonkar played a major role in sanctioning illegal loans, leading to substantial losses. They cited the audit report, which detailed 56 illegally sanctioned loans and numerous irregularities. They also alleged that Shirgaonkar received a commission of Rs. 88 lakhs from these transactions and raised concerns about the possibility of him tampering with evidence.
Court’s Reasoning and Decision:
Judge Kanade, after reviewing the police papers, noted that Shirgaonkar, as CEO, was a functional director of the board. The court highlighted the statement of borrower Hitesh Pandya, who claimed to have paid Rs. 24 lakhs to Shirgaonkar after loan sanctions. The court also pointed to the audit report, which detailed Shirgaonkar’s involvement in recommending loans without verifying documents and stocks.
“After going through the papers on record it reveals that allegations against the present applicant accused are well founded,” Judge Kanade stated in his order. “The investigation in the present crime is going on. Huge amount of public is involved in the present case. Considering the serious nature of offence, huge amount involved in the present case and direct involvement of present applicant/accused in the crime, I am of view that applicant/accused is not to be enlarged on bail.”
Consequently, the court rejected Shirgaonkar’s bail application.
Implications and Significance:
This ruling underscores the court’s stringent stance against financial fraud involving public funds and the direct involvement of high-ranking officials. The decision highlights the importance of audit reports and witness statements in establishing prima facie cases.
The court’s emphasis on the “huge amount of public involved” reflects the judiciary’s commitment to protecting the interests of depositors and maintaining the integrity of the banking system.
The order was dictated, transcribed, and signed on July 30, 2022, and uploaded on the same day at 5:40 p.m.