Mumbai, May 17, 2024 – Kawal Ramesh Malhotra and Ayush Kawal Malhotra, accused in a multi-crore cyber fraud case, have been denied bail by the Additional Sessions Court, Greater Mumbai. Additional Sessions Judge Dr. A.A. Joglekar rejected their bail application (Criminal Bail Application No. 1140 of 2024), citing the ongoing investigation, the nature of the economic offense, and the potential for tampering with evidence.

The Malhotras were arrested in connection with C.R. No. 33 of 2024, registered at Matunga Police Station, for offenses punishable under sections 409 (criminal breach of trust), 420 (cheating and dishonestly inducing delivery of property), 467 (forgery of valuable security, will, etc.), 468 (forgery for¹ purpose of cheating), 471 (using as genuine a forged document² or electronic record), and 34 (acts done by several persons in furtherance of common intention) of the Indian Penal Code (IPC),³ along with sections 66(C) and 66(D) of the Information Technology Act.

Prosecution’s Case:

The prosecution alleged that the Malhotras, along with co-accused, defrauded the public, including the complainant, by forming a WhatsApp group and sending fake links to gain financial benefits. They allegedly induced the complainant to transfer ₹49,35,000. The funds were then allegedly withdrawn by co-accused and transferred through the Malhotras’ courier services using Hawala and cryptocurrency transactions.

Defense Arguments:

The Malhotras’ advocate, Sunny Waskar, argued that his clients were falsely implicated and that the main accused, Ashish Ghatala, was the primary perpetrator. He stated that the funds were transferred to various accounts at the behest of co-accused, and recoveries were made from the co-accused. He argued that there was no concrete evidence linking the Malhotras to the crime and no financial transactions between them and the co-accused. He claimed that nothing was recovered from the Malhotras and that they were not involved in the financial aspects of the crime.

Prosecution’s Objections:

The Additional Public Prosecutor (APP), Ashwini Raikar, opposed the bail, stating that the funds received by the Malhotras and co-accused were yet to be recovered. She argued that the co-accused and wanted accused had opened bank accounts and withdrawn cash, which was then sent to the Malhotras. She emphasized that further investigation was ongoing and that the Malhotras were required for confrontation. She also expressed concerns about absconding, tampering with evidence, and threatening witnesses.

Court’s Decision:

Judge Joglekar, after reviewing the case records and submissions, noted the following:

• Prima Facie Case: The court found a prima facie case against the Malhotras, based on bank statements and call detail records (CDRs) indicating their acquaintance with the co-accused.
• Hawala and Cryptocurrency Transactions: The court noted the alleged use of Hawala and cryptocurrency transactions to transfer and conceal the defrauded funds.
• Ongoing Investigation: The court emphasized that the investigation was ongoing, particularly regarding the economic aspects of the crime.
• Potential for Tampering: The court expressed concerns about the potential for the Malhotras to dispose of the proceeds and tamper with evidence if released on bail.
• Economic Offense: The court highlighted the nature of the crime as an economic offense, which required thorough investigation.
• Supreme Court Precedent: The court cited the Supreme Court’s judgment in P. Chidambaram’s case, which emphasizes the need to avoid derailing investigations in economic offenses.

Considering these factors, the court concluded that the Malhotras’ bail application should be rejected.

Significance of the Order:

This order highlights the court’s consideration of the following factors when denying bail in a cyber fraud case:

• Prima Facie Evidence: The court relied on bank statements and CDRs to establish a prima facie case.
• Complex Transactions: The court considered the complex nature of the Hawala and cryptocurrency transactions used to conceal the funds.
• Ongoing Investigation: The court emphasized the importance of allowing the investigation to continue without interference.
• Economic Offense: The court recognized the seriousness of economic offenses and the need for thorough investigation.
• Potential for Tampering: The court expressed concerns about the potential for the accused to tamper with evidence and dispose of proceeds.
• Supreme Court Precedent: The court relied on Supreme Court precedent to justify denying bail in economic offenses.