Mumbai, Maharashtra – January 18, 2019 – A Special CBI Court in Mumbai today granted bail to Prafful Prakash Sawant, a 29-year-old officer working in the Junior Management Grade at Punjab National Bank (PNB), who was arrested in connection with the multi-crore Letters of Undertaking (LOUs) scam that rocked the banking sector. Special Judge Shri. Jayendra C. Jagdale allowed Sawant’s bail application (No. 957 of 2018) against a personal bond of ₹50,000 and sureties of the like amount.

Sawant, who was posted in the Forex Department of PNB’s Mid Corporate Branch at Brady House, Mumbai, between August 5, 2015, and September 11, 2017, was accused of facilitating the issuance of unauthorized and fraudulent LOUs. The CBI alleged that these LOUs caused a wrongful loss of ₹9,09,63,956.48 to PNB and a corresponding wrongful gain to M/s. Chandri Paper & Allied Products Pvt. Ltd.

The charges against Sawant included criminal conspiracy (Section 120-B of the Indian Penal Code), criminal breach of trust by a public servant (Section 409 IPC), cheating (Section 420 IPC), and offences under the Prevention of Corruption Act, 1988 [Sections 13(2) r/w 13(1)(c) & (d)]. He was arrested by the CBI on December 18, 2018.

Defense Argues Lack of Direct Involvement and Completion of Investigation

Advocate Mr. Aabad H.H. Ponda, representing Sawant, argued that his client was involved in routine export and inward remittance work and assisted the segment head as per business needs. He pointed out that the alleged scam came to light in February 2018 due to irregularities in LOUs related to another FIR, leading to the implementation of user-based limits for issuing LOUs only subsequently.

The defense further highlighted the absence of a proper system of checks and balances for SWIFT messages at the time of the alleged transactions. Crucially, Mr. Ponda submitted that the investigation against his client was complete, and the charge sheet had already been filed. He argued that the investigation had not revealed any evidence or documents proving that Sawant had issued or approved any of the fraudulent LOUs, which pertained to import transactions.

The defense also emphasized that the entire case against Sawant was based on documents, with no recoveries or discoveries made at his instance. It was argued that he was not a beneficiary of the crime’s proceeds and that criminal liability could not be fastened on him based on mere suspicion without concrete material evidence.

Prosecution Expresses Concerns About Tampering and Influence

Special Public Prosecutor Mr. Omprakash, representing the CBI, strongly opposed the bail application. The prosecution’s reply (Ex-2) detailed the allegations, stating that Sawant, despite being an officer in the Forex Department, had dishonestly and deliberately failed to comply with office orders dated February 7, 2017, and March 14, 2017, issued by the Chief Manager, Bechu Tiwari. These orders mandated daily compliance reports on SWIFT monitoring and checking of all SWIFT messages (except MT-103 & MT-202). The CBI argued that this non-compliance facilitated the commission of the offense.

The prosecution contended that Sawant had abused his official position, improperly performed his duty, and thereby facilitated the fraud of ₹9,09,63,956.48 on PNB, leading to wrongful gain for M/s. Chandri Paper & Allied Products Pvt. Ltd. The CBI expressed concerns that if released on bail at this crucial stage, Sawant could attempt to thwart the investigation by tampering with remaining evidence and influencing witnesses, which would be detrimental to the case.

Court Emphasizes Completion of Investigation and Vague Allegations

Special Judge Jagdale, after hearing both sides and perusing the documents, referred to the principles laid down by the Supreme Court in the case of Nimmagadda Prasad v/s. Central Bureau of Investigation [(2013 DGLS (Soft.) 404)] regarding the considerations for granting bail. These include the nature of accusations, the evidence supporting them, the severity of punishment, the accused’s character, the possibility of securing their presence at trial, the risk of witness tampering, and the larger public interest.

The court noted that the prosecution had not raised concerns about Sawant’s presence during the trial or any specific threat to the larger public interest. While the prosecution expressed apprehension about witness tampering and evidence destruction, the court pointed out that these were “vague allegations” without any specific details about which witnesses Sawant might influence or what evidence he might tamper with.

Crucially, the court highlighted that the investigation against Sawant was complete, and the charge sheet had already been filed. The court stated that the personal liberty of the applicant could not be curtailed based on such vague allegations, especially when there was no proper reason to keep him in judicial custody indefinitely after the filing of the charge sheet.

Bail Granted with Conditions

Consequently, the court allowed Sawant’s bail application, subject to the following conditions:

1. He shall execute a Personal Recognizance (P.R.) Bond of ₹50,000.
2. He shall furnish one or more sureties of the like amount within two months.
3. He shall not leave India without prior permission from the court.
4. He shall surrender his passport, if any, to the CBI until furnishing surety.
5. He shall furnish his permanent address and contact numbers to the CBI.
6. He shall furnish the addresses and contact numbers of two relatives to the CBI.
7. He shall not tamper with prosecution evidence and shall assist in the disposal of the trial.
8. He shall not commit any offense while on bail.
9. He shall remain present before the investigating officer every Tuesday between 10:00 a.m. and 4:00 p.m. until further orders.
10. Breach of any of these conditions will lead to the cancellation of his bail.
11. He is allowed to be released provisionally for two months after furnishing a cash bail of ₹50,000, pending the submission of sureties.

The order signifies a potential shift in the legal proceedings concerning some of the accused in the PNB scam, particularly those against whom the investigation is complete and the allegations of direct involvement are less pronounced. The stringent conditions imposed by the court, however, underscore the seriousness of the charges and the ongoing nature of the overall investigation into the larger conspiracy.