C.S. DIAS, J.

1. The application is filed under Section 438 of the Code of Criminal Procedure, 1973, (in short, 'Code') for an order of pre-arrest bail.

2. The petitioner is the 2nd accused in Crime No.1673/CB EOW/EKM/R/2023 of the Crime Branch, Economic Offence Wing, Ernakulam Unit, which is registered against the accused persons for allegedly committing the offences punishable under Sections 406 and 420 read with Section 34 of the Indian Penal Code (in short, 'IPC').

3. The prosecution case, in brief, is that: the accused, with an intention to cheat the defacto complainant and make unlawful gain, induced the defacto complainant to invest money in the 'Demat Account' of 'Karvy Stock Broking India Limited' (1st accused company) owned by the Karvy Group based in Hyderabad. Accordingly, the defacto complainant transferred Rs.2/- crore to the said company from his bank account in the Federal Bank, Palarivattom on 17.10.2019. However, the accused did not pay any profit and refused to return the capital. Thus, the accused have committed the above offences.

4. Heard; Sri. S. Sreekumar, the learned Senior Counsel appearing for the petitioner and Smt.Pushpalatha, the learned Public Prosecutor.

5. The learned Senior Counsel for the petitioner submitted that the petitioner is totally innocent of the accusations levelled against him. By no stretch of imagination can the offences under Sections 406 and 420 of the IPC be attracted to the facts of the case. There is no material to substantiate the petitioner's culpability in the crime. In fact, the 1st accused-company was doing share trading business for nearly three decades. The defacto complainant/3rd respondent had approached the petitioner to do share trading business. Accordingly, the 3 rd respondent had transferred Rs.2/- crore on 18.10.2019 to the 1st accused-company. However, the Securities and Exchange Board of India (SEBI) imposed restrictions on the 1st accused-company, restraining it from taking new clients. Subsequently, on 02.12.2019, National Stock Exchange (NSE) suspended the membership of the 1st accused-company as per Annexure 2 order. The 1st accused-company's bank accounts were frozen. Therefore, the 1st accused could not return the money to the 3rd respondent. It is only due to the aforesaid circumstances, that the money could not be returned. Therefore, there is no element of mens rea on the part of the accused in not repaying the money back to the 3rd respondent or paying him any profit. The learned Senior Counsel drew the attention of this Court through Sections 405 and 415 of the Indian Penal Code and stated that the offences will not lie. Now NSE has returned nearly Rs.47/- lakh to the 3rd respondent. Since, the NSE seisin of the matter, the 3rd respondent is to approach them for redressal of his grievances. The petitioner was an accused in other cases before the Courts at Hyderabad. He has been enlarged on bail in all the cases. The petitioner's custodial interrogation is not necessary and no recovery is to be effected. Hence, the application may be allowed.

6. The learned Public Prosecutor seriously opposed the bail application. She submitted that the petitioner is a habitual offender, since he is an accused in Crime Nos.891/2021 and 746/2022 both registered by the Gachibowli Police Station, Crime No.134/2020, 78/2021, 100/2021, 150/2021, and 168/2021 all registered by the Hyderabad Police Station, and Crime No.274/2019 of the Narayanguda Police Station. The petitioner was the Chairman and the Managing Director of the 1st accused company. The petitioner was in charge of the administration and management of the day to day affairs of the 1st accused-company. The 1st accused-company received the money on the solemn undertaking that they would invest the money in the share trading immediately. But, the same was not done. The accused had the mens rea to cheat the defacto complainant. The crime is being investigated by the Crime Branch. The petitioner's custodial interrogation is necessary and recovery is to be effected for the full fledged investigation of the crime. If the petitioner is granted an order of pre-arrest bail, it would certainly torpedo the entire investigation. Therefore, the application may be dismissed.

7. The prosecution allegation is that the accused had in furtherance of their common intention induced the defacto complainant to invest money with the 1st accusedcompany, on the assurance of paying him high profit. However, the accused did not pay any profit and refused to return the capital.

8. On a perusal of the materials on record, it is apparent that the 3rd respondent had transferred Rs.2/- crore to the 1st accused-company for the purpose of doing share trading business. The petitioner has contended that it was only because SEBI had imposed restrictions on the accused, that they were unable to deal in share trading. As per Annexure 2, the NSE also suspended the membership of the accused. Therefore, the transaction could not take place and the accused could not return the money. The petitioner ought to have invested the money then and there and not keep the money with them. It is an undisputed fact that the petitioner is an accused in similar crimes registered by different police stations. Admittedly, the petitioner was the Chairman and the Managing Director of the 1st accused-company, and was in charge of the administration and affairs of the 1st accused-company.

9. In Jagan Mohan Reddy Y.S. v. Central Bureau of Investigation [2013 KHC 4402], the Hon’ble Supreme Court has categorically declared that economic offences constitute a separate class and need to be visited with a different approach when it comes to the question of bail. The economic offences having deep-rooted conspiracies involving huge loss of public funds, and needs to be viewed seriously and be considered as grave offences affecting the country’s economy as a whole.

10. In Himanshu Chandravadan Desai and others v. State of Gujarat [2006 (2) SCC (Cri) 143] the Hon’ble Supreme Court has observed that the Courts should be circumspect and cautious in granting aniticipatory bail in crimes involving a conspiracy to cheat and defraud public institution in a systematic manner.

11. In P. Chidambaram v. Directorate of Enforcement [(2019) 9 SCC 24], the Hon'ble Supreme Court has observed in the following lines:

“69. Ordinarily, arrest is a part of procedure of the investigation to secure not only the presence of the accused but several other purposes. Power under Section 438 CrPC is an extraordinary power and the same has to be exercised sparingly. The privilege of the prearrest bail should be granted only in exceptional cases. The judicial discretion conferred upon the court has to be properly exercised after application of mind as to the nature and gravity of the accusation; possibility of the applicant fleeing justice and other factors to decide whether it is a fit case for grant of anticipatory bail. Grant of anticipatory bail to some extent interferes in the sphere of investigation of an offence and hence, the court must be circumspect while exercising such power for grant of anticipatory bail. Anticipatory bail is not to be granted as a matter of rule and it has to be granted only when the court is convinced that exceptional circumstances exist to resort to that extraordinary remedy.”

12. In Jai Prakash Singh v. State of Bihar and another, [(2012) 4 SCC 379] the Hon’ble Supreme Court has reiterated the legal position that, an order of prearrest bail being an extra ordinary privilege, should be granted only in exceptional cases. The judicial discretion conferred upon the Courts has to be properly exercised, after proper application of mind, to decide whether it is a fit case to grant an order of pre-arrest bail. The court has to be prima facie satisfied that the applicant has been falsely enroped in the crime and his liberty is being misused.

13. In Srikant Upadhyay v. State of Bihar [2024 KHC OnLine 6137] the Honourable Supreme Court, after referring to all the earlier decisions on the point, has observed in the following lines:

“8. It is thus obvious from the catena of decisions dealing with bail that even while clarifying that arrest should be the last option and it should be restricted to cases where arrest is imperative in the facts and circumstances of a case, the consistent view is that the grant of anticipatory bail shall be restricted to exceptional circumstances. In other words, the position is that the power to grant anticipatory bail under S.438, CrPC is an exceptional power and should be exercised only in exceptional cases and not as a matter of course. Its object is to ensure that a person should not be harassed or humiliated in order to satisfy the grudge or personal vendetta of the complainant. (See the decision of this Court in HDFC Bank Ltd. v. J.J.Mannan & Anr., 2010 (1) SCC 679).

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24. We have already held that the power to grant anticipatory bail is an extraordinary power. Though in many cases it was held that bail is said to be a rule, it cannot, by any stretch of imagination, be said that anticipatory bail is the rule. It cannot be the rule and the question of its grant should be left to the cautious and judicious discretion by the Court depending on the facts and circumstances of each case. While called upon to exercise the said power, the Court concerned has to be very cautious as the grant of interim protection or protection to the accused in serious cases may lead to miscarriage of justice and may hamper the investigation to a great extent as it may sometimes lead to tampering or distraction of the evidence. We shall not be understood to have held that the Court shall not pass an interim protection pending consideration of such application as the Section is destined to safeguard the freedom of an individual against unwarranted arrest and we say that such orders shall be passed in eminently fit cases.

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14. On a careful consideration of the facts, the rival submissions made across the Bar and the materials placed on record, especially on comprehending the nature, gravity, and seriousness of the economic offences leveled against the petitioner, that there are prima facie materials to substantiate that the petitioner was the Chairman and the Managing Director of the 1st accused company and his involvement in the crime, that the 3rd respondent had transferred Rs.2/- crore to the 1st accused company, that the accused had failed to pay any profit or return the capital, that the petitioner's custodial interrogation is necessary and recovery is to be effected and further that the petitioner is a person with criminal antecedents, I am not inclined to exercise the discretionary jurisdiction of this Court under Section 438 of the Code in favour of the petitioner. The application is meritless and is only to be dismissed.

15. Resultantly, the application is dismissed.