The Madras High Court has dismissed the bail application of former Managing Director of First Leasing Company of India Limited, Farouk Irani, in connection with a bank fraud case of over Rs 500 crore, saying his custodial interrogation was very much required.
Dismissing the bail plea, Justice S Vaidyanathan on Friday rejected Irani’s submission that his arrest was mala fide and vindictive, the case was only civil in nature and that he had been arrested ‘hurriedly’ for non-payment of loans, unmindful of his age.
The judge also said the offence of money laundering posed a serious threat not only to the financial system of the country but also to the nation’s integrity and sovereignty. The Enforcement Directorate (ED) had arrested Irani on June 14 this year in connection with the fraud. ED submitted that Irani had lured and induced IDBI Bank’s Saidapet branch here to part with Rs 273.9 crore in September 2014 with a mala fide intention and another Rs 248.4 crore from SBI’s commercial branch Chennai.
Irani played a pivotal role in creating wrongful loss to the banks and had illegally enriched himself, along with six others, with these amounts, ED said, adding estimated proceeds of the crime, enjoyed, used and diverted for personal/family benefits by Irani alone worked out to about Rs 100 crore. Irani joined the company when industrialist A C Muthiah was it’s chairman. ED said he was instrumental in making unsubstantiated entries in books of account, thereby inflating the income and assets of the company.
Irani, however, had denied the charge and said it was committed after he quit the company. The judge while rejecting Irani’s ubmissions said the Prevention of Money Laundering Act was a special act concerning a serious fraud and that whether or not he cheated the banks of the amounts could not be gone into at this stage.
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His undertakings not to flee justice and surrendering his passport could not be considered for granting bail, as the court was of the view that his custodial interrogation was very much required in the case, the judge said. On August 1, two former officials of FLCIL were arrested by the ED in connection the case.
S Dilliraj, former Vice President and Chief Financial Officer and L Sivaramakrishnan, former CFO of FLCIL, a Non Banking Finance Company registered with RBI, had been arrested under provisions of Prevention of Money Laundering Act, 2002.
A money laundering case had been registered by ED against the firm in relation to a CBI case filed against it for “cheating” IDBI Bank and SBI of over Rs 500 crore a few years ago.