Bombay High Court | MPID Court Can Also Try IPC Offences | Right Of Appeal Is Statutory, Not Fundamental; Bail Denied In ₹7 Crore Ponzi Fraud
Safiya Malik
The High Court of Judicature at Bombay, Single Bench of Justice Amit Borkar, has dismissed a bail application while affirming that the Designated Court under the Maharashtra Protection of Interest of Depositors (in Financial Establishments) Act, 1999, can also try connected offences under the Indian Penal Code. The Court held that allegations of large-scale cheating and breach of trust—where over 127 investors were duped of more than ₹7 crore through fraudulent investment schemes—disclosed a prima facie case of economic offences of grave seriousness. Addressing the argument that the accused lost one level of appeal, the Court clarified that the right of appeal is not a fundamental right but a statutory one, and the Legislature may structure the appellate forum based on the subject matter. In light of the magnitude of fraud and the applicant’s antecedents, bail was denied
The applicant, Milind Satish Sawant, filed a bail application under Section 439 of the Code of Criminal Procedure, 1973, in connection with Crime Register No. 52 of 2022 registered at Bhandup Police Station. The offences invoked included Sections 406, 409, 420, read with Sections 34 and 120-B of the Indian Penal Code, along with Sections 3 and 4 of the Maharashtra Protection of Interest of Depositors (in Financial Establishments) Act, 1999.
The prosecution alleged that the complainant, a resident of Badlapur, was introduced by a friend to an investment scheme operated by Mars Finance. The complainant was promised monthly returns of 5% on investments and was persuaded to obtain loans through various banks, the proceeds of which were transferred into the accounts of Mars Finance. A total of ₹38,19,927 was disbursed from five different banks. Of this, ₹34,30,000 was transferred into the account of the applicant. Agreements were executed and a cheque of ₹34,00,000 was issued to the complainant, assuring monthly returns of ₹1,70,000 for five years. Despite these assurances, no returns were paid, and the office of Mars Finance was later found closed.
The complaint stated that the accused duped him of ₹33,80,000 and further cheated his acquaintances of approximately ₹59,00,000. The modus alleged was collection of money from investors under false assurances, followed by default and closure of operations. It was recorded that over 127 investors were similarly affected, amounting to fraud exceeding ₹7,29,85,000.
The applicant, through counsel, argued that the Designated Court under the MPID Act had no jurisdiction to try offences under the IPC, that part repayment had been made, and that the money invested did not constitute a “deposit” under Section 3 of the MPID Act. Reliance was placed on parity with an earlier bail order in Crime No. 123 of 2021 and on Supreme Court judgments in Arnesh Kumar v. State of Bihar and Satender Kumar Antil v. CBI.
The prosecution, represented by the Additional Public Prosecutor, opposed bail, contending that the Designated Court retains its identity as a Sessions Court, that the material demonstrated prima facie cheating and misappropriation, and that the applicant had antecedents involving similar offences. It was submitted that the applicant, in connivance with others, collected funds fraudulently and siphoned them for personal use.
The Court recorded that the main argument of the applicant was jurisdictional, namely that the Designated Court under the MPID Act could not try IPC offences. On this point, the Court observed: “Section 6 of the MPID Act expressly empowers the State Government to designate one or more Courts of Session as Designated Courts for trying offences under the MPID Act. The legal position is well settled that such designation does not change the essential nature or character of the Court of Session.”
It further stated: “The Sessions Court, even after being designated as an MPID Court, continues to exercise its full powers under the Cr.P.C. as a Sessions Court, while also exercising the additional jurisdiction conferred by the MPID Act. The designation, thus, is an enlargement of jurisdiction, not a restriction.”
On the question of appellate remedy, the Court noted: “As to the contention that the accused loses one appellate forum, this Court finds it without merit. The right of appeal is not a fundamental right; it is purely a statutory right created by the Legislature. The Legislature, depending on the nature of the subject, may consciously provide for a higher forum of appeal in certain classes of cases.”
The Court also addressed the argument that the amounts collected were not deposits, recording: “On a plain reading of Section 3 of the MPID Act, it is clear that any money received by a financial establishment under any scheme or arrangement, which promises return in cash or in kind, qualifies as a deposit… In the present case, the prosecution material shows that several investors were induced to part with their money under an assurance of extraordinary monthly returns ranging between 5% and 10%.”
With respect to Section 409 IPC, the Court stated: “The investigation further discloses that instead of using the entrusted money for genuine investments, the applicant siphoned large sums into his personal account. This diversion of funds for personal use amounts to clear misappropriation and dishonest conversion, thereby satisfying the second requirement of Section 409 IPC.”
On the plea of parity with an earlier bail order, the Court remarked: “The principle of parity cannot be applied in a mechanical fashion. The antecedents of the applicant themselves reveal that he is a repeat offender. Moreover, the present case involves more than 127 investors and an amount exceeding ₹7 crores, whereas the earlier case involved only 25 investors and about 82.70 lakhs.”
It stated: “In light of the seriousness of the allegations, the scale of the fraud, and the antecedents of the applicant, this Court is of the considered opinion that releasing the applicant on bail at this stage would not be justified.”
“Grant of bail in such circumstances would not only undermine public confidence in the justice system but may also encourage repetition of similar fraudulent acts.”
“Considering all these aspects, the gravity of allegations, the magnitude of fraud, the manner in which innocent investors have been duped, and the antecedents of the applicant, this Court finds that no case is made out for grant of bail. The submissions of the applicant, though carefully considered, do not persuade this Court to exercise its discretion under Section 439 Cr.P.C. in his favour.”
“Accordingly, the bail application stands rejected.”
Advocates Representing the Parties
For the Petitioner: Mr. Nitin Pradhan a/w Ms. Shubhada Khot i/b Ms. Ameeta Kuttikrishnan & Ms. Shambhavi Desai & Ms. Gayatri Pore
For the Respondent: Ms. Shilpa G. Talhar, APP for the State
Case Title: Milind Satish Sawant v. State of Maharashtra
Neutral Citation: 2025:BHC-AS:37033
Case Number: Bail Application No. 1175 of 2025
Bench: Justice Amit Borkar
