Kerala High Court Grants Bail in ₹115 Crore Cooperative Bank Scam | Custody Since July and Absence of Criminal Antecedents Weigh in Favour of Accused
Safiya Malik
The High Court of Kerala Single Bench of Justice A. Badharudeen delivered an order granting bail to the petitioner, who was arraigned as the seventh accused in a case concerning alleged large-scale financial misappropriation from a cooperative society. The Court held that the continued detention of the petitioner was not required for the purposes of investigation. While acknowledging the seriousness of the allegations, the Court directed the release of the petitioner on bail subject to strict conditions, stating that "further custody of the petitioner, for the purpose of investigation is not necessary and he can be enlarged on bail." The order thus permitted the petitioner to secure bail upon execution of a bond and compliance with other conditions imposed by the Court.
The matter originated from the registration of a crime alleging large-scale financial misappropriation by the members of the Managing Committee of the Angamaly Urban Cooperative Society. The allegations centered on abuse of official position to sanction and renew fake loans using fraudulent documents, which allegedly resulted in substantial losses to the cooperative society.
Initially, Crime No.112 of 2024 was registered at Angamaly Police Station, Ernakulam. Subsequently, the case was transferred and re-registered as Crime No.388/2024 by the Crime Branch (Economic Offence Wing), Ernakulam. The complaint alleged that loans were sanctioned in the names of fictitious persons and that the same documents were used repeatedly for renewal of loans. According to the prosecution, the total misappropriated amount was initially estimated at Rs.55 crores, which, upon further investigation, was assessed at Rs.115.8 crores.
The petitioner, arraigned as the seventh accused, was a former Director Board member of the Angamaly Urban Cooperative Society during the period between 2017 and 2018. The prosecution alleged that he, along with other committee members, had participated in sanctioning and renewing fraudulent loans, thereby facilitating the misappropriation of society funds. The charges invoked against the accused included offences under Sections 406, 408, 417, 465, 467, 468, 471, and 420 read with Section 34 of the Indian Penal Code, as well as offences under Sections 13(1)(a) and 13(2) of the Prevention of Corruption Act, 1988.
The petitioner contended through counsel that his role was limited to participating in the renewal of loans during his tenure as Director Board member, and that no new loans were sanctioned after 2018, as confirmed in the prosecution’s own case. It was argued that he relied on the belief that the earlier loans were genuine and in order, and that he had no knowledge of fake or fraudulent loan accounts. Furthermore, it was submitted that the petitioner was aged, ailing, and had been in judicial custody since 11 July 2025, following the rejection of his anticipatory bail plea on 18 June 2025.
The prosecution, represented by the Additional Director General of Prosecution (ADGP), opposed the bail application. It was argued that the petitioner’s role was clearly established, that the offence involved large-scale financial fraud adversely affecting depositors, and that the magnitude of the scam required thorough and effective investigation. The ADGP submitted that many depositors had suffered due to the scam and were facing difficulties in meeting daily needs. However, it was conceded by the prosecution that the petitioner had no prior criminal antecedents.
An additional respondent, one of the depositors who lost money in the scam, also opposed the grant of bail, stressing the dire condition of the depositors whose funds were allegedly siphoned.
The Court considered the submissions of all parties, including the defence counsel, the prosecution, and the counsel for the depositor, while also examining the progress of the investigation and the petitioner’s period of custody.
Justice A. Badharudeen recorded the facts of the matter, noting that "crime was registered alleging that the accused persons, who are the members of the Managing Committee of the Angamaly Urban Cooperative Society, abused their position with intention to cause undue loss to the Society, have sanctioned fake loans and renewed loans by using the same documents in the name of fake persons and misappropriated Rs.55 Crores belongs the Society." The Court further noted the prosecution’s submission that "during the course of investigation, it is revealed that, as of now, the misappropriation of money would come to Rs.115.8 Crores."
The Court acknowledged the petitioner’s contention that he was only a Director Board member during 2017–2018 and that he had not sanctioned any new loans after 2018. The Court recorded the argument that "the 7th accused participated in the board meetings to renew the loans alone, believing that the earlier loans were in order and he did not have any knowledge regarding grant of any fake loans." The Court also noted the submission regarding the petitioner’s age, ill-health, and continued detention since 11 July 2025.
On the opposing side, the Court recorded the ADGP’s submission that "this is a huge scam, whereby many depositors were affected and the role of the petitioner in this crime is well made out, prima facie." The ADGP stated that effective investigation was crucial but also conceded that the petitioner had no criminal antecedents. The Court further recorded the submissions of the depositor who appeared as additional respondent, stating that depositors were struggling due to loss of money.
Justice Badharudeen recalled that anticipatory bail had previously been denied to the petitioner by order dated 18 June 2025 in Bail Application No.1315 of 2025, following which he was arrested and remanded to custody. The Court specifically observed that "the allegations against the petitioner are very serious and the same would require effective investigation." However, balancing the gravity of allegations with the progress of the investigation and the petitioner’s custodial period, the Court concluded that "further custody of the petitioner, for the purpose of investigation is not necessary and he can be enlarged on bail."
The Court allowed the bail application and ordered the release of the petitioner subject to stringent conditions. It directed that the petitioner be released on executing a bond of Rs.50,000 with two solvent sureties of the like amount to the satisfaction of the jurisdictional court concerned. The Court mandated that the petitioner shall not intimidate witnesses or tamper with evidence, and that he must cooperate with the investigation and remain available for trial.
The Court further directed that the petitioner must appear before the Investigating Officer as and when directed, in addition to reporting before the Investigating Officer every Monday between 9 am and 10 am for a period of three months or until the completion of the investigation, whichever is earlier. It was ordered that the petitioner shall not, directly or indirectly, make any inducement, threat, or promise to any person acquainted with the facts of the case, so as to dissuade them from disclosing information to the Court or to the police.
The Court explicitly prohibited the petitioner from involving himself in any other offence during the currency of bail, stating that any such event, if reported or brought to the notice of the Court, would constitute sufficient grounds to cancel the bail. Furthermore, it directed that the petitioner shall not leave the jurisdiction of the jurisdictional court without prior permission.
The order concluded with a caution that violation of any of the imposed conditions shall result in cancellation of the bail granted.
Advocates Representing the Parties
For the Petitioner: Sri. Jeswin P. Varghese, Advocate
For the Respondents: Public Prosecutor Shri. Athul Roy; Additional Director General of Prosecution, Senior Public Prosecutor C.K. Suresh
Case Title: V.D. Tomy v. State of Kerala & Anr.
Neutral Citation: 2025: KER:64425
Case Number: Bail Application No. 9405 of 2025
Bench: Justice A. Badharudeen
