Sanchayita Lahkar

The High Court of Judicature at Madras Single Bench of Justice G. Jayachandran ordered the interim release on bail of a 63-year-old petitioner, Managing Director of M/s Mylapore Hindu Permanent Fund Limited, accused of defrauding depositors under the TNPID Act, the BUDS Act, and provisions of the Bharatiya Nagarik Suraksha Sanhita, 2023. The Court directed that he be enlarged on bail subject to strict conditions, including surrender of passport, weekly reporting, deposit of ₹100 crores before the Special Court, and steps to liquidate attached properties, holding that continued incarceration would serve no purpose while depositors await recovery

The matter arose from allegations of large-scale financial irregularities linked to the operations of M/s Mylapore Hindu Permanent Fund Limited, a Nidhi company. The prosecution alleged that the petitioner, functioning as Managing Director, along with co-accused directors, canvassed deposits from the public under various schemes promising high returns. The prosecution maintained that the accused defaulted in repayment of maturity amounts, leading to significant financial distress among depositors.

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According to the prosecution, deposits collected from thousands of members were fraudulently diverted for personal gain and unjust enrichment. The petitioner was arrested on 13 August 2024 and remanded to judicial custody for offences initially framed under Sections 409, 420, and 34 of the Indian Penal Code, alongside provisions of the BUDS Act and the TNPID Act. Subsequently, charges were altered to reflect provisions of the Bharatiya Nyaya Sanhita, 2023, including Sections 316(5) and 318(4) read with Section 3(5), in addition to Section 22 of the BUDS Act and Section 5 of the TNPID Act.

The petitioner sought bail contending that his arrest arose from a fringe complaint and that the sudden police action had crippled the company’s financial operations. It was submitted that repayment delays stemmed from disruptions caused by the Covid-19 pandemic, which created panic among depositors and led to premature closure demands. The sealing of the company’s office allegedly prevented borrowers from repaying their loans and disrupted related business entities, resulting in severe financial decline.

In support of his bail application, the petitioner filed an affidavit disclosing 76 items of assets, valued at Rs. 633,97,34,942/-, which he asserted were available for liquidation to settle outstanding dues. He undertook to liquidate assets to repay deposits, promising that matured deposits would be settled within a year, and those yet to mature would be repaid upon their respective due dates.

The prosecution and intervenors opposed bail, asserting that the assets listed were not the petitioner’s absolute properties. According to their submissions, some assets belonged to the company or third parties, many were encumbered, and the market valuation offered was highly inflated. They alleged the petitioner failed to disclose the money trail relating to fraudulent jewel loans using depositors’ KYC documents. The State contended that the petitioner’s lack of clean hands, risk of absconding, and insufficiency of available assets to cover the alleged Rs. 619 crores fraud rendered bail inappropriate.

The prosecution stated that the petitioner’s valuation contrasted starkly with the official guideline value of Rs. 36,91,26,820/- and asserted that loan receivables stood at merely Rs. 49 crores. Allegations further indicated that, in addition to Rs. 619 crores defrauded from depositors, about Rs. 700 crores was siphoned off through fake gold loans. Intervenors pointed out that depositors remained unpaid even after a year of incarceration, and confiscated assets so far accounted for only Rs. 34 crores.

The judgment stated: “The rival submissions and the statements lead to an inference that, the petitioner along with the other accused persons had defrauded depositors and the assets of the M/s Mylapore Hindu Permanent Fund Limited- Nidhi Company been ruined after this petitioner took over as its Managing Director.”

The court noted: “The assets offered by the petitioner by way of affidavit is not adequate to meet the liability. At the same time, this Court also take note of the fact that the petitioner was arrested on 13.08.2024 a year ago and till date, the depositors are not in a position to get even a fraction of the money deposited.”

The order further recorded: “In the said circumstances, long incarceration of this petitioner is not going to yield any result, except diminution of assets value available for liquidation. The statement furnished by the intervenors indicates that as on date about Rs.300 crores to be paid for the depositors whose deposit has already matured. The value of the assets so far confiscated is only about Rs.34 crores. To realise the money after selling it in auction may take few more years.”

Taking into account the petitioner’s prolonged detention and his undertaking to liquidate assets, the court considered interim bail subject to stringent conditions as appropriate. The court observed that such conditional release would provide an opportunity for depositors’ interests to be addressed while ensuring judicial oversight.

It was ordered that “The petitioner to surrender his passport before the Special Judge for TNPID Act Cases, Chennai.” The court mandated that the petitioner mobilize Rs. 100 crores independently and deposit the same before the TNPID Court to the credit of C.C. No. 1 of 2025 on or before 30 October 2025.

“Tthe petitioner shall report before the Special Court for TNPID Act Cases, Chennai every Monday at 10.30 a.m till 30.10.2025. The petitioner shall voluntarily surrender before the Special Judge for TNPID Act Cases, Chennai on 31.10.2025. On such surrender, the petitioner to be committed to the prison.”

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“Any sale of those properties shall be only on the approval of the Special Court for TNPID Act Cases, Chennai and with consent of the prosecution.” The petitioner was also restrained from creating any transfer or encumbrance on the properties without prior permission from the Special Court.

The order provided that breach of conditions would empower the trial court to pass orders treating the bail as granted by itself, in line with the Supreme Court judgement in P.K. Shaji vs. State of Kerala [(2005) 13 SCC 283]. “If the accused thereafter absconds, a fresh FIR can be registered under Section 269 of B.N.S.” The court scheduled the matter for further consideration on 31 October 2025, to evaluate the bona fides of the petitioner’s undertakings and feasibility of asset liquidation.

Advocates Representing the Parties

For the Petitioner: Mr. S. T. S. Murthy, Senior Counsel for Mr. R. Hari
For the Respondents: Mr. E. Raj Tilak, Additional Public Prosecutor
For the Intervenors: Mr. A. Ashwin Kumar, Mr. Arun C. Mohan, Mr. R. Thirumoorthy, Mr. K. Sarathkumar, Mr. K. Rahul, Mr. T. Harish Chowdhary, and Mr. R. Shriram Adhethyen

Case Title: T. Devanathan Yadav v. State represented by The Deputy Superintendent of Police, Economic Offence Wing, Guindy, Chennai
Case Number: Crl.O.P. No. 18872 of 2025
Bench: Justice Dr. G. Jayachandran