Court grants bail to former MD Joy Thomas in PMC bank fraud case
A court granted bail to Joy Thomas, ex-MD of PMC Bank, in a ₹4,635 crore fraud case, citing co-accused parity and long pre-trial incarceration.
MUMBAI: A special court designated under the Prevention of Money Laundering Act (PMLA) on Monday granted bail to the former managing director of Punjab and Maharashtra co-operative bank (PMC bank), Joy Thomas Kanjigrathingal, in the ₹4,635 crore bank fraud case.
Relying on the ground of parity that co-accused Waryam Singh, the ex-chairman of the bank and a co-accused who was granted bail in the same case, and taking into consideration the ground of long incarceration without the possibility of trial, the special sessions judge AC Daga granted bail to Thomas.
The case against Thomas was initially registered at Bhandup police station and subsequently transferred to the Economic Offences Wing. As per the FIR, the multi-state cooperative bank allegedly sanctioned fraudulent loans to Housing Development and Infrastructure Limited, causing a financial fraud worth ₹4,365 crore. As per the prosecution, Joy gave sanction to the loan despite being aware of the procedural irregularities of the matter. Despite being responsible for pointing out the alleged irregularities, the FIR stated that Joy never pointed out the irregularities to the regulators.
The special public prosecutor Ajay Misar submitted that HDIL, the largest borrower of PMC bank has kept dues amounting to ₹4,335.46 crore from 2008 to 2019. “The applicant, managing directors and other functionaries including the board of directors, executives of the PMC bank intentionally reported false records of accounts to the Reserve Bank of India to suppress the material position of loan accounts of HDIL group of companies”, argued the prosecution.
He submitted that Thomas along with the other co-accused officials of the bank exploited the internal resources of the bank, allowing the HDIL group to fraudulently avail of those loans by overlooking the regulatory norms. Misar pointed out the physical and mental trauma caused to the depositors of the bank by the accused, adding that the nature and gravity show the huge loss to public money with many depositors still undergoing protest because of their loss.
The defence relied on the grounds of parity (co-accused in similar situations should be treated equally) while arguing for the bail, as they submitted that Waryam Singh (ex-chairman of PMC bank), Rakesh Wadhwan and Sarang Wadhawan (the father-son duo who are promoters of HDIL), were also granted bail by the Bombay high court. Advocate Haznain Kazi appearing for Thomas said that he was falsely implicated in the case, submitting that he was not the beneficiary of any of the transactions. Further, Kazi argued that the charges are yet to be framed in the case, adding that the case is based on documentary evidence which is in the custody of the Investigating agency. He also pointed out that the depositor’s money had been already secured as the operations of PMC bank were taken over by Unity Small Finance Bank.
Considering the grounds of parity, the court observed that the role of Waryam Singh (granted bail by the Bombay high court), who was the chairman of PMC Bank is slightly more than that of Thomas. Further, the court also made an observation on the long incarceration period, stating, “There is no possibility that in the near future, the trial will conclude and therefore, an applicant cannot be indefinitely incarcerated as and by-way of pre-trial punishment,”
While allowing Thomas’s bail plea, special sessions judge AC Daga held, “This is a fit case on the grounds of parity as well as on the grounds of long incarceration for releasing the applicant/ accused on bail.”
The PMC banking fraud in which lakhs of depositors lost their money, came to the limelight in 2019, after the Reserve Bank of India (RBI) conducted a special audit revealing that the cooperative bank extended fraudulent loans over ₹7,457.49 crore mostly to a real estate company called Housing Development & Infrastructure Ltd (HDIL) by manipulating the core banking system.
It further created around 21 fictitious accounts to cover up their loan disbursements. Thomas, the then MD of the bank, was named as one of the accused in the chargesheet filed by the EOW in 2019 along with the other accused. Thomas, along with Singh, who had close ties with HDIL promoter Wadhawan, were accused of fraudulently sanctioning loans without adhering to banking security and procedures.