‘Multi-crore money laundering case’ HC grants bail to ex-JK State Cooperative Bank Chairman

Srinagar, Feb 14: The High Court of J&K and Ladakh Wednesday granted bail to former J&K State Cooperative Bank chairman Muhammad Shafi Dar who was arrested by the Enforcement Directorate (ED) on November 30 last year in an alleged multi-crore money laundering case.

“The petitioner was not having any veto authority as chairman of the Board of Management of the bank as a result whereof the decision to sanction the loan was carried out solely by the petitioner by force of his discretion and dictate overruling and making the rest of the Board of Management as non-participant in the decision making and the decision itself,” a bench of Justice Rahul Bharti said while granting bail to Dar.

The court noted that the petitioner had ceased to be the chairman of J&K State Cooperative Bank since 2020 and as such that denudes him from any position to influence any aspect relatable to the case.

“In addition, the sickness of the petitioner is also a ground persuading this court to grant him bail,” it said.

About the rejection of the bail to Dar in terms of the order dated December 15, 2023, by the trial court, the bench said: “The Court of Special Judge Anti-Corruption (CBI Cases) Srinagar brushed aside the aspect of the matter concerning reported sickness of the petitioner Dar saying that the heart-related medical condition of the petitioner can be investigated even when the petitioner is suffering arrest custody.”

The court said that there was no denying the fact that the petitioner Dar was a 63-year-old person and at this stage of life any health deteriorating condition if neglected that too in a state of custody could cause complications.

It observed that there was a medical reference on record to prima facie establish that the petitioner was having heart-related complication which in exercise of his fundamental right to personal liberty was well within his right to get it treated to the best of his resources and discretion.

Granting bail to Dar, the court directed him to furnish a personal bond to the tune of Rs 10 lakh with two sureties of like amount.

Dar would have to obey all the conditions regarding bail including the one that he would not leave the territorial jurisdiction of Special Judge Anti-Corruption (CBI Cases) Srinagar without due permission from the said court.

An alleged registered cooperative society in the name of ‘River Jhelum Cooperative House Building Society’ had come to approach the J&K State Cooperative Bank Srinagar with an application to avail a loan of Rs 300 crore for the purported purpose of development of a housing colony upon 300 kanal of land at Shivpora, Srinagar, meant to be a satellite township.

The court said that the loan case of the River Jhelum Cooperative House Building Society was reported to have been sanctioned by the governing body council of the bank in September 2018 wherefrom the Board of Directors had accorded its approval for the grant of loan in favour of the society by a decision in March 2019.

The court said that as per the statement of facts in the present petition the process of availing of a loan by the River Jhelum Cooperative House Building Society from the J&K State Cooperative Bank, Srinagar had originated from the Registrar Cooperative Societies J&K’s end before Dar becoming the Chairman of the Board of Directors of the Bank and further that the approval for grant of loan of rupees 250 crore was not accorded by Dar in his discretion and authority but by the Board of Directors of the J&K State Cooperative Bank, Srinagar’s approval of which Dar was one of the directors.

The court observed that the loan amount of Rs 233 crore allegedly came to be loaned to the River Jhelum Cooperative House Building Society on April 25, 2019.

The ED came into the picture in the case when on March 31, 2021, it registered ECIR/SRZO/04/2021 in the course of an investigation whereof led to the arrest of Dar on November 30, 2023, purportedly reckoning money laundering angle in the case.

As per the ED’s narrative, the petitioner facilitated documentation concerning the grant of a loan to the tune of Rs 250 crore to the fictitious society River Jhelum Cooperative House Building Society for which purpose got a back-dated resolution in the minutes of the General Body meeting of September 8, 2018, of the J&K State Cooperative Bank, Srinagar, which allegedly came to be approved by the bank’s Board of Management in its meeting on March 31, 2019.

The ED contends that the entire exercise involving River Jhelum Cooperative House Building Society coming forward with the loan proposal to the J&K State Cooperative Bank, Srinagar, with the indulgence of the Registrar of Cooperative Societies as being the statutory authority under J&K Cooperative Societies Act, 1989, was a sham exercise to siphon off bank money to become and turn into proceeds of crime in the hands of Dar and co-actors.