THE HONOURABLE DR JUSTICE Y. LAKSHMANA RAO CRIMINAL PETITION Nos:7474, 7475, 7476 & 7477 of 2025 ORDER: The Crl.P.Nos.7474, 7475, 7476 & 7477 of 2025 are heard and disposed of by way of this common order as the Petitioners in these petitions are arrayed as accused Nos.4, 7, 6 and 5 respectively in one FIR i.e., Cr.No.177/2025 of Pithapuram Rural Police Station. 2. Provenance of the case of the prosecution is that the accused persons, with common criminal intention, have committed offences of misappropriation of public funds, forgery, cheating, and violation of service norms prior to 24.09.2024 at or about 17:00 hours at B.Kothuru Village, Pithapuram Mandal. The matter was brought to official notice and reported on the same date and at the same time. It is the allegation of the complainant, V.Sri Ramani, Project Director, District Rural Development Agency (DRDA), Kakinada, that Accused No. 1, D.Padmakumari, Village Organisation Assistant, B.Kothuru Village, in conspiracy with Accused No.2, Branch Manager, Bank of Baroda, Pithapuram, orchestrated a fraudulent operation by creating 168 duplicate Self Help Groups (SHGs) between 2018 and 2024, 141 in Bank of Baroda and 27 in DCCB, Pithapuram, by preparing forged documentation using credentials of individuals residing outside the mandated territorial jurisdiction, thereby contravening SHG operational guidelines. 3. It is further alleged that on the strength of such fabricated records, the accused persons secured loan disbursements amounting to Rs.10.21 Crores 2 in the name of the fictitious SHGs, thereby intentionally caused unlawful gain to themselves and consequent financial loss to the banking institutions. Moreover, Accused No.3, MR Meenakshi, serving as Community Coordinator, P.Thimmapuram Cluster, is alleged to have enrolled herself as a member of Kanakadurga SHG, contrary to the Human Resource norms and service conditions prescribed by the Society for Elimination of Rural Poverty (SERP), thereby constituting a breach of ethical service conduct and misuse of official position. 3. Mr. T.V.S.Prabhakar Rao, learned Counsel for Petitioners submits that the Petitioners have been arrayed as accused Nos.4, 5, 6 and 7 in Crime No.177 of 2024 registered by Pithapuram Rural Police Station, based solely on the statement of a co-accused, namely the Village Organization Assistant (A1), without any independent corroborative material. It is a settled proposition of law that the unverified confession of a co-accused cannot be the sole basis to prosecute another individual, particularly in the absence of substantive incriminating evidence. All the accused had served as managers at the Bank of Baroda, Pithapuram branch during different tenures, each holding the post at varying periods relevant to the investigation and have held responsible positions at multiple branches across different states. During their tenure, they discharged their duties professionally, maintaining an unblemished record and earning commendations from their superiors. Their conduct has not attracted any adverse notice at any point during their service, thereby indicating their integrity and commitment. 3 4. The Petitioners were not the sole authority responsible for sanctioning loans under the SHG scheme. As per bank procedure, loans above Rs.5 Lakhs are sanctioned by the Regional Manager, and every loan undergoes layered scrutiny involving Credit Managers, Field Officers, and additional verification from the DRDA. The sanctioning process is governed by institutional checks that prevent any single officer from exercising unfettered discretion. 5. He further argues that the SHG loans in question were primarily takeovers from other banks such as District Cooperative Central Bank and Godavari Grameena Bank. Group loan applications were supported by resolutions, Aadhaar documentation, and signatures of 10 members along with the group animator. Once sanctioned, amounts were credited into group accounts jointly operated by the group President and Secretary. The Petitioners have no operational access to such accounts and could not have personally diverted or misused funds. An internal departmental enquiry was conducted by senior officials of Bank of Baroda in respect of the alleged irregularities. Upon scrutiny of transactions and roles of concerned staff, the Petitioners were found to have acted within prescribed norms. No mala fide intent or financial irregularity was attributed to them. A report on this effect was duly submitted to both the police authorities and the DRDA. 6. The principal accused (A1), responsible for coordinating between SHGs and the bank, was found to have fabricated fake groups and exploited procedural gaps for personal gain. In a bid to deflect responsibility, Accused 4 No.1 named the Petitioners in her confession, without offering any documentary proof. It was also discovered during investigation that Accused No.1 had committed similar fraudulent acts at Indian Bank in 2017, yet no disciplinary action was taken by DRDA, which continued her appointment. 7. He further argued that other individuals, including Accused No.3, are found to have colluded with Accused No.1 to get loans sanctioned for family members, misusing their official positions. Accused No.3 has been granted anticipatory bail by this Court in Crl.P.No.6002/2025, despite her deeper involvement, and the Petitioners, whose role is merely peripheral, deserves equal consideration. Of the 15 SHG loans under scrutiny, 9 have been closed and the remaining accounts reflect recoveries exceeding 50%. These figures rebut the allegation of systemic fraud and affirm that the bank’s practices, including those supervised by the Petitioners, have largely resulted in functioning and recoverable assets. 8. The investigation has progressed substantially, and all material witnesses have been examined. No overt acts have been attributed to the Petitioners and there is no evidence of personal enrichment, criminal conspiracy, or misappropriation of funds. Petitioners’ implications appear speculative and founded on presumptions unsupported by material facts. 9. The Petitioners are of a respected professional and the sole breadwinners for their dependent family comprising aged parents, spouse, and minor children. Any coercive action at this stage would result in grave and irreparable hardship for innocent dependents. Denial of protection under law 5 would amount to miscarriage of justice considering the facts available. The Petitioners reiterate their willingness to cooperate fully with the investigation and abide by any condition imposed by this Hon’ble Court. Their continued employment ensures their availability and participation in the inquiry, and their antecedents reflect their credibility and responsible character. 10. Learned Counsel for the Petitioners further submits that in view of the above submissions, and the Petitioners’ innocence, procedural integrity, and lack of direct involvement, the benefit of protection from arrest pending investigation may be granted by an order of anticipatory bail. 11. Mr. Neelotpal Ganji, learned Assistant Public Prosecutor vehemently argued that Crime No.177 of 2024 was registered pursuant to a complaint from a senior functionary of the District Rural Development Agency (DRDA), Kakinada, disclosing prima facie material indicating large-scale financial fraud in relation to the constitution and operation of Self-Help Groups (SHGs). Upon investigation, it emerged that 168 SHGs, 141 associated with Bank of Baroda and 27 with DCCB, Pithapuram were formed with falsified Aadhaar credentials, fabricated resolutions, and without territorial eligibility, thereby enabling unlawful sanction of loans aggregating Rs.10.21 Crores. These groups were non-existent on the ground and functioned as paper entities. 12. He further argued that the Village Organisation Assistant/Accused No.1 is alleged to have actively facilitated the fabrication of documentation and manipulated institutional procedures for sanctioning loan proposals. However, the fraudulent scheme was enabled and sustained through the gross 6 negligence or tacit collusion of branch-level bank officials. Accused Nos.4 to 7, who held managerial positions in Bank of Baroda at different points, are alleged to have sanctioned loans without due verification, failed to detect anomalies in documentation, and permitted procedural violations, thereby attracting culpability under Sections 406, 408, 409, 420, and 471 read with Section 34 of ‘the I.P.C.’ 13. It is further contended that departmental inquiries, if any, are administrative in nature and cannot override the evidentiary value of statements recorded under ‘the Cr.P.C.,’ digital records seized during investigation, and corroborative material pointing to willful default or complicity. Given the gravity of offences, quantum of defalcation, and the erosion of public trust in institutional lending systems, it is submitted that custodial interrogation is vital for unearthing the financial trail, identifying additional co- accused, and securing further material evidence. 14. Learned Assistant Public Prosecutor further argued that considering the above, the prayer for anticipatory bail may obstruct the investigatory process, impair retrieval of diverted funds, and defeat the ends of justice and it is eventually urged that such pleas be declined, and liberty of the investigating agency be preserved. 15. Thoughtful consideration is bestowed on the arguments advanced by the learned Counsel for both sides. I have perused the entire record. 16. Now the point for consideration is: “Whether the petitioners are entitled for grant of pre-arrest bail?” 7 17. In this context, it is apposite to refer the judgment of the Hon’ble Apex Court in P. Krishna Mohan Reddy v. State of Andhra Pradesh1, at Para Nos.27 and 53 (iv) it is held as under: “27. To some extent, the petitioners could be said to have made out a prima facie case of political bias or mala fides but that by itself is not sufficient to grant anticipatory bail overlooking the other prima facie materials on record. Political vendetta or bias if any is one of the relevant considerations while considering the plea of anticipatory bail. The courts should keep one thing in mind, more particularly, while considering the plea of anticipatory bail that when two groups of rival political parties are at war which may ultimately lead to litigations, more particularly, criminal prosecutions there is bound to be some element of political bias or vendetta involved in the same. However, political vendetta by itself is not sufficient for the grant of anticipatory bail. The courts should not just look into the aspect of political vendetta and ignore the other materials on record constituting a prima facie case as alleged by the State. It is only when the court is convinced more than prima facie that the allegations are frivolous and baseless, that the court may bring into the element of political vendetta into consideration for the purpose of considering the plea of anticipatory bail. The frivolity in the entire case that the court may look into should be attributed to political bias or vendetta. 53. From the above exposition of law, the following emerges: (iv) Where such police statement of an accused is confessional statement, the rigour of Section(s) 25 and 26 respectively will apply with all its vigour. A confessional statement of an accused will only be admissible if it is not hit by Section(s) 24 or 25 respectively and is in tune with the provisions of Section(s) 26, 28 and 29 of the Evidence Act respectively. In other words, a police statement of an accused which is in the form of a confession is per se inadmissible and no reliance whatsoever can be placed on such statements either at the stage of bail or during trial. Since such confessional statements are rendered inadmissible by virtue of Section 25 of the Evidence Act, the provision of Section 30 would be of no avail, and no reliance can be placed on such confessional statement of an accused to implicate another co-accused.” 18. The Hon’ble Apex Court in Sushila Aggarwal v. State (NCT of Delhi)2, at Para No.48 it is held as under: “48. The Law Commission of India, in its 41st Report of 1969, noted that the necessity for granting anticipatory bail arises mainly due to influential persons attempting to implicate their rivals in false cases, or disgracing them by getting them detained in jail. The Report further noted that apart from false cases, where there are reasonable grounds for holding that a person accused of an offence is not likely to abscond, or otherwise misuse his liberty while on bail, there seems to be no justification to require him first to submit to custody, remain in prison for some days and then apply for bail. The 12025 SCC Online SC 1157 2 (2020) 5 SCC 1 8 Report recommended that a provision be included for the direction to grant bail in such cases, and that this power vests in the High Courts and Courts of Session only....” 19. The Hon’ble Apex Court in Bhadresh Bipinbhai Sheth v. State of Gujarat3, at Para Nos.25, 25.1, 25.2, 25.3, 25.4, 25.5, 25.9, 25.10 it is held as under: 25. The principles which can be culled out, for the purposes of the instant case, can be stated as under: 25.1. The complaint filed against the accused needs to be thoroughly examined, including the aspect whether the complainant has filed a false or frivolous complaint on earlier occasion. The court should also examine the fact whether there is any family dispute between the accused and the complainant, and the complainant must be clearly told that if the complaint is found to be false or frivolous, then strict action will be taken against him in accordance with law. If the connivance between the complainant and the investigating officer is established, then action be taken against the investigating officer in accordance with law. 25.2. The gravity of charge and the exact role of the accused must be properly comprehended. Before arrest, the arresting officer must record the valid reasons which have led to the arrest of the accused in the case diary. In exceptional cases, the reasons could be recorded immediately after the arrest, so that while dealing with the bail application, the remarks and observations of the arresting officer can also be properly evaluated by the court. 25.3. It is imperative for the courts to carefully and with meticulous precision evaluate the facts of the case. The discretion to grant bail must be exercised on the basis of the available material and the facts of the particular case. In cases where the court is of the considered view that the accused has joined the investigation and he is fully cooperating with the investigating agency and is not likely to abscond, in that event, custodial interrogation should be avoided. A great ignominy, humiliation and disgrace is attached to arrest. Arrest leads to many serious consequences not only for the accused but for the entire family and at times for the entire community. Most people do not make any distinction between arrest at a pre-conviction stage or post- conviction stage. 25.4. There is no justification for reading into Section 438 CrPC the limitations mentioned in Section 437 CrPC. The plenitude of Section 438 must be given its full play. There is no requirement that the accused must make out a “special case” for the exercise of the power to grant anticipatory bail. This virtually, reduces the salutary power conferred by Section 438 CrPC to a dead letter. A person seeking anticipatory bail is still a free man entitled to the presumption of innocence. He is willing to submit to restraints and conditions on his freedom, by the acceptance of conditions which the court may deem fit to impose, in consideration of the assurance that if arrested, he shall be enlarged on bail. 3 (2016) 1 SCC 152 9 25.5. The proper course of action on an application for anticipatory bail ought to be that after evaluating the averments and accusations available on the record if the court is inclined to grant anticipatory bail then an interim bail be granted and notice be issued to the Public Prosecutor. After hearing the Public Prosecutor, the court may either reject the anticipatory bail application or confirm the initial order of granting bail. The court would certainly be entitled to impose conditions for the grant of anticipatory bail. The Public Prosecutor or the complainant would be at liberty to move the same court for cancellation or modifying the conditions of anticipatory bail at any time if liberty granted by the court is misused. The anticipatory bail granted by the court should ordinarily be continued till the trial of the case. 25.9. No inflexible guidelines or straitjacket formula can be provided for grant or refusal of the anticipatory bail because all circumstances and situations of future cannot be clearly visualised for the grant or refusal of anticipatory bail. In consonance with legislative intention, the grant or refusal of anticipatory bail should necessarily depend on the facts and circumstances of each case. 25.10. We shall also reproduce para 112 of the judgment in Siddharam Satlingappa case [(2011) 1 SCC 694 : (2011) 1 SCC (Cri) 514] , wherein the Court delineated the following factors and parameters that need to be taken into consideration while dealing with anticipatory bail: (a) The nature and gravity of the accusation and the exact role of the accused must be properly comprehended before arrest is made; (b) The antecedents of the applicant including the fact as to whether the accused has previously undergone imprisonment on conviction by a court in respect of any cognizable offence; (c) The possibility of the applicant to flee from justice; (d) The possibility of the accused's likelihood to repeat similar or other offences; (e) Where the accusations have been made only with the object of injuring or humiliating the applicant by arresting him or her; (f) Impact of grant of anticipatory bail particularly in cases of large magnitude affecting a very large number of people; (g) The courts must evaluate the entire available material against the accused very carefully. The court must also clearly comprehend the exact role of the accused in the case. The cases in which the accused is implicated with the help of Sections 34 and 149 of the Penal Code, 1860 the court should consider with even greater care and caution, because over implication in the cases is a matter of common knowledge and concern; (h) While considering the prayer for grant of anticipatory bail, a balance has to be struck between two factors, namely, no prejudice should be caused to free, fair and full investigation, and there should be prevention of harassment, humiliation and unjustified detention of the accused; (i) The court should consider reasonable apprehension of tampering of the witness or apprehension of threat to the complainant; (j) Frivolity in prosecution should always be considered and it is only the element of genuineness that shall have to be considered in the matter of grant of bail and in the event of there being some doubt as to the genuineness of the prosecution, in the normal course of events, the accused is entitled to an order of bail.” 20. This Court on 26.06.2025 in Crl.P.No.6002 of 2025 granted pre-arrest bail to Accused No.3, who was facing similar allegations. As per the record 10 available in this case, it has to be pointed out that the Assistant General Manager and the Regional Head of Bank of Baroda on 24.09.2024 i.e., on the same date of registration of the FIR addressed a letter to the District Collector and Chairman DRDA, Kakinada, informed that there was no mala fide intention observed as far as the bank staff was concerned, even though there were a few procedural lapses observed while financing these groups. It is further informed that an internal investigation has ben carried out in this regard by the higher authorities of Bank of Baroda and issued explanatory letters to all the staff members worked during the aforesaid period (2018 to 2023) and the said matter was in the process of disciplinary proceedings of the bank and a suitable administrative action would be initiated on the erring staff members as per the bank’s stipulated guidelines. 21. It was further informed by the Assistant General Manager and Regional Head to the District Collector and Chairman, DRDA, Kakinada that the regional office, Rajamahendravaram has filed FIR with CBCID pertaining to 36 SHG fraud accounts, and other remaining 101 accounts, and they were filing single FIR with CBCID before 30.09.2024. 22. Surprisingly, as seen from the record, the District Collector and Chairman DRDA, Kakinada pursuant to the letter addressed by the Assistant General Manager and Regional Head of Bank of Baroda neither communicated nor given due instructions either to the Superintendent of Police or the Inspector of Police Pithapuram Rural Police Station. Indeed, the Branch Manager, Bank of Baroda Pithapuram also addressed a letter on 11 09.10.2024 to the Inspector of Police, Pithapuram Rural that there was no lapses which can be attributed to the Branch Managers of Bank of Baroda Pithapuram. The present complaint was not maintainable against the bank or its officers. In this regard, it has to be pointed out that the inertia on the part of the District Collect and Chairman of the DRDA, Kakinada and the Inspector of Police, Pithapuram Rural Police Station leaves much to be desired. 23. Ironically, this letter was also ignored either by the Inspector of Police, Pithapuram Rural and the Sub Inspector of Police, Pithapuram Rural Police Station who received the letter dated 09.10.2024. The Inspector of Police, Pithapuram Rural Police Station in a mechanical, casual and callus way shown the Petitioners as Accused Nos.4 to 7. Inaction on the part of the Collector and Chairman of DRDA, Kakinada pursuant to the letter addressed by the Assistant General Manager and Regional Head of Bank of Baroda, Kakinada dated 24.09.2024 cannot be lightly ignored, similarly, the Inspector of Police, Pithapuram Rural Police Station. The Superintendent of Police, Kakinada who is the superior officer of the district, who has to oversee the investigation shall also be found fault in not properly giving instructions to the investigating officer. 24. This Court, upon perusal of the material placed on record, found no specific allegation of personal gain or overt act attributable to the accused, nor any indication of intent to cause wrongful loss to the institution. The allegations were primarily found on the statement of a co-accused, which lacked independent corroboration or evidentiary support. The prosecution 12 failed to demonstrate any pressing need for custodial interrogation, and there was no material to suggest non-cooperation or likelihood of tampering with evidence. The accused remained gainfully employed and available for investigation. 25. This Court observed that the sanction of loans had occurred through layered institutional mechanisms, and no prima facie deviation from procedure or breach of duty was established against the accused individually. 26. Considering the absence of criminal antecedents, the ongoing recovery from several accounts, and the advanced stage of investigation, the Court is of the considered view that the apprehension of arrest was genuine and that custodial detention was unwarranted. Accordingly, in view of the settled principle that bail is the rule and jail the exception, and to maintain a balance in between the two factors namely no prejudice should be caused to free, fair and full investigation and prevention of harassment, humiliation and unjustified detention of the petitioners, this Court inclines to grant pre-arrest bail to the petitioners with the following stringent conditions. In view of the gravity and nature of the allegations levelled against the petitioners/accused Nos.4 to 7, and their alleged exact role played in this case, this Court deems it fit to grant pre-arrest bail to the petitioners/accused Nos.4 to 7. 27. In the result, the Criminal Petition is allowed with the following conditions: i. In the event of their arrest, the petitioners/Accused Nos.4 to 7 shall be enlarged on bail subject to executing a bond for a 13 sum of Rs.25,000/- (Rupees Twenty Five Thousand only), with two sureties for the like sum each to the satisfaction of the arresting police officials. ii. The petitioners/Accused Nos.4 to 7 shall make themselves available for investigation as and when required and fully cooperate with the Investigating Officer. iii. The petitioners/Accused Nos.4 to 7 shall not cause any threat, inducement or promise to the prosecution witnesses. iv. The petitioners/Accused Nos.4 to 7 shall not leave the limits of the country without the express permission from the Station House Officer concerned. v. The petitioners/Accused Nos.4 to 7 shall surrender their passports, if any, to the investigating officer. If they claim that they do not have a passport, they shall submit an affidavit to that effect to the Investigating Officer. _________________________ DR. Y. LAKSHMANA RAO, J Dated: 30.07.2025 VTS