DesignTech Scam: Andhra Pradesh HC denies Anticipatory Bail to Chartered Accountant for alleged Scam worth Rs. 371 Crores

A petition was filed, under Section 438, Cr.P.C. for the grant of anticipatory bail by the petitioner a chartered accountant in connection with the 371 Crore DesignTech scam which was denied by the Andhra Pradesh High Court. The court reasoned that granting anticipatory bail for economic offences at this stage of the investigation would impede an efficient investigation. The high court declined to grant anticipatory bail to one of the defendants who is accused of forging invoices in order to defraud people of money because it described the alleged scandal at the Andhra Pradesh State Skill Development Corporation (APSSDC), in which Rs 371 crore was allegedly involved, as a socio-economic crime.

A work order was assigned to M/s. Sharat and Associates, Forensic Audit Firm to conduct inquiry and submit report. The report pointed out the flaws in policies, flaws in systems and utilization of funds, and analysis of various spending practices and to find out irregularities, misstatements, governance procedures, internal policies evaluation for the financial years 2014-15 to 2018-19. Based on this complaint and report, CID registered the above crime on 09.12.2021 against which the Bail Application has been filed by the Petitioner in the Andhra Pradesh High Court.

The prosecution claims that out of five, the petitioner bought three shell firms. The wife of the petitioner is one of the Directors in two of the three companies that the petitioner purchased, according to information obtained by the prosecution. The prosecution was able to gather some information from the petitioner’s examinations on December 22, 2021, and April 18, 2022, and the petitioner was required to come before the investigating officer for more questioning and to comply with the inquiry. However, during a key time, the petitioner chose not to appear before the investigating officer. The petitioner argued that because he works for himself, the allegations made against him under the Prevention of Corruption Act would not be valid.

The Hon’ble High Court relied on the judgment in the case of P.Chidambaram vs. Directorate of Enforcement, the Hon’ble Apex Court made it clear that granting anticipatory bail at the state of the investigation will frustrate the investigating agency in interrogating the accused and in collecting useful information and also the materials which might have been concealed. Success in such interrogation would elude if the accused knows that he is protected by the order of the Court and the grant of anticipatory bail in economic offences would definitely hamper the effective investigation.

Dismissing the petition, Justice Subba Reddy Satti observed that during the examination of the petitioner, on 22.12.2021 and 18.04.2022, the prosecution could not get some information as the petitioner avoided appearing before investigating officer during a crucial period of investigation.

Given the facts and circumstances, the petitioner was not entitled to prearrest bail because the offence was a socio-economic violation and the amount involved was about Rs. 371,00,00,000. Therefore, this criminal petition was dismissed and the petitioner was not granted Anticipatory Bail u/s 438 of Cr.P.C.