Bombay High Court
Shukkal S/O Dharmaji Makde vs The State Of Maharashtra, Thr. Pso Ps … on 17 February, 2026
2026:BHC-NAG:2762-DB
Judgment
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IN THE HIGH COURT OF JUDICATURE AT BOMBAY,
NAGPUR BENCH, NAGPUR
CRIMINAL APPLICATION APL NO.673/2021
Shukul s/o Dharmaji Makde,
Aged about: 63 years, occupation: retired,
r/o plot No.36, Near Modern School,
Bokhara, tahsil and district: Nagpur. ..... Applicant.
:: V E R S U S ::
1. State of Maharashtra,
Through Police Station Officer,
Khaperkheda, tahsil: Saoner,
district Nagpur.
2. Vivek Kamlakar Huddar,
(Govt.auditor), aged 52 years, occupation
Service, r/o plot No.202,
Ramnagar, Nagpur. ..... Non-applicants.
==============================
Shri S.G.Karmarkar, Counsel for the Applicant.
Mrs.M.A.Barabde, APP for Non-applicant No.1/State.
==============================
CORAM : URMILA JOSHI-PHALKE, J.
CLOSED ON : 09/02/2026
PRONOUNCED ON : 17/02/2026
JUDGMENT
1. Heard learned counsel for the applicant and learned
APP for the State. Admit. Heard finally by consent.
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2. By this application, the applicant is seeking quashing
of FIR in connection with Crime No.301/2020 registered for
offences under Sections 403, 406, 409, 467, 468, 471, 477-A
of the IPC and 3 and 4 of The Maharashtra Protection of
Interest of Depositors (in Financial Establishments) Act, 1999
(the MPID Act) and consequent proceeding arising out of the
same bearing Special MPID Case No.26/2022 pending before
learned District Judge-15 and Special Court under MPID Act,
Nagpur.
3. Facts of the case in brief are as under:
The crime is registered on the basis of an Audit
Report of the year 2001-2018. The applicant was the Director
of “Shri Santaji Nagari Sahakari Pat Sanstha Limited” (the
said Society) which is a Registered Cooperative Society. The
said Society is running Credit Cooperative Business. The
applicant was one of founder Members of the said Society. As
per allegations in the FIR, during the period of 2001-2018,
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during the Audit, it revealed that various irregularities and
illegalities are committed by the Directors and Managers as
well as Accountant. As per allegations, loans were disbursed
without following due process and without obtaining approval
from the entire body of the Directors. The “deposits” accepted
from various investors are not returned back to them and the
said “deposits” were transferred to other bank accounts. No
action was taken for recovery of the amounts also and thereby
loss is caused to the said Society to the tune of
Rs.1,31,29,059/-.
On the basis of the said report, the police have
registered the crime against the applicant and other co-
accused.
4. Learned counsel for the applicant submitted that as
far as the applicant is concerned, there is no specific
allegation that he was looking after day-to-day affairs of the
said Society and he is responsible to disburse the loan
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amounts and transfer amounts either in his account or
accounts of his relatives. The general allegation is levelled
against all the Directors. In fact the applicant is serving in
Western Coalfields Limited. He is not responsible for the day-
to-day affairs of the said Society. Though Audit Report shows
that there are various irregularities, by no stretch of
imagination, it can be said that offence is committed under
Section 409 or 406 of the IPC. Therefore, no offence is made
out against the applicant. In view of that, the application
deserves to be allowed.
5. Per contra, learned APP for the State strongly
opposed the said contentions and invited my attention
towards various activities conducted in the said Society. He
submitted that public money involved in the said transactions
was misused by the Board of Directors. Admittedly, the
amounts were entrusted by various investors with the said
Society and the said amounts were not returned to the
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investors, which is sufficient to disclose that there is criminal
breach of trust.
He invited my attention towards the Audit Report and
submitted that in the Audit Report various irregularities are
pointed out Eg. (i) entries were not taken as to “deposits,” (ii)
daily “deposits” and loans were not disbursed by following
due process, (iii) and no steps are taken to recover the said
amounts. The various statements of witnesses disclose that
they have deposited amounts which were not received by
them. Thus, the entire Audit Report discloses that the entire
Body of the Directors is responsible for the loss of the public
money, which is sufficient to attract offences under Sections
He submitted that, at this stage, there is a sufficient
material to proceed against the applicant and, therefore, the
application deserves to be rejected.
…..5/-
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6. On hearing both the sides and perusing the entire
investigation papers, it reveals that involvement of the
applicant is in economic offence.
7. Before adverting to the rival contentions, with
reference to the application under Section 482 of the CrPC, it
would be appropriate to refer legal principles in respect of
scope of exercise of powers under Section 482 of the CrPC.
8. In the case of Paramjeet Batra vs. State of
Uttarakhand and ors, reported in (2013)11 SCC 673, the
Hon’ble Apex Court held, as under:
“While exercising its jurisdiction under Section
482 of the Code the High Court has to be
cautious. This power is to be used sparingly and
only for the purpose of preventing abuse of the
process of any court or otherwise to secure ends
of justice. Whether a complaint discloses a
criminal offence or not depends upon the
nature of facts alleged therein. Whether
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essential ingredients of criminal offence are
present or not has to be judged by the High
Court. A complaint disclosing civil transactions
may also have a criminal texture. But the High
Court must see whether a dispute which is
essentially of a civil nature is given a cloak of
criminal offence. In such a situation, if a civil
remedy is available and is, in fact, adopted as
has happened in this case, the High Court
should not hesitate to quash criminal
proceedings to prevent abuse of process of
court.”
9. In the decision in the case of State of Haryana and
ors vs. Bhajan Lal and ors, reported in 1992 Suppl.(1) SCC
335, after considering various decision and statutory
provisions, the Hon’ble Apex Court has laid down following
principles:
“(i) where the allegations made in the First
Information Report or the complaint, even if
they are taken at their face value and accepted
in their entirety do not prima facie constitute
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any offence or make out a case against the
accused;
(b) where the allegations in the First
Information Report and other materials, if any,
accompanying the F.I.R. do not disclose a
cognizable offence, justifying an investigation
by police officers under Section 156(1) of the
Code except under an order of a Magistrate
within the purview of Section 155(2) of the
Code;
(c) where the uncontroverted allegations made
in the FIR or ‘complaint and the evidence
collected in support of the same do not disclose
the commission of any offence and make out a
case against the accused;
(d) where the allegations in the FIR do not
constitute a cognizable offence but constitute
only a non-cognizable offence, no investigation
is permitted by a police officer without an
order of a Magistrate as contemplated under
Section 155(2) of the Code;
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(e) where the allegations made in the FIR or
complaint are so absurd and inherently
improbable on the basis of which no prudent
person can ever reach a just conclusion that
there is sufficient ground for proceeding
against the accused;
(f) where there is an express legal bar
engrafted in any of the provisions of the Code
or the concerned Act (under which a criminal
proceeding is instituted) to the institution and
continuance of the proceedings and/or where
there is a specific provision in the Code or the
concerned Act, providing efficacious redress for
the grievance of the aggrieved party; and
(g) where a criminal proceeding is manifestly
attended with mala fide and/or where the
proceeding is maliciously instituted with an
ulterior motive for wreaking vengeance on the
accused and with a view to spite him due to
private and personal grudge”.
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10. In the light of the above principles, if facts of the
present case are taken into consideration, it shows that the
applicant was the Director of the said Society, which is a
registered cooperative institute. It is alleged that during the
Audit Report of the year 2001-2018, the Directors and the
Managers, in connivance with each other, have committed
irregularities and illegalities. As per the allegations, the
transactions regarding the loan repayment, were not recorded
properly. The entries regarding the “deposits”, accepted
through agents against daily “deposits”, are not maintained. It
further revealed that the “deposits” deposited by the various
investors, even after maturity period, were not returned to the
investors and the same amounts were misappropriated. It
further revealed during the Audit Report that various
illegalities are committed by transferring amounts in accounts
of investors and, thereafter, the said amounts were
misappropriated. Thus, during the Audit, it revealed that
total amount of misappropriation is Rs.1,31,29,059/-.
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During the investigation, the investigating officer has recorded
various statements of witnesses. The statement of Auditor
i.e. informant shows that he has specifically stated manner in
which the misappropriation is committed by the Body of
Directors, Managers, and Accountant.
The statement of Sangpal Telang also corroborates the
same and it specifically states that as the Directors have not
kept proper control on the transactions, the Manager, Cashier,
and various Directors have misappropriated the amounts and
caused loss to the said Society.
The statements of various investors are also recorded,
which also show that though they have invested the amounts
in Fixed Deposits, on maturity period, when they have
demanded the amounts, the amounts were not received by
them and they have lost their amounts. Their statements
specifically show that the Board of Directors and the
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employees of the said Society have misappropriated the said
amounts.
11. Thus, involvement of the applicant in the alleged
incident appears to be there.
12. At this stage, a mini trial is not to be conducted.
13. What is required to be seen is that, whether there is
a sufficient material to force the applicant to face trial.
14. The Audit Report and various statements of
witnesses including statement of Auditor disclose involvement
of all the Directors.
15. Learned counsel for the applicant submitted that
provisions of Sections 3 and 4 of the MPID Act are not
applicable as allegations levelled against the applicant
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nowhere show that the “deposits” with the said Society are
misappropriated.
16. Clause(c) of Section 2 of the MPID Act defines
‘deposit’ as under :
“(c) “Deposit” means the deposit of money either
in one lump sum or by installments made with
the Financial Establishment for a fixed period
for interest or for return in any kind or for any
service and includes and shall be deemed
always to have included any receipt of money or
acceptance of any valuable commodity by any
Financial Establishment to be returned after a
specified period or otherwise, either in cash or
in kind or in the form of specified service with
or without any benefit in the form of interest,
bonus, profit, or in any other form, but does not
include–
(i) amount raised by way of share capital or by
any way of debenture, bond or any other
instrument covered under the guidelines given,…..13/-
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and regulations made, by the SEBI, established
under the Securities and Exchange Board of
India Act, 1992 (15 of 1992) ;
(ii) amounts contributed as capital by partners
of a film;
(iii) amounts received from a Scheduled bank or
Shraddha Talekar PS Co-operative Bank or any
other banking company as defined in clause (c)
of Section 5 of the Banking Regulation Act,
1949 (10 of 1949);
(iv) any amount received from–
(a) the Industrial Development Bank of
India;
(b) a State Financial Institution;
(c) any financial institution specified in or
under section 6-A of Industrial
Development Bank of India Act, 1964 (18
of 1964) ; or
(d) any other institution that may be
specified by the Government in this behalf;
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(v) amounts received in the ordinary course of
business by way of –
(a) security deposit;
(b) dealership deposit; and
(c) earnest money;
(vi) any amount received from an individual or
a firm or an association or individuals not being
a body corporate, registered under any
enactment relating to money lending which is
for the time being in force in the State ; and
(vii) any amount received by way of
subscriptions in receipt of a Chit.
Explanation I — “Chit” has the meaning as
assigned to in clause (b) of Section 2 of the Chit
Funds Act, 1982 (40 of 1982);
Explanation II .– “Any credit given by a seller to
a buyer on the sale of any property (whether
movable or immovable) shall not be deemed to
be a deposit for the purposes of this clause.”
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Whereas clause (d) of Section 2 defines “Financial
Establishment” as:
“(d) Financial Establishment” means any person
defined under clause (c) of Section 5 of the
Banking Regulation Act, 1949 (10 of 1949).”
accepting deposit under any scheme or
arrangement or in any other manner but does
not include a corporation or a co-operative
society owned or controlled by any State
Government or the Central Government or a
banking company defined under clause (c) of
Section 5 of the Banking Regulation Act, 1949
(10 of 1949).”
17. Thus, definitions of ‘deposit’ and ‘financial
establishment’ are rather expansive. The inclusive definition of
‘deposit’ covers any receipt of money or acceptance of any
valuable commodity, except those amounts which have been
specifically excluded by sub-clauses (i) to (vii) thereof. Thus,
any person accepting deposits under any scheme or in any
other manner satisfies the description of financial
establishment except a corporation or a co-operative society
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owned or controlled by any State Government or the Central
Government or a banking company defined under the
18. In the present case, admittedly, the said Society, a
cooperative institute, registered under the Cooperative
Societies Act, is running a financial establishment and
statements of witnesses disclose that they have collected
“deposits.”
19. Learned counsel for the applicant submitted that the
entire controversy revolves around question as to whether
loan amounts given to various investors are within the
definition of “deposit.”
20. The Hon’ble Apex Court, in the case of State of
Maharashtra vs. 63 Moon Technologies Limited, reported in
(2022)9 SCC 457, dealt with the scope and ambit of “deposit”
and “financial establishment” and held as under:
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“(i) the expression ‘deposit’ is conspicuously
broad in its width and ambit for it includes, not
only any receipt of money but also the
acceptance of any valuable commodity by a
financial establishment under any scheme or
arrangement;
(ii) the money or commodity must be liable to
be returned. However, such return need not
necessarily be in the form of cash or kind but
also in the form of a service, with or without
any benefit such as interest;
(iii) it is not necessary that the return should be
with the benefit of interest, bonus or profit.
Therefore, if the financial establishment is
obligated to return the deposit without any
increments, it shall still fall within the purview
of Section 2(c) of the MPID Act, provided that
the deposit does not fall within any of the
exceptions;
(iv) the phrase ‘valuable commodity’ cannot be
restricted to only mean precious metals.
Agricultural commodities which NSEL trades in
will fall within the purview of the term, and
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(v) the definition is broadly worded to include
even the possession of the commodities for a
limited purpose.”
Thus, expression ‘deposit’ is conspicuously broad in
its width and ambit for it includes, not only any receipt of
money but also the acceptance of any valuable commodity by
a financial establishment under any scheme or arrangement.
The expression ‘any’ is used in the substantive part of the
definition of the expression ‘deposit’ on five occasions namely;
“i) Any receipt of money;
(ii) Any valuable commodities;
(iii) By any financial establishment;
(iv) With or without any benefit; and
(v) In any other form.
The Hon’ble Apex Court further explains that there is
nothing in the definition of the term “deposit” to mean that
the acceptance of the commodity should be accompanied by a
transfer of title to the commodity. Even if the financial
establishment is only in “custody” of the commodity, it would
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still fall within the purview of the phrase “acceptance of
commodity”.
According to the second ingredient of Section 2(c), the
money or commodity must be liable to be returned. However,
such return need not necessarily be in the form of cash or
kind but also in the form of a service, with or without any
benefit such as interest. It needs to be recalled that clause (v)
of Section 2(c) states that a deposit of money or commodity
made as a security deposit, dealership deposit or an advance
amount is excluded from the definition of the phrase
“deposit”.
21. On going through the entire record and investigation
papers, especially statements of witnesses, it reveals that
various investors have deposited the amounts. Admittedly,
the said amounts are to be returned on maturity period. It
reveals that daily deposits are also accepted by the said
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Society, which are also, admittedly, to be returned back to the
investors.
22. Thus, the entire investigation papers show that
amounts are obtained by way of “deposits” from the various
investors and, therefore, the same are required to be repaid by
the said Society. Therefore, it would amount to “deposit”
within the meaning and for the purpose of MPID Act.
23. The object of the MPID Act is only to protect the
interests of small depositors from fraud perpetrated on
unsuspecting investors, who entrusted their life’s savings to
unscrupulous and fraudulent persons and who ultimately
betrayed their trust. The said enactment was enacted to
protect the interests of small depositors from fraud. The
nature of legislation is to protect the interests of small
depositors, who invest their life’s earnings and savings in
schemes for making profit floated by unscrupulous individuals
and companies, both incorporated and unincorporated which
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needs to be kept in mind while testing the provisions of the
24. On going through the definition of “financial
establishment”, admittedly, the applicant, who was the
Director and responsible for the day-to-day affairs of the
Society, accepted the amounts from the various investors and
disbursed the loan amount which is public money and has not
taken steps to recover the same. It is not a simple breach of
trust but it is an offence under breach of trust contemplated
under Section 403 of the IPC.
25. For the criminal breach of trust, the property must
have been entrusted to the accused or he must have dominion
over it. The property in respect of which the offence of breach
of trust has been committed must be either the property of
some person other than the accused or the beneficial interest
in or ownership’ of it must be of some other person. The
accused must hold that property on trust of such other person.
…..22/-
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Although the offence, i.e. the offence of simple breach of trust
and the offence of criminal breach of trust, there is a
distinction. To attract the offence of criminal breach of trust,
there has to be entrustment of the property and the same
being dishonestly misappropriate. In other words, in case of
criminal breach of trust, the offender/accused is lawfully
entrusted with property and he has dishonestly
misappropriated the same.
26. Admittedly, the amounts invested with the said
Society of which the applicant was the Director are the public
money. The involvement of the applicant appears to be there
in misappropriation of the public money.
27. The Hon’ble Apex Court, in the case of State of
Gujarat vs. Mohan Lal Jitamalji Porwal, reported in (1987)2
SCC 364 held as follows:
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“5. ….The entire community is aggrieved if the
economic offenders who ruin the economy of
the State are not brought to book. A murder
may be committed in the heat of moment upon
passions being aroused. An economic offence is
committed with cool calculation and deliberate
design with an eye on personal profit
regardless of the consequence to the
community. A disregard for the interest of the
community can be manifested only at the cost
of forfeiting the trust and faith of the
community in the system to administer justice
in an even-handed manner without fear of
criticism from the quarters which view white
collar crimes with a permissive eye unmindful
of the damage done to the national economy
and national interest…..”
28. The Hon’ble Apex Court, while dealing with offence,
involving conspiracy to commit economic offences of huge
magnitude, in the case of Y.S.Jagan Mohan Reddy vs. CBI,
reported in (2013)7 SCC 439 laid down following parameters:
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“i) economic offences constitute a class apart
and need to be visited with a different approach
in the matter of bail. The economic offence
having deep rooted conspiracies and involving
huge loss of public funds needs to be viewed
seriously and considered as grave offences
affecting the economy of the country as a whole
and thereby posing serious threat to the
financial health of the country, and
ii) while granting bail, the court has to keep in
mind the nature of accusations, the nature of
evidence in support thereof, the severity of the
punishment which conviction will entail, the
character of the accused, circumstances which
are peculiar to the accused, reasonable
possibility of securing the presence of the
accused at the trial, reasonable apprehension of
the witnesses being tampered with, the larger
interest of the public/State and other similar
considerations.”
29. By applying the principles laid down by the Hon’ble
Apex Court to the present case, while quashing the FIR, a
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prima facie material is there to connect the applicant with the
alleged crime and, therefore, this is not a fit case wherein
powers under Section 482 of the CrPC are to be exercised.
30. For the above reasons mentioned, the application
deserves to be rejected and the same is rejected.
Application stands disposed of.
(URMILA JOSHI-PHALKE, J.)
!! BrWankhede !!
Signed by: Mr. B. R. Wankhede
Designation: PS To Honourable Judge …..26/-
Date: 17/02/2026 19:32:04
