Odisha HC denies pre-arrest bail to six accused in alleged ₹3.25-crore UCO Bank loan fraud

The six Petitioners sought pre-arrest bail under Section 482 of the Bharatiya Nagarik Suraksha Sanhita, 2023, in C.T. Case No. 12 of 2026 arising from EOW P.S. Case No. 9 of 2026, pending before the Designated Court under the OPID Act, Cuttack.

The prosecution alleged serious financial irregularities in the sanction, processing and disbursal of 22 UCO car loans and two business loans involving approximately Rs.3.25 crore.

The alleged offences included criminal conspiracy, cheating, criminal breach of trust, cheating by personation, forgery, use of forged documents, falsification of accounts and cheating by personation through computer resources under Sections 120-B, 420, 409, 419, 467, 468, 471 and 477-A IPC read with Section 66-D of the Information Technology Act, 2008.

The Petitioners were bank employees allegedly involved in loan processing, account opening, KYC verification, recommendation or appraisal, while Shakti Prasad Das was the brother of the principal accused, Shiba Prasad Das.

The prosecution alleged manipulation of banking records, fabricated documents, artificial repayment histories and diversion of loan funds.

The Case Diary prima facie indicated that borrower accounts were opened without proper documentation and that loans were sanctioned in breach of prescribed procedures, with approximately Rs.1.2685 crore involved in 11 identified loan accounts.

In Shakti Prasad Das’s case, Rs.32 lakh was credited to his Union Bank account, followed by several immediate debits, allegedly indicating routing of funds and repayment of disputed loan accounts.

The investigation was continuing and was stated to be at a crucial stage.

1. Whether the Petitioners were entitled to the exceptional remedy of pre-arrest bail under Section 482 BNSS in an economic-offence prosecution involving alleged bank fraud of approximately Rs.3.25 crore?

2. Whether the Petitioners’ reliance on documentary evidence, social roots, absence of direct monetary gain in some cases, or subordinate employment roles justified protection from arrest while the investigation into the larger conspiracy remained pending?

3. Whether custodial interrogation was necessary for an effective investigation, or whether pre-arrest protection would impede the investigation into the alleged loan-sanctioning irregularities and money trail?

The Court applied Section 482 BNSS governing pre-arrest bail and considered the penal provisions under Sections 120-B, 420, 409, 419, 467, 468, 471 and 477-A IPC read with Section 66-D of the Information Technology Act, 2008.

It applied the principle that economic offences involving substantial public or financial loss must be assessed on a distinct footing when considering bail, particularly anticipatory bail.

Relying on Serious Fraud Investigation Office v. Aditya Sarda, 2025 SCC OnLine SC 764, the Court held that pre-arrest bail in economic offences affecting the community and the economy should ordinarily not be granted absent exceptional circumstances.

It further relied on State v. Anil Sharma, (1997) 7 SCC 187, for the principle that effective interrogation may be frustrated when an accused is protected by anticipatory bail.

The Court also remained conscious of the parameters stated in Satender Kumar Antil v. Central Bureau of Investigation, 2023 SCC OnLine SC 452, while distinguishing the present economic-offence context.

The other authorities cited by the State included P. Chidambaram v. Directorate of Enforcement, (2019) 9 SCC 24; Directorate of Enforcement v. P.V. Prabhakar Rao, (1997) 6 SCC 647; Y.S. Jaganmohan Reddy v. CBI, (2013) 7 SCC 439; State of Gujarat v. Mohanlal Jitamalji Porwal, (1987) 2 SCC 364; and Nimmagadda Prasad v. CBI, (2013) 7 SCC 466.

The Court found prima facie material indicating systematic violation of banking norms, improper opening of borrower accounts, fabricated quotations and diversion of loan proceeds.

It rejected the Petitioners’ contention that they merely acted on the instructions of the principal accused, holding that their respective roles in loan appraisal, recommendation, sanction, account opening, KYC verification and transaction processing required investigation and could not be disregarded at face value.

The Court considered that the documentary nature of the evidence and the Petitioners’ roots in society did not eliminate the need for effective interrogation.

The alleged participation of the bank employees, together with the transaction trail involving Shakti Prasad Das, required investigation into the larger conspiracy and the movement of funds.

Applying the stricter approach applicable to economic offences, the Court concluded that granting pre-arrest bail at that stage could derail the investigation and render interrogation ineffective or merely formal.

No exceptional circumstance sufficient to justify the extraordinary remedy was established.

All six ABLAPL applications were rejected, the interim order was vacated, and the matters were accordingly disposed of.