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by Admin
07 December 2025 4:45 AM
"Re-transfer of Misappropriated Amount Does Not Exonerate – It's Part of the Conspiracy" – In a significant ruling Kerala High Court refused anticipatory bail to a group of vendors accused of collaborating with panchayat officials to siphon off over ₹2 crore from MGNREGA schemes across multiple projects under the Thondernadu Grama Panchayat in Wayanad. Deciding a batch of connected bail applications, Justice A. Badharudeen held that corruption and public fund misappropriation cases demand custodial interrogation, especially when the scam involves “falsified records, siphoning of funds, and potential flight risk.”
The petitioners – including vendors Najeeb V, Baiju T.K., and Rashid A – are accused of fraudulently receiving government funds intended for works like construction of cattle sheds, wells, chicken coops, and sheepfolds under the MGNREGA scheme, in criminal conspiracy with Panchayat officials. The allegations span from 2020 to 2025, across seven separate FIRs, with manipulated project records and forged login credentials being central to the scam.
“No Exceptional Circumstance Made Out – Bail Would Hamper Investigation” – Court Reaffirms Strict Standards for Pre-Arrest Bail in Corruption Cases
Rejecting the petitioners’ plea under Section 482 of the Bharatiya Nagarik Suraksha Sanhita, 2023 (BNSS), the Court observed:
“Granting anticipatory bail to persons involved in corruption cases involving misappropriation of crores of rupees would spoil the investigation itself and affect meaningful prosecution. Such bail can only be granted in exceptional cases – which is not the case here.” [Para 34]
Relying on its prior rulings in Shefin M.B. v. State of Kerala [2025 KHC OnLine 2027] and Praveen Raj v. State of Kerala [2025 KHC OnLine 949], the Court reiterated that anticipatory bail in corruption cases is not a rule, but an exception, particularly when the money trail is yet to be fully uncovered and custodial interrogation is imperative to recover public funds.
Attempt to Justify Receipt or Return of Funds Rejected: "Return of Money is No Defence"
One of the petitioners, Baiju T.K., contended that he had returned ₹34,25,000 to the account of the 1st accused upon demand, and that such a step demonstrated his bonafides. However, the Court flatly rejected this contention:
“The re-transfer of misappropriated money to the first accused is not an exonerating circumstance. It shows continuation of conspiracy and is, in fact, an aggravating factor strengthening the prosecution’s case.” [Para 31]
Similarly, petitioner Rashid A argued that he was still entitled to additional payments for goods supplied and had even filed a writ petition seeking the same. But the Court, noting the prima facie evidence of his involvement in falsifying records and receiving inflated payments, refused to treat the claim of entitlement as a ground for anticipatory bail.
Massive Multi-Year Scheme Exposed: Projects Inflated, Records Falsified, ₹2 Crore Diverted
The investigation into Crime No. 373/2025 triggered a broader inquiry into multiple financial irregularities across different public works under the Panchayat’s MGNREGA scheme. Based on the complaints and findings of the District Joint Programme Coordinator, a series of FIRs were registered involving different project heads. Key allegations include:
₹13.47 lakhs diverted in chicken coop projects by showing inflated costs and falsified records.
₹25.39 lakhs misappropriated in well-digging projects.
₹13.45 lakhs diverted in cattle shed construction.
₹1.03 lakhs siphoned in soak pit project.
₹1 crore illegally transferred under the pretext of constructing sheepfolds by showing cost per shed at 3x the actual rate.
₹63,000 diverted in concrete road work.
₹1.06 lakhs misappropriated in Anganwadi construction.
The modus operandi in all cases was consistent: project cost inflation, manipulation of digital records using stolen login credentials, and routing funds to private vendors in connivance with the engineer and accountant of the Panchayat.
"Offences Involve Life Imprisonment": Court Rejects Leniency Plea Based on Sentence Threshold
Petitioners argued that the maximum punishment for the alleged offences is only seven years, making anticipatory bail a viable option. The Court rejected this contention by clarifying that Section 316(5) of the Bharatiya Nyaya Sanhita (BNS) (analogous to Section 409 IPC) attracts life imprisonment, and offences under the Prevention of Corruption Act, 2018, can carry up to 10 years of imprisonment.
“The punishment for criminal breach of trust by public servant under BNS is life imprisonment. Offences under the PC Act are equally grave. Therefore, the argument based on sentence threshold is misconceived.” [Para 32]
Custodial Interrogation Essential: Court Cites Risk of Tampering Evidence, Absconding
The Public Prosecutor, placing reliance on detailed investigation reports, strongly opposed bail, arguing:
“Custodial interrogation is essential to trace the money trail, question accused on fund transfers, and recover public money. If released on bail, they may tamper with digital and physical records, influence witnesses, and abscond. In fact, the 1st accused has already fled abroad.” [Para 33]
The Court concurred, noting the high probability of destruction of evidence and the need for meaningful custodial questioning to secure successful prosecution.
Anticipatory Bail Denied, Petitioners Directed to Surrender Immediately
Justice A. Badharudeen dismissed all 13 anticipatory bail applications, directing the petitioners to surrender before the Investigating Officer forthwith and cooperate with the investigation, failing which the police were empowered to arrest them as per law.
“The arrest, custodial interrogation and recovery of misappropriated money are very much essential to effectuate meaningful investigation and successful prosecution.” [Para 34]
Date of Decision: 4th December 2025
