Pre-Arrest Bail Not a Shield for Habitual Fraudsters: Bombay High Court Denies Relief in ₹82 Lakh Real Estate Scam, Citing Need for Custodial Interrogation

“Custodial interrogation cannot be ruled out simply because the accused denies involvement”— In a decisive ruling Bombay High Court refused anticipatory bail to real estate broker Pawan Amar Mutreja, who was accused in a conspiracy involving the misappropriation of ₹82 lakhs from a restaurateur under the pretense of bribing BMC officials. The Court emphasized that "an applicant seeking pre-arrest bail must come to court with clean hands", and that when custodial interrogation is essential to unearth the truth, the process of investigation cannot be thwarted by granting protection from arrest.

Justice Advait M. Sethna held that the allegations showed not only a prima facie case of serious financial fraud but also established habitual fraudulent conduct that warranted custodial inquiry.

The complainant, Jayprakash Shetty, a restaurant owner, alleged that he was lured into parting with ₹82 lakhs—₹50 lakhs by bank transfer and ₹32 lakhs in cash—by the applicant and co-accused Paresh Shah and Prakash Vyas. They promised to facilitate the transfer of restaurant ownership and a reduction in rent by bribing officials of the Municipal Corporation of Greater Mumbai (BMC).

The FIR, registered on April 14, 2025, invoked Sections 318(4), 316(2), and 61(1) of the Bharatiya Nagarik Suraksha Sanhita, 2023. The investigation revealed a financial trail pointing directly to Mutreja: ₹9.5 lakhs were transferred from the co-accused's account into his, and an additional ₹9.24 lakhs were deposited in cash shortly after the complainant parted with the money.

Justice Sethna rejected the applicant’s explanation that the amounts received were “loans” for his mother’s cancer treatment, calling the argument “an afterthought” in the absence of any supporting documents.

The Court remarked, “The accused has not placed on record any loan agreement or bank entries in support of his version. It is evident that the explanation is an afterthought and intended to mislead the Court.”

The Court further noted that WhatsApp communications revealed Mutreja was actively involved in orchestrating the entire transaction, undercutting his claim of being uninvolved. Voice recordings submitted by the complainant, allegedly tampered with, also pointed to a concerted effort to suppress evidence.

Addressing the issue of whether custodial interrogation was necessary, the Court held: “Custodial interrogation is qualitatively more elicitation-oriented than questioning a suspect who is well ensconced with a favourable order under Section 438”—CBI v. Anil Sharma was cited with approval.

The Court emphasized the jurisprudence laid down in Sumitha Pradeep v. Arun Kumar C.K., stating:

“The Court must consider the necessity of custodial interrogation along with the accused’s conduct, antecedents, and likelihood of tampering with evidence. These are not to be viewed in isolation.”

In response to the applicant’s six prior criminal cases for similar offences, Justice Sethna noted:

“The repeated registration of FIRs against the applicant in financial offences of like nature reveals a pattern of conduct that cannot be ignored. The Court cannot turn a blind eye to habitual fraud under the cloak of anticipatory bail.”

Dismissing the application, the Court held: “There is no reason to interfere in the process of investigation and put breaks on the wheels of justice. The applicant has not approached the Court with clean hands. His custodial interrogation is essential to go to the root of the conspiracy and trace the movement of funds.”

The interim relief granted earlier was also dismissed, solidifying the Court’s position that anticipatory bail is not meant to shield those who manipulate legal processes while being prima facie involved in serious economic crimes.

Date of Decision: May 16, 2025