HC grants bail to 2 arrested in ₹879.97 cr Cox & Kings loan fraud

MUMBAI: Bombay High Court grants bail to CKL's CFO and auditor due to prolonged incarceration, following main accused's bail by Supreme Court.

MUMBAI: The Bombay high court on Tuesday granted bail to two accused in the multiple financial fraud cases related to Cox & Kings Limited (CKL) on account of their prolonged incarceration, and because the main accused in the case has already been granted bail by the Supreme Court.

HC grants bail to 2 arrested in ₹879.97 cr Cox & Kings loan fraud

The accused - CKL’s chief financial officer Anil O. Khandelwal and internal auditor Naresh Tikamchand Jain - were arrested on March 2, 2021, in connection to the alleged financial fraud by CKL, stemming from its extensive borrowing from multiple institutions and banks from 2011 to 2019. Several complaints filed against the company alleged that it had secured loans under the false pretence of financial stability. Khandelwal and Jain were accused of playing a key role in the fraud through falsification of accounts in collusion with others.

With the total outstanding loans running to hundreds of crores, CKL defaulted on repayments. Notably, Tourism Finance Corporation of India Limited (TFCIL) reported an amount of ₹110.48 crore non-repayment, while HDFC bank accused it of defaulting on a corporate credit facility for ₹50.17 crore. Kotak Mahindra Bank requested the recovery of ₹174.32 crore, while Yes Bank was concerned with an unpaid working capital loan of ₹525 crore. Kurlon Enterprises also filed a complaint for the repayment of two short-term loans totalling to ₹10 crore each.

Senior advocate Ashok Mundargi, representing Khandelwal, claimed parity on the grounds that the main accused in the case, Ajay Ajit Peter Kerkar, had been granted bail by the Supreme Court. Citing Khandelwal’s prolonged incarceration, he urged the court to grant bail.

Similarly, advocates Satyavrat Joshi and Sayee Sawant, representing Jain, supported the submissions by advocate Mundargi and urged the court to grant bail in the interest of justice.

Additional public prosecutor Megha S Bajoria opposed the bail pleas, highlighting that the offence was against the economy of the nation which affected the financial fabric of society, and emphasised on the major role attributed to both the accused, exposing their malafide intentions.

Considering the case on parity and long incarceration, with no certainty on the completion of the trial, the single-judge bench of justice Milind N. Jadhav granted bail to both the accused. The bench noted that both had secured bail in related cases under the Prevention of Money Laundering Act (PMLA) in May 2024. “This is also a factor that must be taken into consideration,” justice Jadhav said while granting them bail on furnishing personal bonds of ₹ 1 lakh each.

The court also made strong observations over the due diligence of the financial institutions in the country. Pointing out the strict measures in lending to individual borrowers, the court noted that the large corporate loans seem to bypass the scrutiny. “It should not be forgotten that these monies which were advanced as loan by the banks were public monies. Therefore, even if the CKL presented and relied upon its balance sheet for procuring the loan amount, which runs into hundreds of crores in most of the cases, it was the duty of the banks to undertake appropriate due diligence,” it said.