Thrissur: At a time when central agencies and the Union government are accused of leaning too much on sealed cover jurisprudence, something opposite played out in a special court in Kochi hearing the bail plea of CPM councillor Aravindakshan P R (57) and accountant Jilse C K (45) in the Karuvannur bank scam case.
Accused no. 3 Aravindakshan sought the protection of a sealed cover when the Directorate of Enforcement (ED) started playing a purported recording of his phone conversation with accused no. 1 and private financier Satheesh Kumar P in the special court in Kochi on Thursday, October 19. "It was an incriminating phone conversation," said M J Santhosh, the public prosecutor representing ED in the Special Court for money laundering cases.
The CPM-controlled Karuvanannur Service Cooperative Bank in Thrissur sanctioned multiple loans to same persons and loans without adequate mortgage and to ineligible members for a period of 10 years from 2011 to 2021. A clique of employees also used monthly deposit schemes (chit funds) to swindle the cooperative society's money. The bank's present secretary in-charge Sreekala E S estimated that 90 wilful defaulters own Rs 343 crore to the bank as on December 31, 2022.
When ED searched the house of Satheesh Kumar on August 22, 2023 as part of the investigation, it seized a mobile phone that had "several incriminating call records between Satheesh Kumar and Aravindakshan".
Santhosh said the court gave him permission to play the call record but when the conversation started Aravindakshan's counsel K Vishwan stood up and raised loud objections. "The defence lawyer said the electronic evidence cannot be accepted as evidence because it was not certified under Section 65 B of the Indian Evidence Act," he said.
But the certification was needed only during the trial stage and the ED was trying to show to the court that prima facie there was evidence against the accused, Santhosh said.
That's when the defence lawyer said the electronic evidence may be submitted to the court in a sealed cover. According to Section 123 of the Indian Evidence Act of 1872, courts can seek information in secrecy if its publication hampered an ongoing investigation.
The Supreme Court's Rule 7 of Order XIII cites an additional reason: if the disclosure of the information may violate an individual's privacy or breach of trust.
But the Supreme Court, particularly under Chief Justice D Y Chandrachud, is averse to sealed covers. He had refused to accepted sealed cover from the Union government on a case related to One Rank One Pension.
Before that, a three-member bench of Justices R Bhanumathi, A S Bopanna, Hrishikesh Roy pulled up the Delhi High Court for denying bail to P Chidambaram in the INX media case based on seal cover evidence from ED. The apex court had held sealed covers fundamentally against fair trail because the accused would not know what they are charged with.
ED's prosecutor in the Karuvannur bank scam Santhosh told the special court in Kochi that the central agency was ready to present the phone conversation between the first accused Satheesh Kumar and the third accused Aravindakshan in open court so that the accused can also hear and comment on it, if they have any. "We have no fear that playing the call record in open court will impede the investigation. We don't feel it is a document that needs to be shrouded in secrecy," he said.
The defence said they did not want to listen to the conversation. "I said if you don't want to, we will not play," the prosecutor said.
Now, the central agency would submit the call recordings along with the charge sheet. To be sure, Aravindakshan -- a confidant of CPM state committee member and former minister A C Moideen -- became an accused in the ED's case only after the central agency stumbled on the call recordings in Satheesh Kumar's phone.
On September 7, 2023, 16 days after the phone was seized, ED summoned Aravindakshan for questioning. ED arrested him on September 26.
The ED has accused him of helping Satheesh Kumar whiten the illegal loans he allegedly got from Karuvannur Service Cooperative Bank. The agency alleged that Rs 50 lakh from Satheesh Kumar was credited to Aravindakshan's account as fixed deposits in Karuvannur bank. It said Rs 45 lakh was deposited in nine tranches of Rs 5 lakh each on March 2, 2017, and October 4, 2017.
Though he claimed his only source of income was the honorarium of Rs 90,000 per year he received as a municipal councillor, his account with the State Bank of India saw transactions amounting to around Rs 66.76 lakh in four years from 2014-2015 to 2017-2018. Transactions worth Rs 1.02 crore were found in his other bank account with Peringandoor Service Cooperative Bank.
ED's prosecutor Santosh said Aravindakshan had given Rs 20 lakh to Satheesh Kumar's daughter as fees for her medical education. "Satheesh gave the money to Aravindakshan in cash, who whitened it through his account and gave it to his daughter," he said.
When asked about the transaction, the CPM councillor reportedly said he was helping Satheesh Kumar. "Satheesh has 46 bank accounts and is also a private financing company. Why should a councillor help such a person," he asked.
The ED has seized Satheesh's 46 accounts which had around Rs 1 crore in them.
During the bail hearing on Thursday, Aravindakshan's counsel Vishwan said the councillor was not a nobody but owned a hotel, two granite quarries, and a plantation estate. "This is the first time he has admitted to such wealth. Till now he has said his source of income was the honorarium he got as a municipal councillor," he said.
When Aravindakshan's counsel revealed his new sources of income, ED's prosecutor Santhosh asked him to give it in writing to the court so that the agency could investigate his investments in those firms. "His counsel went mum after that," he said.
'Accountant Jilse took loans in fictitious names'
Opposing the bail plea of the former accountant of Karuvannur bank Jilse C K, the prosecutor Santhosh told the court on Thursday that he took loans worth Rs 4.25 crore in the name of fictitious persons by pledging properties owned by him and his father-in-law. According to the bank's bylaw, employees cannot take loans from the bank.
Jilse mortgaged a 50-cent plot in his name and took three loans of Rs 50 lakh each in 2020. The bank gave the loans to Sreedeep, Babu, and Paulson A J.
The bank gave Jilse another loan of Rs 2.75 crore the same year for which he mortgaged his father-in-law Kumaran C M's property. Mortgage loans of Rs 50 lakh each were given to five persons -- Shanim Shahul, Thankamma, Ibrahim, Shameer, and Kumaran C M. His wife Sreelatha T S was given a business loan of Rs 25 lakh on the same property.
Of the nine persons who looked at the loans, only the loan against Babu (with membership number 19216) was almost repaid (Rs 47.85 lakh.) The other eight persons did not pay a single rupee back and the total loan outstanding has grown to Rs 5.06 crore as of December 31, 2022.
Except for Jilse's father-in-law Kumaran, wife Sreelatha, and Paulson A J, ED could not track any of the other borrowers. "The other six are fictitious. They do not exist," Santhosh said.
Jilse, the fourth accused in the ED's case, was arrested on September 26, the same day Aravindakshan was arrested.
From the beginning, Jilse took the position that he did not borrow any money from the bank, and his property was used only as surety for others to take loans.
But on Thursday, ED submitted a note handwritten by Jilse in which he admitted his liability to the bank, said prosecutor Santhosh. The letter written to the then-bank president and CPM leader K K Divakaran requested the bank to return the title deeds mortgaged with the bank so that Jilse could sell the properties and return the money. "The bank returned the title deeds when the loans were outstanding. Jilse sold the property and used the money for his personal use," said Santhosh. Divakaran is likely to become an accused in the case.
He said ED perused the title deed of Jilse's 50-cent property and it was registered for Rs 10 lakh but the loan extended on the plot was Rs 1.5 crore.
On September 5, the ED filed a petition with the Sub-Registrar's Office (SRO) at Irinjalakuda for Kumaran's property deed because the bank did not have it. "We got several documents from the Sub-Registrar's Office but not what he sought for," he said.
For the sake of transparency, the ED submitted to the court the letter it wrote to the SRO and the reply it got from the office, he said.
Prosecutor Santhosh said the ED had submitted enough proof to convince the special court to deny bail to the two accused. The bail hearing has concluded and the court reserved its judgment to Monday, October 25.
