Advocates' Welfare Fund Scam: Kerala High Court Denies Pre-Arrest Bail To 7 Accused

Justice K. Babu refused pre-arrest bail to the accused pointing out that this could tamper with the ongoing investigation in the matter. 

This comes after ASGI S Manu appeared on behalf of CBI and submitted that the scam was executed over a span of 10 years and that the investigating team would require more time to acquire the details of the case. The ASGI also added that custodial interrogation of the accused is warranted in the case for the same reason. 

The CBI also demonstrated the details of the financial transactions that took place through the bank accounts of the accused. Subsequently, the Court was convinced that the anticipatory bail applications had to be dismissed. 

When the matter was taken up in May, the Judge had refused to grant interim protection to the accused. 

The Court had earlier ordered a CBI investigation into the scam weighing the depravity of the offence in two petitions filed by lawyers practising before various courts across the State and enrolled with the Bar Council.

The fund was constituted to provide retirement benefits and social security to advocates in Kerala. The source of the fund consists of amounts paid by the Bar Council, contributions made by the Bar Council, Voluntary donations or contributions made by the Bar Council of India or by any other Bar Associations and includes all sums by way of sale of stamps under Section 22 of the Kerala Court Fees and Suit Valuation Act.

Under Section 9 of the Act, the Trustee committee shall administer the fund and shall hold the assets belonging to the funds and the trust. Under Section 10 (4) of the Act, it is mandatory to audit all accounts of the Trustee Committee annually by a Chartered Accountant appointed by the Bar Council.

However, according to the petitioners, the same had not been done properly for some years.

In 2017, allegations of serious financial irregularities in its utilisation of funds were raised and the same was deliberated by the Trustee Committee in its meeting held in 2019. Thereafter, it was decided to take action and request for a vigilance enquiry regarding the irregularities and defalcation in the printing and distributing of welfare fund stamps entrusted to the Bar Council of Kerala. The amount was allegedly swindled through fake documents over a span of 10 years.

Accordingly, the Vigilance Department registered a first information report against one Chandran, who was the then accountant of the trustee fund, alleging offences under section 13 (2) read with 13(1)(c)(d) of the Prevention of Corruption Act.

Investigations revealed that there was large-scale misappropriation of the funds and that there was no auditing since 2007. According to the petitioners, a failure to audit the account for such a long period facilitated the culprits to misappropriate funds by playing fraud and manipulation.

Therefore, the petitioners approached the Court and sought directions entrusting the investigation of the case to the Central Bureau of Investigation.

When the CBI probe was ordered, the Bar Council of Kerala had issued a press release disclosing that it does not plan to appeal against the High Court's decision and that the Council endorses the verdict of the Court. Following this, the Central Bureau of Investigation had registered an FIR to probe the scam recently.

As per the re-registered FIR, there are nine accused - MK Chandran, an accountant with KAWFTC, and his eight acquaintances: K Babu Scaria, Sreekala Chandran, Anadaraj, Martin A, Dhanapalan, Rajagopal P, Jeyaprabha R and Fathima Sherin. The funds were transferred into their bank accounts. Seven of them, namely accused 3 to 9, had moved the Court seeking anticipatory bail in the matter.

Case Title: Jeyaprabha R. v. CBI & connected matters.

Citation: 2022 LiveLaw (Ker) 342