The Kerala High Court directed a CBI investigation into a scam involving misappropriation of over ₹7.5 crores from the Kerala Advocates Welfare Fund. The amount was allegedly swindled through fake documents over a span of 10 years.Justice Sunil Thomas observed that the investigation had to be handed over to the CBI weighing the depravity of the offence:"After considering the complexity of...
The Kerala High Court directed a CBI investigation into a scam involving misappropriation of over ₹7.5 crores from the Kerala Advocates Welfare Fund. The amount was allegedly swindled through fake documents over a span of 10 years.
Justice Sunil Thomas observed that the investigation had to be handed over to the CBI weighing the depravity of the offence:
"After considering the complexity of the nature involved and the fact that the matter is of a general importance, applicable to interest of all the lawyers as a community who have a right to know, how their contribution was misused, to sustain the faith of the public in the Bar Council as well as the Advocate's Welfare Fund Trust, the deep and perversive nature of the crime involved, the matter needs investigation by a specialized agency."
The Bench further pulled up the Trustee Committee in charge of maintaining the fund, upon finding that it had not maintained any records or properly audited the funds for over a decade as statutorily required:
"What shocks the conscience of anybody is that, during the long period of ten years, no records were maintained and the records whatever meant were shabbily retained... Shockingly, nobody verified the records and that during this long period, the records were not even audited, even though Trustee Committee was under an obligation to get the records audited.... This indifference from the Trustee Committee has led to this enormous squandering of the money by the persons concerned."
The Court was considering two petitions filed by lawyers practising before various courts across the State and enrolled with the Bar Council of Kerala. They also claim that they have membership in the Advocates Welfare Fund, constituted under Section 15 of the Kerala Advocates Welfare Fund Act.
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 to be 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.
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.
The petitioners were represented by Advocates Sooraj T Elenjickal, Abu Siddik P, KN Peer Mohammed Khan. Muhammed Janaise V, Aswin Kumar MJ, Mohammed Musthafa AK and Helen PA.
The Vigilance and Anti-Corruption Bureau filed a detailed statement arguing that the investigation was progressing in a steady manner and substantial evidence had been collected.
They submitted that during the course of the investigation, two audits were conducted, one by the Kerala Local Fund Audit, which revealed a pecuniary loss of ₹ 6,72,51,250 and another one by the Statutory Auditor appointed by the Kerala Advocates Welfare Fund Trust Committee, which revealed misappropriation of ₹7,61,24,725.
Moreover, two of the accused, accountant MK Chandran and one Babu Scaria were arrested pursuant to their investigation in 2019, they added.
However, it was stated that their investigation did not reveal any evidence of a criminal conspiracy by the office-bearers of the Kerala Bar Council or by any of its members/Secretary of the Kerala Advocates' Welfare Fund Trustee Committee.
The Kerala Advocates' Welfare Fund Trustee Committee filed a separate counter affidavit supporting the facts mentioned by the Bar Council of Kerala.
However, it was alleged that the petitioners in the instant were politically motivated.
The Court opined that considering the huge amounts involved, the complexity of crime, lack of various records and that materials were spread over two States, it should have been investigated effectively with a larger team of investigation even from the beginning. It, therefore, ordered that the investigation be handed over to the CBI within a month.
Case Title: Adv. Khalid N.A & Ors v. Union of India & Ors