Money Laundering Case: High Court Grants Bail to Ex-J&K State Cooperative Bank Chairman

Former Chairman of the J&K State Cooperative Bank Muhammad Shafi Dar, who has been in judicial custody since 2023, was granted bail by the High Court of Jammu and Kashmir, in a money laundering case.

Srinagar: The High Court of Jammu and Kashmir and Ladakh has granted bail to former Chairman of the J&K State Cooperative Bank Muhammad Shafi Dar, who was arrested by the Enforcement Directorate (ED), in connection with an alleged Rs 233 crore money laundering scam.

Justice Rahul Bharti, heading the Srinagar bench of the High Court, allowed Dar's bail petition on February 13, 2024. The court observed that Dar, aged 63, is well within his right to argue that the decision to grant the loan in question was a collective decision of the Board of Management and could not be individualised to him alone.

Dar had been arrested under Section 19 of the Prevention of Money Laundering Act, 2002, and had been continuing in judicial custody since November 30, 2023. His bail was rejected by the lower court, prompting him to move to the High Court seeking relief under Section 439 of the Criminal Procedure Code, 1973, read with Section 44 (2) of the Prevention of Money Laundering Act, 2002.

The case revolves around Dar's alleged involvement in facilitating a loan of Rs 250 crore to a fictitious society, the River Jhelum Cooperative House Building Society, purportedly for the development of a satellite township in Shivpora, Srinagar. The ED, opposing Dar's bail, contended that he sanctioned and facilitated the loan without proper documentation, KYC norms, or tangible security, thereby laundering the proceeds of crime.

Upon meticulous examination, the court noted that Dar, as the chairman of the Board of Management, was not the sole decision-maker regarding the loan sanction. The decision-making process involved the participation of the entire Board. "The petitioner was not having any veto authority as the chairman of the Board of Management of the Bank as a result whereof the decision to sanction the loan was carried out solely by the petitioner by force of his discretion and dictate overruling and making the rest of the Board of Management as a non-participant in the decision making and the decision itself," the court observed.

Justice Bharti recognised the complexity of the decision-making dynamics within the Board and questioned whether it was fair to individualise the liability solely to Dar. The court emphasised that the responsibility for the decision cannot be solely attributed to the petitioner and absolving the rest of the board members.

While acknowledging the seriousness of the accusations, the court also considered Dar's health condition, noting his age and reported heart-related complications. In conclusion, the court granted conditional bail to Dar, requiring him to furnish a personal bond of Rs 10 lakhs and two sureties. He is to stay within Srinagar's jurisdiction unless permitted otherwise, refrain from interfering with the investigation, and appear when summoned.

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