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Justice Sunil Thomas of the Kerala High Court on Thursday ordered Central Bureau of Investigation (CBI) to look into the alleged he misappropriation of fund from Advocates Welfare Fund running into crores of rupees.

The petitions have been filed by a bunch of lawyers. They allege that some time in 2017, it was disclosed that serious financial irregularities in the utilization of funds and embezzlement of funds of the Trustee Committee was committed. Upon investigation, the Vigilance Department registered FIR 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 Prevention of Corruption Act. 7. Investigation revealed very serious irregularities and that there were large scale misappropriation of funds of the trustee committee. It was found that there was no auditing since 2007 onwards.

According to the petitioners, failure to audit the account for such a long period facilitated the culprits to misappropriate funds by playing fraud and manipulation. It was alleged that one Ajayan, the Secretary of the Bar Council, who was the ex-officio had informed the Bar council that records and registers were submitted for audit. In fact, several records were not even allegedly maintained. The petitioners have further stated that the Vigilance and Anti-Corruption Bureau (VACB) is not carrying out the investigation properly and prayed for transfer of the matter to CBI.

The Court noted that the criminal liability totalled to Rs.6.72 Crores. The statutory audit appointed by the Trustee Committee found a loss of Rs.7,61,24,725/-. The loss mainly arose out of the following:

1. unaccounted sale of stamps
2. interest received from fixed deposits as seen from accounts was less than the actual interest to be received from Bank.
3. Excess payment of Rs.35 ,303/- from welfare fund account.
4.  Misappropriation to the tune of Rs.35,668,450/- with respect to sale of stamps.
5.  shortage of unsold welfare stamp worth Rs.31,582,800/-
6. An amount of Rs.33,74,756/- related to unaccounted welfare stamp fund subscription.
7.  Inflated accounts of sales of stamps by making fictiuos entries even on holidays.

The Court further observed that there is clear indication of the enormity of crime committed by the accused. The crime is spread over a long period of ten years. “The lawyers are statutorily bound to remit the contribution by way of affixing stamps while filing each vakalath. The fund so collected is utilized for releasing to the lawyers, either in the event of their retirement or unfortunate death.”

“What shocks the conscience of anybody is that, during the above long period of ten years, no records were maintained and the records whatever meant were shabbily retained. It is also surprising that during the above period, nobody cared to verify how the money was being collected, maintained and utilised. 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,” the Court further noted.

This indifference from the Trust Committee has led to this enormous squandering of the money by the persons concerned.

The VACB had put the onus of the entire crime on the accountant. The Court rubbished that finding stating “the allegation of the investigation agency seems to be is that, during the long period of ten years, without maintaining any records, single handedly the said accountant, swindled the money without the knowledge of any other staff or the Trust. This is prima facie absolutely unbelievable.”

The Court further turned on the Secretary and stated that “it shows absolute and gross negligence on the part of the Secretary and full abdication of his powers and duties. He never cared to verify the records and the handling of money. In other words, according to the version, accountant was exercising more powers than the Secretary even, and secretary seems to be a mute spectator. If this is also accepted, necessarily it leads to the fact that the culpable negligence shown by the Secretary must have contributed to this situation.”

The Court further took note of the fact that the records reveal that the investigation led to the identification of accounts of several persons in whose account money was deposited by the first and the second accused. According to the investigating agency, the transfer of about 86% of the total funds misappropriated have been accounted. Merely, by concluding that the amounts has not been properly accounted, they can be held responsible for various criminal acts. “However, investigation cannot end there,” the Court stated.

“I feel that the matter needs to be investigated by a specialized agency in the nature of CBI,”the Court concluded.

case title: Advocate CG Arun Vs. State of Kerala