Nagpur special court grants bail to Rakesh Garg in Future Digital Asset Scheme fraud case

A special court in Nagpur has granted bail to Rakesh Garg, an accused in a case linked to the Future Digital Asset Scheme. The matter was heard by A.A. Ayachit, Special Judge (MPID) and District Judge-9, Nagpur. The court passed the order after hearing both sides.

It is alleged that large sums were collected from investors in the name of the scheme and that crores of rupees were allegedly misappropriated by luring them with good returns. Garg was described as the company's alleged director. According to the prosecution, Mehul Dixit is also an accused in the case. Police arrested both during the investigation.

According to the allegations of the complainant, Reema Ghosh, she and other investors were asked to put money into the scheme. It is alleged that anyone depositing Rs 9,000 was assured of Rs 12,500 in an online wallet within a month. There was also an alleged lure of commission for bringing in new investors. According to the complaint, investors were told that bringing in 25 new investors, each depositing Rs 9,000, would earn commission of up to lakhs of rupees and, allegedly, "merchant coins". The coins were also claimed to be usable for other facilities, including in US dollars.

The complainant alleges that, trusting these claims, she brought many people into the scheme. Initially the amount allegedly showed in some investors' wallets, but they could not withdraw it. When investors later asked for their money back, they allegedly did not receive the refund, incentive amount, merchant coins or the other promised benefits. A police complaint was then filed and an investigation began.

Police registered a case against Garg, described as the alleged director of CLBP System Pvt. Ltd., and Dixit, the company's alleged agent in Nagpur, under Sections 318(4), 316(5) and 3(5) of the Bharatiya Nyaya Sanhita (BNS), Section 3 of the MPID Act and Section 66 of the Information Technology Act. Both were arrested during the investigation. Garg's bail application was later filed in the special court.

Advocates Kamal Satuja, Kailash Dodani and Hitesh Khandwani argued for Garg. The defence said Garg had been wrongly made an accused. According to them, the complaint's references to explaining the scheme to investors, getting money deposited and assuring returns point to Dixit as having the main role. The defence also said that Dixit collected money from investors and explained the terms and benefits, while there is no firm basis to show that any of the alleged investment was deposited in Garg's personal bank account.

The defence said the investigation is complete and police have filed a chargesheet. No investor named in the chargesheet says that Garg personally asked them to invest. The Rs 9,000 deposited by people in the company's account was for company membership and cannot be treated as investment money deposited directly into Garg's personal account.

The defence also said the investigating agency has already frozen the bank accounts of Garg and his companies. These accounts allegedly hold more than Rs 2.28 crore. The amount from investors currently mentioned in the chargesheet is about Rs 5.40 lakh. The accused said that if the investigation treats this as the amount misappropriated, it can be adjusted against the money in the frozen accounts. He said he would have no objection to the same for any additional amount confirmed if more complaints come in.

The advocates told the court that nothing significant or any money remains to be recovered from the accused. He has cooperated with the investigation and is ready to continue assisting the investigating officer. With the chargesheet filed, continued custody is not necessary, they said.

Public Prosecutor Girish Dubey opposed bail on behalf of the government. He said the case involves a serious economic offence and a large number of investors may allegedly be affected. According to the prosecution, the alleged misappropriation could grow as the probe widens, and it cannot be ruled out that it may reach crores of rupees. He said some accused are still absconding and further investigation is continuing. The prosecution feared that, if released on bail, the accused could influence witnesses, obstruct the investigation or abscond. His being a resident of Punjab was also cited in seeking rejection of the application.

After hearing both sides, Judge A.A. Ayachit granted bail to Garg. The court imposed several conditions. Garg must provide his passport details to the court, appear and cooperate when summoned by the investigating officer, and not travel abroad without the court's permission.

The order brings Garg significant relief. However, the investigation and court proceedings will continue, and the allegations can be confirmed only after trial.