Court dismisses bail plea of businessman accused of cheating Republic of Djibouti with US$ 5 mn

By Dhiraj Beniwal
New Delhi [India], February 8 : A Delhi court has recently dismissed a bail plea of a businessman accused of cheating the Republic of Djibouti (RoD) of USD 5 million.
The FIR was registered in 2018 based on the complaint filed by the Ambassador to the Republic of Djibouti (RoD) in India.
The businessman surrendered before the court in terms of the order of the Supreme Court of India.
Kiran Gupta, Additional Sessions Judge (ASJ) of Patiala House Court, on Tuesday dismissed the bail plea of Sai Ramakrishna Karuturi.
"The applicant was given the bank guarantee or loan to the tune of USD 6.5 million for performing the agricultural activities that he had failed to perform," ASJ Kiran Gupta said in the order dated February 6, 2024.
The court also said that the applicant had neither returned the amount nor supplied the agricultural produce as agreed between the parties under the aegis of the agreements dated September 10, 2011, and February 23, 2012.
" The applicant, even after executing the acknowledgement of debt dated February 10, 2013, for an amount of 5 million USD, has not paid the said amount to RoD," the 1Court remarked in the order.
The court also noted that he had not supplied any accounts of losses purportedly incurred by him due to floods, except the newspaper clippings.
The applicant had failed to show that he had supplied substantial machinery and equipment to RoD as agreed between the parties, as further noted.
It was stated in the bail application that he has clean antecedents and has no previous involvement. He is a married man with three daughters. He has a medical history.
He has been in custody since October 16, 2023, when he surrendered to the custody and jurisdiction of the court in terms of an order dated September 25, 2023, of the Supreme Court of India, the plea stated.
It was argued by counsel for Karatiri that the complaint is from 2018 and no final report has been filed by the IO to date. Despite lodging the FIR in 2018, no efforts were made by the IO to arrest the appellant or accused.
The applicant or accused cooperated in the investigation on every date and stage. The IO had issued a Letter of Retogatory, which would take a long time and until the same is received, no sanction can be procured under 188 IPC.
It was submitted that the applicant may not be suffering incarceration for an indefinite period. The dispute, if any, is premised on the agreements and is civil. There is a clause for international arbitration; however, the same has not been invoked by the complainant. The KOL is under IBC at present, the counsel argued.
It was also submitted that the applicant had no intention to cheat anyone. The crops could not be grown due to the conditions beyond his control. He has duly compensated the complainant by providing sufficient machinery.
The bail plea was opposed by the Additional Public Prosecutor for the State and advocate Raman Gandhi, Counsel for the complainant, stating that the applicant, who is the Director of KOL, had cheated the complainant of an amount of US $ 5 million without performing any act under the agreements dated September 10, 2011, and February 23, 2012, executed by him through his company.
Though he claimed to have taken on lease 3,00,000 hectares of land from the
Government of Ethiopia at Gambella, but it was subsequently revealed that the entire land was in a flood plain and unfit for any agricultural activity, the prosecution said.
It was also stated by the prosecution that the accused did not have any land left aside for 10,000 hectares of land. He never showed the 10,000 hectares of land that were allegedly earmarked for agricultural activity to be performed for the complainant as per the agreement dated September 10, 2011. No agricultural activity was ever done or started by the applicant. He neither started any agricultural activity nor
repaid the credit facility or loan and thus pocketed the amount of US $ 6.5 million.
It was further submitted that the applicant is a flight risk as he has no permanent residence in India. He has substantial assets in Kenya and Africa, where ICICI Bank has initiated proceedings for recovery.
The complaint is dated May 4, 2018, and is premised on a civil transaction that took place between Karuturi Global Ltd. (KGL) and Karuturi Overseas Ltd., Dubai (KOL) on
the one hand and RoD and its appointed advisory/consultant firm, namely Multiflex Biotech FZC (MBF), on the other hand.
It is also stated that the genesis of the dispute is two tripartite agreements dated September 10, 2011, and February 23, 2012, entered into between parties.
Under these agreements, KOL was to develop about 15,000 hectares of agricultural land in Ethiopia and supply the agricultural produce to Djibouti.
Accordingly, RoD had issued bank guarantees to the tune of US $ 3 Million from the Central Bank of Djibouti under the agreement dated September 10, 2011, and US $ 3.5 Million under the agreement dated February 23, 2012, as securities in
favour of KOL.
It further stated that KOL has invested huge sums in cultivating the lands and has grown crops in full compliance with the terms of both agreements; however, unfortunately, the crops were destroyed as a result of floods, causing huge losses to KOL.
Hence, KOL, as per Clause 8 of the agreement dated September 10, 2011, is not liable for any acts of God. KOL, in compliance with the agreement, had planted about 1200 ha of maize but unfortunately, the crops were destroyed due to floods, resulting in the submergence of crops. The said fact has been acknowledged on behalf of RoD
via email dated November 18, 2012.
Despite suffering heavy losses, since KOL was unable to supply the food material, it supplied the requisite machinery to the government of Djibouti, which is evident from various e-mails exchanged between the parties.