Chhattisgarh HC denies bail in Rs 411 crore Medical Equipment Scam

Bilaspur: Observing that granting bail would send a detrimental message to society, the Chhattisgarh High Court has rejected the bail plea of businessman Shashank Chopda, who is accused of playing a central role in a massive Rs 411 crore scam involving the supply of overpriced medical equipment and reagents under the state-run "Hamar Lab" scheme.

According to investigators, Chopda’s company, Mokshit Corporation, supplied medical machines and blood sample collection tubes to the Chhattisgarh Medical Services Corporation Ltd (CGMSCL) at highly inflated rates. For instance, EDTA tubes were reportedly sold at Rs 2,352 each, whereas their market price is barely Rs 8.50. The allegations also involved that Rs 300 crore worth of chemicals were purchased just to stop them from expiring, and that CBC machines worth Rs 5 lakh were sold for Rs 17 lakh.

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Dismissing the bail plea, the Single Bench of Chief Justice Ramesh Sinha noted, "It is well settled that while granting bail, the Court has to consider three factors viz. flight risk or likelihood of fleeing justice, likelihood of tampering with the evidence and likelihood of influencing the witness. In the present case, since there is a connivance between a private Companies and the officials of the State, it cannot be ruled out that the applicant would not try to tamper with the evidence or influence the witnesses."

The Applicant was arrested in connection with an FIR registered under Sections 409 and 120B of the Indian Penal Code and Sections 13(1)(A), 13(2), and 7(c) of the Prevention of Corruption Act, 1988. The case concerns the purchase of medical equipment and reagents under the “Hamar-Lab” scheme implemented by the Public Health and Family Welfare Department, where the procurement was allegedly done without budgetary approval or proper demand assessment, causing a loss of approximately 411 crore to the State.

Senior advocates Siddharth Mridul and Ajay Mishra, speaking for the accused Shashank Chopda, told the court that although there are serious allegations against Mokshit Corporation, their client had no real role in any wrongdoing. 

Regarding the purchase of EDTA blood collection tubes from Mokshit Corporation at an inflated price of Rs 2,352 per piece, while others got them for just Rs 8.50, the counsel said that this was a typographical error, with the actual price being Rs 23.52 per piece. 

He argued that Chopda’s company simply responded to a government tender and supplied products as ordered. He said the company did not cheat the government; instead, it is still waiting for Rs 351 crore in unpaid dues. According to him, the authorities are falsely blaming Chopda to avoid paying this amount.

On the other hand, Dr. Pande, learned Deputy Advocate General for the State/non-applicant, opposes the bail application and submits that in the FIR that CGMSCL purchased reagents without following the procedures and without making a proper assessment of the requirement of reagents. Before giving the indent for purchasing reagents, neither the budget availability was ensured by the Director of Health Service, nor any administrative approval was obtained. Without bringing the Government to notice, a purchase of about Rs. 411 crores was made by the government, said the counsel for the state. 

Mr. Pande further submits that the applicant is the mastermind of the formation of the cartel, and used influence to tailor tender conditions.  He has used bogus bills from Companies for personal gain and warned that releasing him could risk tampering with evidence and influencing witnesses, especially since investigations into the role of public officials are still ongoing.

Considering the facts and circumstances of the case, the court said, "The present is a case which involves economic offence and which is considered to be more serious than conventional crimes as they affect the entire economy and pose a serious threat to the financial health of the country while shaking public confidence in the financial system. Such crimes committed during the course of economic or business activities cause financial harm and adversely impact the country's economic well-being and financial health. 

These offences typically involve fraudulent activities that affect both public and private financial interests. The non-applicant has still to investigate the case with relation to the involvement of the government officials/officials of the CGMSCL, without whose connivance, the applicant could not have been able to secure the tender in question and that too, at an excessive rate."

The Court noted, “Economic offences constitute a different class and need to be visited with a different approach in the matter of bail.”

The Court referred to the Supreme Court’s decision in State of Gujarat v. Mohan Lal Jitamalji Porwal, where it had been held that economic offences threaten the financial integrity of the State and public confidence in justice, and must be treated with heightened seriousness.

The Court noted that the Applicant had, through fictitious entities and misuse of official influence, created a monopoly over the supply of medical reagents. 

"It is not an ordinary financial crime but a crime in an organised manner. The documents appended with the petition prima facie discloses that the investigation has established that the applicant masterminded an elaborate and wellorchestrated criminal conspiracy by creating multiple fictitious companies in the names of his relatives and close associates. Under the guise of packaging, repair, maintenance, consultancy, and logistics services, he generated fraudulent invoices exceeding Rs.150 Crores," the Court added.

The Bench further noted that due to the closed system of the supplied machines, public health centres across the State were deprived of necessary diagnostic services, stating, “Because of such act, the people of the State are deprived of various pathological tests… which is a direct loss to the people of the State.”

Citing the seriousness of the offence and potential harm to public welfare, the court rejected the bail application and said.

"Granting bail to the applicant at this stage would not only embolden corrupt practices but also send a highly detrimental message to society, undermining public confidence in the justice delivery system."