2015 (9) TMI 1714 - HC - Companies Law

Seeking grant of anticipatory bail - transfer of investments made or not - offences under Sections 406, 420 and 120B of the Indian Penal Code read with Section 5 of the Tamil Nadu Protection of Interests of Depositors (in Financial Establishments) Act, 1997 - HELD THAT - Since the application for convening a meeting of the debenture holders for considering a scheme of arrangement was filed on 19.9.2013 and also since the police registered the first information report on 21.10.2013, the Company Court, even while ordering the convening of the meeting, granted protective orders preventing the police from arresting the petitioner herein, with the object of seeing as to whether the debenture holders were with the petitioner herein or not. Eventually, the report of the Chairman of the meeting of the debenture holders indicated that more than 93% of the debenture holders supported the scheme of arrangement - A group of debenture holders also filed objections. After considering those objections, the Company Court passed an order dated 30.4.2014 in C.P.No.15 of 2014 sanctioning the scheme of arrangement. All other accused (except the petitioner herein) were granted bail (or anticipatory bail in the case of one) on account of the fundamental fact that the petitioner herein is the kingpin. Both in the scheme of arrangement in C.P.No.15 of 2014 as well as before the Criminal Court, the petitioner herein has made an unequivocal statement that he alone is responsible for repayment of the dues to the debenture holders. Therefore, the case of the petitioner herein cannot be treated on the same footing as the case of the other accused, who were let off on bail (anticipatory bail). The Scheme sanctioned by this Court in C.P.No.15 of 2014 is also not working out as per the time schedule - Petition dismissed.

Issues Involved:
1. Petition for anticipatory bail under Section 438 of the Code of Criminal Procedure.
2. Alleged offences under Sections 406, 420, and 120B of the Indian Penal Code read with Section 5 of the Tamil Nadu Protection of Interests of Depositors (in Financial Establishments) Act, 1997.
3. Financial crisis and scheme of arrangement under Sections 391 to 394 of the Companies Act, 1956.
4. Protective orders and their impact on the investigation.
5. Compliance with the scheme of arrangement sanctioned by the Company Court.
6. Role and responsibility of the petitioner as the Managing Director and the kingpin.

Detailed Analysis:

1. Petition for Anticipatory Bail:
The petitioner, the Managing Director of Viswapriya (India) Limited, filed a petition for anticipatory bail under Section 438 of the Code of Criminal Procedure. The petitioner is the fourth accused in Crime No.05 of 2013, filed by the Economic Offences Wing II of the Chennai City Police.

2. Alleged Offences:
The complaint was lodged by an individual who claimed that he and his family invested Rs. 6,60,000 in a scheme known as 'Prime Investment Scheme' but were subsequently issued cheques that were dishonoured. The alleged offences include criminal breach of trust (Section 406), cheating (Section 420), and criminal conspiracy (Section 120B) under the IPC, along with violations under the Tamil Nadu Protection of Interests of Depositors Act, 1997.

3. Financial Crisis and Scheme of Arrangement:
The petitioner promoted about 49 companies. When Viswapriya (India) Limited faced a financial crisis, another company promoted by the petitioner, M/s. Analog Financial Services Private Limited, filed an application seeking a scheme of arrangement under Sections 391 to 394 of the Companies Act, 1956. The application was filed before the Company Court in September 2013, and a meeting of the secured debenture holders was convened. The majority of debenture holders supported the scheme, and the Company Court sanctioned it on 30.4.2014.

4. Protective Orders:
From the date of the FIR on 21.10.2013, the petitioner enjoyed various protective orders, including stays on proceedings and protection from arrest. These orders were in place until 6.8.2015, after which the police were free to continue their investigation.

5. Compliance with the Scheme of Arrangement:
The petitioner made an unequivocal statement that he alone was responsible for repaying the debenture holders. However, the scheme sanctioned by the Company Court has not been honored fully, with only about Rs. 50.00 Lakhs repaid so far. The court called for detailed information from the petitioner to assess his ability to repay the debenture holders, but the petitioner claimed he needed access to office records without fear of arrest to provide complete details.

6. Role and Responsibility of the Petitioner:
The petitioner is identified as the kingpin and has taken full responsibility for the repayment of dues. Despite the court's efforts to explore the petitioner's resources and ensure repayment, the petitioner remained at large, and the police were unable to secure his custody. The court noted that the petitioner's non-compliance with the scheme and the lack of a clear picture regarding his resources justified the dismissal of the anticipatory bail petition.

Conclusion:
The petition for anticipatory bail was dismissed, accepting the contentions of the prosecution and the intervenors. The court emphasized the petitioner's central role and responsibility in the financial crisis and the need for his custody to ensure a clear picture of the repayment capabilities and compliance with the scheme of arrangement.

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