2021 (9) TMI 1300 - HC - Indian Laws

Cancellation of pre-arrest bail - misappropriation of public funds and corruption - Sections 420, 406, 120-B and 34 of the Indian Penal Code, 1860 - HELD THAT - The High Court took a serious view of the said fact and cancelled the anticipatory bail and it is the said order which was challenged before the Hon ble Apex Court. While dismissing the appeal, the Hon ble Supreme Court in MAHANT CHAND NATH YOGI ANR. VERSUS STATE OF HARYANA 2002 (10) TMI 811 - SUPREME COURT observed that in the case in question, there are serious allegations of misappropriation of public funds and corruption and thus, upheld the order of the High Court. he facts of the present case are substantially different inasmuch as,even as per the case of the prosecution, there were business dealings between the complainant company and the accused persons and the case has civil tappings and there is no allegation of misappropriation of public funds nor the provisions of the Prevention of Corruption Act, 1988 are attracted in the present case, nor the Respondent Nos. 3 to 5 conducted themselves in the manner as the accused. This Court feels that the order passed by the Sessions Judge is legal and in accordance with law and that there is no ground much less cogent or overwhelming ground to set aside the same and to cancel the anticipatory bail granted to respondent Nos.3 to 5, thus, the present petition stands dismissed and order dated 01.10.2020 is upheld. Petition dismissed.

Summary

Issues Involved:
1. Cancellation of pre-arrest bail granted to respondents.
2. Allegations of fraudulent intention and cheating.
3. Compliance with NCLT order and impact on transactions.
4. Requirement of custodial interrogation.
5. Arguments and defenses raised by both parties.
6. Legal precedents and principles governing bail and its cancellation.

Detailed Analysis:

1. Cancellation of Pre-Arrest Bail:
The petitioner sought the cancellation of pre-arrest bail granted to respondent Nos. 3 to 5 by the Sessions Judge, Rewari, under Section 439(2) read with Section 482 of Cr.P.C. The Sessions Judge had granted anticipatory bail on 01.10.2020, observing that the respondents canceled the disputed purchase orders dated 17.10.2019 upon understanding the NCLT order's impact, and no goods were supplied based on these orders. The court also noted the advanced age of some respondents and the documentary nature of the evidence, concluding that custodial interrogation was unnecessary.

2. Allegations of Fraudulent Intention and Cheating:
The petitioner alleged that respondents placed purchase orders on 17.10.2019 despite the NCLT's suspension of the Board of Directors on 24.09.2019, indicating fraudulent intent. However, the respondents argued that these orders were canceled upon realizing the NCLT order's implications, and no goods were received. They also highlighted that previous transactions and payments were part of ongoing business dealings, not personal misconduct.

3. Compliance with NCLT Order and Impact on Transactions:
The petitioner contended that the respondents violated Section 14 of the Insolvency and Bankruptcy Code, 2016, which bars transactions post-NCLT order. The respondents countered that the NCLT order was uploaded in October 2019, and they informed the complainant about the suspension of the Board of Directors through letters dated 30.10.2019 and 20.11.2019. They emphasized that all transactions were in the company's name, not personal, and the complainant's claims were being addressed by the IRP.

4. Requirement of Custodial Interrogation:
The Sessions Judge and the High Court both found that custodial interrogation was unnecessary as the case was based on documentary evidence. The court noted that the respondents had joined the investigation, as confirmed by the prosecution's withdrawal of a cancellation application on 04.01.2021.

5. Arguments and Defenses Raised by Both Parties:
The petitioner argued that the respondents' actions post-NCLT order indicated fraudulent intent and that significant amounts remained unpaid. The respondents defended their actions by stating that the disputed orders were canceled, no goods were received post-NCLT order, and all dealings were corporate, not personal. They also highlighted ongoing legal proceedings, including claims before the IRP and Section 138 petitions under the Negotiable Instruments Act.

6. Legal Precedents and Principles Governing Bail and Its Cancellation:
The court referred to Supreme Court judgments, emphasizing that bail already granted requires "cogent and overwhelming grounds" for cancellation. The court found the Sessions Judge's order well-reasoned and not mechanical, aligning with principles laid out in cases like Mahant Chand Nath Yogi and Dolat Ram. The court distinguished the present case from Sudhir's case, noting the absence of public fund misappropriation and corruption allegations.

Conclusion:
The High Court upheld the Sessions Judge's order granting anticipatory bail, finding no compelling reasons to cancel it. The court highlighted that the case's documentary nature and civil aspects did not necessitate custodial interrogation. The petition for cancellation of anticipatory bail was dismissed, and the Sessions Judge's order was affirmed. The court clarified that its observations were solely for deciding the bail cancellation petition and not on the merits of the main case.