2019 (6) TMI 1647 - HC - Money Laundering

Seeking grant of bail - company had obtained borrowings from different banks, although, the Company had appeared in the defaulter list of the Reserve Bank of India - allegation that actual turnover of the company was much less than the projected turnover - loan transaction is a genuine transaction or not - HELD THAT - This Court deems it appropriate, at this stage, when the investigating agency is further investigating into the matter, that instead of granting the regular bail to the present applicant, it is appropriate and equitable in wake of the chargesheet having been laid in this case in the month of July, 2018, to grant him interim bail with certain stringent conditions and more particularly the applicant is having agreed not to transfer in any mode or manner any of the properties which are enlisted by different list before this Court, to grant them interim bail for the period of three months for now. This Court is conscious of the fact that essentially and predominantly the case is based on documentary evidences. The further investigation of the C.B.I. which is on going is also mainly relying on the documentary evidences and concerned witness is being questioned on the strength of such documents. There is no likely hood of tampering with the documentary evidences which have been seized and which are in the custody of various Banks. The Court is also conscious of the well laid down principle of 'bail and not jail' where more particularly there are rival claims of loss being not on account of any fraud committed with the Bank, but because of the various factors affecting the market so also the aspect that the chargesheet has been filed long ago and there is no likely hood of the trial getting over with such bulky volume of evidence and numbers of witnesses in a near future. The matters which are investigated by C.B.I. since involving serious question, the trial is likely to take a longer time - It will also give an opportunity to the Court to monitor the pace of investigation and the conduct of the accused during the course of further investigation. This will uphold the right of individual liberty and yet will not stultify in any manner the right of investigating agency to further investigate. The applicant is ordered to be released on interim bail for the period of three months from the date of his release, subject to conditions imposed - application allowed in part.

Issues Involved:
1. Successive bail application under Section 439 of the Code of Criminal Procedure, 1973.
2. Allegations of fraud and criminality against the company and its directors.
3. Investigation and chargesheet by CBI.
4. Applicant’s arguments for bail.
5. CBI’s opposition to bail.
6. Judicial custody and interim bail considerations.
7. Conditions imposed for interim bail.

Issue-wise Detailed Analysis:

1. Successive Bail Application:
The petitioner filed a successive bail application under Section 439 of the Code of Criminal Procedure, 1973, in connection with R.C. No. RC0292018A0006 registered with CBI/ACB Gandhinagar. The petitioner was previously denied bail and directed to approach the court after three months due to ongoing investigation.

2. Allegations of Fraud and Criminality:
The FIR alleged that Diamond Power Infrastructure Limited (the Company) obtained borrowings from different banks despite being on the RBI defaulter list. The prosecution claimed that the company’s actual turnover was much less than projected, and false documents were created to avail more drawing power. It was also alleged that the company issued letters of credit to sister concerns without following RBI guidelines, and loans were given to associates and relatives without bank permission, diverting receivables into unauthorized accounts.

3. Investigation and Chargesheet by CBI:
The CBI conducted searches and collected voluminous documents from various banks and private firms. The investigation revealed that the company defaulted on loans and carried out transactions with firms without actual purchase of goods to project higher turnover. The investigative audit by T.R. Chaddha & Co. pointed out irregularities and the connivance of bank officials. The CBI also highlighted a forged RBI letter used to release working capital limits and inadequate valuation of the company’s assets to cover outstanding dues.

4. Applicant’s Arguments for Bail:
The applicant argued that the loan transactions were genuine and the company faced financial distress due to market conditions, not fraud. The company had incurred losses due to increased raw material prices, delayed expansion, and liquidity constraints. The applicant emphasized that forensic audits found no fund diversion or fraud, and the company had paid significant amounts in interest and banking charges. The applicant also highlighted the delay in trial proceedings and the large number of witnesses and documents involved.

5. CBI’s Opposition to Bail:
The CBI opposed the bail application, arguing that the investigation was ongoing and the applicant could tamper with evidence or influence witnesses if released. The CBI highlighted the seriousness of the charges, the involvement of multiple banks and financial institutions, and the applicant’s role in the alleged fraud.

6. Judicial Custody and Interim Bail Considerations:
The court noted that the applicant had been in judicial custody for over 12 months, and the chargesheet was filed in July 2018. Five out of seven accused were granted bail, and the company’s properties were attached by the Enforcement Directorate. The court considered the applicant’s family circumstances and the lack of any untoward incidents during previous temporary bails. The court emphasized the principle of "bail and not jail" and the need to balance individual liberty with the ongoing investigation.

7. Conditions Imposed for Interim Bail:
The court granted interim bail to the applicant for three months with stringent conditions, including:
- Executing a personal bond of ?2.5 Cr. and furnishing surety of ?50 Lakh.
- Not taking undue advantage of liberty or misusing it.
- Not tampering with evidence or documents.
- Surrendering the passport.
- Not transferring any properties listed in the court order.
- Marking presence before the CBI/ACB office once a fortnight.
- Not leaving Vadodara district except for trial purposes.
- Not contacting any witnesses or bank officials.
- The Registrar/Sub Registrar to be intimated to prevent any property transfers.

The court allowed the application for interim bail, converting the regular bail application to interim bail, and permitted direct service. The court also stated that the trial court should not be influenced by the observations made while granting interim bail.

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