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2023 (10) TMI 1369 - HC - Companies LawGrant of bail - diversion of funds or not - accusation is that the applicant defrauded the bank by declaring false value of stock offered as collateral - bail sought on medical grounds - Section 447 of the Companies Act, 2013 - HELD THAT - The Forensic Audit Report which SFIO is relying upon indicates that JACPL has faced genuine business losses and that there is no financial irregularities. It appears that there is no independent stock audit done by SFIO. The SFIO has arrived at value of the stock based on the statement of the store keepers and there are some substance in the contention of learned senior advocate for the applicant that SFIO did not carry out any independent forensic analysis relating to valuation of the stock. So far as the accusation that Rs. 550 crores have gone to Jagat Overseas from the account of the company which amounts to siphoning is concerned, it appears that in the financial year 2014-2015 Rs. 522.60 crores were transferred from Jagat Overseas account to the account of JACPL and Rs. 552.41 crores was received back from JACPL to Jagat Overseas . Prima facie, this may be a transaction squaring up of the amount credited and debited. In prima facie opinion, there is a reasonable ground to believe that the offence punishable under Section 447 of the said Act may not be attracted in the present case. The applicant is 63 years of age. It is thus seen that the applicant needs constant medical treatment. No doubt the same is available and provided to the applicant at Sir J. J. Hospital and in prison hospital. However, there are no hesitation in opining that the applicant needs constant medical attention considering his age and ailment. The age and medical condition of the applicant is one of the circumstance which is taken into consideration for enlarging the applicant on bail. Though it is stated that the applicant is willing to furnish a surety having valuation of upto Rs. 5 crores for the purpose of releasing him on bail, on behalf of the applicant, learned counsel on instructions of the applicant through his son who is personally present in the Court submitted that a sum of Rs. 5 crores will be deposited with the Special Court by way of Fixed Deposit in the name of the concerned Registrar/ Superintendent of the Special Court within a period of two months from the date of the applicant s enlargement on bail. The statement is accepted as an undertaking to this Court. The affidavit to that effect be filed by the applicant in this Court before his release. Registry to accept. The said deposit will abide by the orders passed by the Special Court. The applicant is in custody for more than 18 months with no possibility of the trial concluding any time soon. The investigation is complete. The charge-sheet has been filed. There are no criminal antecedents reported against the applicant. The applicant does not appear to be a flight risk. Further incarceration will only be by way of a pre-trial punishment. The applicant- Sant Lal Aggarwal shall be released on bail on his furnishing P.R. Bond of Rs. 1,00,000/- with one or more local sureties in the like amount and subject to fulfilment of conditions imposed. Bail application allowed.
Issues Involved:
1. Bail Application under Section 447 of the Companies Act, 2013. 2. Applicability of the Companies Act, 2013 versus Companies Act, 1956. 3. Allegations of financial fraud and misrepresentation. 4. Medical condition of the applicant. 5. Evaluation of evidence and investigation reports. 6. Provisions for bail under Section 212(6) of the Companies Act, 2013. Summary: 1. Bail Application under Section 447 of the Companies Act, 2013: The applicant sought bail for offences under Section 447 of the Companies Act, 2013, initiated by the Serious Fraud Investigation Office (SFIO) in Special Company Case No. 418/2022. The applicant, a director of Jagat Agro Commodities Pvt. Ltd. (JACPL), was arrested on 8/3/2022. The trial court and this court previously granted bail to two other accused. 2. Applicability of the Companies Act, 2013 versus Companies Act, 1956: The applicant's counsel argued that the investigation and prosecution should be under the Companies Act, 1956, as the proceedings commenced before the Companies Act, 2013 came into effect. However, the court did not delve into this issue, suggesting it could be considered in appropriate proceedings. 3. Allegations of financial fraud and misrepresentation: SFIO accused the applicant of defrauding the bank by inflating stock values and diverting funds. The applicant's counsel contended that repeated audits, including a forensic audit, verified the stock's physical existence and value, and no independent forensic audit was conducted by SFIO. The SFIO's primary accusations included fewer godowns than declared and significant discrepancies in stock value. 4. Medical condition of the applicant: The applicant, aged 63, suffers from multiple ailments, including hypertension, diabetes, ischemic heart disease, and seizure disorder. Medical reports indicated ongoing treatment and the need for constant medical attention. The court considered the applicant's age and medical condition as factors for granting bail. 5. Evaluation of evidence and investigation reports: The court noted that bank audits and forensic reports indicated genuine business losses and no financial irregularities. SFIO's valuation of stock was based on employee statements without independent forensic analysis. The court found some merit in the applicant's contention regarding the lack of independent stock audit by SFIO. 6. Provisions for bail under Section 212(6) of the Companies Act, 2013: Section 212(6) requires the Public Prosecutor's opportunity to oppose bail and the court's satisfaction that the accused is not guilty and unlikely to reoffend. The court found reasonable grounds to believe that the offence under Section 447 may not be attracted and considered the applicant's prolonged custody, medical condition, and lack of flight risk. Order: The court granted bail with conditions, including furnishing a P.R. Bond of Rs. 1,00,000/-, monthly attendance at SFIO, non-tampering with evidence, surrender of passport, and adherence to statements made in the affidavit. The observations were prima facie and not to influence the Special Court during the trial.
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