2022 (5) TMI 1315 - HC - Companies Law

Seeking grant of Bail - second bail application - fraudulent merchantine trade - wrongful loss to the Public Sector Banks - siphoning of Bank funds through merchantine trade - falsification of financial statement of the Companies involved in the matter by not showing true and fair views - HELD THAT - As is evident from the record, earlier an F.I.R. was lodged on behalf of the C.B.I. on the basis of same set of facts on which present compliant has been filed. Applicant was enlarged on bail. Thereafter, he was again arrested in the present matter started by the S.F.I.O. Applicant moved bail application before this Court, which was rejected. Thereafter, he approached the Apex Court and was allowed on interim bail. Applicant withdrew the Special Leave Petition with liberty to approach the High Court or the court below. Thereafter, this second bail application has been moved. Although, technically, this is the second bail application moved before this Court, but submission raised on behalf of the S.F.I.O. that bail application is not maintainable directly before the High Court is not tenable. Present bail application can be entertained and decided by the High Court. Perusal of the record also reveals that one Udai J. Desai had also approached this Court for bail, but bail prayer made by him was rejected by this Court. Thereafter, he approached the Apex Court and he was allowed on bail. Another co-accused Vishwanath Gupta had applied for anticipatory bail, which was allowed by the coordinate bench of this Court, as is clear from the record. Order passed on the anticipatory bail application was challenged before the Apex Court, which was dismissed. Applicant is allowed to be released on bail - application allowed.

Issues Involved:
1. Second Bail Application
2. Prima Facie Case and Embargo under Section 212(6) of the Companies Act
3. Role of Co-accused and Parity in Bail
4. Applicant's Conduct and Compliance with Bail Conditions
5. Allegations and Investigation Findings

Issue-wise Detailed Analysis:

1. Second Bail Application:
The applicant moved a second bail application, arguing that the merit of the case was not considered in the first bail application. The court noted that although this is technically the second bail application, it is maintainable and can be entertained by the High Court. The applicant had approached the Apex Court after the rejection of the first bail application, where he was granted interim bail and later withdrew the Special Leave Petition with liberty to approach the High Court or the trial court.

2. Prima Facie Case and Embargo under Section 212(6) of the Companies Act:
The applicant contended that no prima facie case was made out against him and that the embargo under Section 212(6) of the Companies Act should not prevent his release on bail. The court acknowledged that the first bail application was rejected based on Section 212(6), but noted that co-accused with identical roles had been granted bail by the Apex Court. The court also considered that the applicant had not misused the liberty granted during interim bail and had fully cooperated with the investigating agency.

3. Role of Co-accused and Parity in Bail:
The applicant argued that many co-accused, including Udai J. Desai and Vishwanath Gupta, had been granted bail by higher courts. The court noted that Udai J. Desai was granted bail by the Apex Court after his bail application was rejected by the High Court. Similarly, Vishwanath Gupta's anticipatory bail was upheld by the Apex Court. The court found that the applicant's role was similar to that of the co-accused who had been granted bail, thus warranting parity in bail decisions.

4. Applicant's Conduct and Compliance with Bail Conditions:
The applicant's counsel argued that the applicant had not misused the liberty granted by the Apex Court or the High Court during interim bail and had complied with all conditions imposed. The court found no evidence of breach of bail conditions and noted that the applicant had fully cooperated with the investigation. The court also considered the applicant's personal circumstances, including the death of his father and the illness of his mother, which required his presence.

5. Allegations and Investigation Findings:
The prosecution alleged that the applicant, as a promoter-director of several companies, caused wrongful loss to public sector banks amounting to Rs. 4168 crores by engaging in fraudulent merchant trade, falsifying financial statements, and manipulating financial transactions. The investigation revealed that the companies involved obtained credit facilities through deceptive means, engaged in speculative currency trading, and manipulated financial statements to show false profitability. Despite these allegations, the court found that the applicant's role was similar to that of co-accused who had been granted bail, and that the trial was not likely to conclude soon.

Conclusion:
The court granted bail to the applicant, considering the parity with co-accused, the applicant's compliance with interim bail conditions, and the lack of immediate need for his custody. The bail was granted on the condition that the applicant would not tamper with evidence, intimidate witnesses, or commit similar offenses. The applicant was also required to deposit his passport and not leave the country without court permission.

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