2022 (7) TMI 414 - HC - Indian Laws

Seeking grant of Bail - fraudulent mismanagement of Company - petitioner is the Company Secretary and a signatory of the Financial Statements of FY 2013-14 and 2014-15 of BEL, which was a subsidiary of BSL - It was claimed that the petitioner being the Company Secretary of BEL was privy to all Board meetings and was a signatory to the financial statement, wherein there was a major irregularity with respect to investment in BSL - Section 212(6) of the Companies Act - HELD THAT - The accused was not arrested either by the Investigating agency during the period of investigations or even thereafter when the charge-sheet was filed in the Court. In fact, the bail application was heard for about three years and the accused was not taken into judicial custody despite being present in Court on every date. The respondent has nowhere averred that the custody of the accused was required for the purpose of the investigations or thereafter not any assertion was made for taking the petition into consideration. Interestingly, the petitioner had no interim protection of any superior Court during investigation or while his bail was being heard by the learned Trial Court after taking cognizance, but was never, taken into custody for three years and suddenly on 01.06.2022 when the allegations were still continuing, he was abruptly taken into custody for a reason which existed since last about three years. Moreover, being the Trial Court, it was competent to pass appropriate orders in the circumstances. The bail application was listed for further arguments for 02.06.2022 on which date the application was dismissed. The accused has been appearing before the Investigating Officer and thereafter before the Court diligently and his custody was never sought by the respondent. The petitioner was the Company Secretary in the Company of the accused no. 2 and his main accusation was that he had signed the Financial Statements in his capacity as the Company Secretary. The primary accused, namely, Mr. Neeraj Singhal and Mr. Nitin Johari have already been granted interim bail. The allegations pertain to years-2014-2015 and 2015-2016 and the petitioner neither before nor after has been involved in any criminal offence. The petitioner is hereby admitted to bail on submitting a Bail Bond and Surety Bond in the sum of Rs.1,00,000/- to the satisfaction of the trial court/Special Judge - Application allowed.

Summary

Issues involved:
Petition under Section 482 seeking quashing of order and bail - Challenge to order taking petitioner into judicial custody - Role of petitioner in financial mismanagement - Comparison with other accused granted bail - Interpretation of Section 212(6) of Companies Act - Failure to appear for bail hearing - Justification for granting bail.

Analysis:
1. Petitioner's Role and Allegations:
The petitioner filed a petition under Section 482 seeking to quash an order and grant bail. The petitioner, a Company Secretary, was accused of signing Financial Statements for a company involved in financial mismanagement. The petitioner argued that he had no active role in the mismanagement and had cooperated with investigations. The petitioner's role was compared to other prime accused granted interim bail by the Supreme Court.

2. Prosecution's Allegations:
The prosecution alleged that the petitioner was actively involved in the financial irregularities. Investigations revealed a complex web of fund diversion by ex-promoters of the company. The petitioner, as the Company Secretary, was accused of being privy to board meetings and signing flawed financial statements. The prosecution cited Section 212(6) of the Companies Act, emphasizing the mandatory conditions for bail.

3. Bail Application and Court Proceedings:
The bail application of the petitioner was heard over several dates, with the final hearing scheduled for 01.06.2022. Due to the absence of the main counsel, the hearing was adjourned to 02.06.2022. However, the petitioner failed to appear on the adjourned date, leading to his judicial custody. The petitioner then directly approached the High Court challenging the custody order.

4. Court's Decision and Reasoning:
The High Court considered the petitioner's consistent appearance before the court and cooperation with investigations. It noted the sudden decision to take the petitioner into custody after three years of bail hearings. The Court found no justification for the abrupt custody decision, especially when the petitioner had no interim protection. The Court also highlighted the petitioner's non-involvement in criminal activities post the alleged financial irregularities.

5. Granting of Bail:
After evaluating the circumstances and the petitioner's conduct, the High Court granted bail to the petitioner upon submission of a Bail Bond and Surety Bond. The Court emphasized the petitioner's diligent appearance before authorities and lack of custody requirements by the prosecution. The decision was based on the petitioner's role, cooperation, and lack of criminal involvement beyond the alleged financial mismanagement.

This detailed analysis outlines the key legal aspects, arguments, and reasoning leading to the High Court's decision to grant bail to the petitioner in the context of the financial mismanagement allegations and the interpretation of relevant legal provisions.