Tax Management India. Com
Law and Practice  :  Digital eBook
Research is most exciting & rewarding
  TMI - Tax Management India. Com
Follow us:
  Facebook   Twitter   Linkedin   Telegram

Home Case Index All Cases Companies Law Companies Law + HC Companies Law - 2023 (6) TMI HC This

  • Login
  • Cases Cited
  • Summary

Forgot password       New User/ Regiser

⇒ Register to get Live Demo



 

2023 (6) TMI 73 - HC - Companies Law


Issues Involved:
1. Grant of Bail under Section 439 of CrPC read with Section 212(6) of the Companies Act, 2013.
2. Allegations of Fraud under various sections of the Companies Act and IPC.
3. Role of the Applicant in the alleged fraudulent activities.
4. Assessment of Evidence and the applicant's involvement.
5. Application of Legal Principles for granting bail in economic offences.

Summary:

Issue 1: Grant of Bail
The applicant sought regular bail under Section 439 of CrPC read with Section 212(6) of the Companies Act, 2013. The court examined whether the applicant satisfied the twin conditions under Section 212(6) of the Companies Act, which imposes stringent conditions for granting bail in cases involving economic offences.

Issue 2: Allegations of Fraud
The applicant, a Chartered Accountant associated with BPSL, faced allegations of fraud involving siphoning off funds, falsification of financial statements, and cheating banks. The specific charges included:
- Charge 1: Fraud with intent to injure the company's interest under Section 447 of the Companies Act.
- Charge 2: Fraudulently availing credit facilities from banks under Section 36(c) read with Section 447 of the Companies Act.
- Charge 3: Cheating banks under Sections 120B, 417, and 420 of IPC.
- Charge 4: Fraudulent inducement of banks under Section 36(c) read with Section 447 of the Companies Act.
- Charge 7 & 8: Making false representations in financials under Sections 129 and 448 read with Section 447 of the Companies Act.
- Charge 10: Other fraudulent transactions under Section 447 of the Companies Act.
- Charge 11: Misuse and fraudulent abuse of the audit committee structure under Section 447 of the Companies Act.

Issue 3: Role of the Applicant
The applicant was alleged to have played a significant role in the fraudulent activities as the Chief Financial Officer (CFO) of BPSL. However, the applicant argued that he was merely a namesake CFO and not involved in the day-to-day financial operations or decision-making processes. The applicant's defense included:
- No Direct Involvement: The applicant claimed that the financial statements were prepared under the supervision of Amarjeet Sharma at the Chandigarh office, while he worked from the Delhi office.
- No Knowledge of Fraud: The applicant argued that he relied on others for the veracity of financial figures and was not aware of any fraudulent activities.
- No Beneficiary: The applicant contended that there was no material evidence to show that he benefited from the alleged siphoned funds.

Issue 4: Assessment of Evidence
The court analyzed the evidence presented, including statements from entry operators and co-accused, attendance registers of board meetings, and the applicant's role in the company. Key findings included:
- Statements of Entry Operators: None of the entry operators named the applicant in their statements.
- Preparation of Financial Statements: The financial statements were prepared under the supervision of Amarjeet Sharma, and the applicant was not directly involved.
- Attendance at Meetings: The applicant's name did not appear in the attendance registers of board meetings or audit committee meetings, contradicting the respondent's claims.

Issue 5: Application of Legal Principles
The court considered various legal precedents and principles, emphasizing the need for a prima facie assessment of the material on record. The court noted that:
- Presumption of Innocence: The applicant is presumed innocent until proven guilty, and the stringent conditions for bail should be interpreted reasonably.
- No Tampering or Flight Risk: The applicant had cooperated with the investigation, and there was no evidence of tampering with evidence or being a flight risk.
- Delay in Trial: Given the voluminous documents and the likelihood of a prolonged trial, the applicant's right to personal liberty was considered.

Conclusion:
The court granted bail to the applicant, subject to conditions, including furnishing a personal bond, not leaving India without permission, and not tampering with evidence. The decision was based on the prima facie assessment of the evidence, the applicant's cooperation with the investigation, and the absence of any direct involvement or benefit from the alleged fraudulent activities.

 

 

 

 

Quick Updates:Latest Updates