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2023 (7) TMI 1187 - HC - Companies LawSeeking grant of bail - petitioner has been implicated for his role as an officer who is in default within the meaning of section 2(60) of the Companies Act - petitioner was a director of the company at the relevant time - fulfilment of twin-conditions imposed under section 212(6) of the Companies Act - HELD THAT - Section 212(8) of the Companies Act says that an investigating officer of the SFIO has the power to arrest an accused if he has reason to believe on the basis of material available with him that the person is guilty of commission of an offence under section 212(6). Though, no doubt, this power of arrest is meant to enforce police custody in aid of investigation, what is important to note is that arrest is permissible if the investigating officer has reason to believe that the accused is guilty of the offence based on available material. In the present case, the record shows that the investigating officer never arrested the petitioner throughout the investigation, further investigation and other pre-cognizance stages, all of which took more than 06 years. Even at the stage when the final investigation report was filed before the learned Special Judge, the investigating officer did not seek that the petitioner be either arrested or remanded to judicial custody. This was presumably guided by the words of the Supreme Court in JOGINDER KUMAR VERSUS STATE OF UP. 1994 (4) TMI 385 - SUPREME COURT and SIDDHARTH VERSUS THE STATE OF UTTAR PRADESH ANR. 2021 (8) TMI 977 - SUPREME COURT . In view of the verdict of the Supreme Court in SUNDEEP KUMAR BAFNA VERSUS STATE OF MAHARASHTRA ANR 2015 (8) TMI 724 - SUPREME COURT , what is settled is that a person is in custody , no sooner he surrenders before the appropriate court. But that custody does not tantamount to being under incarceration as referred to in SATENDER KUMAR ANTIL VERSUS CENTRAL BUREAU OF INVESTIGATION ANR. 2022 (8) TMI 152 - SUPREME COURT . Now, the word incarceration has not been defined either in the Code of Criminal Procedure 1973, nor in the Indian Penal Code 1860, nor in the Prisoners Act 1900, nor even in the Prisons Act 1894. Therefore, taking cue from what the Supreme Court has held in Satender Kumar Antil, evidently when the petitioner appeared before the learned Special Judge in compliance of the summons issued to him, he was in custody of the court but not under incarceration . Accordingly, the twin-conditions contained in section 212(6) of the Companies Act did not get actuated. A reasonable interpretation of the twin-conditions leads to the conclusion that since the petitioner had not been arrested throughout the course of investigation; he had appeared before the learned Special Judge against summons - not arrest warrants - issued to him; and most importantly, when the investigating officer had not even sought police custody or judicial custody of the petitioner, the twin conditions would not apply. At that point in time, the twin-conditions stipulated in section 212(6) of the Companies Act did not automatically get actuated. What really transpired was that merely upon appearing before the learned Special Judge, as if by reflex action, the court remanded the petitioner to judicial custody; whereupon the petitioner filed a bail application; which also came to be dismissed there-and-then invoking section 212(6). The learned Special Judge misdirected himself in applying section 212(6) of the Companies Act, on the flawed premise that that that was the stage for grant of bail, whereas, it was the stage of considering whether there was any need to remand the petitioner to judicial custody at all. As discussed above, it was for the Investigating Officer to seek that the petitioner be remanded to judicial custody, for justifiable reasons based on material gathered during investigation, which he did not do - the Investigating Officer had not filed any application seeking that the petitioner be placed in judicial custody, even upto the stage when the petitioner appeared before the learned Special Judge on being summonsed. Since the Investigating Officer did not arrest the petitioner during the more than 06-year long proceedings and investigation, evidently, the Investigating Officer did not consider it necessary to do so based on the material in his possession collected in the course of investigation. This court is inclined to admit the petitioner to regular bail, subject to the conditions imposed - application allowed.
Issues Involved:
1. Whether the petitioner should be granted regular bail under Section 439 of the Cr.P.C. 2. Applicability of twin conditions under Section 212(6) of the Companies Act, 2013. 3. Consideration of the petitioner's conduct and risk factors for bail. Summary: Issue 1: Whether the petitioner should be granted regular bail under Section 439 of the Cr.P.C. The petitioner, accused No. 2 in complaint case No. 245/2021 titled SFIO vs. Parul Polymers Pvt. Ltd & Ors., seeks regular bail. The petitioner has been in custody for 6 months and 28 days and has been released on bail in two other matters. The learned counsel for the petitioner argued that the petitioner was never arrested during the investigation and that no material suggests he is a flight risk or may influence witnesses. The petitioner has spent about 14 months in jail as an under-trial. The court noted that the petitioner had been admitted to regular bail in a connected case and emphasized the importance of protecting constitutional rights and the principle that the gravity of the offense alone is not a ground to deny bail. Issue 2: Applicability of twin conditions under Section 212(6) of the Companies Act, 2013 The court discussed the principles for granting bail, including the stringent twin conditions under Section 212(6) of the Companies Act. It referenced several Supreme Court judgments, noting that the twin conditions should be interpreted reasonably and only apply after an accused is already under incarceration. The court observed that the petitioner was not under arrest when he appeared before the learned Special Judge and that the investigating officer did not seek his arrest or judicial custody. Therefore, the twin conditions did not automatically apply at that stage. Issue 3: Consideration of the petitioner's conduct and risk factors for bail The court noted that the investigating officer never considered the petitioner a flight risk or likely to tamper with evidence, as he was not arrested during the investigation. The court found no basis for the learned Special Judge to remand the petitioner to judicial custody without any articulated reason. The court emphasized that the severity of the allegations alone does not justify pre-trial incarceration and that the petitioner's right to an expeditious trial must be protected. Conclusion: The court admitted the petitioner to regular bail, subject to conditions including furnishing a personal bond, surrendering the passport, and not contacting prosecution witnesses or bank officials. The court directed the investigating officer to issue a Look-out-Circular to prevent the petitioner from leaving the country. The judgment clarified that nothing in it should be construed as an opinion on the merits of the pending matter and emphasized that punishment must follow conviction, not pre-trial incarceration.
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