2021 (1) TMI 1336 - HC - Indian Laws

Seeking grant of anticipatory bail - Vicarious liability of applicant being a former director and current shareholder of the company involved in the alleged fraud - HELD THAT - The applicant is named in the FIR as the wife of Sanjay Bhati. She herself has admitted that she was the Director of the Company in question till February 2017. Thereafter she resigned from the said post. She remains shareholder of 3.8% shares till today. It is also evident from the record that a huge money of the investors invested in Bike Boat Scheme of the Company has been diverted / reinvested in different other Schemes. It is also evident that EMI and other benefits assured / agreed upon between the investors and the Company have not been returned / paid to them. A number of criminal cases have been lodged against the applicant as is clear from the rejection orders of the anticipatory bail annexed with the bail application as Annexure-13. It is also evident that at the time of diversion of the money in different other schemes invested by the investors against the agreement entered into between the investors and the Company applicant was also having share of 3.8% in the Company. A reward of Rs. 50, 000/-is also against her as applicant is not cooperating the investigating agency. It is true that there is no need to make out a special or exceptional case for anticipatory bail but during investigation in this case evidence under Section 409 IPC and other offences as disclosed here-inabove have also been added; number of investors (more than 2.5 lakhs) have invested their money in the Company; invested amount is also over and above 3500 crores and they are still waiting for return of the money invested by them in the Company hence having regard to the entire facts and circumstances of the case and the law laid down by the Apex Court in Lavesh case 2012 (8) TMI 1190 - SUPREME COURT and also considering the submissions of learned counsel for the parties and keeping in view the nature and gravity of offence money invested by the investors with the Company modus operandi adopted by the Company diverting the investors amount in other different Scheme against the agreement criminal cases lodged against the applicant issuance of non-bailable warrant and reward of Rs. 50, 000/- and without expressing any opinion on the merits of the case the Court is of the view that the applicant has not made out a case for anticipatory bail. Conclusion - The applicant s non-cooperation and the issuance of a non-bailable warrant justified the denial of anticipatory bail. The anticipatory bail application is rejected.

Summary

1. ISSUES PRESENTED and CONSIDERED

The core legal questions considered in this judgment are:

• Whether the applicant is entitled to anticipatory bail under Section 438 of the Code of Criminal Procedure (CrPC) for charges under Sections 420 and 406 of the Indian Penal Code (IPC).
• Whether the applicant, being a former director and current shareholder of the company involved in the alleged fraud, can be held vicariously liable for the offenses committed by the company.
• Whether the applicant's resignation as a director before the alleged offenses absolves her of any criminal liability.
• Whether the applicant's role as a shareholder and her alleged access to company records imply control over the company's day-to-day affairs, thus implicating her in the fraud.
• Whether the issuance of a non-bailable warrant and a reward for the applicant's arrest justifies the denial of anticipatory bail.
• Whether the applicant's non-cooperation with the investigation and the potential for evidence destruction affect the decision on anticipatory bail.

2. ISSUE-WISE DETAILED ANALYSIS

Issue 1: Entitlement to Anticipatory Bail

• Legal Framework and Precedents: Section 438 CrPC provides for anticipatory bail. Relevant precedents include the Sushila Aggarwal case, which outlines the conditions and considerations for granting anticipatory bail.
• Court's Interpretation and Reasoning: The court emphasized that anticipatory bail is not a matter of right and must be considered judiciously, taking into account the nature and gravity of the offense, the role of the accused, and the potential impact on the investigation.
• Key Evidence and Findings: The court noted the applicant's past role as a director and current status as a shareholder, along with her alleged access to company records, as factors suggesting her involvement in the company's affairs.
• Application of Law to Facts: The court applied the principles from the Sushila Aggarwal case to assess the applicant's request for anticipatory bail, considering her potential involvement in the alleged fraud and her lack of cooperation with the investigation.
• Treatment of Competing Arguments: The applicant argued that she had resigned before the alleged offenses and had no active role in the company. The prosecution contended that her shareholder status and access to records implied control and involvement in the fraud.
• Conclusions: The court concluded that the applicant did not make a compelling case for anticipatory bail, given the serious allegations and her potential involvement in the company's fraudulent activities.

Issue 2: Vicarious Liability and Resignation as Director

• Legal Framework and Precedents: The concept of vicarious liability in criminal law, particularly under Section 141 of the Negotiable Instruments Act, was discussed in the N.K. Wahi case.
• Court's Interpretation and Reasoning: The court reasoned that mere resignation as a director does not absolve an individual from liability if they were involved in the company's affairs during the commission of the offense.
• Key Evidence and Findings: The court noted that the applicant was a director until February 2017 and remained a shareholder, suggesting continued involvement in the company's activities.
• Application of Law to Facts: The court applied the principles of vicarious liability to determine that the applicant's resignation did not automatically negate her potential liability for the alleged offenses.
• Treatment of Competing Arguments: The applicant's defense centered on her resignation and lack of active involvement, while the prosecution highlighted her shareholder status and access to records as indicative of control.
• Conclusions: The court found that the applicant's resignation did not preclude her liability, given her ongoing shareholder status and access to company records.

Issue 3: Non-Bailable Warrant and Non-Cooperation

• Legal Framework and Precedents: The issuance of non-bailable warrants and the implications of non-cooperation were considered in light of the principles established in the Lavesh case.
• Court's Interpretation and Reasoning: The court emphasized the seriousness of the charges and the applicant's lack of cooperation as factors justifying the issuance of a non-bailable warrant and the denial of anticipatory bail.
• Key Evidence and Findings: The court noted the issuance of a non-bailable warrant and a reward for the applicant's arrest, alongside her alleged non-cooperation with the investigation.
• Application of Law to Facts: The court applied the principles from the Lavesh case to assess the impact of the applicant's non-cooperation and the issuance of a non-bailable warrant on her bail application.
• Treatment of Competing Arguments: The applicant's defense focused on her willingness to cooperate, while the prosecution argued that her past non-cooperation and potential for evidence destruction warranted the denial of bail.
• Conclusions: The court concluded that the applicant's non-cooperation and the issuance of a non-bailable warrant justified the denial of anticipatory bail.

3. SIGNIFICANT HOLDINGS

• Verbatim Quotes of Crucial Legal Reasoning: The court referenced the Sushila Aggarwal case, stating, "The accused is not obliged to make out a special case for grant of anticipatory bail; reading an otherwise wide power would fetter the court's discretion."
• Core Principles Established: The judgment reinforced the principle that anticipatory bail should be granted judiciously, considering the seriousness of the offense, the role of the accused, and the potential impact on the investigation.
• Final Determinations on Each Issue: The court determined that the applicant did not make a sufficient case for anticipatory bail, given her potential involvement in the alleged fraud, her shareholder status, and her non-cooperation with the investigation.