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TMI Blog2017 (9) TMI 285X X X X Extracts X X X X X X X X Extracts X X X X ..... on fortification of the “reason to believe” on the basis of the information of the person having committed the offence. The necessity of the arrest of a person would, therefore, depend upon the facts and circumstances of each case and no straight jacket formula can be laid for that purpose. It is a settled legal position that a person can be proceeded against and can be tried even without arresting him. In so far as facts of the present case are concerned, it appears that the petitioners are sought to be proceeded against for the offences in question not in individual capacity but as Directors of the Company afore stated. The FIR avers the commission of the offence particularly by the Company by allegedly employing dubious method for avoidance of the tax as above stated. The Company, however, is not made a party to the proceedings and the FIR does not specify as to which of the nine Directors of the Company had played an active role. In this context, it would be relevant to refer to Sections 85 (1)(b)(c)(e)(f)(g), 85 (2)(g), 85(4) and Section 85(6) of the Gujarat Value Added Tax Act, 2003 (for short ‘VAT Act’), which deal with the procedure in relation to the offences by Compan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .Application No. 20341 of 2017 with Criminal Misc.Application No. 20340 of 2017 - - - Dated:- 28-8-2017 - MR. G.R.UDHWANI, J. Criminal Misc.Application No. 20014 of 2017 with Criminal Misc.Application No. 20011 of 2017 with Criminal Misc.Application No. 20009 of 2017 For The Applicants : Mr Mihir Joshi, Senior Advocate With Mr Shalin Mehta, Senior Advocate With Mr Tanvish Bhatt, Advocate For M/S Wadiaghandy Co, Advocate For The Respondent : Mr. Mitesh Amin, Public Prosecutor with Mr Rutvij Oza, spl. PP with Mr Hardik Trivedi, Asst. Spl. Public Prosecutor ORAL ORDER 1. This application is filed seeking bail under Section 438 of the Code of Criminal Procedure, 1973 in respect of the offences punishable under Sections 406, 420, 467, 468, 471, 474, 120B of the Indian Penal Code and under Sections 85(1)(b), (C),(e), (f), (g), 85 (2)(g), 85(4), and 85(6) of the Gujarat Value Added Tax Act, 2003 for which FIR came to be registered at C.R. No.I4 of 2016 with the CID (Crime) Ahmedabad Zone Police Station. 2. The broad facts of the case are; 2.1 The petitioners herein (except Mr Anil Kumar Chauhan i.e. the petitioner in Criminal Misc. Application No. 2034 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... IR would further indicate that two persons namely Rajendra Keshwani and Amit Pancholi are alleged to have played a vital and crucial role in operation of the scam. That, to the above 12 CSAS, goods worth more than 916 crores were dispatched by the Company and the tax amounting to more than 200 crores has been avoided. 2.6 Inviting the attention of this Court to observations made by this Court in paragraphs 7 and 9 in the order dated 13.10.2016 passed in Criminal Misc. Application No. 18706 of 2016 in the case of Rajendra alias Sonu Jethabhai Keshwani and Minesh Manubhai Vyas seeking anticipatory bail, observing that red carpet treatment was given to the accused persons herein, it was submitted that the investigator moved into action against the petitioners without any incriminating material against the petitioners, only in response to the said observations. 2.7 Parity is also sought by the learned counsel for the petitioners while referring to the said order as also the order passed in the case of Amit Pancholi by the lower Court and in the case of Ashok Jain by this Court. 2.8 It was next contended that in absence of Company being accused and in absence of the case of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bail. 2.14 It was argued that the FIR contains specific reference to role of Amit Pancholi having created the fictitious movement of documents and entities, and thus, the question as to creator of the entities / scam is answered in the FIR itself. It was also argued that no material so far during the course of more than a year of investigation is brought on record pointing out the benefits received by the Company / Directors out of the scam, and therefore, the Investigating Agency cannot be permitted to make out the imaginary grounds for seeking custodial interrogation of the petitioners. It was submitted that C Form and H Form were admittedly not issued by the petitioners, and therefore also, no question of petitioners custodial interrogation arises. It was contended that, in fact, the investigator was trying to go beyond the FIR and other material which does not exist. 2.15 The learned counsel also submitted that full cooperation is given by the applicants so far in the course of investigation and the applicants would continue to cooperate with the Investigating Agency. Referring to various documents produced on record, it was contended that there was constant appearan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tended that the investigation so far revealed that the place of their trading etc., is fictitious and no business operations are being done at the said places. It was contended authorship of such fictitious entities and its beneficiaries in the scam is a big question to be probed which would require the custodial interrogation of the Directors of the Company. It was contended that the likely beneficiaries of the scam are the Directors of the Company. It was pointed out by the learned APP that the purpose of the scam was to avoid the tax since the sale of the goods in question within the State would incur farfar high tax liability as compared to inter State sale and no tax liability would be incurred if the goods are dispatched during the course of export. 2.17 It was contended that being conscious of the scam, the Company itself deposited with the taxing agency a sum of over ₹ 100 crores assessed against it. It was submitted that the tax liability without interest and penalty may come to about ₹ 240 crores. 2.18 Learned APP also submitted that the custodial interrogation of the petitioner is necessary since the author of fictitious creation i.e. Rajendra Keshwani ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... between the representatives of both the parties and thus the Directors of the Company had an occasion to meet persons belonging to economically weaker section of the society like autorickshaw drivers and that it was thus within their knowledge prima facie, that the entities were fictitious. 2.21 Learned PP would contend that the Directors of the Company are prime suspects in as much as though it is being argued before this Court that they were unaware of the illegal activities of other accused, at no point of time in any of the documents or correspondence entered into by the Directors with the Investigating Agency it was ever contended that they had been fooled by the scammers. It was submitted that at no point of time any of the scammers were told by the Directors that a huge liability of ₹ 240 crores were assessed and that they shall bear such liability. That they have voluntarily accepted such liability, which would, prima facie, indicate the involvement of the Directors in the scam. 2.22 It was contended that the cases of those admitted either on anticipatory bail or regular bail and the case of the petitioners herein is not comparable in as much as their role i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the either side on merits at this stage of the proceedings. It cannot be disputed that as and when necessary and if the facts of the case so requires, an authorized Police Officer can obtain the custody of a person for investigation / interrogation either with or without warrant as the case may be. The arrest, however, cannot be made on mere imagination; but it can always be made inter alia on reasonable suspicion on fortification of the reason to believe on the basis of the information of the person having committed the offence. The necessity of the arrest of a person would, therefore, depend upon the facts and circumstances of each case and no straight jacket formula can be laid for that purpose. It is a settled legal position that a person can be proceeded against and can be tried even without arresting him. 2.26 In so far as facts of the present case are concerned, it appears that the petitioners are sought to be proceeded against for the offences in question not in individual capacity but as Directors of the Company afore stated. The FIR avers the commission of the offence particularly by the Company by allegedly employing dubious method for avoidance of the tax as above ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng the goods into the possession of the above referred CSA agents. Except as above, it is not pointed out as to how the petitioners were responsible for such movement, and thus, the suspicion prima facie, appears to be imaginary rather than substantial or cogent. It is not even alleged that the petitioners received any benefit out of the transaction in question out of the scam in question. Undisputedly, the investigation for a period of more than one year has been done so far and except as above, no cogent material justifying the suspicion against the petitioners forms the record of the case. Even the allegations in the FIR centers around two accused namely Amit Pancholi and Rajendra Keshwani. During the course of more than one year of investigation, the Investigating Agency is unable to collect the material connecting the acts of the said accused or other accused directly with the petitioners. Admittedly, each of the 11 or 12 CSAs possessed individual TIN number and it is under those numbers that they operated. It is not the case of the Investigating Agency that the petitioners aided in obtaining such TIN numbers possessed by the 11 or 12 CSA agents. Admittedly, Form C and H ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is taken into consideration, the case for admitting the petitioners to bail is made out. This Court, therefore, orders bail for the petitioners in anticipation of their arrest. 3. Learned Advocate for the petitioners on instructions states that the petitioners are ready and willing to abide by all the conditions, including impositions of conditions with regard to the powers of Investigating Agency to file an application before the competent court for their remand. He would further submit that upon filing of such application by the Investigating Agency, the right of petitioners accused to oppose such applications on merits may be kept open. 4. In the result, these applications are allowed. It is directed that in the event of arrest of the applicants herein in connection with FIR registered at C.R. No.I4 of 2016 at CID (CRIME) Ahmedabad Zone Police Station, the applicants shall be released on bail on their furnishing a personal bond of ₹ 1,00,000/( Rupees One lakh only) each with one surety each of the like amount on the following conditions that they shall: (a) cooperate with the investigation and make themselves available for interrogation whenever required; (b ..... X X X X Extracts X X X X X X X X Extracts X X X X
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