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TMI Blog2018 (4) TMI 1589X X X X Extracts X X X X X X X X Extracts X X X X ..... or any incriminating material placed against this applicant, this applicant deserves vacation of the restraint order in force against him, accordingly this MA is disposed of vacating the restraint order dated February 23, 2018 against this applicant. - M.A. Nos. 180, 182, 183, 184, 217, 218, 219 of 2018 and C.P. No. 277/241-242/NCLT/MB/MAH/2018 - - - Dated:- 2-4-2018 - B.S.V. Prakash Kumar, Member (J) and Ravikumar Duraisamy, Member (T) For the Appellant : Sanjay Shorey, A.K. Sethi, Meghav Gupta, M.V. Chakranarayan, Vinod Sharma, S. Ramakantha, R.S. Meena, P. Naikwadi, A. Patwegan, Trupti Sharma, Noor Shergill and Sanjay Rai ORDER B.S.V. Prakash Kumar, Member (J) 1. It is a common order on miscellaneous applications filed by various respondents seeking vacation of restraint order passed by this Bench on February 23, 2018 against these respondents not to remove, transfer or dispose funds, assets and properties of the entities and individuals until further orders on the ground that these respective respondents, who had filed these applications, have not indulged in the fraud said to have taken place in respect of the Gitanjali group of companies. Their common gr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Solar Exports (respondent No. 4) and M/s. Stellar Diamond (respondent No. 5) in conspiracy with Mr. Nirav Modi (respondent No. 1), Mr. Nishal Modi (respondent No. 12), Mrs. Ami Nirav Modi (respondent No. 13) and Mr. Mehul Choksi (respondent No. 14). 6. He says he has no connection with any of these persons except continuing as an independent director in Firestar until before his resignation, even while continuing as independent director, he did not come across any suspicious transactions warranting his interference, moreover, his appointment letter categorically stated that his commitment would be limited to 4-5 days a quarter and he had no authority to operate bank accounts. He says, he has come to know of this fraud like any other person only after the news broke on February 5, 2018. It is pertinent to note that no allegation has been levelled against this applicant (respondent No. 52) in the present petition. 7. The applicant says that he graduated from St. Stephen College, New Delhi in the year 1979 and thereafter did two years' management course from IIM, Ahmedabad. Ever since, he worked for about 30 years in various multinational companies, inter alia, holding seni ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r should not be considered as willful defaulter unless it is conclusively established that fraud has taken place in connivance with the independent director. Counsel says inclusion of the name of the applicant in the proceedings amounts to abuse of process of law and travesty of justice therefore, respectfully submitted that restraint order shall be vacated. 9. Counsel further says, the applicant is a retired individual meeting his day-to-day expenditure from his investment and hard earned savings earned over his professional career of more than 25 years, because of this order, now this applicant is not in a position to liquidate his investments for his day-to-day expenses also. He says that he has dependent wife and two children pursuing their professional careers abroad and he needs to pay taxes in view of the contractual commitment entered into, but because of this order, he is unable to meet with the eventualities coming upon him. He wanted to sell his property at Delhi so as to shift his family to Bangalore, that also, could not happen because he is restrained from selling his Delhi asset in view of shifting of his residence from Delhi to Bangalore. Saying so, he has sought ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le final report under section 212(15) of the Companies Act, 2013, as investigating officer (police) files charge sheet against the accused under section 173 of the Criminal Procedure Code. 14. This Bench is conscious of the fact that it is not conferred with any magisterial powers as conferred under the CrPC, but when the Companies Act has conferred jurisdiction upon this Bench to pass such an order which can be passed by criminal court while investigation is in progress, this Bench is bound to pass an order as directed by the section provided fact constitute elements of the section. 15. It appears that CBI already examined this applicant but so far no proceeding has been initiated against him and not given any further directions to initiate proceedings against this applicant. The idea behind passing restraint order is, the culprits involved in the fraud do not run away with the booty drained off from the Punjab National Bank. 16. On hearing submissions on section 221 of the Companies Act, 2013, it is perceived that this order could be passed when this Bench has reasonable ground to believe that removal, transfer or disposal of funds, assets, properties of the company is l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a board constituted with natural persons. Therefore, whenever company is involved in fraud, it will always point at the persons managing the affairs of the company. In this scenario, unless the persons (directors and other key managerial personnel) involved are curtailed from dealing with not only the assets of the company but also the assets lying with the persons involved in committing fraud, it is next to impossible to claw back the proceeds of the fraud from the persons running the affairs of the companies. I need not say that fraud vitiates everything; therefore, to get off the hook, such persons cannot veil the situation with the doctrine of separate entity, because in a situation like this, hands of law are long enough to pierce the corporate veil and catch the culprits. Here money being secreted out by colluding with some bank officials, competent authority is conferred with powers to search and seize them; this section is nothing but to aid the same. 20. In view of this reason, when action against company/companies for getting back the money fraudulently taken out is permissible, if such money is routed to the persons managing through these companies, then it is obviou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 22. Of course, the petitioner filed this case under sections 241 and 242, but this Bench having noticed that this petitioner is short of information and material for constituting prima facie case under sections 241 and 242, this Bench has passed impugned restraint order under section 221 of the Companies Act, 2013. 23. But at the same time, it is the duty of this court to see that innocent people are not burdened by this restraint order therefore as and when any innocent comes before this Bench saying that he has no involvement in the fraud spiraling from the day-to-day, this Bench has to diligently respond to the reliefs sought by such people. Of course, it is true that this Bench cannot decide who is innocent and who is culprit, but to the extent order passed by this Bench, it should not become helpless to vacate that order if no material is found against whom this order is in force. In view of the same, for there being neither an averment nor any incriminating material placed against this applicant, this applicant deserves vacation of the restraint order in force against him, accordingly this MA is disposed of vacating the restraint order dated February 23, 2018 against th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the case above and there being no averment or incriminating material against this respondent except continuing as independent director until before February 5, 2018. This case being similar to case in M.A. No. 182 of 2018, applying the same discussion and observations to this application, the restraint order dated February 23, 2018 is hereby vacated against this respondent as well. 27. As to M.A. No. 183 of 2018, it is an MA filed by a person called Gopal Krishnan Nair (respondent No. 44), who is a qualified chartered accountant and former executive director in respondent No. 1 and a director of respondent during the periods 1999 to 2009, thereafter on November 13, 2009/December 23, 2009 resigned as executive director of Gitanjali Gems Ltd. (respondent No. 1). Ever since, he has never worked as director of any of the companies which are respondents before this Bench. He says that he ceased to have any association directly or indirectly with respondent No. 1 or other group companies with effect from November 13, 2009/December 23, 2009 because he tendered his resignation from the board with effect from November 13, 2009. In support of this statement, this applicant filed Form 32 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... roduced to this group highlighting the design and quality of Firestar products and the vision of founders Mr. Modi, respondent No. 53 made to an introductory call with Mr. Modi on September 29, 2016 followed by face to face meeting on October 12, 2016. This was the first time, the applicant met Mr. Modi. Since he was said that Modi was interested to create India first luxury jewellery brand that would compete with the best in the world and interested to strengthen its Board for such expansion, after being shared with the names of Mr. Suresh Senapathy and Mr. Gautham Mukkavilli as independent directors, he agreed for joining as non-executive independent director. In furtherance of it, he was informed that he was appointed as independent director on December 6, 2016. He says that during this assignment, he did not come across any suspicious transaction. He says that he also, like everybody heard the news of the alleged fraud played by Mr. Nirav Modi on February 5, 2018 as soon as such news came out, he tendered his resignation as independent director in respondent No. -8 company on February 7, 2018. 31. On filing this application, as to this person when we looked at the company pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s and assets has been put to hardship which is repugnant to the constitutional right of the applicant. 34. As against these averments, on verification of the company petition, we have noticed that he has been shown as one of the directors of respondent No. 1 but by seeing the material papers filed by this respondent, it is evident that he left the company on September 30, 2013 for there being no material with this Bench negating the statement and the papers filed by this respondent No. 43, this Bench hereby vacates the restraint order dated February 23, 2018 passed against respondent No. 43. Accordingly, this application is hereby disposed of. 35. As to M.A. No. 218 of 2018 filed by Mrs. Nazura Yash Ajaney (respondent No. 38), she submits that she is a commerce graduate with 20 years' experience in the field of early childhood education and parent child relationship. As she has worked with Non-Government Organisation called Helix Aids Foundation, her husband is a management consultant providing consultation to the company based in Kolhapur, through some known person, she was invited to join on the board of respondent No. 1 to focus on its corporate social responsibilit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ete her name from the parties of the captioned petition. 38. In support of this application moved by her for vacation of the restraint order, she filed some correspondence disclosing that she knows the people like Mehul Choksi (respondent No. 14) since beginning and also by seeing growth chart to hold herself of as a person having expertise in child care propelling the management of these companies to take her as independent director does not seem to us all is not well. The main business of these companies appears to be business dealing with diamonds and jewellery which is no way connected to child care, but she says so as to supervise the child care activities, she has been taken as independent director in these companies. By seeing her track record and the business of these companies, it appears it is not believable that she has been taken as independent director by looking at her expertise in child care. Besides this, an FIR has been filed against this respondent No. 38 along with others on February 13, 2018 under section 120 read with section 420 of the IPC and also sections 13(2) read with section 13(1)(d) of the Prevention of Corruption Act, 1988. She being shown as an acc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orld Ltd., and Bezal Jewellery P. Ltd. 42. He says his wife is diabetic patient and had undergone a spine surgery on November 15, 2017 since his services were acquired to spare to his wife, he tendered his resignation on December 20, 2017 however, that being neglected to be sent to Registrar of Companies, he once again sent his resignation letter through company on February 14, 2018. Thereafter, intimated to BSE on February 20, 2018 about his resignation from respondent No. 1. It does not sound well to believe that he already resigned on December 20, 2017 and mistakenly it was not sent to the Registrar of Companies. 43. In the FIR filed by the PNB, he has been shown as accused No. 13 in the said FIR. He only resigned from this company a couple of days before this case was filed before this Bench. Counsel representing this respondent has reiterated the same argument which was made by other applicants stating that this order should not have been passed against this respondent for he being an independent director of the respective companies. Though this petition was filed against 64 persons, only 16 persons were shown as accused in the FIR filed by the PNB. Out of those 16, this ..... X X X X Extracts X X X X X X X X Extracts X X X X
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