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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 ..... to such a hardship that they could not even withdraw money from their bank accounts and deal with their assets for the fraud said to have been played by somebody else. Their common submission is that though no allegation has been made against them and no criminating material being placed before this Bench showing these respondents indulged or participated in anything that assisted or aided the culprits who indulged in the fraud, hence sought for vacation of the order dated February 23, 2018 against the applicants/respondents. 2. Since the grievance of all these respondents being more or less common, instead of passing separate orders repeating the same discussion in each of the applications, we hereby pass a common order dealing with the pleadings of each of the applicants/respondents separately. 3. For counsel appeared in various applications having adopted the arguments made by senior counsel Mr. Iqbal Chhagla in M.A. No. 182 of 2018, we first deal with M.A. No. 182 of 2018, thereafter deal with remaining applications. 4. One Mr. Gautam Mukkavilli, who is shown as respondent No. 52, filed this M.A. No. 182 of 2018 stating that he is an erstwhile non-executive independent direc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rom the year 1991 up to 2016, he retired from Pepsico as Vice President-Strategy and Business Transformation for Pepsico India, Middle East and North Africa. All through his life, he is free from any blemish. He was in fact informed through a friend in the year 2016 that Nirav Modi scouting for persons to serve as non-executive independent directors in his companies, that is how he was introduced to Nirav Modi vide an e-mail dated September 21, 2016. An e-mail exchange took place, until such time, he did not have any kind of contact with Mr. Nirav Modi. When this issue came out, Mr. Nirav Modi spoke to him on February 3, 2018 assuring that CBI investigation was not against Firestar, he says however he would resolve the matter with his bankers but finally this issue has come out reporting that Mr. Nirav Modi himself was involved in the fraud As soon as this information came to him, he tendered his resignation on February 7, 2018. Subsequent to this, i.e., Union of India filed this case including this applicant as respondent No. 52 on February 23, 2018. Above this, PNB has filed another complaint dated March 4, 2018 leading to the registration of FIR wherein he has not been made as a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the extent it applies to the applicant and also to delete his name from the parties in the present company petition. 10. When the applicant counsel has made his argument, the officer appearing on behalf of the Union of India has stated that investigation is in progress therefore they need sometime to respond to the submissions of the applicant counsel. When this Bench has put it to the said officer as to whether any material has been gathered to say that this applicant is involved in the fraud taken place, no answer has come from the said officer except arguing on legal propositions such as doctrine of preponderance of evidence against proof beyond reasonable doubt and its application and showing some citations not connected to the present application filed by this applicant. The said officer has not shown any incriminating material against this applicant save and except saying that he is an independent director of Firestar at the time when fraud took place, therefore restraint order should not be vacated unless investigation is complete. 11. One thing is pertinent to note that this ex parte order was given on February 23, 2018 by now already one month is over, when such an ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e company or its shareholders or creditors or public interest. In view of the same, this Bench, having felt that there is reasonable ground to commit such acts, ordered restraining such removal or transfer, etc. 17. For passing this order under this section, it need not be looked into as to whether enough material is placed before this Bench at the time of passing this order, because at the time of investigation, the investigating agency will proceed with investigation with the leads come to it, in a position like that, it need not be seen whether it is governed by civil jurisprudence or criminal jurisprudence. I can rather say that elements of the section are akin to the procedure laid under the CrPC. For this section is clear to pass an order, if this Bench is of the view that there is a reasonable ground to believe the assets are likely to be dissipated if immediate action is not taken, it can pass such an order. 18. Since it is a web of companies involved in committing fraud against public sector bank causing colossal loss to the public institution, there is every chance to believe that the persons involved in those companies can be at fault in respect to this fraud. One fact ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... conduits to gulp down everything that comes to the company. When this being the ground situation, can it be said that relief under section 221 is extendable only against the companies, not against the culprits hidden under it? That money is not in the books of at least companies in India. Linchpins in this fraud are not in India. Everybody knows it goes without saying that when granting consequential relief is imperative to attain the purpose of main relief, courts can reach out to pass such reliefs as well. 21. This relief under section 221 cannot be conceived as relief like in civil case asking for filing reply, rejoinder-the reason is, it is not on adjudication of rights of the parties, it is an aid to action under criminal law, because as I said earlier this procedure is akin to the procedure under the CrPC, investigating officer of SFIO on the direction of the Central Government will file its report before special court as police officer files charge sheet (final report) under section 173 of the CrPC to prosecute the accused as mandated under section 212 of the Companies Act, 2013, moreover it is a temporary injunction not culminating into a permanent order, therefore even fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... No. 51), filed this miscellaneous application with the same reliefs mentioned in the above MA, I believe I don't need to repeat the discussion and observations made in the above MA but to the extent of knowing this applicant involvement or no involvement of him in the fraud played out, it is important to examine the facts before applying the reasons given in M.A. No. 182 of 2017. 25. This applicant is also an independent director of Firestar (respondent No. 8) and Firestar Diamond (respondent No. 9). He was appointed as independent director in July, 2015 and resigned on February 5, 2018 from both the companies. He says he has over 37 years of professional experience and has served well reputed multinational companies including Wipro in senior position in India. He is a chartered accountant with distinguished track record, member of board in Wipro till his superannuation in March, 2015. He is also a Member in SEBI's Committee on Disclosure and Accounting Standards and National Advisory Committee on Accounting Standard set up by the Government of India, currently this applicant is chairman of audit committee as well as a director of Wipro Enterprise P. Ltd. This gentleman a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fication of this company petition, this Bench has noticed that this applicant has been shown as one of the directors/key managerial person of respondent No. 2, but fact of the matter is, he resigned from the directorship of all these companies in the year 2009 itself, ever since it appears he is nowhere connected to Gitanjali group companies, whereby the order against this erstwhile director without any incriminating material against him not sustainable henceforth, applying the discussion in M.A. No. 182 of 2018, the restraint order dated February 23, 2018 against this respondent is hereby vacated. 29. As to M.A. No. 184 of 2018, it is an MA filed by a person called Sanjay Rishi (respondent No. 53), represented by senior counsel Mr. Seervai, submits that he continued as independent director of respondent No. 8 from December 6, 2016 till February 7, 2018. During this period, he says, he did not come across suspicious transactions warranting his interference. As soon as the news of fraud has come out on February 5, 2018 he immediately tendered his resignation on February 7, 2018. He says that he has no association whatsoever with any of Nirav Modi or Choksy Companies except to the e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the directors of respondent No. 8, since the petitioner has not placed any incriminating material against this respondent to strengthen the order passed by this Bench on February 23, 2018 by adopting the observations made in M.A. No. 182 of 2018, this Bench hereby vacates the restraint order passed against this respondent. 32. As to M.A. No. 217 of 2018, it is an MA filed by a person called Mr. Sujal Shah (respondent No. 43) stating that he was approached in the year 2005 inviting him to work as independent director of Gitanjali Gems Ltd. (respondent No. 1) and continued as independent director up to 2013. He says he was not in-charge and/or responsible for the conduct of the business and/or affairs of the company at point in time. As the applicant had been desirous of not continuing, in the year 2013, the applicant who was due to retire by rotation did not offer for himself for re-appointment and necessary resolution was passed in annual general meeting on September 30, 2013 and also filed Form 32 reflecting cessation of directorship from the year 2013, ever since he has no connection with this company. He says in spite of it, in the company petition this applicant has been sh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r 29, 2014 thereafter she was appointed as independent director in two more companies of this group, i.e., Nakshatra World Ltd., on December 15, 2016 and in respondent No. 2 on December 16, 2016 with the purpose of focusing on the corporate social responsibility programmes. Thereafter, her name was included in an FIR filed by the PNB on February 15, 2018 in respect of the fraud committed. She submits that on seeing in the media she noticed that fraud alleged to have been committed by respondent No. 14 and some of his concerns, as soon as knowing it, she tendered her resignation to these three companies on February 18, 2018. 36. She submits that this Bench, though individuals are not covered under section 221 of the Companies Act, 2013, restraint order against the respondents and the individuals connected to these companies has been passed from dealing with assets of the individuals as well. She says that she has no connection with respondent No. 14 except while discharging her duties as an independent director in those companies. She says that other than the customer sitting fees in respect of attending the meeting of respondent No. 1 and Nakshatra World, the applicant has not rec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld become an impediment if at all CBI found that any money or part of the money swindled from the bank has gone to this respondent. 39. By looking at the application filed by her, prima facie we believe that there was no occasion to make her directly as an independent director in a listed company without having any expertise either on financial side or in the business which this company is doing. It is a fact that no material has been supplied by the petitioner except mentioning her as one of the respondents on the ground that this respondent continued as director in respondent No. 1 as well as respondent No. 2. But this cannot become a reason to vacate this order when this Bench believes that there is a prima facie case against her by looking at the application filed by her and by looking at her name showing in the FIR filed by the bank. 40. In a scenario like this, relying on the discussion made in M.A. No. 182 of 2018, we hereby modify the order dated February 23, 2018 permitting this respondent to the extent of withdrawing Rs. 1,00,000 per month from her bank accounts as to other assets are concerned it need not be reiterated that she is restrained from removal, transfer or d ..... X X X X Extracts X X X X X X X X Extracts X X X X
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