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TMI Blog2019 (12) TMI 396X X X X Extracts X X X X X X X X Extracts X X X X ..... cer had placed on record before the Court. In effect, the argument of the counsel is that the same material cannot be interpreted in two different manners, one by the Investigating Officer and the other by the Trial Court. However, this court does not find any substance in this argument as well. The provision regarding arrest of a person during investigation under the new Companies Act is contained in section 212(8). The perusal of this provision shows that under the new Companies Act, the investigating officer does not have unbridled or as much liberal powers to arrest a person, as are available under Cr.P.C. Under the new Companies Act, 2013; before arresting a person, investigating officer is required to have material in his possession and on the basis of that material, is required to record reasons in writing that a person has been guilty of offence punishable under sections, which are mentioned in section 212 (6) of this Act. Therefore despite having the material in his possession justifying the arrest of a person, the investigating officer under the Companies Act may not choose to arrest a person, so as to avoid onerous duty of recording reasons. The trial court is under a ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ied that by nature, the petitioner could be manipulative. Hence, this court has no reason to believe that if the petitioner is released on bail, he is not likely to influence the witnesses of the case and also not likely to destroy the evidence against him. The past conduct of the petitioner has also not been exemplary - Also the argument of the counsel for the SFIO that since the vocation of the petitioner and his Companies is only to commit crimes to earn money, therefore, by any means, it cannot be said that if the petitioner is released on bail, he would not commit any offence again, also finds favor with this court. Petition dismissed. X X X X Extracts X X X X X X X X Extracts X X X X ..... i) of LLP Act 2008, ordered an investigation into the affairs of the said companies, through the Serious Fraud Investigation Office (hereinafter referred to as SFIO), which is an instrumentality created under the new Companies Act for investigation into the affairs of the companies. During investigation it came out that 70 Companies of the Adarsh Group of Companies Ltd. had shown ₹ 4140Crores approximately as payable to the said Co-operative Society; as the loan yet to be repaid. Still further, during investigation some companies out-side the Adarsh Group of Companies were also found to be the alleged collaborators of the Adarsh Group and those companies were also taken under investigation. Accordingly, a total of about 125 Companies (hereinafter referred to as CUIs), and some individuals, including the petitioner and his Companies as conspirators; were taken under investigation. After completion of the investigation and taking necessary permissions from the Central Government, SFIO presented the investigation report in the form of a statutory Complaint before the Special Court at Gurugram on 18.5.2019. In this Complaint / report the petitioner is arrayed as Accused No.130. U ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bove-said amount was shown as having been paid to the Co-operative Society, ACCSL, as advance Share Application Money (SAM) pending allotment. However this cash amount was not deposited in the accounts of the Co-operative Society. When further coordinated investigation of the CUIs and The Co-operative Society was carried out then it was found in the accounts of the Co-operative Society that there were the bills and invoices for an amount of ₹ 223.77Crores, for alleged purchase of Suit Lengths (Cloth) by the Co-operative Society from 27 Companies; including the Companies of the petitioner. But besides the alleged part-supply from the Companies of the petitioner, even the remaining; entire supply of the cloth from the Companies/Firms of the other persons; was also shown as having been arranged through petitioner Jainam Rathod. Out of the above purchase of cloth, purchase worth ₹ 89.23Crores was found to have been made during the period from 31-03-2016 to 31-10-2017. Bills and invoices for these purchases were reflecting the petitioner or his Companies/Firms as the supplier; therefore, this led the investigation to the petitioner and his Companies to the extent of these t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vestigation by appearing before the investigating officer of the case, as and when he was called. The petitioner had not even applied for anticipatory bail. Despite that the petitioner was not taken into custody by the investigating officer. On completion of collection of the alleged evidence, when the complaint was filed by the investigating officer, then the Special Court had taken cognizance of the offence on 03-06-2019, that is, after about 5 months of the petitioner last joining the investigation. The petitioner was summoned by the special court. The petitioner appeared before the special court on 13/07/2019 in compliance of the summons issued by the court. Even at that stage the petitioner was granted interim bail by the trial court. Although there was not even any allegation that the petitioner had misused his liberty or the interim bail granted by the trial court, yet the application for bail pending trial, moved by the petitioner, was finally dismissed on 28-08-2019 and then petitioner has been taken into custody. Since then he is suffering incarceration. Continuing his argument, learned Counsel for the petitioner submitted that section 4 of Cr.P.C. provides that except as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... further under section 217 (4) the investigating officer of the case has been conferred power to examine a person on oath and under section 217(5) the investigation officer has been given enormous powers of the civil court as well; for summoning the witnesses and for enforcing their presence. Therefore the investigating officer had the trappings of the court also, besides being an investigating officer who could have arrested the petitioner; if he had some material in his possession. Under the provisions of the section 439 Cr.P.C. the bail pending trial is to be considered by the trial court by applying the criteria as prescribed in section 439 Cr.P.C. The requirements prescribed for arresting a person during investigation under section 212(8); by the investigating officer; for the offences under new Companies Act, stand at much higher pedestal than the conditions required to be considered by the trial court for releasing such an accused on bail pending trial by exercising powers under section 439 Cr.P.C. Hence, if the investigating officer himself had not arrested the petitioner during the investigation; that shows he did not have the requisite material in his possession to justify ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o life and liberty of the petitioner guaranteed by Article 21 of the Constitution, rather, are also in violation of the provisions of Article 14, being irrational, illogical and requiring the court to record something which is impossible by any means. The learned Counsel for the petitioner has relied upon the judgment of this court rendered in Ankush Kumar @ Sonu V/s State of Punjab, 2018 SCC Online P&H 1259 to support his argument. Again referring to the judgment of the Supreme Court rendered in case of Nikesh Tara Chand Shah (Supra) the learned Counsel for the petitioner has further argued that even if the applicability of twin conditions, as prescribed under section 212(6) of the new Companies Act; is to be invited to the case of the petitioner, then interpretation of these conditions has to be toned down to see only the probability of conviction of the petitioner; and the probability of conviction under the new Companies Act only. However, the evidence, allegedly collected by the prosecution, against the petitioner is not sufficient to bring out the probability of conviction of the petitioner for the offences under the Companies Act, nor is there any material on record; to sho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mpanies, if any, was being circulated among themselves only. The petitioner has no concern with that money of those Companies. The petitioner had no equity transaction with those companies. Hence it is clear that petitioner is an innocent person and he is a law abiding gentleman and legitimate businessman. He has not committed any crime as alleged against him. Hence he deserves to be released on bail during the pendency of the trial. On the other hand, learned Asstt. Solicitor General of India, appearing for SFIO, has argued that the fact that the investigating officer had not arrested the petitioner during the investigation is totally inconsequential. Referring to the provision of section 212(8) of the new Companies Act, learned counsel appearing for SFIO has submitted that the provision itself speaks of the words investigating officer 'may arrest' such a person. Hence it is clear that it is the discretion of the investigating officer, whether to arrest the person or not; of course he has to satisfy the statutory condition; if he so desire to effect the arrest. However, even if there are reasons to believe that such a person is guilty of the offence under the Companies Act and ev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... IO has submitted that merely because the petitioner had himself appeared before the court after the charge-sheet was filed against him or merely because he was granted interim bail, in the first instance, does not mean that the bail cannot be denied to the petitioner during the pendency of the trial or that such person cannot be taken into custody. Question of bail still has to be considered and decided by the court as per the relevant and applicable factors. It is, accordingly, submitted by the Counsel that in case of Nitin Johari (Supra) also, though the charge- sheet had been filed and the High Court had granted bail, yet the Supreme Court set aside the order of the High Court and remanded the matter to the High Court for fresh consideration, by considering the relevant factors. Had this been the valid proposition of law; that when the charge-sheet stands filed and accused appear before the court; then the petitioner cannot be taken into custody, then the Supreme Court would not have sent the matter back to the High Court for reconsideration; which could have very well; led to denial of bail in that case. Still further, relying upon the judgment of the Supreme Court rendered in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y Laundering Act and has removed the inconsistency qua the offences punishable under the Prevention of Money Laundering Act, and therefore, has rectified the aspect which had earlier led to declaration of the twin conditions under that Act as ultr-vires. Still further it is submitted by the ld. Counsel that although constitutional validity of the twin conditions, as prescribed under section 212 (6) of the Companies Act is under challenge before the Supreme Court in case of Serious Frauds Investigation Office V/s Neeraj Singhal 2018 SCC Online SC 1573 and other cases, however, the Supreme Court has again reiterated the applicability of the twin conditions for the purpose of consideration for bail, in case of Nitin Johari (supra). So far as the reliance of the Counsel for the petitioner upon the judgment of this Court in case of Ankush Kumar (Supra) is concerned, it is submitted by the Counsel for the SFIO that when this court had considered the applicability of the twin conditions in the above said case, this court had specifically observed that the vires of the twin conditions would be considered by the appropriate Court / Bench in some appropriate matter. But now the validity of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ere paper entries only, to help about 30 companies of the Adarsh Group of Companies to swindle the money of the cash-in-hands; which was the public money. In lieu of this help and conspiracy with the above said companies, the petitioner has availed commission of about 22lakhs. The fakeness of the invoices, the Bill and the entries created by the petitioner has been duly established by the evidence collected by the investigating officer from the accounts of the Cooperative Society, maintained on the SAP accounting software, wherein it has been found that most of these entries were actually made within few days after the demonetization of certain currency notes by the Central Government, although these were shown as spread over a long duration during the financial year; by antedating the entries and the bills and the invoices supporting those entries. The fake bills/ invoices were recovered from the Co-operative Society and the perfectly matching and identical copies of said bills and the invoices were recovered from the computer of the petitioner. Pointing out further evidence, counsel for SFIO has submitted that the suit lengths were shown to have been supplied / transported to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aightforward conduct is expected from the petitioner, who is manipulative by disposition. In the same vein, the counsel for the SFIO has also submitted that since the vocation of the petitioner and his Companies is only to commit crimes to earn the money, therefore, by any means, it cannot be said that if the petitioner is released on bail, he would not commit any offence again. In the end it has been argued by the learned counsel for the SFIO that even if the conditions, as prescribed under section 212(6) of the new Companies Act, 2013 are not to be taken into consideration, at least the factors which has been laid down by the Supreme Court in case of Y. S. Jagan Mohan Reddy(supra) and which has been reiterated by the Supreme Court in case of Nitin Johari (supra), for the economic offences, has to be considered by the court while considering grant of bail to the petitioner. However, the charge-sheet against the petitioner is under section 447 of the Companies Act, which is a serious offence, inviting punishment of imprisonment up to 10 years. Still further, although the Counsel for the petitioner had submitted that the petitioner is not directly involved in embezzlement of the ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... been submitted by the Counsel for the petitioner that even the Supreme Court has granted bail in case of Sanjay Chandra V/s Central Bureau of investigation, (2012) 1 SCC 40 despite the fact that the offences in that case involved economic offences. The Supreme Court has granted bail even by observing in para No.46 of that judgment that it was conscious of the fact that the offences involved were the economic offences of huge magnitude, and if proved, may even jeopardize the economy of the country. Still the accused in that case were released on bail. The para relied upon by the petitioner reads as under:- "46. We are conscious of the fact that the accused are charged with economic offences of huge magnitude. We are also conscious of the fact that the offences alleged, if proved, may jeopardise the economy of the country. At the same time, we cannot lose sight of the fact that the investigating agency has already completed investigation and the charge-sheet is already filed before the Special Judge, CBI, New Delhi. Therefore, their presence in the custody may not be necessary for further investigation. We are of the view that the appellants are entitled to the grant of bail pendi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... simply as only a 'person present in the court'; without any legal capacity qua trial as such. The sections included in this chapter do not even use the word 'accused', except in some sections relating to a person, who has already avoided ordinary process of the summons or warrant and therefore; is to be dealt with through the proceedings for proclamation. Hence; this chapter is prescribing simply the procedure for ensuring the presence of a person before the court, whether as an accused or as a witness. Once a person is brought to or appears before the court; it is for the court to deal with the person in accordance with the procedure prescribed under the Cr.P.C. If the person is called by the court through the above prescribed procedure as a witness ; then he shall be dealt with the procedure meant for a witness. But if such a person is called by the court through the above prescribed procedure as an accused, then he shall be dealt with under the provisions relating to the 'bail', prescribed elsewhere in Cr.P.C.. Nothing much can be read in section 88 Cr.P.C. to argue that if a person is present before the court then he has can be required only to execute bonds or furnish surety ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ough such a witness may not have been cited as a witness by either side. Not only this, section 319 Cr.P.C. also empower the court to add any person in attendance of the court as an additional accused in the trial, if in the opinion of the court such person is required to be added as an accused as per the standards prescribed for such addition. Hence, under Cr.P.C.; a criminal court always have a power to deal with a person, who is otherwise present in the court; maybe even by chance. Section 88 is only one manifestation of such power of the criminal court; at the stage of compelling appearance of such a person before the court. Although the counsel for the petitioner have relied upon the judgment of the Supreme Court rendered in case of Data Ram (Supra), however, this court finds the said judgments to be totally distinguishable on the particular facts of those cases vis-à-vis the facts of the present case and was not followed in the subsequent case of Pankaj Jain (Supra) case. The section 88 Cr.P.C itself uses the word 'may', with no further duty cast upon the court to necessarily grant bail to the accused person. Hence there is no question of an accused getting automatic r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng in this section shall be deemed to affect the provisions of sub-section (3) of section 116 [or section 446A [Explanation. - Where a person is unable to give bail within a week of the date of his arrest, it shall be a sufficient ground for the officer or the Court to presume that he is an indigent person for the purposes of this proviso.] (2) Notwithstanding anything contained in sub-section (1), where a person has failed to comply with the conditions of the bail-bond as regards the time and place of attendance, the Court may refuse to release him on bail, when on a subsequent occasion in the same case he appears before the Court or is brought in custody and any such refusal shall be without prejudice to the powers of the Court to call upon any person bound by such bond to bond to pay the penalty thereof under section 446. 437. When bail may be taken in case of non bailable offence:- [(1) When any person accused of, or suspected of, the commission of any non-bailable offence, is arrested or detained without warrant by an officer in charge of a police station or appears or is brought before a Court other than the High Court or Court of Session, he may be released on bail, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ffence, is released on bail under sub-section (1) the Court shall impose the condition , - (a) that such person shall attend in accordance with the conditions of the bond executed under this chapter, (b) that such person shall not commit an offence similar to the offence of which he is accused or suspected, of the commission of which he is suspected, and (c) that such person shall not directly or indirectly make any inducement, threat or promise to any person acquainted with the facts of the case or to any police officer or tamper with the evidence, and may also impose, in the interests of justice, such other conditions as it considers necessary.] otherwise in the interests of justice. (4) An officer or a Court releasing any person on bail under subsection (1), or sub-section (2), shall record in writing his or its reasons or special reasons for so doing. (5) Any Court which has released a person on bail under subsection (1), or sub-section (2), may, if it considers it necessary so to do, direct that such person be arrested and commit him to custody. (6) If, in any case triable by a Magistrate, the trial of a personaccused of any non-bailable offence is not concluded wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he discretion of the court in the matter of grant of bail. Such an argument not only tends to make discretion of the court subservient to the discretion of the Investigation Officer in the matter of bail to the accused, but also is in direct negation of language of section 436 and 437 of the Cr.P.C. Only section 439 contemplates a person being arrested and being in custody for being considered for grant of bail by a Sessions Court or High Court. However, even this section provides that even if such a person is released on bail, these courts can order such a person to be taken into custody again, depending upon the facts and circumstances of the case. Hence mere fact that a person was not arrested during the investigation, in itself, is totally irrelevant so far as a claim of the accused to get bail in a particular case, as a matter of right, is concerned, although this fact may have some relevance qua some other factors which may be relevant for exercise of discretion by the court for granting bail to such a person. However, such indirect relevance in the facts of the present case would be assessed by this court in succeeding paras, at another place. Having considered general arg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tral government or any state government shall proceed with investigation in such case in respect of any offence under this act and in case any such investigation has already been initiated, it shall not be proceeded further with and the concerned agency shall transfer the relevant documents and records in respect of such offences under this act to serious fraud investigation office. (3) Where the investigation into the affairs of a company has been assigned by the Central Government to Serious Fraud Investigation Office, it shall conduct the investigation in the manner and follow the procedure provided in this Chapter; and submit its report to the Central Government within such period as may be specified in the order. (4) The Director, Serious Fraud Investigation Office shall cause the affairs of the company to be investigated by an Investigating Officer who shall have the power of the inspector under section 217. (5) The company and its officers and employees, who are or have been in employment of the company shall be responsible to provide all information, explanation, documents and assistance to the Investigating Officer as he may require for conduct of the investigation. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l within twenty-four hours, be taken to a Judicial Magistrate or a Metropolitan Magistrate, as the case may be, having jurisdiction: Provided that the period of twenty-four hours shall exclude the time necessary for the journey from the place of arrest to the Magistrate's court. (11) The Central Government if so directs, the Serious Fraud Investigation Office shall submit an interim report to the Central Government. (12) On completion of the investigation, the Serious FraudInvestigation Office shall submit the investigation report to the Central Government. (13) Notwithstanding anything contained in this Act or in any otherlaw for the time being in force, a copy of the investigation report may be obtained by any person concerned by making an application in this regard to the court. (14) On receipt of the investigation report, the Central Governmentmay, after examination of the report (and after taking such legal advice, as it may think fit), direct the Serious Fraud Investigation Office to initiate prosecution against the company and its officers or employees, who are or have been in employment of the company or any other person directly or indirectly connected with the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... furnish such information to, or produce such books and papers before him or any person authorised by him in this behalf as he may consider necessary, if the furnishing of such information or the production of such books and papers is relevant or necessary for the purposes of his investigation. (3) The inspector shall not keep in his custody any books and papers produced under sub-section (1) or sub-section (2) for more than one hundred and eighty days and return the same to the company, body corporate, firm or individual by whom or on whose behalf the books and papers were produced: Provided that the books and papers may be called for by the inspector if they are needed again for a further period of one hundred and eighty days by an order in writing. (4) An inspector may examine on oath- (a) any of the persons referred to in sub-section (1); and (b) with the prior approval of the Central Government, any other person, in relation to the affairs of the company, or other body corporate or person, as the case may be, and for that purpose may require any of those persons to appear before him personally: Provided that in case of an investigation under section 212, the prior a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -five thousand rupees but which may extend to one lakh rupees, and also with a further fine which may extend to two thousand rupees for every day after the first during which the failure or refusal continues. (9) The officers of the Central Government, State Government, police or statutory authority shall provide assistance to the inspector for the purpose of inspection, inquiry or investigation, which the inspector may, with the prior approval of the Central Government, require. (10) The Central Government may enter into an agreement with the Government of a foreign State for reciprocal arrangements to assist in any inspection, inquiry or investigation under this Act or under the corresponding law in force in that State and may, by notification, render the application of this Chapter in relation to a foreign State with which reciprocal arrangements have been made subject to such modifications, exceptions, conditions and qualifications as may be deemed expedient for implementing the agreement with that State. (11) Notwithstanding anything contained in this Act or in the Code of Criminal Procedure, 1973 (2 of 1974) if, in the course of an investigation into the affairs of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gation into affairs of related companies, etc. - If an inspector appointed under section 210 or section 212 or section 213 to investigate into the affairs of a company considers it necessary for the purposes of the investigation, to investigate also the affairs of- (a) any other body corporate which is, or has at any relevant time been the company's subsidiary company or holding company, or a subsidiary company of its holding company; (b) any other body corporate which is, or has at any relevant time been managed by any person as managing director or as manager, who is, or was, at the relevant time, the managing director or the manager of the company; (c) any other body corporate whose Board of Directors comprises nominees of the company or is accustomed to act in accordance with the directions or instructions of the company or any of its directors; or (d) any person who is or has at any relevant time been the company's managing director or manager or employee, he shall, subject to the prior approval of the Central Government, investigate into and report on the affairs of the other body corporate or of the managing director or manager, in so far as he considers that the res ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wer which a Magistrate having jurisdiction to try a case may exercise under section 167 of the Code of Criminal Procedure, 1973 (2 of 1974) in relation to an accused person who has been forwarded to him under that section; and (d) a Special Court may, upon perusal of the police report ofthe facts constituting an offence under this Act or upon a complaint in that behalf, take cognizance of that offence without the accused being committed to it for trial. (2) When trying an offence under this Act, a Special Courtmay also try an offence other than an offence under this Act with which the accused may, under the Code of Criminal Procedure, 1973 (2 of 1974) be charged at the same trial. (3) Notwithstanding anything contained in the Code of Criminal Procedure, 1973 (2 of 1974), the Special Court may, if it thinks fit, try in a summary way any offence under this Act which is punishable with imprisonment for a term not exceeding three years: Provided that in the case of any conviction in a summary trial, no sentence of imprisonment for a term exceeding one year shall be passed: Provided further that when at the commencement of, or in the course of, a summary trial, it appears to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... per cent of the turnover the company, whichever is lower, and does not involve public interest, any person guilty of such fraud shall be punishable with imprisonment for a term which may extend to five years or with fine which may extend to twenty lakh rupees or with both." Explanation.- For the purposes of this section - (i) "fraud" in relation to affairs of a company or any body corporate, includes any act, omission, concealment of any fact or abuse of position committed by any person or any other person with the connivance in any manner, with intent to deceive, to gain undue advantage from, or to injure the interests of, the company or its shareholders or its creditors or any other person, whether or not there is any wrongful gain or wrongful loss; (ii) "wrongful gain" means the gain by unlawful means of property to which the person gaining is not legally entitled; (iii) "wrongful loss " means the loss by unlawful means of property to which the person losing is legally entitled;" Referring to the provision of the section 212 the counsel for the petitioner has laid stress on the above-mentioned argument that the Investigating Officer has vast powers to arrest the accuse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for grant of bail by much higher standards as compared to the standards prescribed for consideration for arrest by the investigating officer. Therefore in a given case, investigating officer may think that despite the availability of the material with him, since the accused has been cooperating during the investigation, therefore, he need not arrest such a person and that this job would be better left to be done by the court. In another given situation, the investigating officer of the case might be even colluding with the accused, and therefore, he may not arrest such an accused despite the availability of material sufficient to arrest such an accused. Hence; the fact that the accused was not arrested by the investigating officer under Section 212(8) during the investigation, does not show either the non-existence of the material sufficient to arrest such an accused nor does such a non-arrest, necessarily, has any reference to any application of mind by the Investigating Officer; to the material available with him; qua the guilt of the accused. Needless to say, that under section 212(8) the investigating officer of the case is required to consider the material and record reasons ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... losure, not keeping proper records and other defaults and defects qua affairs of a Company as punishable, although with smaller quantum of punishments of imprisonment and/or fine. These provisions are strewn with throughout the body of the Act. To inspect the records of Companies and to investigate these minor offences, the Central Government is to appoint 'Inspectors' of Companies, who shall work as the ordinary Inspectors to investigate the said firms. The investigation, under the Companies Act can be initiated in three different manners and for different reasons, which might come to the knowledge of the Central Government. If during routine inspection something criminal comes to the knowledge of Inspectors, on that the investigation can be started under Section 208 of the Companies Act. If certain other misconduct or fraud in the affairs of a Company comes to the knowledge of the Central Government, and for the reasons mentioned therein, the Central Government can order investigation under Section 210 of the Companies Act. Still further, if during some proceedings some default or even fraudulent affairs in relation to the conduct of affairs of the company comes to the kn ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly under Section 219, all have to be conducted under the procedure given under Section 217 of Companies Act; additionally controlled by restrictive provisions of Section 212 for officers of SFIO. Under Section 217, when an investigation Officer feels the need to join any person or other body corporate in investigation qua the affairs of the company which he is already authorised to investigate, then under Section 217(2) he can seek record from such any other person or body corporate, as he considers relevant for the purpose of his investigation. Under Section 217(4) he can also record the statement on Oath, of the Officers and employees etc of the Company under investigation. Additionally he can also record statement on Oath of any other person or body corporate, which is not directly connected with, or controlled by the Company under investigation. At this stage of investigation, the provisions of Section 217(4) makes a distinction between the ordinary Inspector of Companies, investigating as per the mandate of Sections 208, 210 and 213 on the one hand; and the Officer of SFIO investigating the serious fraud as per the mandate of Section 212 on the other hand. If a statement on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rosecution can be initiated against such person as well, despite the fact that the affairs of his own company were not directly under investigation for serious fraud in relation to their own affairs. A person can, very well, be prosecuted as a person abetting or as a conspirator or perpetrator of fraud in relation to a company not owned or controlled by him. Hence this Court finds that the investigation, the complaint or the cognizance of the offences against the petitioner are not vitiated in any manner. At the same time this court does not find any substance in the argument of the learned Counsel for the SFIO has that the twin conditions prescribed under section 212(6) of the New Companies Act, 2013 start with negation of bail to the accused and the court could grant bail to such an accused only if the court records a satisfaction qua the accused being 'not guilty' of the alleged offence and also a satisfaction that if released on bail the accused is not likely to commit any similar offence again. Also this court does not find substance in the insistence of the learned counsel for the SFIO that the application of the twin conditions, as prescribed under Section 212 (6), are mand ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e and liberty protected by Article 21 of the Constitution of India. In case of conflict between the rights guaranteed by the Articles 14 & 21 of the Constitution on one hand and the language in a statute on the other hand, the latter has to give in to the former. This has also been so held by the Supreme Court in another case where the Supreme Court has held that despite prohibition of suspension of sentence under NDPS Act, the Courts can suspend the sentence. Hence it was held by this court that, despite the fact that the constitutional vires of the language of the twin conditions might be considered by some other court in some other appropriate proceedings, the state could not be permitted to take the twin conditions as an objection to the grant of the bail to the accused. This court does not find any reason to take a different view now. This judgment of this court was even challenged before the Hon'ble Supreme Court in case of SLP(Criminal) Diary No. 42609 of 2018, State of Punjab V/s Ankush Kumar @ Sonu. However, the Hon'ble Supreme Court had not found any reason to interfere with that judgment of this court; and SLP was, accordingly, dismissed by the Supreme Court. It would no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or declining bail to such a person; requires the satisfaction and belief of the court that the said person 'has been guilty' of the offence mentioned in that provision. On the other hand Section 437(7) deals with a situation where the trial stands concluded but the decision is not yet pronounced. In this Situation; this provision provides that the accused need not be unnecessarily incarcerated and he can be released on bail if the court has a satisfaction and belief; on the basis of the evidence of the prosecution; that the accused 'is not guilty' of the offence. Both these provisions are perfectly in tandem with the other provisions of Cr.P.C. relating to the stages and progress of trial, like framing of charge, discharge and acquittal of an accused as per the progress of trial and availability of evidence on record. On the other hand, section 212(6) of the Companies Act requires from the court; at the start of the trial itself; what section 437(7) requires from the court at the end of the trial. Even if, by hook or crook, the court manages to record, while granting bail to an accused, as is required under section 212(6), that the accused 'is not guilty', then it negates the enti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s into custody and keeping them in custody till their examination and cross-examination before the trial court, as prosecution witnesses, was completed, because in those cases only the police persons were the witnesses and they were not appearing before the trial court, for 19 dates in one case and for 41 dates in another case; despite the fact that the accused was in continuous custody or was regularly appearing before the trial court. Such kind of cases does galore. In such a situation the court would do substantial justice; or would stick to the conditions; like the ones prescribed under section 212(6); to deny even the bail to such an accused? Even if the courts are to stick to such condition; then how much injustice to the accused would be sufficient to off-set or to balance with the rigor of the twin condition? This court finds the answer to these inconvenient questions to be in negative and, therefore, constrained to observe that in humble view of this court; the twin conditions mentioned in section 212(6) are not mandatory in their compliance. Although learned Counsel for the SFIO has submitted that in the case of Nitin Johari (Supra) the Hon'ble court has remanded the mat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts of the Supreme Court. Even in case of Nitin Johari (Supra) the Supreme Court had emphasized the fact that in case of consideration of bail to the accused in case of economic offences, the factors and criteria mentioned by the Supreme Court in case of Y.S. Jagan Mohan Reddy (Supra) are to be followed. Observation of the Hon'ble Supreme Court, as approvingly quoted in the case of Nitin Johari (Supra), are as under:- "34. Economic offences constitute a class apart and need to be visited with a different approach in the matter of bail. The economic offences having deep-rooted conspiracies and involving huge loss of public funds need to be viewed seriously and considered as grave offences affecting the economy of the country as a whole and thereby posting serious threat to the financial health of the country." 35. While granting bail, the court has to keep in mind the nature of accusations, the nature of evidence in support thereof, the severity of the punishment which conviction will entail, the character of the accused, circumstances which are peculiar to the accused, reasonable possibility of securing the presence of the accused at the trial, reasonable apprehension of the wit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dance in the judgment of the Supreme Court rendered in Nitin Johari's (supra) case in this regard. Otherwise also the fact that the offences under the new Companies Act are the 'economic offences' and have to be treated a 'class apart' is clear from the provision of section 446A of the Companies Act itself. This section creates an extraordinary provision to bind-down the discretion of the Special Court even in the matter of award of punishment to the convict. This section has specifically made the nature, the scale and machinations of the offence and the fraud, size of the Company, Nature of the Business of the Company and the Injury to the Public Interest; to be the guiding factor to grade the quantum of the punishment to be awarded accused by the Court. Hence there is no doubt that the offences under the Companies Act constitute a class apart and these offences are prescribed by the Companies Act itself as to be treated as the serious economic offences. So far as the seriousness of the offences and the material against the petitioner is concerned, this court finds weight in the arguments of the learned Assistant Solicitor General representing SFIO that there are serious allegati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... these were shown as spread over a long duration during the financial year; by antedating the entries and the bills and the invoices supporting those entries. The fake bills/ invoices were, allegedly, recovered from the Co-operative Society and the perfectly matching and identical copies of said bills and the invoices are alleged to have been recovered from the computer of the petitioner. Still further, the suit lengths were shown to have been supplied/transported to the Cooperative Society through the transporter J. K. Movers. However, when joined into the investigation, the owner of the J. K. Movers is stated to have denied having transported any such material to the Co-operative Society. Still further, some of the bills/invoices were showing that although the said material was arranged by the petitioner or his Companies, but actually the said material was shown to have been supplied by the Company of one Ajay Agrawal. However, the owner of the said company, Ajay Agrawal, has also been joined into the investigation and he has also stated to have made a statement that neither he had ever supplied the said material to the Co-operative Society, nor had he ever authorized the petitio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d seizure, the powers of the investigating officers under the Companies Act are far more controlled and circumscribed by the conditions, restrictions and even the prohibitions under the relevant provisions of the Companies Act. Accordingly, under the Companies Act the investigating officer has also been conferred commensurate sanctity and his work has been conferred more authenticity as compared to that of the ordinary police officers. Therefore, under the provisions of the section 217(4) and section 217(5) Companies Act the investigating Officers has been given the power to record even the statements on oath and to summon person as the civil court does. The statement recorded by an authority having powers to record the statement on oath can never be put at par with the one recorded by an ordinary police officer. Such a statement recorded by the investigating officer under Companies Act, even if it is of 'admission' of certain fact; though could not be taken as sufficient for conviction on its own, however, the same would not be discarded as a 'confession' hit by section 25 of the evidence Act. As per the mandate of the section 217(7) of the Companies Act, this can certainly be rel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sment; cannot be branded as unfair process. If at all the individual investigating officers is alleged to have exercised actual coercion as of fact or the pressure in some case, the accused would be at liberty to expose such aspect by getting an opportunity to cross-examine such an investigating officer and by leading other evidence to this effect. Hence this court finds no ground to discard the statement of the petitioner and his co-accused; even for the purpose of consideration of bail. There is other independent witness as well against the petitioner who is stated to have made a statement fixing the petitioner in the crime involved in this case. Statement of Ajay Agrawal is also on record of the case in which he has stated that bills which are alleged to have been raised by the petitioner in the name of his Companies were never issued by his Companies, nor had he ever authorized the petitioner to issue these bills. Hence these bills; some of which have even been admitted by the petitioner are shown to be fake. In view of this, the court finds that there is material against the petitioner showing his culpability in the heinous economic crime. Still further the charge-sheet agai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... therwise also; insisting upon independent material from the investigating officer; to show that the accused is likely to flee from country or to influence the witnesses or to destroy the evidence, is again, asking impossible from him, besides extending a dangerous inbuilt suggestion to him that he should always go beyond his brief of investigation and should try to find out or even to create some evidence or material to ensure that the accused could be denied bail. Unfortunately, if he succeeds in bringing some such material before the court and the court believes the same for denying bail to the accused, would not the same create a totally uncalled for bias against the accused during the trial? Only a mind which thinks of human thought process to be a compartmentalized aspect and in distinct water-tight segments, instead of being a rational and interdependent continual process, can deny this logical conclusion. Conspiracies and the designed intentions; being those aspects of human psychology which are concealed deep within the grey matter; normally do not have easy external direct material to manifest. Even the Social or the political status of a person; or his economic clout; are ..... X X X X Extracts X X X X X X X X Extracts X X X X
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