9911796707
TMI Blog2020 (12) TMI 156X X X X Extracts X X X X X X X X Extracts X X X X ..... ith the factum that economic offences corrode the very fabric of democratic governance and probity in public life and are considered to be the gravest offences against the society and the persons alleged to have committed such offences are necessarily required to be treated differently in the matter of bail. What is brought forth through the observations therein is to the effect that merely because a person who was not arrested by the police or Investigating Agency during investigation nor produced in custody as envisaged in Section 170 of the Cr.P.C., 1973 ought not to be taken into custody merely because the charge sheet has been filed, the same however, does not spell out an embargo on the Court to reject a prayer made for bail by such an accused not arrested during investigation or not produced in custody, to be taken into custody in the circumstances where the facts of a case as alleged bring forth the gravity and magnitude of the alleged commission of an offence and consequently negate the grant of bail. As regards the contention raised on behalf of the petitioner that the petitioner was not a flight risk and there is no scope of his tampering evidence and influencing t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... application in toto. 3. The status report dated 11.06.2020 submitted under the signatures of the Assistant Commissioner of Police, Sector-IV, EOW, Delhi states to the effect that a complaint of M/s Dalmia Cements Bharat Ltd. against M/s Allied Financial Services Pvt. Ltd. Ors was received in EOW regarding fraudulent transfer of Mutual Funds Units/securities worth ₹ 344.07 Crores of the complainant. It is submitted further through the said status report that the erstwhile subsidiaries of the complainant company namely OCL India Cements Ltd. and Dalmia Cement East Limited were interested in making mutual fund investments in May 2017 and availed the services of the Depository i.e. National Securities Depository Limited (NSDL) and its participant Allied Financial Services Pvt. Ltd. (AFSPL) and AOF were signed and demat accounts with client ID No. 10061626 in the name of OCL Cements Ltd. (OCL) and Client ID No. 10061329 in the name of Dalmia Cements East Ltd. (DCEL) were opened and after making initial investment, several further investments and redemptions were made in the said accounts from time to time and the complainant held securities worth ₹ 344.07 Crores in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... INF789FF01PH1 489790.286 B. Dalmia Cement East Limited (Client ID 10061329) S. No. Name of mutual funds ISIN Units 1. DSP Mutual Fund Low Duration FD Reg Growth OP INF740K018P2 50435849.802. 6. It was further submitted through the said status report that the investigation revealed that the said units of Mutual Funds worth ₹ 344.07 Crores were fraudulently transferred in favour of Allied Financial Services Pvt. Ltd. (Depository Participant/Intermediary), who further pledged it with IL FS Securities Services Ltd. Sh.Awanish Kumar Mishra, Director of Allied Financial Services Pvt Ltd is alleged to have fraudulently transferred the credentials of the complainant in the account opening form and fed wrong credentials on NSDL server to deprive the complainant from getting an alert message for each transaction and that the accused Awanish Kumar Mishra further fraudulently transferred the mutual fund units of the complainant worth ₹ 344.07 crores by using delivery instruction slips ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .07 Crores belonging to the complainant from its DMAT account to the trading accounts of the accused and that the applicant arrayed as accused No.4 in collusion and conspiracy with the other accused violated the securities laws and forged and fabricated DISs in order to criminally misappropriate the mutual funds units of INR 344.07 Crores belonging to the complainant, and as a consequence thereof, the complainant being a public limited company cannot use its own money for meeting its day to day operations including paying salaries to its employees. 10. The complainant has further alleged that the applicant and the co-accused has received a premium of INR 380 Crores fraudulently by using the mutual fund units of INR 344.07 Crores of the Complainant as their own margin money and a wrongful gain of INR 380 crores has accrued to the applicant/accused No.4 and other accused. Inter alia the complainant has submitted that on 04.12.2018 ISSL/Accused No.3 i.e. a part of IL FS Group, committed a fraud of INR 90,000 crores by forming 350 shell companies and thus, the Central Government sacked its entire board on the ground of oppression and mismanagement of the company and as per the media ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ge or mandate of the Complainant, who neither issued any mandate for transfer of the Securities nor received any consideration for such transfer thereof. iii. Pursuant to taking above position in future and option contracts by fraudulently using the Securities of the Complainant as its own margin money by Allied/Accused No.2 with ISSL/Accused No.3 (where Applicant/Accused No.4 was working as Business Head) , the Accused Persons had received a sum of INR 380 Crores towards premium, and thus, Applicant/Accused No.4 along with other Accused Persons gained a sum of INR 380 crores illegally and wrongfully by causing illegal and wrongful loss to the Complainant to the tune of INR 344.07 Crores. iv. Allied/Accused No.2 used to send forged and fabricated Statement of Holdings from time to time in respect of Demat Accounts just to make the Complainant believe that its Securities are intact in their Demat accounts. v. Forensic Science Laboratory Report ( FSL Report ) filed along with the Charge Sheet, also confirmed that the signatures of authorized signatories of the Complainant on all sixty-six (66) Delivery Instructions Slips are forged by Accused Persons which were used by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ISSL opened trading terminal of Allied and allowed them to roll over their position during Jan' 19, specifically after the termination notice was issued on 8-Jan-19. g. ISSL choose to ignore significant unusual increase in the asset and liabilities of Allied financials for FY 18 and didn't acted upon it at all. A proper review of financial statements of Allied should have triggered an alarm and some sort of action should have been taken by ISSL. h. Auditors observation was there in financials transactions that Allied had multiple doubtful transaction with related parties and the recovery is doubtful which ISSL ignored and have not acted upon. i. ISSL despite having a previous relationship with Allied, have misrepresented in their CAM document (at the time of on-boarding) that they don't have any existing relationship with Allied. j. In 2010, SEBI ordered an adverse order against Allied for synchronised trades and penalised by SEBI. ISSL ignored this instance at the time of on boarding of Allied. k. Allied was under Risk Reduction Management (RRM) for 137 trading days out of 299 trading days. RRM specifically that the trading member crosses 90% ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... does not possess any title/right over such securities. Thus, pledge of securities, belonging to fully paid client, is not treated as valid pledge in law (Emphasis supplied) The complainant further submits that admittedly, it had only Demat Accounts with Allied/Accused No.2 and had no trading account nor any power of attorney was given by OCL DCEL to Allied/Accused No.2, and as such the case of Complainant is much stronger than in KARVY STOCK BROKING LIMITED, wherein investors had trading accounts and had also given power of attorney, which was misused by the broker, while in the instant case, the Complainant had only Demat Accounts with Allied / Accused No.2 and no trading account and admittedly, no power of attorney was ever given by OCL DCEL to Allied / Accused No.2 in respect of such Demat Accounts. It was thus submitted on behalf of the complainant that the fraudulent transfer of Securities of Complainant from its Demat Accounts by the Accused Persons to their own account and to their related entities is illegal on the face of it. 15. It was further submitted by the complainant to the effect that the accused no.1 in collusion and in conspiracy with the Applican ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onsequently, ISSL/Accused No.3 (where the Applicant/Accused No.4 was working as Business Head) has been facing multiple investigations by various authorities including SEBI, NSDL, EOW, SFIO etc. The complainant has further submitted to the effect that SEBI, upon completion of forensic audit conducted by it in respect of the transaction between ISSL/Accused No.3 (where the Applicant/Accused No.4 was working as Business Head) and Allied/Accused No.2, has also observed that ISSL/Accused No.3 (where the Applicant/Accused No.4 was working as Business Head) has not only actively participated in the fraud committed by Allied/Accused No.3 in respect of Securities belonging to the Complainant but also facilitated Allied/Accused No.2 in executing fraudulent transfer of Securities belonging to the Complainant in collusion with Allied/Accused No.2 and thus, the SEBI has also issued a Show Cause Notice dated 09.12.2019 against ISSL/Accused No.3 (where the Applicant/Accused No.4 was working as Business Head). 18. It is further contended on behalf of the complainant that the applicant/accused no.4 is guilty of serious offences such as conspiring in the commission of forgery for the purpose of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al misappropriation of mutual funds under Sections 406/420/467/468/471/120B of the Indian Penal Code, 1860 have been committed by the accused nos. 1 2 i.e. M/s AFSPL and none of the criminal offences have been committed by ISSL and the applicant. 21. Inter alia the applicant has submitted further to the effect that M/s AFSPL further utilized the alleged mutual funds of the Complainant to avail margin to carry out future option trades on National Stock Exchange ( Exchange ) by transferring them with ISSL which in turn pledged the said units with National Clearing Limited ( Clearing Corporation ). It has been submitted by the applicant that ISSL is a professional clearing member registered with Clearing Corporation as well as SEBI, who settles the trade carried out by the trading member on the exchange, whereas M/s AFSPL is a trading member registered with exchange and SEBI. For ISSL, the clients are the trading members with no knowledge about the end clients of the Trading members. The applicant further submits that ISSL had no knowledge about the background details of the collaterals provided by the Trading Members to avail margin limits and that in view of the relevant rule ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ant thereof must be a norm not an exception as propounded in Sanjay Chandra v. CBI (2012) 1 SCC 40. 26. The applicant has further submitted that the dictum of the verdict of Lt. Gen. Tejinder Singh V. CBI 2014 SCC Online Del 4560 which categorically holds that if the charge-sheet is filed without arrest and the accused appears in compliance of the summons, the Ld. Court has no other option except to release the Accused on bail irrespective of the fact that he files a bail application or not is wholly applicable to the case. 27. The applicant has thus sought that he be allowed to be released on bail subject to conditions as may be imposed as deemed fit by the Court. ANALYSIS 28. It is essential to observe that the applicant was in a fiduciary capacity and has allegedly committed gross breach of trust in relation thereto in alleged connivance with other co-accused persons of an alleged amount of INR 344.07 crores, and it has to be taken into account the factum that the complainant is a public limited company, and that the members of the public have also consequently been allegedly defrauded of the amount of INR 344.07 crores by alleged fraudulent use of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re 4 instances where collateral was released by ISSL to AFSPL without corresponding reduction in exposure/margin requirements. The aforesaid instances of release of collaterals over weekends were unusual. The said release of collateral by ISSL helped AFSPL to make Dalmia Group believe that their MF units were intact in their respective demat accounts. Details of which are as under: Date Total Margin Cash Securities MF Amount Released Total Collateral Shortfall on Saturday and Sunday 30-Dec-17 1,81,27,20,261.54 71,62,00,000.00 3,40,27,11,266,266.92 3,29,62,41 ,561.48 82,26,69, 705.44 99,00,50,556.10 31-Dec-17 1,81,27,20,261.54 71,62,00,000.00 3,40,27,11,2 66,266.92 3,29,62,41 ,561.48 82,26,69, 705.44 99,00,50,556.10 31-Mar-18 3,25,99,58,458.67 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Instances of the same are as under: S.No. Particulars 1. Networth as on September 30, 2018 after deducting ICDs, interest on ICDs, loan to IL FS Employee welfare trust, Interest on Joan, Impact of lnd AS and Sundry Debtors of Rs. (154.06) Cr, Networth as on September 30, 2018 is 53 .0 I Cr. as against Nerworth submission of member of ₹ 207.07 Cr 2. After deducting ICDs amounting to ₹ 750 Cr, Networth as on March 31,2018 is (573 .01) Cr as against Networth submission of member of ₹ 176.99 Cr. If ISSL had duly considered the aforesaid ICDs under the head doubtful debts and advances, it would have revealed the shortfall in its networth and thereby resulting into noncompliance of Rule 12 of Chapter IV of The Rules of NSE Clearing Limited. Since, ISSL has failed to meet the requirement of minimum networth, the same is prima-facie in violation of clauses A (2) A (5) of the code of conduct as specified in Schedule II of Regulation 9 (f) of SEBI (Stock Brokers) Regulations, 1992, read with regulation 1 OF of SEBI (Stock Br ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f his having not been arrested during investigation or not being produced in custody is itself sufficient to entitle him to be released on bail. Reason is simple. If a person has been at large and free for several years and has not been even arrested during investigation, to send him to jail by refusing bail suddenly, merely because charge-sheet has been filed is against the basic principles governing grant or refusal of bail. , which is reiteration of observations of this Court in Court on its own motion Vs. CBI 109 (2003) DLT 4944, it is essential to observe that what is brought forth through the observations therein is to the effect that merely because a person who was not arrested by the police or Investigating Agency during investigation nor produced in custody as envisaged in Section 170 of the Cr.P.C., 1973 ought not to be taken into custody merely because the charge sheet has been filed, the same however, does not spell out an embargo on the Court to reject a prayer made for bail by such an accused not arrested during investigation or not produced in custody, to be taken into custody in the circumstances where the facts of a case as alleged bring forth the gravit ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
