9911796707
TMI Blog2021 (3) TMI 1091X X X X Extracts X X X X X X X X Extracts X X X X ..... 8(5), 447, 448 of the Companies Act, 2013 and Section 211, 217, 628 of the Companies Act, 1956. 2. As per the observations in the order on summoning dated 29.02.2020 of the learned Special Judge, Companies Act, the Central Government under powers conferred under Section 206 (4) directed the conducting of an inquiry vide order dated 20.11.2017 which culminated into submission of an inquiry report dated 19.02.2018 under Section 208 of the Companies Act to the Central Government as a consequence of which the Ministry of Corporate Affairs, Government of India in terms of the exercise of power under Section 212(1)(a), (b) & (c) of the Companies Act, 2013 assigned the investigation into the affairs of Rockland Hospitals Limited (RHL) now M/s Medeor Hospital Limited vide order dated 31.05.2018 and also accorded approval to carry out the investigation into the affairs of four other group companies of the complainant i.e. Rockland Hotels Limited (RHOL), Somya Constructions Private Limited (SMCL), Rockland Media and Communication Private Limited (RMCPL) and RSH Meditech Systems Pvt. Ltd. vide order dated 30.09.2019 and that the Director SFIO in turn appointed officers of the SFIO as inspect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e entire amount of Rs. 13.17 Crore was transferred, under the signature of Prabhat Kumar Srivastava/applicant, to the personal Saving Bank Account of co-accused Rishi Kumar Srivastava. Further, on the next day, the same amount of Rs, 13.17 Crore was transferred from the account of Rishi Kumar Srivastava as unsecured loan to RHL. The said unsecured loan of Rs. 13.17 Crore was gradually repaid by RHL to Rishi Kumar Srivastava in the financial year 2014-15, 2015-16 & 2016-17, which were actually the funds of RHL itself. By transferring the amounts from FARC to Rishi Kumar Srivastava and then further transferring it to RHL as unsecured loan, a false facade was created to show that the amount has been transferred through Rishi Kumar Srivastava to RHL, as disclosed in the FARC financial statements, whereas in truth RHL was burdened with an additional liability of Rs. 13.17 Crore, the amount which otherwise belonged to RHL. B. Second Instance: Investigation established that RHL maintained a Hospital Information System (HIS) wherein details of patients availing facilities/ services at its hospitals are captured and these entries including patient registration, billing, discharge etc., ar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ated by accommodation entry operators, who masquerade the source and destination of funds by transferring entries through a web of parties. Investigation established that applicant between FY 2013-14 to FY 2015-16 was in-charge of the day-to-day affairs of RHL. He was a signing and approving authority for disbursements made against expenditure in RHL. He was also one of the authorized signatories to the Bank Accounts of RHL through which payments to the 71 accounts/ entities were made. It was on his directions that bogus expenses, siphoning off Rs. 76.03 Crore were recorded in the Books of RHL. D. Fourth Instance: The books of accounts of RHL established that, a total of Rs. 9.61 Crore were brought in as share capital by the promoters and a total of Rs. 168.38 Crore were brought into the company through 21 Companies (Layer -1) controlled by the promoters, including the applicant, of RHL during the FYs 2004-05 to 2014-15, whereas the net income earned by all promoters of RHL and their spouses shown in the income tax returns filed by them during the period 2005-06 to 2016- 17 was Rs. 8.53 Crore only. These 21 companies were incorporated by the promoters, including the applicant, of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... equity shares of RHL to it, at that time the applicant was not holding all the shares. The shares of IFC were purchased by the promoters only on 27.06.2016 at a cost of Rs. 11 Crores. Prabhat Kumar Srivastava/applicant chose not to inform IFC of the deal with VPS and entered a separate deal with IFC for Rs. 11 Crore to purchase its shares in RHL, so that they could obtain undue benefit from the sale at the expense of the minority shareholder (IFC). VPS has transferred Rs. 19.5 crores to escrow account held by Prabhat Kumar Srivastava/applicant, Rishi Kumar Srivastava & Mala Srivastava and thereafter Rs. 11 Crore was paid to IFC. These shares were, thereafter, sold within 2 days to VPS for a price of Rs. 47.45 per share which translated to a total amount of Rs. 19.15 Crore. In this regard it is to be noted that the share sale agreement dated 27.06.2016 between IFC and Mala Srivastava had stated unequivocally that the purchaser was not purchasing the same for resale. Thus the aforesaid facts established that the applicant was having full knowledge of sale of share of RHL to VPS, and had abused their position in RHL by conniving to defraud the minority shareholder (IFC), which falls ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te having complete knowledge that the financial statements were false, in the sense that the assets (Building and Medical Equipment) recognized were inflated, expenses in Profit and Loss account were bogus etc." 5. The petitioner in response to the written submissions of the SFIO specifically in relation to the transactions detailed in paragraph 4 hereinabove has submitted as under:- "Allegation A: Applicant, in conspiracy with Aditya Kr Bhandari, Rishi Kumar Srivastava (Charge Sheet/ Complaint filed without Arrest), allegedly siphoned off funds of RHL to the tune of Rs. 13.21 Cr belonging to RHL, the applicant has committed an offence u/s 447 and 448 of the Companies Act, 2013. Applicants Reply: After obtaining this amount on loan from Bank, RHL paid the same to MCD for sanction of Additional Constructible Area/ FAR for Qutab Institutional Area Hospital as RHL was occupying the Hospital on Licensee Basis from Far Trust, however, when MCD refunded this amount, the same was received by FARC Trust as the said Trust was the Landowner/ Lessee of DDA. FARC transferred the amount back to RHL through one of its Trustees A5/ Rishi Kr Srivastava and the same has been 'DECLARED' in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... RHL and Entry Operators have stated that the said amount has been paid back in Cash to the accused persons and therefore the applicant has committed an offence u/s 447 and 448 of the Companies Act, 2013. Applicants Reply: Payments to Vendors (who have been alleged to be Entry Operators) were only made through Banks and not in cash. The allegation that the Entry Operators returned Cash to the accused persons does not stand on its legs as there is no proof of cash transactions such as "Source'/ "Cash Receipt" on record. The Hon'ble Delhi High Court in Bai App No.434/2020 titled Pradeep Sherawat Vs. State has granted Anticipatory Bail as no proof of cash such as "Source and/ or Cash Receipt" was available. MOST IMPORTANTLY, even if the allegations of SFIO are considered to be gospel truth, it is reiterated that as against alleged Siphoned-Off amount of 76.03 Cr, a sum of Rs. 145.59 Cr has already been collected by RHL in the above said Instance of alleged Non Existent Doctor Referred Patients Sale, hence the question of their being an intention to Siphon-Off does not arise at the first place. Allegation D, E, G & H: Bank landed funds were allegedly siphoned off from RHL through b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is concerned....". 6. The petitioner has submitted further that RHL was established in 2004 and being led by Srivastava Family as its Directors and Majority Share Holders, RHL availed Bank loans to the tune of 430 Cr approximately, that in 2016, the minority Share Holding of RHL which was owned by International Finance Corporation (IFC) were purchased by Mala Srivastava and thereafter 100 % Shares of RHL were sold to VPS Healthcare; that as a part of consideration purchasing the 100% Shares of RHL, after taking over RHL, during January, 2017, the Srivastava Family paid the entire loans of RHL out of their sales consideration from 100% shares of RHL which were obtained by RHL during the tenure of Srivastava Family and discharged the guarantees of the Srivastava Family; that thereafter various disputes arose and VPS Healthcare by themselves and through its Auditor filed a complaint before the ROC in respect to the manner in which the affairs of RHL were managed by Srivastava Family in December 2017, pursuant to which vide order dated 31.05.2018 MCA directed SFIO to investigate the matter and that no other Shareholder/ Creditor/ Debtor of RHL has filed any Complaint till date and tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in relation to his ailments established that he is a sick/infirm person suffering from Major medical ailments i.e. Type 2 - Diabetes Mellitus, Hypertension, Coronary Heart Disease, 'Severe' Non Proliferative Diabetic Retinopathy (NPDR), Hypothyroidism, Benign Prostate Hyperplasia (BPH), derailment of LFT Parameters and that, his urine flow is also stated to be insufficient. It is further submitted that the applicant suffers from attacks of benign paroxysmal positional vertigo and has developed a problem in walking properly and has disk bulge at L3, L4 and L5 S.1 which are ailments of such irreversible nature that the same require continuous follow-ups and treatment and lapse of treatment could be fatal to the life of the applicant and the factum of the applicant being highly co-morbid has also not been denied by the SFIO. The applicant thus, submits that he is a sick/ infirm person and therefore falls within the proviso to Section 212(6) of the Companies Act, 2013 which is a proviso enabling the Court to grant bail to the applicant without applying the twin conditions of bail under Section 212(6) of the Companies Act, 2013 and it is contended on behalf of the applicant that thus, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... years and is also said to be suffering from age related health problems. Considering the above factors and the facts and circumstances of the case, we are of the view that the appellant is entitled to be granted bail." 9. It is submitted on behalf of the applicant that he is neither a flight risk nor is there any allegation against him of tampering any evidence and that the investigation in the matter is complete and the charge sheet has already been filed and thus, he be granted regular bail. 10. It is further submitted on behalf of the applicant/petitioner that the order dated 14.05.2020 granting regular bail to the co-accused Aditya Kumar Bhandari takes into account the factum that there was no public money involved and all bank loans stood fully paid back and that the bankers did not file any complaint and no loss had been caused to any financial institution or Central Government, which factors apply even qua the present applicant/petitioner. 11. A contention was raised on behalf of the SFIO that in terms of Section 212(6) of the Companies Act, 2013, wherein it has been legislated to the effect:- "212. Investigation into affairs of Company by Serious Fraud Investigation Of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t guilty of the offence alleged to have been committed by him and that the petitioner is not likely to commit any offence whilst on bail. 12. Section 212(7) of the Companies Act, 2013 reads to the effect:- "212. Investigation into affairs of Company by Serious Fraud Investigation Office.- ....... ........ ....... (7) The limitation on granting of bail specified in sub-section (6) is in addition to the limitations under the Code of Criminal Procedure, 1973 (2 of 1974) or any other law for the time being in force on granting of bail. 13. It is further submitted on behalf of the SFIO that the applicant is an accused against whom offences under Sections 447, 36 r/w/s 447/448 r/w/s 447 have been invoked separately for distinct fraudulent transactions wherein he is allegedly involved and thus the satisfaction required by Section 212(6) (ii) of the Companies Act, 2013 as required to be recorded is qua each of the said separate transactions before grant of bail to the applicant. It is further submitted on behalf of the SFIO that the grounds raised by the applicant i.e. settlement with the new management/VPS, no loss to banks, no complaint by banks, withdrawal of resolutio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is wholly uncalled for. Reliance was also placed on behalf of the SFIO on the observations of the Hon'ble Supreme Court in the said case, which read to the effect:- "A perusal of Section 37 of the Act leaves no doubt in the mind of the court that a person accused of an offence, punishable for a term of imprisonment of five years or more, shall generally be not released on bail. Negation of bail is the rule and its grant an exception under subclause (ii) of clause (b) of Section 37(1). For granting the bail the court must, on the basis of the record produced before it, be satisfied that there are reasonable grounds for believing that the accused is not guilty of the offences with which he is charged and further that he is not likely to commit any offence while on bail. It has further to be noticed that the conditions for granting the bail, specified in clause (b) of sub-section (1) of Section 37 are in addition to the limitations provided under the Code of Criminal Procedure or any other law for the time being in force regulating the grant of bail. Liberal approach in the matter of bail under the Act is uncalled for" 16. Likewise, the SFIO places reliance on the verdict of the Ho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 81) with specific reference to observations therein, which read to the effect:- "2. The appellant-prosecution has challenged the discretion exercised by the learned Single Judge of the High Court of Kerala in granting post-arrest bail to the accused respondents without noticing the mandate of Section 37(1)(b)(ii) of the Narcotic Drugs and Psychotropic Substances Act, 1985 (hereinafter being referred to as "NDPS Act") under the order impugned dated 10th May, 2019 followed with 12th June, 2019 rejecting the application filed by the appellant under Section 482 of the Code of Criminal Procedure (hereinafter being referred to as "CrPC") for recalling the order of post-arrest bail dated 10th May, 2019. ...... ...... 18. The jurisdiction of the Court to grant bail is circumscribed by the provisions of Section 37 of the NDPS Act. It can be granted in case there are reasonable grounds for believing that accused is not guilty of such offence, and that he is not likely to commit any offence while on bail. It is the mandate of the legislature which is required to be followed. At this juncture, a reference to Section 37 of the Act is apposite. .... 20. The scheme of Section 37 reve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8) 13 SCC 813, "Union of India v. Niyazuddin" (2018) 13 SCC 738. Reliance was also placed on behalf of the SFIO on the verdict in "Serious Fraud Investigation Office v. Nittin Johari & Anr." SCC Online SC 1178 to reiterate its contention that Section 212(6) of the Companies Act, 2013 is mandatory in nature and as in the facts and circumstances of the instant case which have been explained in detail, the applicant is not entitled to be released on bail as there is no reasonable ground for believing that he has not committed any fraud in view of ample evidence available on record. 19. The observations of the Hon'ble Supreme Court in "Rohit Tandon v. Directorate of Enforcement, (2018) 11 SCC 46 with specific observations in paragraph 21 thereof which reads to the effect:- ".... 21. The consistent view taken by this Hon'ble Court is that 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 posing a serious threat to the financial health of the country....", have essentially to be taken into account before considering the praye ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nsidered at the time of consideration of an application for bail, even if the allegation is one of a grave economic offence, it is not a rule that bail should be denied in every case since there is no bar created in the relevant enactment passed by the legislature nor does the bail jurisprudence provide so. 51. Furthermore, it is in these circumstances that the provisions of Section 212(6) of the Companies Act, 2013 in the facts and circumstances of the instant case would have also to be considered and thus, it cannot be contended that the embargo of Section 212(6) would essentially operate in the instant case., and vide verdict dated 20.12.2019 in Bail Appln. No.1706/2019 titled as "Sachin Jain Vs. Serious Fraud Investigation Office" vide observations in paragraphs 31 & 32 thereof, it has been observed to the effect:- "31. Taking the said aspect into account as well as the factum that the summons bearing no.SFIO/INV/334-339 & 359-463/ AMBBPL & Others and AAPL & Others/ 2016/I/8425/2016 dated 16.08.2016 and SFIO/INV/334-339 & 359-463/ AMBBPL & Ors and AAPL &Others/ 2016/I/10205/2017 dated 16.03.2017 issued to the petitioner by the SFIO referred to hereinabove were apparently no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... omic offence, it is not a rule that bail should be denied in every case since there is no bar created in the relevant enactment passed by the legislature nor does the bail jurisprudence provide so. 32. Furthermore, it is in these circumstances that the provisions of Section 212(6) of the Companies Act, 2013 in the facts and circumstances of the instant case would have also to be considered and thus, it cannot be contended that the embargo of Section 212(6) would essentially operate in the instant case." 24. On behalf of the SFIO, it was however submitted that the transactions in which the petitioner is involved which have resulted into a fraud that has been committed by the petitioner relating to an economic offence, negate the grant of bail to the applicant. 25. Reliance was also placed on behalf of the SFIO on the order dated 14.05.2020 of the Co-ordinate Bench of this Court in Bail Appln. No.639/2020 whereby the co-accused namely Aditya Kumar Bhandari was granted bail with specific observations in paragraph 43 thereof, which reads to the effect:- "43. After going through the status report and considering the arguments advanced by learned Additional Solicitor General, Ms.Ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... order dated 20.10.2020 directing surrender of all prisoners on interim bails in a phased manner and no further extension having been granted with it having been directed that the litigants were at liberty to move the Courts concerned for extension of interim orders which could be considered by the Courts concerned uninfluenced by the order passed dated 20.10.2020 in W.P.(Crl.)3037/2020 by the Hon'ble Full Bench of this Court and coupled with the factum that vide order dated 01.03.2021 in a Petition for Special Leave to Appeal (C) No.13021/2020 whereby there has been no further extension of interim bail was granted, which order has been partly modified vide order dated 15.03.2021 of the Hon'ble Supreme Court whereby a schedule for surrender has been laid down on the date stipulated in the said order. Another contention raised on behalf of the SFIO was that in as much as, the applicant is on interim bail unless he surrenders, the provisions of Section 439 of the Cr.P.C., 1973 cannot be brought into play qua which, reliance is sought to be placed on behalf of the petitioner on the verdict of the Hon'ble Apex Court in "Sundeep Kumar Bafna Vs State" [(2014) 16 SCC623] wherein it has be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s where the applicant was lodged as to whether the said test was requisite and whether it could be conducted at the jail premises. The SFIO had also been called upon to submit a verification report in relation to the physical condition of the applicant. 29. The SFIO verified the document issued by the Human Care Medical Trust, Dwarka with a questionnaire dated 10.03.2021 to the effect:- "No.SFIO/INV/RHL/838/2018/1/21796/2021 dated 10/03/2021 To HUMAN CARE MEDICAL TRUST PALAM VIHAR, SECTOR-6 DWARKA, NEW DELHI-110075 Subject: Seeking Medical Opinion on the orders of the HHC, Delhi. Sir, Shri Prabhat Kumar Srivastava has approached the Hon'ble High Court, Delhi seeking bail by filing Bail Application No.463/2021 and the Hon'ble High Court while hearing of his bail petition has directed Serious Fraud Investigation Office to verify the medical condition of Prabhat Kumar Srivastava as to his assertion that he is scheduled to undergo Coronary Heart Angiography during the first week of April, 2021. In support of this he ha submitted an Outpatient summary dated 06.02.2021 from your Hospital (Copy Enclosed). In this regard you are required to state A) Whether the do ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... NU MALHOTRA, HIGH COURT OF DELHI, NEW DELHI. In reference to the subject cited above, it is hereby submitted that the aforesaid inmate PRABHAT KUMAR SRIVASTAVA (60 years old Male) S/o SARJU PRASAD SRIVASTAVA was previously lodged in CENTRAL JAIL-07, Tihar. In reference to the court order dated 09/03/2021, Where in the HON"BLE HIGH COURT wants to know two issues/queries:- 1. Angiography test can be conducted at jail premise? 2. Under custody, facilities are available to take the accused to appropriate government hospital for angiography test, if so medically advised? Clarification- In regards, to the two queries, My opinion is an under that the inmate patient Prabhat Kumar Srivastava was a known case of Uncontrolled type-2 Diabetes Mellitus, Essential Hypertension, C.A.D. (coronary atery diseases) (heart diseases), history of P.T.C.A. done in 2017, Hypothyroidism with severe non proliferative diabetes retinopathy with diabetes macular edema. Inmate patient was admitted in M.I.Room of Central Jail no.07, Dispensary from 27/02/2020 to 23/03/2020 in critical condition. While at Central jail no.07, He was repeatedly sent to Safdarjung Hospital for follow up treatment of C.A.D ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lf of either side, this Court is of the considered view that the applicant cannot be considered to be a person so sick to fall within the ambit of grant of regular bail till disposal of the proceedings in the complaint case for all that he needs is the intravitreal injections and the angiography which he himself has chosen to be rescheduled after his eye injections and which angiography even as per the report of the Human Care Medical Trust would require hospitalization for a day, though the other procedure would take time depending upon the procedure required and the kidney function test. 34. Thus, though the Court does not consider it appropriate to grant the bail to the applicant in terms of Section 212(6) and the proviso thereto in the category of being a sick person or infirm person, nevertheless, in as much as, the applicant does require medical care despite the factum that it is the applicant who has chosen to get his angiography done in the month of April, 2021 conducted after his eye treatment, it is considered appropriate to extend the period of interim bail granted to the applicant vide order dated 08.04.2020 for a period of 60 days at the maximum whereupon he is direct ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h are stated to be actually funds of RHL itself with the allegations against the petitioner that by transferring the amounts from FARC to Rishi Kumar Srivastava and that further transferring it to the RHL as unsecured loan, a false facade was created to show that the amount had been transferred through Rishi Kumar Srivastava to RHL as disclosed in the FARC financial statements whereas RHL was burdened to an additional liability of Rs. 13.17 Crores which amount otherwise belonged to RHL, coupled with the allegations against the petitioner that email communications gathered at the time of investigation established that the petitioner had supervised direct manipulation of the patient information pertaining to "Doctor Referred Patients" recorded in the Hospital Information System and that the doctors whose names were recorded in the said Hospital Information System stated on oath that such quantum or nature of surgeries conducted on "Doctor Referred Patients" were false and fake and the DRP transactions were fictitious in nature and was one of the means for forging books of accounts, coupled with the factum that as per the investigation conducted by the SFIO, the applicant is alleged t ..... 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