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TMI Blog2021 (6) TMI 795X X X X Extracts X X X X X X X X Extracts X X X X ..... referred to in Section 212(6) of the Companies Act, 2013 but use of word 'may' in Section 212(8) of the Companies Act, 2013 by the Parliament makes it discretionary for him to arrest or not to arrest such person and it is not mandatory for him to arrest such person. Therefore, the mere fact that the petitioner was not summoned or arrested by the Investigating Officer during investigation does not entitle the petitioner to grant of bail. The question of bail is primarily a matter of judicial discretion and not any right of the accused. The question of grant of bail to the accused has to be decided by the Court on the facts and circumstances of the case in accordance with the provisions regarding grant of bail contained in Chapter XXXIII of the Cr.P.C. and the relevant statute creating the offence and well settled principles guiding exercise of judicial discretion. The provisions of Section 212(6) of the Companies Act, 2013 are pari materia to Section 45 of the Prevention of Money Laundering Act, 2002, Section 37(1)(b) of the Narcotic Drugs and Psychotropic Substances Act, 1985, Section 20(8) of the Terrorist and Disruptive Activities (Prevention) Act, 1987 and Section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... false information knowing it to be false and omitting material information as to material facts knowing it to be material and to have thereby committed offence under Section 448 punishable under Section 447 of the Companies Act, 2013 to which the rigors of twin conditions laid down in Section 212 (6) (ii) of the Companies Act, 2013 are applicable. The Court can not presume absence of guilty mind/mens rea at this stage. Considering serious nature of the economic offences involved, nature of accusation against and role attributed to the petitioner who is alleged to have signed and filed financial statements which were false in material particulars and also omitted material facts, there being no reasonable ground to believe that the petitioner has not committed offence under Section 448 punishable under Section 447 of the Companies Act, 2013 - the petitioner does not deserve grant of anticipatory bail. Application dismissed. - CRM-M-24870-2020 - - - Dated:- 30-4-2021 - Hon'ble Mr. Justice Arun Kumar Tyagi For the Petitioner : Mr. Vikram Chaudhri, Senior Advocate with Mr. Gautam Avasthi, Advocate and Mr. Rahil Mahajan, Advocate For the Respondent : Mr. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the above said 126 CUIs had fraudulently/illegally obtained loan from ACCSL to the tune of ₹ 1700/- crores. Amount of ₹ 4120/- crores was outstanding against said loans as on 31.03.2018. Section 25 of the Multi-State Cooperative Societies Act, 2002 did not allow a company to be a member of Credit Co-operative Society. Amendment of the bye-laws of ACCSL for making companies eligible for membership of ACCSL was rejected by the Central Registrar vide order dated 19.04.2012. The petitioner was director of Fracton Technologies Pvt. Ltd., one of the above said 70 CUIs, from 15.06.2011 to 14.08.2018 and was managing affairs thereof during the said period. Fracton Technologies Pvt. Ltd. obtained loan to the tune of ₹ 14.75/- crores from ACCSL from financial year 2012-13 to financial year 2016-17 and part of the above said loan secured during enforcement of the Companies Act, 1956 remained unpaid upon commencement of the Companies Act, 2013. On completion of the investigation and after taking necessary permissions from the Central Government, SFIO presented the investigation report in the form of statutory Complaint before the Special Court at Gurugram on 18.5. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ith the relevant statutory provisions. The petitioner having no reasons to doubt him accepted his explanation at face value due to lack of knowledge and inability to understand the intricacies involved in financial matters/accounting process. Subsequently, registration of charge of the ACCSL in respect of loan given to Fracton Technologies Pvt. Ltd. with the Registrar of Companies also confirmed his belief that the same was in accordance with the statute/rules. The petitioner signed the financial statements brought to him by Abhay Shah, Chartered Accountant of the AGCL believing the same to be correct. The petitioner being a layman understood the ACCSL to be a financial institution. The petitioner has been accused of having signed and filed false/wrong statements by mentioning the funds received from the ACCSL as loan from the financial institution and showing charges as bank charges/bank interest and to have thereby committed offence under Section 448 of the Companies Act, 2013 punishable under Section 447 of the Companies Act, 2013 but the ingredients of offence under Section 448 of the Companies Act, 2013, which are different from those of the offence of fraud under Section 447 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ara materia to the language of the twin conditions contained in section 212(6) of the new Companies Act, had earlier comeup for consideration of the Supreme Courts in case of Nikesh Tarachand Shah (supra) case and such language has already been declared to be ultra vires by the Supreme Court in that case. Not only this, even this court had an occasion of considering the nature and scope and the operational functionality of the language of these twin conditions, as contained in the Narcotic Drugs and Psychotropic Substances Act, in case of Ankush Kumar (supra). After threadbare analyzing the operational functionality of the language of the twin conditions, as used in the statute, this court had come to conclusion that the language of the twin conditions requires impossibility from the court, besides defying the human logic in its operational functionality. This language, if made operational in a case, even by adopting the semi-cooked concept of 'reading down' the language - and thereby ignoring the celebrated 'Doctrine of Severability' and the touchstone of Articles 14 21; both, qua test of constitutional validity, then also it turns on their head some well establi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... udgment can be taken as a supplement to the decision of the present case as well. 27. Although the learned Counsel for the SFIO has, additionally, referred to the language used in section 437 of Cr.P.C., 1973 to argue that a similar language is already used in the said provision of bail; and has also relied upon the judgment of the Supreme Court rendered in Kartar Singh v. State of Punjab, 1994 (3) SCC 569 , wherein referring to the language of section 437 Cr.P.C., 1973 the para materia language of twin conditions used in Terrorist and Disruptive Activities Act was upheld. However, although this court has no competence to comment upon this judgment of the Supreme Court, yet it has to be noted that the same judgment was cited even before the Supreme Court in Nikesh Tarachand Shah (supra) case and the Hon'ble Supreme Court had not found it worth reliance to the extent of being sufficient for upholding the para-materia language of twin conditions used in the Prevention of Money Laundering Act. Beyond that; this court can only observe that any further relevance of this judgment can be assessed only by the Hon'ble Supreme Court in the case which is now stated to b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itself; and goes near to recording the satisfaction required for his discharge. 28. Similarly, holding the twin conditions to be mandatorily followed in all situations for release of an accused on bail; can lead the court to hit against the wall in a given situation. This can be clear from another inconvenient question, which has not been shown by the learned Counsel for the SFIO to have been answered by any court so far, including the Hon'ble Supreme Court. The question is - for how long an accused can be kept in custody on the basis of non-fulfillment of the requirement prescribed under section 212(6)? This question was specifically referred to Delhi High Court by way of reference by a judicial officer, in case of Court on its Own Motion (Supra) case. However, even there the question does not find any answer. Unless this question is categorically answered to say that till the conclusion of the trial such a person cannot be released on bail without satisfying the conditions mentioned in section 212(6), the twin condition cannot be held to be mandatory. This is so because if a person can be released on bail without satisfying the twin conditions of the section 212 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lso observed that even if conditions prescribed under section 212(6) are not to be followed, still the criteria meant for bail in cases of economic offences was required to be considered by the High Court of Delhi. Hence, the primary reason for remand in that case was that the High Court of Delhi had not considered the material on record of the case and had granted bail even without adverting to the factors considered relevant by the Supreme Court for economic offences. Additionally, the Supreme Court had also directed the Delhi High Court to consider the 'scope and effect' of the twin conditions prescribed under section 212(6) of the Companies Act. However, in the present case, as mentioned above, this court has already considered the 'scope and effect' of the operational functionality of the language para materia to the one contained in the twin conditions, as prescribed under section 212(6) of the Companies Act and has found in the case of Ankush Kumar (Supra) that the languages is in conflict with the right of the accused guaranteed under Article 14 and Article 21 of the Constitution and thus has to give way to the fundamental rights of the accused; qua his cons ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... M-M 28452 of 2015 titled as Gurpreet Kaur @ Gurmeet Kaur Vs. Niranjan Singh, Assistant Director, Director of Enforcement, Govt. of India decided on 01.10.2015 in which rigors of Section 45(1)(ii) of the Prevention of Money Laundering Act, 2002 were held to be attracted only while considering the bail plea of an accused who has been arrested by the Enforcement Directorate under Section 19 of the the Prevention of Money Laundering Act, 2002. 10. Learned Senior Counsel for the petitioner has further argued that in the eventuality of the twin conditions laid down in Section 212 (6) of the Companies Act, 2013 being held applicable to the case of the petitioner, the same have to be toned down to see only the probability of conviction of the petitioner. In support of his arguments learned Counsel for the petitioner has relied on the following observations in Ranjitsing Brahmajeetsingh Sharma Vs. State of Maharashtra and Another : 2005 (5) SCC 294 :- 45. We are furthermore of the opinion that the restrictions on the power of the Court to grant bail should not be pushed too far. If the Court, having regard to the materials brought on record, is satisfied that in all prob ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se and the trial court would, thus, be free to decide the case on the basis of evidence adduced at the trial, without in any manner being prejudiced thereby. 11. Learned Senior Counsel for the petitioner has further submitted that the petitioner and his team officially built comprehensive education solution and on dis-continuance thereof developed world class network optimization solution but subsequently, all assistance including financial investment was stopped by the AGCL without any information. In June, 2018 serious allegations against the ACCSL surfaced in national media on which the petitioner tendered resignation on August 14, 2018 and after waiting for acceptance thereof, filled form-11 at MCA portal on March 28, 2019 after paying the penalties. Fracton Technologies Pvt. Ltd. was not a shell company and was doing legitimate business. The petitioner only received his monthly remunerations from the company and had no role, what so ever, in the alleged fraud/illegalities. The petitioner does not belong to the group of Mukesh Modi and is not his family member or associate. Role and focus of the petitioner was only on technology related aspects. No doubt the case in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rial will also not serve any useful purpose. 13. In support of his submissions learned Senior Counsel for the petitioner has relied on judgment of Hon'ble Supreme Court in Dataram Singh Vs. State of Uttar Pradesh and Another : (2018) 3 SCC 22 where appellant who cheated complainant of ₹ 37 lakhs and issued cheque for ₹ 18 lakhs but stopped payment thereof was granted bail by Hon'ble Supreme Court in view of the fact that the appellant was not arrested for considerable period of time which indicated that there was no apprehension that the the appellant would abscond or would hamper the trial in any manner. 14. Learned Senior Counsel for the petitioner has also placed reliance on the following observations made by Hon'ble Supreme Court in that case :- 2. A fundamental postulate of criminal jurisprudence is the presumption of innocence, meaning thereby that a person is believed to be innocent until found guilty. However, there are instances in our criminal law where a reverse onus has been placed on an accused with regard to some specific offences but that is another matter and does not detract from the fundamental postulate in res ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f Criminal Procedure, 1973. 7.........The grant or refusal of bail is entirely within the discretion of the judge hearing the matter and though that discretion is unfettered, it must be exercised judiciously and in a humane manner and compassionately.. ..... 15. In support of these arguments learned Senior Counsel for the petitioner has also relied on the judgments of Delhi High Court in Court on its own motion Vs. CBI : 2006(4) R.C.R.(Criminal) 206 wherein directions were issued to Criminal Courts that on appearance before it, person accused of non-bailable offence, who has neither been arrested by the police/Investigating Agency during investigation nor produced in custody as envisaged in Section 170 of the Cr.P.C., be released on bail while holding that the circumstance of his having not been arrested during investigation or not being produced in custody is itself sufficient to entitle him to be released on bail for the simple reason that 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 pri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es Yes Yes No Summoned to join investigation by SFIO Yes No No No Anticipatory bail status Granted Granted Granted Denied The petitioner is entitled to grant of anticipatory bail on parity with the above-said similarly placed persons who have been granted anticipatory bail by this Court. 18. Learned Senior Counsel for the petitioner has also asserted that the petitioner is sole bread earner of his family comprising his old mother, wife and minor children and is not likely to abscond. The case is based largely on documentary evidence which is already seized by and in possession of the complainant and the question of tampering with the evidence or hampering of the trial by the petitioner does not arise at all. The petitioner undertakes to abide by the conditions to be imposed by the Court and will not threaten, intimidate or influence the witnesses of the complainant in any manner whatsoever. 19. Learned Senior ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... guilty of such offence and that he is not likely to commit any offence while on bail. The twin conditions thereby laid down are mandatory and being conditions precedent, bar release of such person on bail unless the same are satisfied. In Nikesh Tarachand Shah Vs. Union of India : 2018(2) R.C.R.(Criminal) 232 , Hon'ble Supreme Court declared Section 45 of the Prevention of Money Laundering Act, 2002 to be unconstitutional but the Parliament has subsequently amended Section 45 of the Prevention of Money Laundering Act, 2002 and the amended provision was considered by Hon'ble Supreme Court in P. Chidambaram Vs. Directorate of Enforcement : (2019) SCC Online SC 1143 (Supreme Court) . Section 37(1)(b) of the Narcotic Drugs and Psychotropic Substances Act, 1985, Section 20(8) of the Terrorist and Disruptive Activities (Prevention) Act, 1987 and Section 21(4) of the Maharashtra Control of Organised Crime Act, 1999 which are pari materia to section 212 (6) of the Companies Act, 2013 have been upheld and given due effect by Hon'ble Supreme Court. In Ankush Kumar @ Sonu Vs. State of Punjab; (2018) SCC Online P H 1259 (Punjab and Haryana High Court) the Coordinate Benc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... etitioner has to surrender and then apply for regular bail. In support of these arguments, learned Additional Solicitor General and learned Senior Panel Counsel for the respondent have placed reliance on the observations in Arun Sharma Vs. Union of India and others : (2016) 3 RCR (Criminal) 883 (DB) (Punjab Haryana High Court); Pankaj Jain Vs. Union of India : (2018) 5 SCC 743 (Supreme Court); Ankush Kumar @ Sonu Vs. State of Punjab; (2018) SCC Online P H 1259 (Punjab and Haryana High Court); Satpal Singh Vs. State of Punjab : (2018) 13 SCC 813 (Supreme Court); HDFC Bank Ltd. Vs. J.J. Mannan @ J.M. John Paul and Another : (2010) 1 SCC 679 (Supreme Court) and Sushila Aggarwal Vs. State (NCT of Delhi) : 2020 (1) RCR (Criminal) 337 (Supreme Court). 23. Learned Additional Solicitor General of India and learned Senior Panel Counsel for the respondent have further argued that the petitioner has not placed any material on record to show and there is no reasonable ground to believe that the petitioner has not committed the offence under Section 448 punishable under Section 447 of the Companies Act, 2013 and that the petitioner will not commit any offence after his release ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... placed reliance on observations in Jainam Rathod Vs. State of Haryana (Punjab and Haryana High Court) : 2020 (1) RCR (Criminal) 241 and Raj Kumar Modi Vs. Serious Fraud Investigation Office : (2019) SCC Online P H 4987 (Punjab and Haryana High Court) where regular bail was denied by the Co-ordinate Bench of this Court in similar matters of co-accused Jainam Rathod and Raj Kumar Modi. 27. Learned Additional Solicitor General of India and learned Senior Panel Counsel for the respondent have further argued that Bhart Kumar Mardia and Leena Harivyasi were granted bail as there were no allegations of commission of offence punishable under Section 447 of the Companies Act, 2013 against them and Section 212(6) of the Companies Act, 2013 was not applicable to them. Vimal S Sharma was granted bail under the proviso to Section 212(6) of the Companies Act, 2013 which permitted grant of bail to a person on the ground of being a sick or infirm or a woman. The case of the petitioner stands on different footing and the petitioner is not entitled to grant of anticipatory bail on parity with them. In view of the quantum of sentence which the conviction may entail, the petitioner is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 212(6) of the Companies Act, 2013 but use of word 'may' in Section 212(8) of the Companies Act, 2013 by the Parliament makes it discretionary for him to arrest or not to arrest such person and it is not mandatory for him to arrest such person. Therefore, the mere fact that the petitioner was not summoned or arrested by the Investigating Officer during investigation does not entitle the petitioner to grant of bail. Reference for judicial precedents in this regard may be made to Jainam Rathod Vs. State of Haryana (P HHC) : 2020 (1) RCR (Criminal) 241 and Raj Kumar Modi Vs. Serious Fraud Investigation Office : (2019) SCC Online P H 4987 (Punjab and Haryana High Court). 31. The question of bail is primarily a matter of judicial discretion and not any right of the accused. The question of grant of bail to the accused has to be decided by the Court on the facts and circumstances of the case in accordance with the provisions regarding grant of bail contained in Chapter XXXIII of the Cr.P.C. and the relevant statute creating the offence and well settled principles guiding exercise of judicial discretion. 32. Section 212(6) of the Companies Act, 2013, which im ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ras No.45 and 51 to 53 of the judgment extracted hereinabove. 37. In Nikesh Tarachand Shah Vs. Union of India : 2018(2) R.C.R.(Criminal) 232 , Hon'ble Supreme Court declared Section 45 of the Prevention of Money Laundering Act, 2002 to be unconstitutional but the Parliament has subsequently amended Section 45 of the Prevention of Money Laundering Act, 2002. The amended provisions were considered by Hon'ble Supreme Court in P. Chidambaram Vs. Directorate of Enforcement : (2019) SCC Online SC 1143 (Supreme Court) . 38. In Ankush Kumar @ Sonu Vs. State of Punjab : (2018) SCC Online P H 1259 (Punjab and Haryana High Court) , the Coordinate Bench of this Court while considering the provisions of Section 37(1)(b) of the Narcotic Drugs and Psychotropic Substances Act, 1985 observed that the operational functionality of the language of twin conditions is based upon totally indeterminate criteria which are required for exercise of this power by the court and also expects the impossible from the Court and that the language of these twin conditions is in direct conflict with the rights of an individual guaranteed by Article 14, which protects him from irrationalit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his Court. 11. At this juncture, it must be noted that even as per Section 212(7) of the Companies Act, the limitation under Section 212(6) with respect to grant of bail is in addition to those already provided in the Cr.P.C. Thus, it is necessary to advert to the principles governing the grant of bail under section 439 of the Cr.P.C., 1973 Specifically, heed must be paid to the stringent view taken by this Court towards grant of bail with respect of economic offences. In this regard, it is pertinent to refer to the following observations of this Court in Y.S. Jagan Mohan Reddy (supra): 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 posing 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, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ave to be satisfied. It is manifest that the conditions are cumulative and not alternative. The satisfaction contemplated regarding the accused being not guilty, has to be based on reasonable grounds . The expression 'reasonable grounds' has not been defined in the said Act but means something more than prima facie grounds. It connotes substantial probable causes for believing that the accused is not guilty of the offence he is charged with. The reasonable belief contemplated in turn points to existence of such facts and circumstances as are sufficient in themselves to justify satisfaction that the accused is not guilty of the alleged offence. [Vide Union of India v. Shiv Shanker Kesari, 2007(4) RCR (Criminal) 186 : 2007(5) RAJ 134 : (2007)7 SCC 798 ]. Thus, recording of satisfaction on both the aspects, noted above, is sine qua non for granting of bail under the Narcotic Drugs And Psychotropic Substances Act. 44. Rigors of Section 37(1)(b) of the Narcotic Drugs and Psychotropic Substances Act, 1985 are not restricted in application only to person, accused of having committed offence punishable under Section 19, Section 24 or Section 27A thereof or offence involvin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ffences. 47. In the present case as per the version of the respondentcomplainant the investigation revealed that ACCSL accepted deposits from its members, mostly low to middle income group individuals and had outstanding deposit liability of ₹ 9253/- crores as on 31.05.2018. AGCL, a group of 126 companies, was being managed/controlled by Mukesh Modi, his family members and associates. 70 out of the aforesaid 126 CUIs had, despite being ineligible, fraudulently/illegally obtained loans from ACCSL to the tune of ₹ 1700/- crores and amount of ₹ 4120/- crores was the outstanding balance against the above-said loans as on 31.03.2018. Section 25 of the Multi-State Cooperative Societies Act, 2002 did not allow a company to be a member of Credit Co-operative Society. Amendment of the bye-laws of ACCSL for making companies eligible for membership of ACCSL was rejected by the Central Registrar vide order dated 19.04.2012. Investigation revealed that the petitioner was a Director in Fracton Technologies Pvt. Ltd., one of the aforesaid 70 CUIs of AGCL, from 15.06.2011 to 14.08.2018 and was managing the affairs of the company during the said period. Fracton Technolog ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re, statement regarding taking of loan from financial institution in all the above-said balance sheets was false in material particulars. Since in balance sheets for the financial years 2013-14, 2014-15 and 2015-16 ending on 31.03.2014, 31.03.2015 and 31.03.2016 name of ACCSL, from which the term loan was taken, was not mentioned, the facts which were material were omitted. The petitioner has claimed that the petitioner was told by Abhay Shah, Chartered Accountant of the AGCL that the ACCSL by virtue of amendment of its bye-laws was authorized to give loan to the companies and that loan being taken by Fracton Technologies Pvt. Ltd. from the ACCSL would be subsequently converted into equity in accordance with the relevant statutory provisions and that the petitioner having no reasons to doubt him accepted his explanation at face value due to lack of knowledge and inability to understand the intricacies involved in financial matters/accounting process but in view of Section 166(3) of the Companies Act, 2013, the petitioner was under obligation to exercise his duties with due and reasonable care, diligence and independent judgement. 48. Sections 447 and 448 of the Companies Act, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eby committed offence under Section 448 punishable under Section 447 of the Companies Act, 2013 to which the rigors of twin conditions laid down in Section 212 (6) (ii) of the Companies Act, 2013 are applicable. The Court can not presume absence of guilty mind/mens rea at this stage. There are no reasonable grounds for believing that the petitioner has not committed offence under Section 448 punishable under Section 447 of the Companies Act, 2013. Since the first condition laid down in Section 212 (6) (ii) of the Companies Act, 2012 for release on bail is not satisfied the petitioner is not entitled to grant of anticipatory bail even if in view of the fact that the petitioner does not have any criminal antecedents, the second condition be considered to be satisfied that the petitioner is not likely to commit any offence under the Companies Act, 2013 after his release on bail. Even otherwise, the case involves serious economic offences affecting large number of individuals from low and middle income groups and also adversely affecting the national economy. The offences under the Companies Act, 2013 are required by the said Act itself to be treated as serious economic offences and co ..... X X X X Extracts X X X X X X X X Extracts X X X X
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