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TMI Blog2022 (6) TMI 874X X X X Extracts X X X X X X X X Extracts X X X X ..... cting Mr. Subrata Bhattacharya s application for bail, the Supreme Court specifically noted that the matter involved an alleged criminal conspiracy in furtherance of which the Directors of M/s PGF Limited and M/s PACL Limited are alleged to have illegally obtained a benefit of Rs 45,184 crores at the expense of 5.46 crore investors spread all over the country from sham land transactions. The Court proceeded on the basis of roles attributed to the applicants therein, as elucidated in the affidavit of the CBI. The applicants in the present case, in contrast, are not directors of PGF/PACL and their roles are required to be independently considered in connection with their applications for bail. As applying the relevant principles to the facts of the present cases, further incarceration of the applicants, pending conclusion of the trial, is unnecessary and they are liable to be released on bail, albeit with stringent conditions to ensure their presence at the trial and to minimise the risk of prejudice to the prosecution. As directed that the applicants will be admitted to bail in connection with FIR No. RCBD1/2014/E/ 0004/CBI/BS FC, registered on 19.02.2014, in Police Station CBI, und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd Sections 4/5 read with Section 6 of the Prize Chit and Money Circulation Schemes (Banning) Act, 1978 ["PCMCS Act"]. As the six applications arise out of the same FIR, they were heard together and are being disposed of by this common judgment. 2. The present applications relate to following six accused: Bail Application No. Name of the accused Accused No. 716/2022 Mr. Praveen Kumar Agarwal A-20 1172/2022 Mr. Subhash Agarwal A-24 1173/2022 Mr. Rajesh Agarwal A-25 1203/2022 Mr. Mohan Lal Sehjpal A-14 1278/2022 Mr. Akash Agarwal A-23 1382/2022 Mr. Mannoj Kumar Jain A-22 Factual background 3. The facts relating to these proceedings are as follows:- a. The abovementioned FIR was registered against two companies, namely PGF Limited ["PGF"] and PACL Limited ["PACL"], and their officers. The FIR was registered pursuant to the directions of the Supreme Court in PGF Limited and Others vs. Union of India and Another (2015) 13 SCC 50, which revealed that the aforesaid companies were carrying out a collective investment scheme ["CIS"] in the garb of sale and development of agricultural land. b. The alleged modus operandi of the accused was to seek investment in lan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... days prior to filing of the supplementary charge sheet, i.e. on 22.12.2021. Five other individuals were also arrested on the same day. The applicants were remanded to police custody for a period of two days [from 23.12.2021 to 25.12.2021], and have been in judicial custody since then. k. It is stated in the supplementary charge sheet that the investment plans offered by PGF and PACL were in the nature of a CIS defined under Section 11AA of the Securities and Exchange Board of India Act, 1992 and regulated by the Securities And Exchange Board of India (Collective Investment Schemes) Regulations, 1999. As the companies had not complied with the aforesaid Act and Regulations, the Securities and Exchange Board of India ["SEBI"] had passed orders against them. l. Upon a reading of the supplementary charge sheet, it is evident that the case made out against the present applicants is that they were involved in diversion of funds raised by PGF/PACL from their investors. In the case of Mr. Mohan Lal Sehjpal, the diversion was carried out through PIPL, of which he was a director. In the cases of the other applicants, the allegation is that companies controlled by them raised fake invoice ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dishonestly and fraudulently facilitated diversion/misappropriation of funds to the tune of Rs. 268.73 Crores through M/s. Jain Infra-projects Limited. He dishonestly received the funds from M/s. PACL Limited (erstwhile M/s. PACL India Limited) on the pretext of land development, but no land development work was done and fake / bogus invoices showing execution of work were prepared to justify receipt of such funds. He purportedly sublet the work to 07 different companies, who also raised such bogus / fake invoices without executing any land development work. Shri Subash Agarwal and Shri Rajesh Agarwal: Shri Subhash Agarwal is the Chairman and Shri Rajesh Agarwal is the Managing Director of M/s. ARSS Infrastructure Projects Limited which received funds to the tune of Rs. 305.76 Crores from M/s. PACL Limited against purported land development work. Investigation revealed that no land development was done and fake /bogus invoices were raised by their company in order to divert the funds collected from investors. Shri Rajesh Agarwal executed the agreement with M/s. PACL India Limited for the purported land development work, which was never meant to be done. Both the persons signed o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... PACL/PGF. In fact, the applicants have not themselves collected any money from investors and the offences mentioned in the FIR cannot be made out against them. The applicants are accused, not of any direct connection with PGF/PACL, but in respect of transactions entered into by companies of which they were directors/promoters with PGF/PACL. b. The case against the applicants is, at the highest, that they were providing accommodating entities to PACL/PGF and thus facilitating diversion of funds obtained from investors by the said two companies. Although, the allegations against PACL and PGF concern obtaining fraudulent investments to the tune of approximately ₹45000 crores and ₹815 crores respectively, the allegations against the present applicants relate only to diversion of a proportion of the said investments, ranging from approximately ₹4000 crores [in the case of Mr. Praveen Kumar Agarwal and Mr. Mohan Pal Sehjpal] to ₹161 crores [in the case of Mr. Akash Agarwal]. The applicants also claim that a large proportion of the amount received by their companies from PGF/PACL was, in fact, paid to sub-contractors for the execution of the work and only a small ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ested soon thereafter on 22.12.2021, despite their cooperation with the IO. Learned counsel submitted that no material has been placed on record to justify the arrest of the concerned individuals despite the fact that they were served notices under Section 41A of the CrPC, which specifically provides that notices under the said section would be issued in cases where the arrest of a person is not required under Section 41(1) of the CrPC. Learned counsel drew my attention to Section 41A(3) of the CrPC, which provides that a person served with notice under Section 41A of the CrPC shall not be arrested in respect of the concerned offence unless reasons are recorded in support of a contrary opinion of the police officer. No such opinion has been placed on record by the prosecution.[2] i. With regard to the contention raised in some of the cases to the effect that the applicants have other criminal antecedents, learned counsel submitted as follows:- • In BAIL APPLN. 716/2022, Mr. Mathur submitted that Mr. Praveen Kumar Agarwal is not in custody in any other case, having been granted bail in all cases in which he was arrested. • In BAIL APPLN. 1172/2022, Mr. Nayar submitte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lhi) (2020) 5 SCC 1 and P. Chidambaram vs. Directorate of Enforcement (2020) 13 SCC 791. 9. Mr. Bhardwaj, learned Special Public Prosecutor, opposed the grant of bail on the following grounds:- a. Mr. Bhardwaj referred to the grave nature of the charges against the applicants, and emphasised that the present cases relate to a ponzi scheme in which the allegation is that the principal perpetrators cheated more than 5.4 crore small investors of their hard-earned wealth. He submitted that the present applicants are the persons through whom the principal perpetrators routed the funds raised from the public and their cooperation was, therefore, essential to the successful implementation of the fraudulent CIS. b. Mr. Bhardwaj submitted that, contrary to the picture portrayed by the applicants, several of the directors of PGF/PACL continue to remain in custody in the present FIR. As far as Mr. Sukhdev Singh is concerned, Mr. Bhardwaj submitted that grant of bail to him is pending challenge before the Sessions Court. He also drew my attention to an order dated 17.01.2020 passed by the Supreme Court in Subrata Bhattacharya vs. Securities and Exchange Board of India and Others TC (Crl) No ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rave offences, but this will only be one of the several considerations for grant or refusal of bail. e. An allegation of tampering with evidence and influencing witnesses must be supported by some material. f. It is relevant to consider whether the accused was arrested during investigation, when they would have had the best opportunity to tamper with evidence or influence witnesses. Strong reasons are required to place a person in judicial custody after filing of the charge sheet. The question of the accused participating in the investigation is also relevant, as is his prior conduct. 12. Turning now to the facts of the present cases, I accept the submission of Mr. Bhardwaj that this case concerns allegations of grave economic offences, with a very large number of victims. However, as noted in the judgments cited above, this sole consideration cannot be dispositive of the applications for bail. Considering the allegations against the accused and the submissions of learned counsel for the parties, I am of the view that the present applicants are entitled to grant of bail for the following reasons:- a. The applicants herein, and the companies of which they were in management, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ailed to comply with any such notices during the period of investigation. e. Significantly, it has been stated by the CBI in its written submissions that five of the six applicants herein [with the exception of Mr. Akash Agarwal] were issued notices under Section 41A of the CrPC on 28.11.2021. The statutory provision itself indicates that the arrest of the noticees was not contemplated at that stage. No material has been placed on record to establish any change of circumstances on the basis of which their arrest could have been considered necessary a few weeks thereafter, particularly given the prolonged period of investigation. The additional material relied upon by the CBI in this connection, namely recording of two statements under Section 164 of the CrPC by two employees of Mr. Praveen Kumar Agarwal, is insufficient as their statements under Section 161 of the CrPC were already on record. Similarly, the CBI relied upon certain witness statements pertaining to the case of Mr. Akash Agarwal, but those statements were recorded in July, 2021, long before the arrest of the accused on 22.12.2021. f. The continued incarceration of the applicants does not appear to be necessary as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... transactions." The Court proceeded on the basis of roles attributed to the applicants therein, as elucidated in the affidavit of the CBI. The applicants in the present case, in contrast, are not directors of PGF/PACL and their roles are required to be independently considered in connection with their applications for bail. 14. The judgments in Rohit Tandon and Nittin Johari, which were cited by Mr. Bhardwaj, do not appear to be conclusive of the present case. Both those cases, unlike the present cases, involve offences under statutes which incorporate statutory limitations on the grant of bail.[6] In Nittin Johari, while reiterating the observations in Y.S. Jagan Mohan Reddy, the Court noted several factors which must be taken into account. In Rohit Tandon also, the Court proceeded to affirm the view taken by the Sessions Court and High Court on facts but did not lay down any general principle militating against the grant of bail, even in the case of grave economic offences. 15. In view of the aforesaid discussion, I am of the view that applying the relevant principles to the facts of the present cases, further incarceration of the applicants, pending conclusion of the trial, is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... isposal of the present bail applications, and will not prejudice the parties in the trial. 18. The applications are disposed of with the aforesaid directions. The pending miscellaneous applications also stand disposed of. 19. A copy of this order be communicated to the concerned Jail Superintendent(s) electronically. [1] As the submissions urged on behalf of the applicants were almost on identical lines, I have dealt with them collectively. Wherever any particular submission was made which was relevant only to a particular applicant, that has been separately mentioned. [2] In the written submissions filed on behalf of the CBI, it has been stated that all the present applicants except Mr. Akash Agarwal were issued notices under Section 41A of the CrPC on 28.11.2021 but were not issued any notices immediately prior to their arrest on 22.12.2021. [3] Supra (note 4) [paragraphs 21 to 23] [4] Supra (note 4) [paragraph 24] [5] Y.S. Jaganmohan Reddy [Supra (note 5)] [paragraph 36]; Nimmagadda Prasad [Supra (note 6)] [paragraph 26]. Mr. Sibal submitted in the course of arguments that, in these cases, bail was, in fact, granted on 23.09.2013, six days after filing of the last charge ..... X X X X Extracts X X X X X X X X Extracts X X X X
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