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TMI Blog2022 (7) TMI 367X X X X Extracts X X X X X X X X Extracts X X X X ..... nce of which he is charged with, and therefore, it is opined that he is not likely to commit any further offence while on bail. Hence, sub-section (ii) of Section 212(6) is also complied with. There are no merit in the contentions and submissions of the learned CGSC - application allowed. - BAIL APPLN. 1802/2022&CRL.M.(BAIL) 737/2022 - - - Dated:- 7-7-2022 - HON'BLE MR. JUSTICE JASMEET SINGH Petitioner Through: Mr. P.V. Kapur, Sr. Adv. with Mr Jatin Sehgal, Mr Siddharth Kapur, Ms DevnaSoni, Mr PareeshVirmani, Mr Sanjay Sharma, Mr Viren Bansal, Mr Rayman Singh, Ms Simran, Mr Yashi Bajpai and Mr Adhirath Singh, Advs. Respondent Through: Mr. Ripu Daman Bhardwaj, CGSC with Mr Kushagra Kumar and Ms Shivan Sharma, Advs. with Mr Shri Madhur Bajaj, Deputy Director, Ms Sonam Sharma, Sr. A.D., Mr Rajesh Dhaiya, Sr. A.D. J U D G M E N T JASMEET SINGH, J. 1. This is an application filed seeking grant of regular bail to the applicant (accused No. 200 in Complaint Case No. 770/2019 titled as Serious Fraud Investigation Office vs. Bhushan Steel Limited and Others . 2. The applicant is a senior citizen and Chartered Accountant (C.A.) by profession with pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ajan and A-200 Sunil Bhatia, stock auditors and A- 186 R.K Mehra and A- 188 M.P. Mehrotra, statutory auditors. At all material time they were aware that the amount shown under SIT in inflated in the books of accounts. 71. Further, as detailed above, A-158 Brij Bhushan Singal A 159 Neeraj Singal, the ex-promoters of BSL, along with A-160 Nitin Johari, ex- Whole Time Director and Chief Financial officer (CFO) of BSL in active connivance with employees of A-1 BSL, namely, A-181 Vivek Mittal, A- 180 Saurabh Mittal, A-179 Pankaj Tewari, A-184 Rajat Jain, A-183 Sunil Agarwal and A185 Rajesh Sharma have filed various false, deceptive statements and misleading information to various banks, to avail/ continue to avail working capital limits from 2013-14 till 2015-16. All the aforesaid accused persons, at all material time, were well aware about the financial position of A-01, BSL and non-existent stocks but nevertheless, induced the banks to sanction total Drawing Power (DP) against Fund Bank Working Capital limits of Rs. 5389 crore, 5606 crore and 5527 crore against which it had cash credit outstanding of Rs. 5761 crore, Rs. 7094 crore and Rs. 9768 crore respectively. This was secured ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of stocks lying in transit i.e. Rs 5389.58 Crore. The stock auditors were told by the management and the bank to cover the DP therefore, the stock positions shown in the stock in transit is actually not correct. The physical stock in transit could not be verified as the company could not provide supporting documents such as invoices and bill of entries etc. for claiming the same. The goods received under LC were devolved to the extent of Rs. 3,676.61 and the amount was paid by the bank, hence, it is not paid stock and it should have been excluded for the purpose of arriving DP. The banks and the management had expressed their concern if this devolved liability excluded for the purpose of DP, the DP should have gone down to the extent above. Hence, the same was taken for DP purpose. In view of the above facts the Stock Auditors M/s ASRN Associates have failed to discharge their legitimate duties to prepare the audit report impartially and against norms of Audit Principles and ignore the serious irregularities in the stock audit report. Hence, he is responsible for the lapses. 5.1.14. Investigation revealed that the Stock Auditors, Sunil Bhatia, a partner of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 022, the applicant went to attend the Court proceedings, but the learned Special Judge was pleased to hear the arguments on bail application and dismissed the same and took the applicant in judicial custody. 4. This Court on 06.06.2022 was pleased to direct issuance of notice, and on 13.06.2022, this Court directed the matter to be listed on 24.06.2022. 5. The Hon ble Supreme Court on 17.06.2022 directed this Court to hear and decide the bail application filed by the petitioner on 24.06.2022. 6. Accordingly, and as per the directions of the Hon ble Supreme Court, I have heard Mr. P.V. Kapur, learned senior counsel for the applicant and Mr. Ripu Daman Bhardwaj, learned CGSC appearing for the respondent. 7. Mr. Kapur, learned senior counsel for the applicant submits that at the outset, the complaint against the petitioner is not maintainable. 7.1 He submits that as per the complaint, the main allegation is that the promoters of BSL, along with some other accused persons, filed various false deceptive statements and misleading information to various banks to avail and continue to avail working capital limits from 2013-14 till 2015-16.It is further alleged that the appli ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ess permission. Please call on the concerned RMs/ SRMs before starting the stock audit to discuss details. We solicit your cooperation in conducting the stock audit in an effective manner. Thanking you, Yours sincerely, Sd/- Asstt. General Manager Copy to M/s Bhushan Steels Ltd., Bhushan Centre, Ground Floor, Hyatt Regency Complex, Bhikaiji Cama Place, New Delhi) for information please. Kindly provide full cooperation to the stock auditors in their task. Asstt. General Manager 7.3 The appointment letter clearly shows that the applicant was not an Auditor of M/s Bhushan Steel Limited during the period under investigation i.e. Financial Year 2013-14 to 2015-16. The counsel has relied on the judgment of the High Court of Delhi, Gaurav Kumar v. Serious Fraud Investigation Office [MANU/DE/4412/2019] to show that the applicant cannot be held liable for acts done during a period which did not concern them. 7.4 The Stock Audit Report dated 15.02.2017 by ASRN Associates was for the period dated 1st April 2016 to 31st October 2016 and had no relevance whatsoever to the FY 2013-14 to FY 2015-16 which is the period under in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r counsel, Mr. P.V. Kapur for the Petitioner and the Ld. CGSC, Mr. Ripu Daman Bhardwaj for the Respondent and gone through their submissions and documents. 10. At the outset, for grant of bail, the twin conditions under section 212(6) of the Companies Act, 2013 have to be met:- Section 212. INVESTIGATION INTO AFFAIRS OF COMPANY BY SERIOUS FRAUD INVESTIGATION OFFICE (6) Notwithstanding anything contained in the Code of Criminal Procedure, 1973 (2 of 1974), [offence covered under section 447] of this Act shall be cognizable and no person accused of any offense under those sections shall be released on bail or on his own bond unless- i. the Public Prosecutor has been given an opportunity to oppose the application for such release; and ii. where the Public Prosecutor opposed the application, the court is satisfied that there are reasonable grounds for believing that he is not guilty of such offense and that he is not likely to commit any offence while on bail: 11. I think this a case where the applicant needs to be enlarged on bail for the following reasons: 11.1 The Applicant was appointed as a stock auditor vide appointment letter dated 29.10.2016 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Birendra Kumar Jha 9.11.2016; 08.12.2016; 02.01.2017; 30.01.2017; 13.02.2017; 09.11.2016 Sahibabad Plant Process description to facilitate understanding of plant functions is attached (Annexure I-A) : Partner: CA Sunil Bhatia CA Surjeet Singh Walia CA Birendra Kumar Jha Other Audit Staff: Miss Ruby Singh Mr. Areeb Usmani 10.12.2016 and 01.02.2017; 14.02.2017 and 15.02.2017; 10.12.2016 and 01.02.2017 to 03.02.2017; 02.02.2017 and 03.02.2017 . . . . . . . . . . . . Asset Classification : Non Performing Asset since 1.10.2014 / Doubtful ASRN Associates have also shown the irregularities in the Position of Account: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 24. 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 CrPC. Thus, it is necessary to advert to the principles governing the grant of bail under Section 439 of CrPC. Specifically, heed must be paid to the stringent view taken by this Court towards grant of bail with respect of economic offences. While the provisions of Section 212(6) of the Companies Act 2013 must be borne in mind, equally, it is necessary to protect the constitutional right to an expeditious trial in a situation where a large number of accused implicated in a criminal trial would necessarily result in a delay in its conclusion. The role of the appellant must be distinguished from the role of the main accused. 13. The summoning order was issued on 16.08.2019 and the Applicant had not been arrested till 01.06.2022 without there being any protection in favour of the Applicant. There is also no reason shown for seeking judicial custody of the Applicant. 14. As regards the legal embargo of Section 212(6), I am of the view that Sub-section-(i) has duly been co ..... X X X X Extracts X X X X X X X X Extracts X X X X
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