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TMI Blog2019 (11) TMI 1736X X X X Extracts X X X X X X X X Extracts X X X X ..... and section 439 the trial of an offender under this Act is to be conducted by the Special Court in accordance with Cr.P.C. and the procedure as modified under this Act. Section 217(7) specifically provides that the statement made by a person before the investigating officer shall be admissible against such person and can be used against him. The Companies Act is a special statute; therefore any provision specifically enacted under this Act shall have overriding effect over any other provision in any other general law, like Cr.P.C. and the Evidence Act, dealing with the same aspect. Otherwise also, to repose confidence in and to provide due protection to the corporate world, unlike the free-hand powers of the police qua arrest, search and seizure, the powers of the investigating officers under the Companies Act are far more controlled and circumscribed by the conditions, restrictions and even the prohibitions under the relevant provisions of the Companies Act. Accordingly, under the Companies Act the investigating officer has also been conferred commensurate sanctity and his work has been conferred more authenticity as compared to that of the ordinary police officers. Therefore, un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the case and also not likely to destroy the evidence against him. The past conduct of the petitioner has also not been exemplary. The argument of the learned Counsel for the petitioner that the petitioner had been joining the investigation and was released on bail as well; and that during that duration he had not made any attempt to influence the witnesses or to destroy the evidence also does not find favour with this court - this court finds force in the argument of the counsel for the SFIO that at that time the petitioner was not sure of him being made an accused in the case, and being made an accused of a serious offence on multiple counts. Therefore he might not have resorted to that exercise. But now, when the petitioner is fully aware that his alleged crime on multiple counts has been detected, it may not be in the fitness of the things to expect the same straightforward conduct from the petitioner, who is alleged to be manipulative by disposition. Also the argument of the counsel for the SFIO that since the vocation of the petitioner and his Companies is only to commit crimes to earn money, therefore, by any means, it cannot be said that if the petitioner is released on bail ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the investors and, accordingly an amount of approximately Rs.9253 Crores, including interest, is reflected in the accounts of the Society ACCSL, as payable to the investors. After collecting this money from the public, Mukesh Modi and family created a large number of Companies under the aegis of Adarsh Group of Companies Ltd. (AGCL), with their associates and relatives as the Directors. Subsequently these companies were shown having been advanced the loans of about Rs.1700 Crores by the Co-operative Society (ACCSL). Loans were required to be returned to the Co-operative Society by these Companies with interest, as per the alleged agreements of advancement of money. However, the same were not returned by the Companies. Therefore the money of the Cooperative Society was allegedly, being siphoned off through the Companies created by Adarsh Group of Companies Limited. When the matter came to knowledge of the Central Government, the Central Government, through Ministry of Corporate Affairs, vide the order dated 28/06/2018, passed in exercise of powers conferred under section 212 (1) of Companies Act 2013 and section 43(2) (3)(c)(i) of LLP Act 2008, ordered an investigation into th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oup, the petitioner was arrested on 10.12.2018. However, since the investigation could not be completed within the specified statutory period, therefore, the petitioner had moved an application seeking the default bail under section 167(2) Cr.P.C. read with section 212(10) and section 436 of the Companies Act 2013. Accordingly, allowing his application the petitioner was released on bail vide order dated 15.2.2019. But during the investigation, the role of the petitioner surfaced qua his involvement in multiple frauds through multiple companies and including his own companies, which were created by him mainly to siphon off the funds of the CUIs of the Adarsh Group. Hence, a comprehensive charge-sheet was filed against him including his role in those frauds; which were neither in the knowledge nor were even contemplated by the Investigating Officer at the time when he had initially arrested the accused/ petitioner. Accordingly, by pleading involvement of the petitioner in new-found and multiple culpability of the petitioner in offence punishable under section 447 of the Companies Act and other offences, the prosecution moved application for cancellation of the default bail granted t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Application Money and bogus purchase of suits length (cloth). The entire transactions involved are alleged to be of Rs. 223.775 Crore which included 30 CUIs and 22 firms, all belonging to Adarsh Group. Still further, huge loans and advances of Rs. 210 Crore had been given without any loans documents or other supporting agreements. During investigation those companies claimed that those loans were provided to them for consolidation of land by purchasing the same for and on behalf of the CUIs of the Adarsh Group. However, neither land was purchased in the name of CUIs nor the funds were returned to them. Investigation revealed that 8 CUIs and 8 Firms of the Adarsh Group were involved through a tripartite agreement with the landowners for purchase of land in Noida. However, in these cases siphoning of funds to the tune of Rs. 80 Crore (approx) had happened through these deal and the funds of ACCSL were utilized fraudulently to repay its own loans to 8 CUIs through Firms. Secondly, Riddhi Siddhi Group of Companies (RSGC) was created, which included 8 companies and was managed and controlled by Mahender Tak (A-155) and his family members; who are also accused in this case. Investig ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his own company A3G Infra Private Limited; as advance for land without any agreement. Neither the land in A3G Infra Private Limited was given to CUI nor was the advanced fund returned. The petitioner, Vivek Harivyasi alongwith co-accused Deepak Shrimali, Shinder Pal Singh and Gurbir Singh Sandhu misappropriated this amount. He also infused unaccounted money into A3G by routing through shell companies belonging to Peeyush Aggarwal. Arguing the case learned counsel for the petitioner submitted that earlier the applicant-accused was released on bail under the provisions of section 167(2) of the Cr.P.C, vide order dated 15.02.19 after being arrested for commission of an offence as punishable under section 447 of the Companies Act, 2013 only. Now the bail granted to him cannot be cancelled and he cannot ordered to be arrested only because he has been summoned for additional offences under the Companies Act and some more offences under IPC. Even the additional offences alleged against the petitioner are under the same highest section 447 of Companies Act; for which he was already arrested or the additional offences are also of similar nature or lesser in gravity. For allegation under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he statements of the co-accused, which again, are not admissible in evidence against the petitioner, or there are the statements of some other witnesses, which are nothing but the hearsay account or the manipulated versions of the transactions involved in the case. However, it is vehemently argued by the Counsel for the petitioner that the trial court has wrongly taken into consideration the twin conditions, as prescribed under section 212 (6) of the new Companies Act, 2013 for declining bail to the petitioner. Referring to the judgment of the Hon ble Supreme Court, in case of Nikesh Tara Chand Shah V/s Union of India and another (2018) 11 SCC 1, learned Counsel for the petitioner has submitted that the Language of section 212 (6) of the new Companies Act is pari- materia with the languages of section 45 of the Prevention of Money Laundering Act. However, the Supreme Court has already declared the language of the twin conditions, as used in the Prevention of Money Laundering Act, as ultra vires. Hence the twin conditions, as contained in section 212 (6) of the new Companies Act, 2013 has also to be treated as ultra vires the Constitution of India and as infringing upon the right ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nies Act on multiple counts, besides under the sections of IPC and the other sections of the Companies Act. Therefore, the bail granted to the petitioner cannot be continued. The question of the bail to the petitioner has to be considered afresh in view of the gravity of offence, material collected against him during the investigation and the restrictive conditions of bail prescribed under the new Companies Act, 2013. Initial failure of the investigating officer to complete the investigation in the prescribed time cannot be taken as a substitute for the consideration of the material collected against the petitioner during the investigation and the gravity of the offence in which the petitioner is found to be involved. Coming to the factors required to be taken into consideration in case of the petitioner; for granting bail, the Counsel for the SFIO has submitted that the petitioner has been charge-sheeted under section 447 of the new Companies Act, 2013 on multiple counts. Section 212(6) of the new Companies Act, 2013 provides that in case of charge-sheet being filed for the offences covered by section 447 no court shall grant bail to the accused unless the twin conditions presc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... concerned, it is submitted by the Counsel for the SFIO that when this court had considered the applicability of the twin conditions in the above said case, this court had specifically observed that the vires of the twin conditions would be considered by the appropriate Court / Bench in some appropriate matter. But now the validity of the twin conditions is very much under challenge before the Supreme Court. However, despite pendency of the challenge to the vires of the twin conditions, the Supreme Court has set aside the order of the High Court granting bail in case of Nitin Johari (Supra) and has remanded the matter to the High Court for reconsideration; with a direction to consider the scope and effect of the twin conditions as prescribed under section 212 (6) of the new Companies Act, 2013; as well as by taking into consideration the other relevant factors; which were spelt out in case of Y.S. Jagan Mohan Reddy V/s Central Bureau of Investigation, (2013) 7 SCC 439, and which have been reiterated in case of Nitin Johari (supra). Hence this court should also take into consideration the scope and effect of the twin conditions as prescribed under section 212(6) of the Companies Act, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Companies (RSGC), which were base at Jaipur and Jammu, misappropriated the funds siphoned from AGCL and RSGC and set up his own network of companies. The loans received by the CUIs of Ridhi Sidhi Group were found to be in violation of the provisions relating to collection of deposits and were never returned to the CUIs of Adarsh Group. Still further, the petitioner being the Key Managerial Person (KMP) of AGCL and RSGC from the year 2008 to 2015 and was managing their real estate business sector. He created his own 5 companies, namely, Cynosure Real Estates Private Limited (CREP), EOS Developers Private Limited, Headstrong International Exports Private Limited, Adler Infra Ventures Private Limited and A3G Infra Private Limited. These companies were owned / controlled by him and were not part of AGCL and RSGC. Investigation revealed that the petitioner Vivek Harivyasi, being a Key Managerial Person in AGC L and RSGC, misappropriated the funds siphoned from AGC L and RSGC to purchase Riyasat Green Farm, Chattarpur in the name of his company Cynosure Real Estates Private Limited (CREP). In the process he was helped by the coaccused Peeyush Aggarwal, Vijay Jhindal, Raj Kum ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r knows that his crime on multiple counts has been finally detected and the material and the evidence against him have been crystallized, no straightforward conduct is expected from the petitioner, who is manipulative by disposition. In the same vein, the counsel for the SFIO has also submitted that since the vocation of the petitioner and his Companies is only to commit crimes by making fake accommodation entries, showing fake transactions and by creating the cobweb of shell and Benami companies; to earn the money, therefore, by any means, it cannot be said that if the petitioner is released on bail, he would not commit any offence again. In the end it has been argued by the learned counsel for the SFIO that even if the conditions, as prescribed under section 212(6) of the new Companies Act, 2013 are not to be taken into consideration, at least the factors which has been laid down by the Supreme Court in case of Y. S. Jagan Mohan Reddy(supra) and which has been reiterated by the Supreme Court in case of Nitin Johari (supra), for the economic offences, has to be considered by the court while considering grant of bail to the petitioner. However, the charge-sheet against the petit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t be necessary for further investigation. We are of the view that the appellants are entitled to the grant of bail pending trial on stringent conditions in order to ally the apprehension expressed by CBI. This judgment was followed even by this Court in case CRMM 46946 of 2017 decided on 24-09-2018, D.K. Sethi V/s Central Bureau of Investigation. It is also vehemently argued by learned Counsel for the petitioner that since the question of bail relates to the life and liberty of the petitioner, therefore, the court has to be liberal in granting the bail, because bail is the rule and the jail is only an exception. The counsel has further argued that the ld. Counsel for the SFIO is wrongly referring to the judgment of the Supreme Court rendered in case of Y. S. Jagan Mohan Reddy (Supra) because after the charge-sheet was filed against Y. S. Jagan Mohan Reddy; he was also granted by the trial court in that case. This court has heard the arguments of the respective counsels for the parties and has perused the record. The concept underlying the criminal procedure is to avoid unnecessary incarceration of any person. Hence; if a person is arrested and the investigation is not comple ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oduced before him in person for the first time and subsequently every time till the accused remains in the custody of the police, but the Magistrate may extend further detention in judicial custody on production of the accused either in person or through the medium of electronic video linkage.] (c) no Magistrate of the second class, not specially empowered in this behalf by the High Court, shall authorise detention in the custody of the police. [Explanation I - For the avoidance of doubts, it is hereby declared that, notwithstanding the expiry of the period specified in paragraph (a), the accused shall be detained in custody so long as he does not furnish bail.] [Explanation II. - If any question arises whether an accused person was produced before the Magistrate as required under clause (b), the production of the accused person may be proved by his signature on the order authorising detention or by the order certified by the Magistrate as to production of the accused person through the medium of electronic video linkage, as the case may be:] [Provided further that in case of woman under eighteen years of is, the detention shall be authorised to be in the custody of a r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat for special reasons and in the interest of justice the continuation of the investigation beyond the period of six months is necessary. (6) Where any order stopping further investigation into an offence has been made under sub-section (5), the Sessions Judge may, if he is satisfied, on an application made to him or otherwise, that further investigation into the offence ought to be made, vacate the order made under sub-section (5) and direct further investigation to be made into the offence subject to such directions with regard to bail and other matters as he may specify. However, a bare perusal of these provisions reproduced above shows that after an accused is released on default bail under section 167(2) Cr.P.C., thereafter, the grant of such bail is to be deemed to have been granted under the provisions of Chapter XXXIII; for the purposes of that Chapter. Therefore any aspect on the issue of bail is to be governed by the ordinary provisions of bail; as contained in Chapter XXXIII of Cr.P.C. Hence, once released on bail by virtue of provision of section 167(2) Cr.P.C.; the bail granted to such an accused comes under the restrictive stipulations and enabling provisions a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... shable with death, imprisonment for life or imprisonment for seven years or more, or he had been previously convicted on two or more occasions of a cognizable offence punishable with imprisonment for three years or more but not less than seven years. Provided that the Court may direct that a person referred to in clause (i) or clause (ii) be released on bail if such person is under the age of sixteen years or is a woman or is sick or infirm: Provided further that the Court may also direct that a person referred to in clause (ii) be released on bail if it is satisfied that it is just and proper so to do for any other special reason: Provided also that the mere fact that an accused person may be required for being identified by witnesses during investigation shall not be sufficient ground for refusing to grant bail if he is otherwise entitled to be released on bail and gives an undertaking that he shall comply with such directions as may be given by the Court]: [Provided also that no person shall, if the offence alleged to have been committed by him is punishable with death, imprisonment for life, or imprisonment for seven years or more, be released on bail by the Court u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... If, at any time after the conclusion of the trial of a person accused of a non-bailable offence and before judgment is delivered, the Court is of opinion that there are reasonable grounds for believing that the accused is not guilty of any such offence, it shall release the accused, if he is in custody, on the execution by him of a bond without sureties for his appearance to hear judgment delivered. 439: SPECIAL POWERS OF HIGH COURT OR SESSIONS COURT REGARDING BAIL:- (1) A High Court or Court of Session may direct (a) that any person accused of an offence and in custody be released on bail, and if the offence is of the nature specified in sub- section (3) of Section 437, may impose any condition which it considers necessary for the purposes mentioned in that subsection. (b) that any condition imposed by a Magistrate when releasing any person on bail be set aside or modified : Provided that the High Court or the Court of Session shall before granting bail to a person who is accused of an offence which is triable exclusively by the Court of Session or which, though not so triable, is punishable with imprisonment for life, give notice of the application for bail to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ourt to arrest an accused and commit him to custody, who has been released on bail under Chapter XXXIII. There may be numerous grounds for exercise of power under Sections 437(5) and 439(2). The principles and grounds for cancelling a bail are well settled, but in the present case, we are concerned only with one aspect of the matter, i.e., a case where after accused has been granted the bail, new and serious offences are added in the case. A person against whom serious offences have been added, who is already on bail can very well be directed to be arrested and committed to custody by the Court in exercise of power under Sections 437(5) and 439(2). Cancelling the bail granted to an accused and directing him to arrest and taken into custody can be one course of the action, which can be adopted while exercising power under Sections 437(5) and 439(2), but there may be cases where without cancelling the bail granted to an accused, on relevant consideration, Court can direct the accused to be arrested and committed to custody. The addition of serious offences is one of such circumstances, under which the Court can direct the accused to be arrested and committed to custody despite the ba ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... alleged crime. Hence, after applying its mind to the report filed by the investigating agency under section 173 Cr.P.C., if the court finds the accused not being entitled to bail on merits of the case; or finds it necessary or appropriate to order the accused being taken into custody, then per se no fault could be found with such an order of the court. Having considered general arguments on fate of default bail granted under section 167(2) Cr.P.C. and regarding grant of bail to the accused, the stage is now set for consideration of grant of bail, particularly, to the petitioner, and with the reference to the provisions and the offences under the New Companies Act 2013. However, before proceeding further, it would be appropriate to have a reference to the relevant provisions of the new Companies Act 2013, governing investigation, bail and the trial, which are as reproduced hereinbelow:- Section 210: Investigation into affairs of company:- (1) Where the Central Government is of the opinion, that it is necessary to investigate into the affairs of a company,- (a) on the receipt of a report of the Registrar or inspector under section 208; (b) on intimation of a special reso ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... such period as may be specified in the order. (4) The Director, Serious Fraud Investigation Office shall cause the affairs of the company to be investigated by an Investigating Officer who shall have the power of the inspector under section 217. (5) The company and its officers and employees, who are or have been in employment of the company shall be responsible to provide all information, explanation, documents and assistance to the Investigating Officer as he may require for conduct of the investigation. (6) Notwithstanding anything contained in the Code of Criminal Procedure, 1973, (2 of 1974) (offences covered under section 447) of this Act shall be cognizable and no person accused of any offence 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 opposes the application, the court is satisfied that there are reasonable grounds for believing that he is not guilty of such offence and that he is not likely to commit any offence while on bail: Provided that a person, who, is under the age of sixteen yea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... being in force, a copy of the investigation report may be obtained by any person concerned by making an application in this regard to the court. (14) On receipt of the investigation report, the Central Government may, after examination of the report (and after taking such legal advice, as it may think fit), direct the Serious Fraud Investigation Office to initiate prosecution against the company and its officers or employees, who are or have been in employment of the company or any other person directly or indirectly connected with the affairs of the company. (15) Notwithstanding anything contained in this Act or in any other law for the time being in force, the investigation report filed with the Special Court for framing of charges shall be deemed to be a report filed by a police officer under section 173 of the Code of Criminal Procedure, 1973. (16) Notwithstanding anything contained in this Act, any investigation or other action taken or initiated by Serious Fraud Investigation Office under the provisions of the Companies Act, 1956 shall continue to be proceeded with under that Act as if this Act had not been passed. (17) (a) In case Serious Fraud Investigation Offi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d for by the inspector if they are needed again for a further period of one hundred and eighty days by an order in writing. (4) An inspector may examine on oath- (a) any of the persons referred to in sub-section (1); and (b) with the prior approval of the Central Government, any other person, in relation to the affairs of the company, or other body corporate or person, as the case may be, and for that purpose may require any of those persons to appear before him personally: Provided that in case of an investigation under section 212, the prior approval of Director, Serious Fraud Investigation Office shall be sufficient under clause (b). (5) Notwithstanding anything contained in any other law for the time being in force or in any contract to the contrary, the inspector, being an officer of the Central Government, making an investigation under this Chapter shall have all the powers as are vested in a civil court under the Code of Civil Procedure, 1908 (5 of 1908), while trying a suit in respect of the following matters, namely:- (a) the discovery and production of books of account and other documents, at such place and time as may be specified by such person; (b) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ist in any inspection, inquiry or investigation under this Act or under the corresponding law in force in that State and may, by notification, render the application of this Chapter in relation to a foreign State with which reciprocal arrangements have been made subject to such modifications, exceptions, conditions and qualifications as may be deemed expedient for implementing the agreement with that State. (11) Notwithstanding anything contained in this Act or in the Code of Criminal Procedure, 1973 (2 of 1974) if, in the course of an investigation into the affairs of the company, an application is made to the competent court in India by the inspector stating that evidence is, or may be, available in a country or place outside India, such court may issue a letter of request to a court or an authority in such country or place, competent to deal with such request, to examine orally, or otherwise, any person, supposed to be acquainted with the facts and circumstances of the case, to record his statement made in the course of such examination and also to require such person or any other person to produce any document or thing, which may be in his possession pertaining to the case, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me, the managing director or the manager of the company; (c) any other body corporate whose Board of Directors comprises nominees of the company or is accustomed to act in accordance with the directions or instructions of the company or any of its directors; or (d) any person who is or has at any relevant time been the company s managing director or manager or employee, he shall, subject to the prior approval of the Central Government, investigate into and report on the affairs of the other body corporate or of the managing director or manager, in so far as he considers that the results of his investigation are relevant to the investigation of the affairs of the company for which he is appointed. Section 229: Penalty for furnishing false statement, mutilation, destruction of documents- Where a person who is required to provide an explanation or make a statement during the course of inspection, inquiry or investigation, or an officer or other employee of a company or other body corporate which is also under investigation, (a) destroys, mutilates or falsifies, or conceals or tampers or unauthorisedly removes, or is a party to the destruction, mutilation or falsi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h the accused may, under the Code of Criminal Procedure, 1973 (2 of 1974) be charged at the same trial. (3) Notwithstanding anything contained in the Code of Criminal Procedure, 1973 (2 of 1974), the Special Court may, if it thinks fit, try in a summary way any offence under this Act which is punishable with imprisonment for a term not exceeding three years: Provided that in the case of any conviction in a summary trial, no sentence of imprisonment for a term exceeding one year shall be passed: Provided further that when at the commencement of, or in the course of, a summary trial, it appears to the Special Court that the nature of the case is such that the sentence of imprisonment for a term exceeding one year may have to be passed or that it is, for any other reason, undesirable to try the case summarily, the Special Court shall, after hearing the parties, record an order to that effect and thereafter recall any witnesses who may have been examined and proceed to hear or rehear the case in accordance with the procedure for the regular trial. Section 438: Application of Code to proceedings before Special Court .- Save as otherwise provided in this Act, the provisions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... entitled; A cursory perusal of the above-said provisions shows that that once the serious fraud investigation is handed over to the special agency constituted under the Companies Act, then the investigation officer of SFIO has the power to arrest the accused. However, as per section 212(10) above; the arrested accused is required to be produced before the Magistrate within 24 hours. Still further, the investigation has to be completed as per the provisions of the Companies Act, as supplemented by general provisions of the Cr.P.C. The investigating officer has been given powers of civil court for certain purposes and also; he has been conferred with the power to record the statement of persons on oath; which has been prescribed to be admissible in evidence against the person making it. The trial is prescribed to be conducted by the Special Court constituted for this purpose and in accordance with the provisions of Cr.P.C. not inconsistent with provisions of the Companies Act. Still further, if the investigation is not completed within the statutory period then the Magistrate under section 167(2) Cr.P.C. or the Special Court; exercising powers of magistrate; as provided under sec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s, but is to be carried out by the Director, Additional Director or other Officers of SFIO, authorized by the Director SFIO. However, the person carrying out the investigation under SFIO is also given a deeming faction of being an 'Inspector' for the purpose of powers of Investigating Officer; defined under Section 217 of the Companies Act. Hence all the Investigating Officers, whether investigating at the instance of Central Government under Section 208 or Section 210 or acting at the instance of Tribunal under Section 213 or acting at the instance of SFIO under Section 212, are to be known as 'Inspector' and are to conduct investigation as per procedure prescribed under Section 217. But Officer of SFIO, authorized to conduct investigation under Section 212; is further bound by the restrictions and prohibitions as prescribed under Section 212 of Companies Act as well. One more fact which comes out is that if an investigation is ordered by the Central Government, whether under Sections 208, 210, 213 or 212, and in the process the affairs of some other subsidiary or controlled company of the company under investigation are also found worth investigation, then even fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... then as per the proviso to Section 217(4)(b) he shall require approval only from the Director SFIO, instead of the Central Govt. This distinction has been made by the statute keeping in view the specialized function of SFIO and nature of the offences; which SFIO is required to investigate. Reason for prescribing condition of requiring approval only from Director, SFIO is because, originally, the investigation is entrusted by the Central Government under Section 212 to SFIO only and not to any Inspector. The Inspector is specified, further, only by the SFIO. Hence, being delegate of Director, SFIO, the Inspector requires prior approval only from the Director, SFIO under Section 217(4)(b) proviso. In the present case the approval from the Director SFIO has been obtained by the investigation officer. Therefore, there is nothing wrong with joining the petitioner also qua the investigation of affairs of the Companies of the Adarsh Group. Since, as per the provisions of Section 212 (14), on receipt of investigation report the Central Government can order initiation of prosecution; not only against the officers and employees etc. of the Company under investigation; but also against ' ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erwoven processes and the same end-product in the form of frauds qua the funds of the Cooperative Society (ACCSL). Hence, all the charges under section 447 on multiple counts; can be very well be tried together and can be pleaded by the prosecution to get the bail granted to the petitioner cancelled on the ground that more and new offences have been added after the petitioner was earlier granted the default bail. Hence; the default bail cannot act as a permanent shield for him qua those alleged frauds which were not even knowledge of the investigating officer at the time of the arrest of the petitioner. Hence the bail granted to the petitioner under section 167(2) has rightly been cancelled by the trial court. After cancellation of default bail the trial court was required to advert to the alleged material against the petitioner and the relevant provisions of law for consideration of grant of regular bail to the petitioner. Same is required to be done by this court as well. Although ld. Counsel for the SFIO has insisted upon the applicability of twin conditions prescribed under section 212(6) of the New Companies Act, 2013 for denying bail to the petitioner, as has also been ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ons of Cr.P.C. dealing with the further progress of the trial in a criminal case, besides requiring prophesy from the court, which by no means, is a job of a criminal court. Hence this court had held in case of Ankush Kumar(supra), that since 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, therefore, the language of these twin conditions is in direct conflict with the rights of an individual guaranteed by Article 14, which protects him from irrationality and arbitrariness in application of law against him, as well, his right to life and liberty protected by Article 21 of the Constitution of India. In case of conflict between the rights guaranteed by the Articles 14 21 of the Constitution on one hand and the language in a statute on the other hand, the latter has to give in to the former. This has also been so held by the Supreme Court in another case where the Supreme Court has held that despite prohibition of suspension of sentence under NDPS Act, the Courts can suspend the sentence. Hence it was held by this co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tly under challenge. However, so far as the language of section 437 Cr.P.C. is concerned, although in itself that cannot be a ground for pleading constitutional validity of the section 212(6) of the Companies Act, yet otherwise also; that language is drastically different than the language used in section 212(6) of Companies Act. A bare perusal of this section shows that the section 437 Cr.P.C. uses two different phrases, qua satisfaction of the court for releasing an accused on bail, at two drastically different stages of the trial. Section 437(1)(i) is dealing with a stage when an accused appears or brought before the trail court for the first time to start proceedings against him. This provision, for declining bail to such a person; requires the satisfaction and belief of the court that the said person has been guilty of the offence mentioned in that provision. On the other hand Section 437(7) deals with a situation where the trial stands concluded but the decision is not yet pronounced. In this Situation; this provision provides that the accused need not be unnecessarily incarcerated and he can be released on bail if the court has a satisfaction and belief; on the basis of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... find the moral courage or the legal sanctity to tell to the accused that he shall have to wait in custody till conclusion of the trial, despite and in face of the legislative policy contained in provisions of section 436A of the Cr.P.C. If an accused is in custody for years together without his fault and without any effective proceedings being conducted against him, this may turn into a totally unfair procedure, which cannot be used to curtail the liberty of an accused in violation of Article 21 of the Constitution of India. And in our system of criminal adjudication these situations are not uncommon. In fact, this court has come across the cases where this court had to order taking the police officers into custody and keeping them in custody till their examination and cross-examination before the trial court, as prosecution witnesses, was completed, because in those cases only the police persons were the witnesses and they were not appearing before the trial court, for 19 dates in one case and for 41 dates in another case; despite the fact that the accused was in continuous custody or was regularly appearing before the trial court. Such kind of cases does galore. In such a situat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reason to interfere with that judgment of this court; and SLP was, accordingly, dismissed by the Supreme Court. Hence this court is of the view that bail to the petitioners cannot be denied only on the strength of insistence by the public prosecutor upon twin conditions, as prescribed under section 212(6) of the Companies Act. However, this court finds substance in the argument of the learned Counsel for the SFIO that the offences involved in this case are the economic offences and therefore, the factors and the criteria laid down by the Supreme Court for consideration for granting bail in economic offences have to be considered by this court. The said criteria have found elucidation in several judgments of the Supreme Court. Even in case of Nitin Johari (Supra) the Supreme Court had emphasized the fact that in case of consideration of bail to the accused in case of economic offences, the factors and criteria mentioned by the Supreme Court in case of Y.S. Jagan Mohan Reddy (Supra) are to be followed. Observation of the Hon ble Supreme Court, as approvingly quoted in the case of Nitin Johari (Supra), are as under:- 34. Economic offences constitute a class apart and need to b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... finds that in a case relating to the same offences under the new Companies Act 2013 only, the Supreme Court of India, in case of Nitin Johari (supra) has specifically directed the High Court of Delhi to take into consideration the factors which are required to be considered for economic offences; for the purpose of consideration of bail to an accused. This court is under duty to adopt the same approach while considering the question of the bail to the petitioner. Any perceived inconsistency, if any, in the approach and in the judgments of the Supreme Court in this regard, can only be raised before and can be clarified only by the Hon ble Supreme Court. So far as this court is concerned, it finds a clear-cut guidance in the judgment of the Supreme Court rendered in Nitin Johari s (supra) case in this regard. Otherwise also the fact that the offences under the new Companies Act, 2013 are the economic offences and have to be treated a class apart is clear from the provision of section 446A of the Companies Act itself. This section creates an extraordinary provision to bind-down the discretion of the Special Court even in the matter of award of punishment to the convict. This sect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of in the records of the companies; through cobweb of companies, of the transactions and of the entries. Therefore, the fake transaction to reflect in the tax record has been created. However, the fakeness of these entries and tax return transactions is exposed by the very fact that there are no records of any supporting agreements of loans or of the supporting documents in the Books of Account of these companies, as claimed in the income tax returns. Coming to the material against the petitioner, learned Counsel for the SFIO has pointed out that investigation has led to the seizure of the material and recovery of fudged entries and the data. The petitioner himself has also made admission regarding the said transaction and entries and the concerned data. Hence there is an admission on oath by the petitioner and also the admissions of the co-accused Peeyush Aggarwal, and others; who have specifically stated that the petitioner had given them the cash and the amounts and that was given to other companies without any supporting documents. Hence, considering the entire material on record against the petitioner, by any means; it cannot be said that petitioner is not involved in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hough could not be taken as sufficient for conviction on its own, however, the same would not be discarded as a confession hit by section 25 of the evidence Act. As per the mandate of the section 217(7) of the Companies Act, this can certainly be relied upon as evidence against the petitioner. Therefore, the same can be considered for the purpose of bail as well. For the same reasons, even the statement of a co-accused would be relevant under section 10 of the Evidence Act, and the same can be relied upon under section 30 of the Evidence Act. Although, the question of reliance upon such statement as evidence would come-up during the trial only after the same is proved , however, for the purpose of bail its relevance as material against the petitioner cannot be excluded at this stage. There is nothing on record that the prosecution shall not prove this statement during the trial or that it would be prohibited from proving the same during the trial. Although in the first blush it can occur to the mind that such provision; which makes the statement made before the investigating officers as admissible in evidence; is in negation of fair trial due to inbuilt possibility of pres ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d Counsel has heavily relied upon the judgment of Supreme Court in case of P. Chidambram V/s CBI, 2019 SCC Online SC 1380 to argue that unless there is independent material to show the effort of the accused to flee from country or to influence the witnesses, he should not be denied bail, however, this court finds that even in that case the Hon ble Supreme Court has observed that no straight-jacket formula can be devised in this regard. Otherwise also, no such universal rule is possible or even desirable. Insisting upon independent material from the investigating officer; to show that the accused is likely to flee from country or to influence the witnesses or to destroy the evidence, is again, asking impossible from him, besides extending a dangerous inbuilt suggestion to him that he should always go beyond his brief of investigation and should try to find out or even to create some evidence or material to ensure that the accused could be denied bail. Unfortunately, if he succeeds in bringing some such material before the court and the court believes the same for denying bail to the accused, would not the same create a totally uncalled for bias against the accused during the trial. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the case and also not likely to destroy the evidence against him. The past conduct of the petitioner has also not been exemplary. The argument of the learned Counsel for the petitioner that the petitioner had been joining the investigation and was released on bail as well; and that during that duration he had not made any attempt to influence the witnesses or to destroy the evidence also does not find favour with this court. Rather; this court finds force in the argument of the counsel for the SFIO that at that time the petitioner was not sure of him being made an accused in the case, and being made an accused of a serious offence on multiple counts. Therefore he might not have resorted to that exercise. But now, when the petitioner is fully aware that his alleged crime on multiple counts has been detected, it may not be in the fitness of the things to expect the same straightforward conduct from the petitioner, who is alleged to be manipulative by disposition. Also the argument of the counsel for the SFIO that since the vocation of the petitioner and his Companies is only to commit crimes to earn money, therefore, by any means, it cannot be said that if the petitioner is relea ..... X X X X Extracts X X X X X X X X Extracts X X X X
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