2020 (5) TMI 328 - HC - Companies Law

Enlargement of the petitioner on bail - liabilities of Directors - Siphoning of funds - allegations against the petitioner are that he was one of the promoters and close associate of Srivastava s and whole time director of RHL between financial year 2011-12 to 2014-15 when funds were deposited with MCD and when the refund from MCD was masqueraded and shown as unsecured loan repayable to Rishi Kumar Srivastava - power of Central Government to investigate into the affairs of a company - petitioner claims that he is not goods heath condition and requires hospitalization during the judicial custody. HELD THAT - The medical report shows that the susceptibility of the petitioner to COVID 19 due to incarceration is not higher and further the contention of the petitioner that he had lost 13 kgs in the last 3 months is false rather his weight had been constant at 78 Kgs for the last 73 days which is within the normal limits (between 17.02.2020 to 29.04.2020). Further considering that the petitioner is being given all required medical treatment by the Jail Authorities and that his condition is stable from the last two months it is established that the petitioner is not having any higher susceptibility of getting infected by COVID 19 due to incarceration in the jail environment - Also considering that the height of the petitioner is around 6 feet and his present weight is 78kgs the Body Mass Index (BMI) of the petitioner is 23.5 Kg/M Sq. Given that the healthy/normal BMI range prescribed by WHO is between 18.5 Kg/M Sq. to 25 Kg/M Sq. by no stretch of imagination can the petitioner be termed as underweight. In fact the ideal weight range for the petitioners height is between 62 82 Kgs - thus there are no medical grounds available to the petitioner for grant of bail. In any case admittedly the petitioner had no role to play with the banks inasmuch as the petitioner was not a guarantor to any bank loan of RHL. In any case the banks have not filed any complaint with regard to having been deceived rather admittedly the entire outstanding of the bank has been cleared - After going through the status report and considering the arguments advanced by learned Additional Solicitor General Ms.Maninder Acharya the main beneficiary of all the 7 instances of fraud is Prabhat Kumar Srivastava and his family. The petitioner herein has received peanuts through interest in shares. All directors and promoters are equally liable therefore cannot be different parameter for petitioner and other promoters. It is not in dispute that investigation is complete criminal complaint has been filed and charges are yet to be framed. Presently our country is under Lock-down due to COVID-19 therefore regular functioning of the courts may take more time. Thus in the present situation trial of the present case is not possible in the near future. Further there is no allegations that petitioner is flight risk or may temper with the evidence or influence the witnesses. Since present application is for bail therefore this Court refrains from making any observation on the merit of the prosecution case which is subject matter of the Trial. However in view of above facts and considering the period in judicial custody this Court is of the view that petitioner deserves for bail - Petitioner is allowed to be released on bail subject to his furnishing a personal bond in the sum of Rs. 50, 000/- before the concerned Jail Superintendent and a surety of the like amount to the satisfaction of Trial Court as and when the Court starts its regular functioning. Bail Application allowed.

Summary

Issues Involved:
1. Bail application for the petitioner.
2. Petitioner's involvement and role in the alleged fraud.
3. Medical condition of the petitioner as a ground for bail.
4. Comparison of petitioner's role with other accused.
5. Applicability of legal precedents and statutory provisions.

Issue-wise Detailed Analysis:

1. Bail Application for the Petitioner:
The petitioner sought bail in Reg. No.CC/149/2020. The petitioner argued that he was not involved in the day-to-day affairs of Rockland Hospitals Limited (RHL) and was not a guarantor for any loans obtained by RHL. The Serious Fraud Investigation Office (SFIO) admitted that the petitioner was not a signatory to the financial statements of RHL and was found not guilty of alleged offenses under Sections 129, 134, and 448 of the Companies Act, 2013. The petitioner had complied with all summons and joined the investigation as required. The court concluded that there were no grounds to withhold bail as a punishment and noted that the petitioner had been in judicial custody for over 92 days.

2. Petitioner's Involvement and Role in the Alleged Fraud:
The SFIO alleged that the petitioner, as a whole-time director and promoter of RHL, was involved in various fraudulent activities, including siphoning off funds, creating fictitious patients (DRP), and generating fake invoices. The SFIO's investigation revealed multiple instances of fraud, including the misuse of funds received from the Municipal Corporation of Delhi (MCD) and the creation of bogus expenses amounting to Rs. 76.03 crores. The SFIO also alleged that the petitioner was part of a scheme to infuse Rs. 168.38 crores of share capital through a web of companies controlled by the promoters. However, the court noted that the petitioner was not a guarantor for any bank loans and that the banks had not filed any complaints regarding deception.

3. Medical Condition of the Petitioner as a Ground for Bail:
The petitioner argued that his health condition, including diabetes and a history of laparoscopic sleeve gastrectomy surgery, made him susceptible to severe health risks, especially in the context of the COVID-19 pandemic. The court reviewed medical reports and found that the petitioner was receiving all necessary medications and his condition was stable. The court concluded that there were no medical grounds to grant bail based on the petitioner's health condition.

4. Comparison of Petitioner's Role with Other Accused:
The court noted that the role of the petitioner was similar to that of Rishi Kumar Srivastava (A-5), who had not been arrested despite being similarly accused. The court found that there was no justification for treating the petitioner differently from other accused individuals who had not been arrested. The court also noted that the main beneficiary of the fraud was Prabhat Kumar Srivastava and his family, and the petitioner had received only a minor benefit through shares.

5. Applicability of Legal Precedents and Statutory Provisions:
The court considered various legal precedents, including the cases of Y.S. Jagan Mohan Reddy vs. CBI and P. Chidambaram vs. Directorate of Enforcement, which emphasized the need to consider the nature of accusations, evidence, and the severity of punishment while granting bail. The court also referred to Sections 210 and 212 of the Companies Act, 2013, which outline the powers of the Central Government and the SFIO to investigate company affairs. The court concluded that the petitioner's case did not involve public funds or interest, and there were no complaints from financial institutions or shareholders.

Conclusion:
The court granted bail to the petitioner, subject to furnishing a personal bond of Rs. 50,000 and a surety of the same amount. The petitioner was restricted from leaving the country without the trial court's permission. The court emphasized that its observations should not influence the trial court's proceedings. The bail application was allowed and disposed of, and the order was transmitted to the relevant parties and authorities for compliance.