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2022 (1) TMI 1139 - HC - Companies LawSeeking grant of Bail - Conspiracy - allegation of a fraudulent Merchanting Trade (MT) business - submission of false/deceptive statements/financials to different Banks to avail credit facility in the form of opening of Letter of Credit - loss to the Public Sector Banks - abuse of applicant's position as promoter/directors of FIL to cause wrongful loss to public sector Banks - HELD THAT:- Applicant had knowingly falsified the books of accounts and the financial statements of FIL deliberately concealing material facts thereby including public sector Banks to fraudulently credit facilities to FIL which ultimately remained outstanding at ₹ 4041 Crores as account of FIL became NPA. Applicant is also stated to be indulged in speculative currency trading unrelated to MT being undertaken by RGC thereby gambling with Banks money which resulted in huge loss. Applicant was instrumental in holding the currency losses in the books of accounts under the garb of debit notes. These debit notes were raised against foreign parties and made part of trade receivable. Later on, these debit notes were adjusted against the payment received from the LC rotated funds. Falsified financial statements of FIL signed by the applicant was filed with ROC and was submitted to public sector Banks depicted false MT trade receivables. The applicant provided false and bogus documents to the Banks. Abuse of position as promoter/directors of FIL to cause wrongful loss of ₹ 4041 Crores to public sector Banks - HELD THAT:- Applicant utilized the corporate identity of FIL to perpetrate fraud of rotating the funds obtained through Letter of Credits discounting for mopping the interest arbitrage available between LC issuance and discounting charges and that between the interest on fixed deposits. This whole conspiracy was played under the garb of doing MT - The sum and substance of the outcome of the investigation conducted in the matter and the facts mentioned in the complaint for prosecution are that concerned Companies were engaged in fraudulent Merchanting Trade and caused wrongful loss to the Public Sector Bank to the tune of ₹ 7820 Crores approximately applying different modus operandi including siphoning of Bank funds through Merchanting Trade; falsification of financial statement of the Companies involved in the matter by not showing true and fair views. Considering the role of the applicant as alleged against him, nature and gravity of the offence and also the evidence available on record in support thereof, prima facie, it appears that huge amount received by the applicant through Letter of Credit has become NPA due to nonpayment of advance taken by the Company on account of falsification in the books of account furnished by the company before the Bank concerned, therefore, the allegations levelled against the applicant and the company concerned cannot be overlooked at this stage - this court is further of the opinion that the applicant is not entitled to bail even under Section 439 Cr.P.C. even if the bail application is not tested on the touchstone of twin conditions as enumerated in Section 212(6) (ii) of the Company Act, 2013 for the reason that offence committed by the applicant is an economic offence which affects the economy of the nation. Application rejected.
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