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2023 (7) TMI 1187 - HC - Companies LawSeeking grant of bail - petitioner has been implicated for his role as an “officer who is in default” within the meaning of section 2(60) of the Companies Act - petitioner was a ‘director’ of the company at the relevant time - fulfilment of twin-conditions imposed under section 212(6) of the Companies Act - HELD THAT:- Section 212(8) of the Companies Act says that an investigating officer of the SFIO has the power to arrest an accused if he has reason to believe on the basis of material available with him that the person is guilty of commission of an offence under section 212(6). Though, no doubt, this power of arrest is meant to enforce ‘police custody’ in aid of investigation, what is important to note is that arrest is permissible if the investigating officer has reason to believe that the accused is guilty of the offence based on available material. In the present case, the record shows that the investigating officer never arrested the petitioner throughout the investigation, further investigation and other pre-cognizance stages, all of which took more than 06 years. Even at the stage when the final investigation report was filed before the learned Special Judge, the investigating officer did not seek that the petitioner be either arrested or remanded to judicial custody. This was presumably guided by the words of the Supreme Court in JOGINDER KUMAR VERSUS STATE OF UP. [1994 (4) TMI 385 - SUPREME COURT] and SIDDHARTH VERSUS THE STATE OF UTTAR PRADESH & ANR. [2021 (8) TMI 977 - SUPREME COURT]. In view of the verdict of the Supreme Court in SUNDEEP KUMAR BAFNA VERSUS STATE OF MAHARASHTRA & ANR [2015 (8) TMI 724 - SUPREME COURT], what is settled is that a person is ‘in custody’, no sooner he surrenders before the appropriate court. But that custody does not tantamount to being “under incarceration” as referred to in SATENDER KUMAR ANTIL VERSUS CENTRAL BUREAU OF INVESTIGATION & ANR. [2022 (8) TMI 152 - SUPREME COURT]. Now, the word ‘incarceration’ has not been defined either in the Code of Criminal Procedure 1973, nor in the Indian Penal Code 1860, nor in the Prisoners Act 1900, nor even in the Prisons Act 1894. Therefore, taking cue from what the Supreme Court has held in Satender Kumar Antil, evidently when the petitioner appeared before the learned Special Judge in compliance of the summons issued to him, he was ‘in custody’ of the court but not ‘under incarceration’. Accordingly, the twin-conditions contained in section 212(6) of the Companies Act did not get actuated. A reasonable interpretation of the twin-conditions leads to the conclusion that since the petitioner had not been arrested throughout the course of investigation; he had appeared before the learned Special Judge against summons - not arrest warrants - issued to him; and most importantly, when the investigating officer had not even sought police custody or judicial custody of the petitioner, the twin conditions would not apply. At that point in time, the twin-conditions stipulated in section 212(6) of the Companies Act did not automatically get actuated. What really transpired was that merely upon appearing before the learned Special Judge, as if by reflex action, the court remanded the petitioner to judicial custody; whereupon the petitioner filed a bail application; which also came to be dismissed there-and-then invoking section 212(6). The learned Special Judge misdirected himself in applying section 212(6) of the Companies Act, on the flawed premise that that that was the stage for grant of bail, whereas, it was the stage of considering whether there was any need to remand the petitioner to judicial custody at all. As discussed above, it was for the Investigating Officer to seek that the petitioner be remanded to judicial custody, for justifiable reasons based on material gathered during investigation, which he did not do - the Investigating Officer had not filed any application seeking that the petitioner be placed in judicial custody, even upto the stage when the petitioner appeared before the learned Special Judge on being summonsed. Since the Investigating Officer did not arrest the petitioner during the more than 06-year long proceedings and investigation, evidently, the Investigating Officer did not consider it necessary to do so based on the material in his possession collected in the course of investigation. This court is inclined to admit the petitioner to regular bail, subject to the conditions imposed - application allowed.
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