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2019 (9) TMI 570

..... T:- 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 the Cr.P.C. Thus, it is necessary to advert to the principles governing the grant of bail under Section 439 of the Cr.P.C. Specifically, heed must be paid to the stringent view taken by this Court towards grant of bail with respect of economic offences. The High Court in the impugned order has failed to apply even these general principles. The High Court, after referring to certain portions of the complaint to ascertain the alleged role of Respondent No. 1, came to the conclusion that the role attributed to him was merely that of colluding with the co-accused promoters in the commission of the offence in question - this vague observation demonstrates non-application of mind on the part of the Court even under Section 439 of the Cr.P.C., even if we keep aside the question of satisfaction of the mandatory requirements under Section 212(6)(ii) of the Companies Act. The High Court has failed to apply its mind to all the circumstances that were required to be considered while granting bail, particularly i .....

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..... o the order dated 03.05.2016 issued by the Ministry of Corporate Affairs (for short the MCA ) under Section 212(1)(c) of the Companies Act. Gradually, the scope of investigation expanded to 157 companies and 130 individuals. 4. Respondent No. 1 came to be arrested on 02.05.2019, and was remanded to the Appellant s custody on 03.05.2019. He has been in judicial custody since 08.05.2019. It is also pertinent to note that previously, co-accused Neeraj Singal had been granted certain interim reliefs (including interim bail) by the High Court of Delhi vide order dated 29.08.2018 in W.P. (Crl.) No. 2453/2018, in which he had challenged the constitutionality of Section 212(6)(ii), (7) and (8) of the Companies Act. The operation and effect of this order (save for his interim release) had been stayed by this Court in appeal, vide order dated 04.09.2018. 5. Respondent No. 1 applied for regular bail under Section 439 of the Code of Criminal Procedure, 1973 (for short the Cr.P.C. ), which was dismissed by the Special Judge (Companies Act), Dwarka District Courts, Delhi, vide order dated 06.06.2019. The Investigation Report was submitted by the Appellant to the MCA on 27.06.2019, and after obta .....

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..... ed 04.09.2018: 9. In the nature of the interim order that we propose to pass, we refrain from elaborating on the contentions and the reasons recorded by the High Court at this stage. However, we may observe that prima facie we find that the reasons being on the constitutional validity of provisions apart from Sections 212(6)(ii) and 212(7) of the Act ought not to have weighed with the High Court for grant of interim relief. Moreover, in any case, the High Court ought to have applied the broad contours required to be kept in mind for grant of bail under Section 439 Cr.P.C., which aspect, we find, has not been adverted to at all in the impugned order. There is prima facie substance in the grievance of the appellants that the High Court has failed to consider matter such as the nature of gravity of the alleged offence. Moreover, we find that in the course of the impugned order, the High Court even proceeded to recall certain observations made by it in another case (Poonam Malik v. Union of India [W.P.(Crl.) No.2384 of 2018] order dated 10th August 2018). It was submitted that in light of these peculiar circumstances, there exists no reason to grant bail to Respondent No. 1 on the grou .....

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..... 5 of the Prevention of Money Laundering Act, 2002 (for short the PMLA ), another provision analogous to Section 212(6) of the Companies Act. It was contended that this decision was irrelevant to the present case, since the classification because of which the provision was held to be unconstitutional had been done away with. This was because when the said judgment was passed, Section 45 of the PMLA imposed the twin conditions for bail only for offences found in Schedule A of the PMLA (i.e., predicate offences found in other penal statutes) which were punishable with imprisonment for three years or more, and this Court had struck down this provision as unconstitutional mainly on the ground that the aforesaid classification did not seem to have a rational nexus to the object of that legislation. However, the Parliament had subsequently amended Section 45 of the PMLA, imposing the twin conditions for bail for offences under the PMLA itself, and not for offences found in Schedule A. It was further submitted that after the said amendment, Section 45 of the PMLA had become in pari materia with Section 212(6) of the Companies Act, as the latter section also imposed the twin conditions for .....

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..... rges before the Special Judge would take a considerable amount of time. It was thus argued that if the present appeal before this Court were allowed, Respondent No.1, who has already spent 124 days in custody, would have to spend well over a year or more in custody even before the commencement of the trial. With respect to the twin mandatory conditions under Section 212(6)(ii) of the Companies Act, learned Senior Counsel highlighted that in Nikesh Tarachand Shah (supra), Section 45 of the PMLA had been held unconstitutional not only under Article 14, but also under Article 21 of the Constitution, as the said section made drastic inroads into the fundamental right of liberty without there being a compelling state interest. However, without going into the question of the constitutionality of Section 212(6) of the Companies Act itself, it was stressed that since the provision, as it exists, requires the Court to practically record a finding of acquittal in order to grant bail, it is well nigh impossible for an applicant to obtain bail under the provision. Overall, it was contended that the High Court had used its discretion in granting bail in Respondent No.1 after applying its mind t .....

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..... . 35. While granting bail, the court has to keep in mind the nature of accusations, the nature of evidence in support thereof, the severity of the punishment which conviction will entail, the character of the accused, circumstances which are peculiar to the accused, reasonable possibility of securing the presence of the accused at the trial, reasonable apprehension of the witnesses being tampered with, the larger interests of the public/State and other similar considerations. This Court has adopted this position in several decisions, including Gautam Kundu v. Directorate of Enforcement (Prevention of Money Laundering Act), Government of India, (2015) 16 SCC 1, and State of Bihar v. Amit Kumar, (2017) 13 SCC 751. Thus, it is evident that the above factors must be taken into account while determining whether bail should be granted in cases involving grave economic offences. 12. As already discussed supra, it is apparent that the Special Court, while considering the bail applications filed by Respondent No. 1 both prior and subsequent to the filing of the Investigation Report and complaint, has attempted to account not only for the conditions laid down in Section 212(6) of the Compani .....

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..... ore this Court, as already noted supra. However, we find it necessary to note that in light of the peculiar circumstances of the case, the High Court ought not to have been influenced by the nonarrest of Brij Bhushan Singal and the grant of bail to Neeraj Singal. 15. In light of the foregoing discussion, we are of the view that the High Court has failed to apply its mind to all the circumstances that were required to be considered while granting bail, particularly in relation to economic offences. Accordingly, the impugned order is hereby set aside. 16. In the interest of justice, we deem it fit to remand the matter to the High Court to reconsider Bail Application No. 1971/2019 filed by Respondent No.1 in light of the principles governing the grant of bail under Section 439 of the Cr.P.C, while also keeping in mind the scope and effect of the twin mandatory conditions for grant of bail laid down in Section 212(6)(ii) of the Companies Act. Needless to say, Respondent No. 1 shall continue to remain in custody subject to the order of the High Court in the said bail application. 17. The impugned order of the High Court is set aside. This appeal is disposed of accordingly, with a reques .....

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