TMI Blog2020 (5) TMI 328X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 instan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0.06.2016. The Rockland Group was managed by Late Rajesh Srivastava and his family. The petitioner was a close friend of Srivastavas and was given employment by Late Rajesh Srivastava on this account. After 30.06.2016, RHL was taken over by VPS Healthcare Pvt. Ltd. and on the wishes and directions of Late Mr. Rajesh Srivastava, the Applicant, was designated on paper as a Director of RHL and some other group companies. But since this was primarily an honorary position given to the petitioner, on account of his continued years of service he was never involved in the day-to-day affairs of the said companies and his Share Holding was negligible. The petitioner was never a Guarantor of the Loans obtained by RHL. 3. The above said position of facts is squarely admitted by Serious Fraud Investigation Office (SFIO) inasmuch as the SFIO itself admits that even though the petitioner was a whole time Director of RHL/A1, he was not a signatory to the Financial Statements of RHL/Al (Page no.34 of the I.O. Report). Further, the petitioner has been found NOT GUILTY of the alleged offence under Sections 129, 134 and 448 of Companies Act, 2013 in respect of alleged 'False Statement in the Ba ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arge of loans. The same is evident from the NOC dated 24.04.2017 issued by Lead Bank. Moreover, there is no complaint alleging cheating or misappropriation of their funds made against the petitioner by any Bank or financial institution, till date. In addition, all the banks and lenders of RHL that existed before the sale of the Company to VPS Healthcare had been duly paid back and no shareholder, creditor or lender has ever raised any complaints about any alleged siphoning off of funds. Moreover, VPS Healthcare owned RHL obtained fresh bank loan of ₹ 400 crores from Federal Bank for running of the operations of the Company vide Sanction Letter dated 04.01.2017. However, petitioner is in no manner related to the said fresh bank loan, as he was neither the Borrower nor the Guarantor of the said new loan obtained by VPS Healthcare. 7. Learned senior counsels further submitted that pursuant to the takeover of RHL by VPS Healthcare, various disputes arose between the parties and the same led to: i. Passing of Order dated 20.01.2017 by this Court restraining the Srivastava Family and their agents including the petitioner from entering the premises of RHL, copy whereof is a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Report was filed before the Ld. Special Judge under Section 173 Cr.P.C. Pursuant to this, an application under Section 437 of the Cr.P.C. seeking the petitioner s enlargement on regular bail was filed on 11.02.2020, however, vide order dated 02.03.2020, the Ld. Special Judge dismissed the same. 11. Learned Senior Counsels argued that it is not a case where any public funds/ public interest is involved and that till date there has not been a single complainant or victim in the present case. Inasmuch as all the loans obtained by RHL, during the period the petitioner was its whole time Director, have been paid back in full. However, the allegation of the SFIO that even though the banks have been paid, at the time of disbursal of the loan, the banks were deceived on account of presentation of window-dressed accounts before the banks. The said fact falls flat on its face inasmuch as despite notice of the present case by SFIO, none of the banks have stated that they were deceived in any manner, hence, the alleged offences of S 36 (c) read with Section 447, 448 of the Companies Act, 2013 are prima facie not made out. Admittedly, the petitioner was neither the Borrower nor the Guaran ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... th the petitioner at that time) is also not prima facie reliable inasmuch as the said Report issued by the Auditor is counter blast to the abovesaid FIR No.81/2017 dated 24.08.2017 lodged by the petitioner against VPS led RHL and the said Auditor on account of various facts such as preparation of balance sheet of RHL within a period of one day and manipulation of accounts/ financial statements. The SFIO's allegation that the abovesaid report of the Auditor was thereafter considered by the ROC and Report dated 19.02.2018 under section 208 of the Companies Act, 2013 was issued by ROC whereby also falls flat as the said report did not recommend inquiry by SFIO. 14. Further argued that SFIO has no jurisdiction to investigate the present matter since none of the pre-requisites that confer such jurisdiction upon the SFIO, exist in terms of Section 212 (a) (b) and (c). The petitioner was not arrested for almost 1 years during investigation, which means that even the SFIO felt that there was no apprehension that he would abscond or hamper the investigation in any manner. The petitioner has been languishing in Judicial Custody for the past more than 92 Days and Charge Sheet/Complai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llant is entitled to an order of bail pending trial on stringent conditions in order to safeguard the interest of CBI. (Emphasis Supplied) 18. Though Section 212(6) of the Companies Act, 2013 provides for satisfaction of the twin conditions for grant of regular bail, the proviso to Section 212(6) of the Companies Act, 2013 itself carves out an exception in cases where the Accused is Sick and the same reads as under: (6) Notwithstanding anything contained in the Code of Criminal Procedure, 1973... 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 years or is a woman or is sick or infirm, may be released on bail, if the Special Court so directs. 19. On the other hand, Ms.Maninder Acharya, learned Additional Sol ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or violation of section 36(c) of Companies Act, 2013 which is also punishable under section 447 of Companies Act, 2013. 21. Further submitted that Rockland Hospitals Limited (RHL) was a company incorporated in the year 2004. It was incorporated with the objective of carrying out the business of establishing and operating Hospitals. RHL had managed three (3) Hospitals, one at Qutub, Dwarka and Manesar. While the operations of hospital at Qutub was taken over by RHL in the FY 2008-09, hospital at Dwarka was made operational in the year 2011 and the hospital at Manesar started its operation in the year 2013. Accordingly, 100% shareholding of RHL was transferred by the shareholders i.e. promoters of RHL in the FY 2016-17 to VPS Health Care Private Limited for a consideration of ₹ 165 Crores. The promoters including petitioner have committed inter-alia frauds by various manners: I. Rockland Hospitals (Qutub) started its commercial operations from 2003-04 and was operated and managed by a trust Foundation of Applied Research in Cancer (FARC), the management and operations were transferred from FARC to RHL from 2008-09 onwards. Municipal Corporation of Delhi (MCD) directed RH ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d acceptance of unsecured Loan of ₹ 13.17 Crore from Rishi Kumar Srivastava on 28.03.2015. Thus, he being the whole-time director was having knowledge of accounts of RHL but, facilitated the Srivastava brothers in consummating their fraudulent scheme of siphoning off ₹ 13.17 Crore received for RHL by FARC for the undue enrichment of Rishi Kumar Srivastava. III. RHL had maintained a Hospital Information System (HIS) wherein details of patients availing facilities/services at its hospitals were captured and these entries including patient registration, billing, discharge etc., are carried out by their respective departments. However only with respect to a category of patients called Doctor Referred Patients (DRP) , such entries were made by IT Team of RHL as per the instructions and knowledge of its MD Prabhat Kumar Srivastava and Group CFO Nikhil Sharma. The doctors whose names have been recorded in the HIS had stated under oath that such quantum or nature of surgeries conducted on DRP were false and fake, hence the DRP transactions were fictitious in nature and was one of the means for fudging the books of accounts. This was also substantiated by the various regis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tigation, it is revealed that RHL had two major sources of funds between FY 2004-05 to FY 2015-16, which were borrowings from the Banks amounting to ₹ 294.65 Crore and Share Capital Infusion of ₹ 221.20 Crore. Share capital infusion brought into the books of RHL was ₹ 9.61 Crore, World Bank (IFC) had brought in ₹ 40 Crore and 21 Promoter Controlled Companies had brought in ₹ 168.38 Crore. While the net income earned by all promoters of RHL and their spouses shown in the income tax returns filed by them during the period 2005-06 to 2016-17 was ₹ 8.53 Crore only, however, they have shown to have infused share capital of ₹ 179 Crores into RHL. The promoters of RHL had designed a dubious scheme whereby ₹ 168.38 Cr of share capital was brought into RHL through a web of 21 Companies controlled by them with the help of 266 accommodation entry operator-controlled companies spread across Delhi, West Bengal, Assam, Bihar, Himachal Pradesh, Haryana, Karnataka, Kerala, Maharashtra, Orissa, Telangana, Tamil Nadu Uttar Pradesh. The promoters of RHL had ultimately purchased 100% of shares of all Layer-1 Companies but without any consideration and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s ₹ 5.03 Crore (₹ 3.69 Crore in his name ₹ 1.34 Crore in his spouse name) by holding shares in Aditya Medicose Private Ltd, Mona Infotech Pvt. Ltd, Prabhat Healthcare Services Pvt Ltd, Regal Builders Promotes Pvt. Ltd, Umesh Pharmaceuticals Pvt.Ltd, A.B. Medicos Pvt. Ltd, Vaibhav India Surgicals Pvt Ltd (7 of the 21 Layer-1 Companies). IX. On 06.06.2008 IFC, World Bank had invested ₹ 40 Crore in the equity share capital of RHL and by deceit, fraudulent conduct of business and act of omission IFC was made to sell the shares it had purchased at ₹ 40 Crore at ₹ 11 Crore to Mala Srivastava on 27.06.2016 and these shares were resold to VPS Health Care Private Limited at a price of ₹ 19.15 Cr on 29.06.2016 thus obtaining an unlawful gain of ₹ 8.14 Cr. The purchase and resale of share of IFC was not just in violations of provisions of the share purchase agreement and share sale agreement but also against the duty cast on directors of RHL Mala Srivastava Prabhat Kumar Srivastava who had the fiduciary duty of protecting the interest of all the shareholders as laid down in section 166 of Companies Act, 2013 which states that a direct ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Y Y Y Y Y 2. Aditya Kumar Bhandari A6 Y Y Y Y Y Y 3. Rishi Kumar Srivastava A5 Y Y Y Y Y Y 4. Nikhil Sharma A7 Y Y 5. Bipin Joshi A8 Y 6. Tarun Kumar Jain A9 Y 7. Mala Srivastava A10 Y 8. Sandeep Narula A11 Y 9. Sandeep ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e offences affecting the economy of the country as a whole and thereby posing serious threat to the financial health of the country. 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 f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eld that even economic offences would fall under the category of grave offence and in such circumstance while considering the application for bail in such matters, the Court will have to deal with the same, being sensitive to the nature of allegation made against the accused. One of the circumstances to consider the gravity of the offence is also the term of sentence that is prescribed for the offence the accused is alleged to have committed. Such consideration with regard to the gravity of offence is a factor which is in addition to the triple test or the tripod test that would be normally applied. In that regard what is also to be kept in perspective is that even if the allegation is one of grave economic offence, it is not a rule that bail should be denied in every case since there is no such bar created in the relevant enactment passed by the legislature nor does the bail jurisprudence provides so. Therefore, the underlining conclusion is that irrespective of the nature and gravity of charge, the precedent of another case alone will not be the basis for either grant or refusal of bail though it may have a bearing on principle. But ultimately the consideration will have to be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itself. Moreover, the e-mail communications gathered at the time of investigation reveal that both Prabhat Kumar Srivastava and Group CFO Nikhil Sharma had supervised/directed manipulation of the patient pertaining to DRP recorded in the system. Thus, given that DRP formed about 40% revenue source of RHL, but act of omission to verify the revenue source, petitioner had participated in fudging of the revenue of RHL by addition of fictitious DRP in the books of RHL. 29. It is further alleged against the petitioner that as promoter and Whole Time Director of RHL during financial year 2013 to financial year 2016 had supervised the fake invoice generation by RHL as brought out in the statements of Tarun Kumar Jain, Finance Manager Ravinder Sharma, thus, the petitioner had actively connived to book bogus expenses of ₹ 76.03 Crore in the Books of RHL. Further he had actually signed the banking instrument (Cheques/RTGS) etc., for siphoning the funds of RHL as authorized signatory to the Bank Accounts of RHL. 30. During investigation, it is revealed that RHL had two major sources of funds between FY 2004-05 to FY 2015-16, which were borrowings from the Banks amounting to ͅ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uticals Pvt. Ltd. Prabhat Healthcare Services Pvt. Ltd., A.B. Medicos Pvt. Ltd., Vaibhav India Surgicals Pvt. Ltd. (7 of the 21 Layer 1 companies). 32. In my opinion, sections 210 and 212 of the Companies Act, 2013 are relevant to establish that Central Government has power to investigate into the affairs of a company, which are reproduced as under: 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 resolution passed by a company that the affairs of the company ought to be investigated; or (c) in public interest, it may order an investigation into the affairs of the company. (2) Where an order is passed by a court or the Tribunal in any proceedings before it that the affairs of a company ought to be investigated, the Central Government shall order an investigation into the affairs of that company. (3) For the purposes of this section, the Central Government may appoint one or more persons as inspectors to investigate i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (6) Notwithstanding anything contained in the Code of Criminal Procedure, 1973, the offences covered under sub-sections (5) and (6) of section 7, section 34, section 36, sub-section (1) of section 38, sub-section (5) of section 46, sub-section (7) of section 56, sub-section (10) of section 66, sub-section (5) of section 140, sub-section (4) of section 206, section 213, section 229, sub-section (1) of section 251, sub-section (3) of section 339 and section 448 which attract the punishment for fraud provided in 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 years or is a woman or is sick or infirm, may be released on bail, if the Special Court so directs: Provided furth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion 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 Office has been investigating any offence under this Act, any other investigating agency, State Government, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oner when taken into custody was 90 Kgs and had lost weight in the initial phase of custody due to reduced capacity of the stomach which leads to reduced intake of food, in addition some inmates also tend to lose weight in the initial phase of jail incarceration due to stress and change in diet. c) Routine investigations were within normal limits. 36. Thus, 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. 37. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to having been deceived, rather, admittedly, the entire outstanding of the bank has been cleared. 42. In respect of Finding Nos. 4 to 9, the same are bailable and hence the same are not required to be considered for the adjudication of the present bail application at this juncture. 43. 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. 44. In the case of Y.S. Jagan Mohan Reddy vs. CBI: (2013) 7 SCC 439 , the Hon ble Supreme Court has held that while granting bail, the Court has to keep in mind the factors like the nature of accusation, evidence in support thereof, the severity of punishment which conviction will entail, reasonable possibility of securing the presence of the accused during trial, reasonable apprehension of the witnesses being tempered with, the large interests of the public/sta ..... X X X X Extracts X X X X X X X X Extracts X X X X
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