TMI Blog2020 (6) TMI 261X X X X Extracts X X X X X X X X Extracts X X X X ..... ection to the grant of bail, however a similar language existing in the Prevention of Money Laundering Act, which was para materia to the language of the twin conditions contained in section 212(6) of the new Companies Act, had earlier come-up for consideration of the Supreme Courts in case of Nikesh Tarachand Shah [ 2017 (11) TMI 1336 - SUPREME COURT ] case and such language has already been declared to be ultra vires by the Supreme Court in that case. This court is under obligation to consider the nature of offence and the material placed on record before the special court, by way of charge-sheet against the petitioner, for consideration of question of granting bail to petitioner. In the present case, not keeping the books and records qua the dealings between the Cynosure Real Estate Company of the co-accused Vivek Harivyasi and the companies of the petitioner, in their respective offices; despite impending legal threat of severe punishment prescribed above provisions itself creates initiation of deceitful intention. There is nothing on record to even remotely suggest that the said money was given by the companies of the petitioner to the Cynosure Real Estate Company of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t sure of him being made an accused in the case. Therefore he might not have resorted to that exercise. But now, when the petitioner is fully aware that his alleged crime has been detected, it may not be in the fitness of the things to expect the same straightforward conduct from the petitioner, who is alleged to be manipulative by disposition. Petition dismissed. - CRM-M-40277-2019 - - - Dated:- 13-11-2019 - HON'BLE MR. JUSTICE RAJBIR SEHRAWAT Present: Mr. S. K. Garg Narwana, Senior Advocate with Mr. Sukesh K. Jindal, and Mr. Naveen Gupta, Advocates for the petitioner. Mr. Chetan Mittal, Assistant S.G.I. with Mr. Alok Kumar Jain, Senior Panel Counsel and Mr. Himanshu Gupta, Advocate for SFIO. Mr. Parshant Baliyan, Investigating Officer; in person. RAJBIR SEHRAWAT, J. This petition under Section 439 of the Code of Criminal Procedure has been filed for grant of regular bail pending trial in Criminal Complaint No.3 (or 5) of 18.05.2019 CIS No. COMA/05/2019, CNR NO. HRGR01-007022-2019 titled as SFIO VS. ADARSH BUILD ESTATE ETC . under Sections Section 447 of Companies Act, 2013, read with section 120-B IPC and sections 418 and 420 IPC rea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... affairs of the companies. During investigation it came out that 70 Companies of the Adarsh Group of Companies Ltd. had shown ₹ 4140Crores approximately, including interest, as payable to the said Co-operative Society; as the loan yet to be repaid. Still further, during investigation some persons and companies out-side the Adarsh Group of Companies were also found to be the alleged collaborators of the Adarsh Group and those companies were also taken under investigation. Accordingly, a total of about 125 Companies (hereinafter referred to as CUIs), and some individuals, including the petitioner and his Companies as conspirators; were taken under investigation. After completion of the investigation and taking necessary permissions from the Central Government, SFIO presented the investigation report in the form of a statutory Complaint before the Special Court at Gurugram on 18.5.2019. In this Complaint/ report the petitioner is arrayed as Accused No.176, and his companies are arrayed as the accused at Sr. No. 99 and 100. Under the provisions of section 212 (15) of Companies Act 2013, such a report be taken as a report presented under section 173 of Cr.P.C. After receipt of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... panies, namely, Cynosure Real Estates Private Limited (CREP), EOS Developers Private Limited, Headstrong International Exports Private Limited, Adler Infra Ventures Private Limited and A3G Infra Private Limited. He misappropriated the funds, which had come from the Co- operative Society (ACCSL) to purchase property, Riyasat Green Farm, Chattarpur in the name of his one company Cynosure Real Estates Private Limited (CREP) for an amount of ₹ 24.49 Crores. Out of this amount ₹ 4 Crores are alleged to have been routed through the two companies of the petitioner, namely, Dinkar Commercial Pvt. Ltd. ₹ 2.30 Crores and Amrendra Finance Pvt. Ltd. ₹ 1.7 Crores. To acquire the farm house and to route the money a conspiracy was, allegedly, hatched by the co-accused Vivek Harivyasi; in connivance with Peeyush Aggarwal - who was also the Statutory Auditor and the shareholder, Paramvir Singh Sangwan - the Shareholder, Vijay Jhindal and the petitioner Raj Kumar Modi. The amount of ₹ 17 Crores, which was actually the money coming from the Co- operative Society (ACCSL) though the CUIs of Adarsh Group; was actually provided by the Vivek Harivyasi in cash and was sent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from the two companies of the petitioner, namely, Dinkar Commercial Private Limted (DCPL) and Amrendra Financial Private Limited (AFPL), to the company of Vevek Harivyasi, namely, Cynosure real Estates Private Limited (CREP), on 03-04-2017, on 05-04-2017 and on 06-04-2017. Amount so transferred was ₹ 4 Crores. So as per the allegations and even the statement of the petitioner his companies transferred ₹ 4 Crores to a one week old company having paid up capital of only ₹ 1 Lakh. This amount was used for purchase of the above-said Riyasat Green Farm House. Out of the remaining auction amount ₹ 10 lakhs is alleged to be contributed by Paramvir Singh Sangwan; and the balance came from other shell companies controlled by Vivek Harivyasi. Hence, it is alleged that the petitioner and his companies have been the conspirators and the participants in the fraud whereby the funds of CUIs of the Adarsh Group, which in turn had come from the Co-operative Society, were embezzled. Arguing the case learned counsel for the petitioner submitted that starting with September 2018, the petitioner had joined the investigation by appearing before the investigating officer of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e summons or warrant; is present in the court the court may require him to execute a bond with or without sureties for his appearance. Hence it is argued that when an accused is already present before the court then the court is not empowered to issue warrant for taking a person in custody. Such a person is entitled to be released on bail on bonds or sureties. Therefore, once the petitioner had appeared before the trial court, pursuant to the summons issued by that court, then the petitioner had got an un-defeatable right to get bail as per the provisions contained in section 88 of Cr.P.C. Ld. Counsel has relied upon the judgment of the Supreme Court in case of Data Ram Singh V/s State of Uttar Pradesh and another, 2018 SCC Online SC 88 and a judgment of this court in case of CRM-M-28490 of 2015, decided on 01-10-2015 Dalip Singh Mann and another V/s Niranjan Singh, Assistant Director, Directorate of Enforcement, Govt. of India. Carrying forward the arguments, Ld. Counsel for the petitioner submitted that under the provisions of section 212(8) the investigating officer has been given power to arrest a person, if on the basis of the material in his possession; he has reasons to beli ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nditions, as used in the Prevention of Money Laundering Act, as ultra vires. Hence the twin conditions, as contained in section 212 (6) of the new Companies Act, has also to be treated as ultra vires the Constitution of India and as infringing upon the rights of the individual. Hence the trial court could not have invoked the twin conditions, as prescribed under section 212 (6) of the new Companies Act, for declining bail to the petitioner. Referring to the same judgment, and Counsel for the petitioner has submitted that even if those twin conditions are to be applied, those would have been applicable only in case the petitioner would have been arrested during the investigation by the investigating officer and then produced before the trial court in custody. However, in the present case the investigating officer himself had not found a case against the petitioner sufficient to justify the arrest of the petitioner, therefore, the twin conditions prescribed under section 212 (6) of the new Companies Act have no application in case of the petitioner. Still further it has been argued by the Counsel for the petitioner that even if the twin conditions are taken to be existing on the stat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as might have been put up to the said witness by the investigating officer of the case by referring him to the alleged records of the petitioner. Therefore even the statement of the said witness is no evidence in the eyes of law. Still further, it is submitted by the Counsel that the petitioner is not involved in directly dealing with the public money, which was allegedly in the hands of the Company of Adarsh Group of Companies. The embezzlement of the money, even as per the case of the prosecution, has been committed by the controllers of the Adarsh Group of Companies Limited, through their subsidiary entities. Petitioner was not connected with those companies, as such. Learned Counsel for the petitioner has further submitted that the petitioner and his companies were not even part of the sanction initially granted by the Central Government for investigation of the Companies. Subsequently 20 more companies were also involved in the investigation with the prior sanction of the central government. However, the companies of the petitioner were not involved even at this stage. No separate approval was taken as required under section 219 of the Companies Act. Hence any investigatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . It is also submitted that when the loans were not returned by the Cynosure Real Estates Private limited then repeated efforts were made to recover the said amounts. Ultimately, the proceedings have also been initiated before the National Company Law Tribunal. Hence there is no question of the petitioner or his companies being the conspirators or the participants in the fraud as alleged in the complaint. Otherwise, the petitioner has no concern with the money of CUIs of the Adarsh Group. The petitioner had no equity transaction with those companies. Hence it is clear that petitioner is an innocent person and he is a law abiding gentleman and legitimate businessman. He has not committed any crime as alleged against him. Hence he deserves to be released on bail during the pendency of the trial. On the other hand, learned Assistant Solicitor General of India, appearing for SFIO, has argued that the fact that the investigating officer had not arrested the petitioner during the investigation is totally inconsequential. Referring to the provision of section 212(8) of the new Companies Act, learned counsel appearing for SFIO has submitted that the provision itself speaks of the words ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and has declined bail to the petitioner. The court below has exercised its statutory discretion. The petitioner has not been able to find fault with this exercise of discretion by the court below. Relying upon the judgment of the Supreme Court in Serious Frauds Investigation Office V/s Nitin Johari 2019 SCC Online 1178 ; and drawing parallel therewith, learned Counsel for SFIO has submitted that merely because the petitioner had himself appeared before the court after the charge-sheet was filed against him or merely because he was granted interim bail, in the first instance, does not mean that the bail cannot be denied to the petitioner during the pendency of the trial or that such person cannot be taken into custody. Question of bail still has to be considered and decided by the court as per the relevant and applicable factors. It is, accordingly, submitted by the Counsel that in case of Nitin Johari (Supra) also, though the charge-sheet had been filed and the High Court had granted bail, yet the Supreme Court set aside the order of the High Court and remanded the matter to the High Court for fresh consideration, by considering the relevant factors. Had this been the valid prop ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the petitioner for bail, the same condition would be required to be considered by this court as well. Referring to the reliance of the counsel for petitioner upon the case of Nikesh Tarachand Shah (supra) case, qua vires of the twin conditions, ld. Counsel for the SFIO has submitted that after that judgment of the Supreme Court, the Parliament has amended the Prevention of Money Laundering Act and has removed the inconsistency qua the offences punishable under the Prevention of Money Laundering Act, and therefore, has rectified the aspect which had earlier led to declaration of the twin conditions under that Act as ultr-vires. Still further it is submitted by the ld. Counsel that although constitutional validity of the twin conditions, as prescribed under section 212 (6) of the Companies Act is under challenge before the Supreme Court in case of Serious Frauds Investigation Office V/s Neeraj Singhal 2018 SCC Online SC 1573 and other cases, however, the Supreme Court has again reiterated the applicability of the twin conditions for the purpose of consideration for bail, in case of Nitin Johari (supra). So far as the reliance of the Counsel for the petitioner upon the judgment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h the two companies of the petitioner, namely, Dinkar Commercial Pvt. Ltd. - ₹ 2.30 Crores and Amrendra Finance Pvt. Ltd. - ₹ 1.7 Crores. To acquire the farm house and to route the money a conspiracy was hatched by the co-accused Vivek Harivyasi; in connivance with Peeyush Aggarwal - who was also the Statutory Auditor and the shareholder, Paramvir Singh Sangwan - the Shareholder, Vijay Jhindal and the petitioner Raj Kumar Modi. The amount of ₹ 17 Crores, which was the money coming from the Co-operative Society (ACCSL) through the CUIs of Adarsh Group; was, actually, provided by the Vivek Harivyasi in cash and was sent to Peeyush Aggarwal through one Saurav Gupta. All this money was, thereafter, routed through the shell companies controlled by Peeyush Aggarwal, Vijay Jhindal and the petitioner Raj Kumar Modi, by creating accommodation bank entries; and was ultimately; utilized to purchase the above-said Farm House in the name of Cynosure Real Estates Pvt.Ltd (CREP), the company controlled by Vivek Harivyasi. The petitioner has even admitted that his companies; Dinkar Commercial Private Limited (DCPL) and Amarendra Financials Private Limited (AFPL), provided unsecur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... spirators and the participants in the fraud whereby the funds of CUIs of the Adarsh Group, which in turn had come from the Co-operative Society, were embezzled. The argument of the petitioner that the money transferred by his companies to Cynosure real Estates Private Limited (CREP) was received on account of return of it loan amounts is also totally farce. The record of the companies of the petitioner reveals that there are entries of the alleged loan amounts, showing advancement to and return by certain companies on the same date or after a lapse of just 2 days. Hence these are only paper entries to route the hawala money. The claim of the petitioner that the amounts were transferred as unsecured loans to the Cynosure real Estates Private Limited (CREP) is totally false and has no basis. These amounts were transferred by the companies of the petitioner without any supporting agreements, deeds or the requisite paperwork in this regard. The companies of the petitioner would have kept proper books of account; had these transactions been the genuine business transactions between the companies. There are no corresponding deeds, documents and the agreements even in the records of Cyn ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment of imprisonment up to 10 years. Still further, although the Counsel for the petitioner had submitted that the petitioner is not directly involved in embezzlement of the cash-in-hand of the companies of the Adarsh Group, however, the fraud, as defined under the new Companies Act, does not contemplate any gain by one person and the loss to another person or to a company. Participation of the petitioner in the crime of embezzlement of the money, per se, is sufficient for conviction of the petitioner. It is also submitted that as per the record; the companies had authorized the petitioner to collect cash from 30 companies of the Adarsh Group of Companies. That cash amount is stated to have been received by the petitioner, but is not found to have been deposited in the bank accounts. These facts were confirmed even by the confirmation ledger signed by the petitioner. The participation of the petitioner has duly been established as per the record. Conduct of the petitioner has also not been exemplary in the past. Appreciating it from the disposition of the petitioner, it cannot be ruled out that the petitioner is likely to influence the witnesses and to destroy the evidence against ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... also vehemently argued by learned Counsel for the petitioner that since the question of bail relates to the life and liberty of the petitioner, therefore, the court has to be liberal in granting the bail, because bail is the rule and the jail is only an exception. This court has heard the learned Counsel for the parties at length and has perused the record. But at the outset it deserves mention that although the counsel for the parties have raised the arguments in extensive details; concerning all the aspects of the matter, including those of the facts and the questions of law, including the ones touching upon the constitutional validity of certain provisions involved in this case, however this court is of the opinion that it may not be appropriate to deal with and decide all the arguments in the same extensive details; in the present proceedings, lest the case of either side should be prejudiced at this stage itself. However, since in this fiercely contested matter the parties have pressed the arguments, therefore, this court is, obviously, expected to deal with the same, at least, in skeletal manner. Accordingly, the arguments are being considered by this court. First of a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... exercise of power and discretion by the court for compelling appearance of the person before it, by issuing summons, bailable warrant and; preferably; only thereafter the issuance of the non- bailable warrant. However, section 87 of the Cr.P.C. creates an exception to this general procedure and empowers the court to issue warrant of arrest in the first instance itself; if it is of the opinion of the existence of the factors mentioned in this section. Likewise, Section 88 contemplates a general provision for making sure that a person whom the court has already called through the summons or warrant or whom the court considered appropriate to remain present in subsequent dates; can be bound down for such appearance. In fact, this section is more in the nature of inclusive power of the criminal court to seek presence of any person connected with the case, in any manner whatsoever, even if such person may not be mentioned in the case; either as an accused or as a witness. This provision is intended to include even those persons who may be present before the court by chance or who might be watching the proceedings as such. Even if a person is otherwise present before the court, the cour ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... her to grant bail to the accused or not. In case of Pankaj Jain (Supra) even the judgment of this court in case of Dalip Singh (Supra), being relied upon by the petitioner, has been considered by the Supreme Court and it has been held that question of grant of bail is primarily a matter of judicial discretion of the court and not any right of the accused. Although learned Counsel for the petitioner has also raised an allied argument on the same lines, by submitting that question of Bail would arise only if a person is first arrested by the investigating officer and then he is brought before the court, and further that if a person himself has appeared before the court; pursuant to the summons issued by the court, then he is not to be sent to the custody, rather, he should be released on bail by asking him to furnish the bonds/sureties under section 88 of Cr.P.C. However, this court does not find any substance even in this allied argument. As observed above, Chapter VI; which contains section 88, is relating only to ensure the presence of a person before the court. If a person is summoned by the court as an accused, then the question of bail to him is to be decided by the court ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be so released if such offence is a cognizable offence and he had been previously convicted of an offence punishable with death, imprisonment for life or imprisonment for seven years or more, or he had been previously convicted on two or more occasions of a cognizable offence punishable with imprisonment for three years or more but not less than seven years. Provided that the Court may direct that a person referred to in clause (i) or clause (ii) be released on bail if such person is under the age of sixteen years or is a woman or is sick or infirm: Provided further that the Court may also direct that a person referred to in clause (ii) be released on bail if it is satisfied that it is just and proper so to do for any other special reason: Provided also that the mere fact that an accused person may be required for being identified by witnesses during investigation shall not be sufficient ground for refusing to grant bail if he is otherwise entitled to be released on bail and gives an undertaking that he shall comply with such directions as may be given by the Court]: [Provided also that no person shall, if the offence alleged to have been committed by him is punisha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ail to the satisfaction of the Magistrate, unless for reasons to be recorded in writing, the Magistrate otherwise directs. (7) If, at any time after the conclusion of the trial of a person accused of a non-bailable offence and before judgment is delivered, the Court is of opinion that there are reasonable grounds for believing that the accused is not guilty of any such offence, it shall release the accused, if he is in custody, on the execution by him of a bond without sureties for his appearance to hear judgment delivered. 439: SPECIAL POWERS OF HIGH COURT OR SESSIONS COURT REGARDING BAIL:- (1) A High Court or Court of Session may direct (a) that any person accused of an offence and in custody be released on bail, and if the offence is of the nature specified in sub- section (3) of Section 437, may impose any condition which it considers necessary for the purposes mentioned in that sub- section. (b) that any condition imposed by a Magistrate when releasing any person on bail be set aside or modified : Provided that the High Court or the Court of Session shall before granting bail to a person who is accused of an offence which is triable exclusivel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce to the provisions and the offences under the New Companies Act 2013. However, before proceeding further, it would be appropriate to have a reference to the relevant provisions of the new Companies Act 2013, which are as reproduced hereinbelow:- 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 into the affairs of the company and to report thereon in such manner as the Central Government may dir ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed under 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 further that the Special Court shall not take cognizance of any offence referred to this sub-section except upon a complaint in writing made by:- (i) the Director, Serious Fraud Investigation Office; or (ii) any officer of the Central Government authorised, by a general or special order in writing in this behalf by that Government. (7) The limitation on granting of bail specified in sub-section (6) is in addition to the limitations under the Code of Criminal Procedure, 1973 (2 of 1974) or any o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g 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, police authority, income-tax authorities having any information or documents in respect of such offence shall provide all such information or documents available with it to the Serious Fraud Investigation Office; (b) The Serious Fraud Investigation Office shall share any information or documents available with it, with any investigating agency, State Government, police authority or income tax authorities, which may be relevant or useful for such investigating agency, State Governmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f Director, Serious Fraud Investigation Office shall be sufficient under clause (b). (5) Notwithstanding anything contained in any other law for the time being in force or in any contract to the contrary, the inspector, being an officer of the Central Government, making an investigation under this Chapter shall have all the powers as are vested in a civil court under the Code of Civil Procedure, 1908 (5 of 1908), while trying a suit in respect of the following matters, namely:- (a) the discovery and production of books of account and other documents, at such place and time as may be specified by such person; (b) summoning and enforcing the attendance of persons and examining them on oath; and (c) inspection of any books, registers and other documents of the company at any place. (6) (i) If any director or officer of the company disobeys the direction issued by the Registrar or the inspector under this section, the director or the officer shall be punishable with imprisonment which may extend to one year and with fine which shall not be less than twenty- five thousand rupees but which may extend to one lakh rupees. (ii) If a director or an officer of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of an investigation into the affairs of the company, an application is made to the competent court in India by the inspector stating that evidence is, or may be, available in a country or place outside India, such court may issue a letter of request to a court or an authority in such country or place, competent to deal with such request, to examine orally, or otherwise, any person, supposed to be acquainted with the facts and circumstances of the case, to record his statement made in the course of such examination and also to require such person or any other person to produce any document or thing, which may be in his possession pertaining to the case, and to forward all the evidence so taken or collected or the authenticated copies thereof or the things so collected to the court in India which had issued such letter of request: Provided that the letter of request shall be transmitted in such manner as the Central Government may specify in this behalf: Provided further that every statement recorded or document or thing received under this sub-section shall be deemed to be the evidence collected during the course of investigation. (12) Upon receipt of a letter of requ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ate or of the managing director or manager, in so far as he considers that the results of his investigation are relevant to the investigation of the affairs of the company for which he is appointed. Section 229: Penalty for furnishing false statement, mutilation, destruction of documents- Where a person who is required to provide an explanation or make a statement during the course of inspection, inquiry or investigation, or an officer or other employee of a company or other body corporate which is also under investigation, (a) destroys, mutilates or falsifies, or conceals or tampers or unauthorisedly removes, or is a party to the destruction, mutilation or falsification or concealment or tampering or unauthorised removal of, documents relating to the property, assets or affairs of the company or the body corporate; (b) makes, or is a party to the making of, a false entry in any document concerning the company or body corporate; or (c) provides an explanation which is false or which he knows to be false, he shall be punishable for fraud in the manner as provided in section 447. SECTION 436. OFFENCES TRIABLE BY SPECIAL COURTS:- (1) Notwithstanding ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ll be passed: Provided further that when at the commencement of, or in the course of, a summary trial, it appears to the Special Court that the nature of the case is such that the sentence of imprisonment for a term exceeding one year may have to be passed or that it is, for any other reason, undesirable to try the case summarily, the Special Court shall, after hearing the parties, record an order to that effect and thereafter recall any witnesses who may have been examined and proceed to hear or rehear the case in accordance with the procedure for the regular trial. Section 438: Application of Code to proceedings before Special Court.- Save as otherwise provided in this Act, the provisions of the Code of Criminal Procedure 1973 (2 of 1974), shall apply to the proceedings before a Special Court and for the purposes of the said provisions, the Special Court shall be deemed to be a Court of Session and the person conducting a prosecution before a Special Court shall be deemed to be a Public Prosecutor. Section 446-A: The Court or the Special Court while deciding the amount of fine or imprisonment under this Act, shall have due regard to the following factors, namel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nto custody on the basis of the same material which the investigation officer had placed on record before the Court. In effect, the argument of the counsel is that the same material cannot be interpreted in two different manners, one by the Investigating Officer and the other by the Trial Court. However, this court does not find any substance in this argument as well. The provision regarding arrest of a person during investigation under the new Companies Act is contained in section 212(8). The perusal of this provision shows that under the new Companies Act, the investigating officer does not have unbridled or as much liberal powers to arrest a person, as are available under Cr.P.C. Under the new Companies Act, 2013; before arresting a person, investigating officer is required to have material in his possession and on the basis of that material, is required to record reasons in writing that a person has been guilty of offence punishable under sections, which are mentioned in section 212 (6) of this Act. Therefore despite having the material in his possession justifying the arrest of a person, the investigating officer under the Companies Act may not choose to arrest a person, so ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cessarily, required to apply its judicial mind before arriving at the conclusion, whether to grant bail to such a person, on merits, or not. Therefore there is a whole lot of difference in the requirements for and actual consideration, quantitatively as well as qualitatively; and in nature and scope thereof, qua the same material, by the investigating officer on the one hand and by the Special Court on the other hand. There can t be any comparison between the two appreciations of the material available on record. The appreciation of the material on record by the court has to be independent of any such appreciation or non-appreciation of the material by the investigating officer. Therefore despite the fact that the investigating officer may have arrested a person during the investigation, the court may grant him the bail during the pendency of the trial; on its appreciation of the evidence filed in the charge-sheet. On the contrary; the trial court may not grant any bail to the accused, on the appreciation of the material placed before it in the form of the charge-sheet, despite the fact that the accused was not arrested by the investigating officer even in the face of the availabil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted by ordinary Inspector of Companies. But 'serious frauds' in relation to affairs of companies have been carved out as separate and distinct category for their investigation and punishment. For investigating serous frauds a separate investigating agency, called 'Serious Fraud Investigation Office' has been provided under Section 211 of the Companies Act. The investigation in serious frauds is to be ordered by Central Government under Section 212 of the Companies Act and is to be carried out by SFIO. This investigation is not to be carried out by ordinary Inspectors of Companies, but is to be carried out by the Director, Additional Director or other Officers of SFIO, authorized by the Director SFIO. However, the person carrying out the investigation under SFIO is also given a deeming faction of being an 'Inspector' for the purpose of powers of Investigating Officer; defined under Section 217 of the Companies Act. Hence all the Investigating Officers, whether investigating at the instance of Central Government under Section 208 or Section 210 or acting at the instance of Tribunal under Section 213 or acting at the instance of SFIO under Section 212, are to b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... covered by Section 217(1). But if the statement of any other person, who is not the employee or Officer etc. of the Company under investigation, is to be recorded on Oath then under provisions of Section 217 (4) (b) the ordinary Inspector of Companies shall be required to obtain prior approval from the Central Government. However, if the Officer of the SFIO, investigating the case under approval granted under Section 212 is to record statement on Oath; of a person who is not connected with the management and control of the affairs of the Company under investigation as employee or officer etc., then as per the proviso to Section 217(4)(b) he shall require approval only from the Director SFIO, instead of the Central Govt. This distinction has been made by the statute keeping in view the specialized function of SFIO and nature of the offences; which SFIO is required to investigate. Reason for prescribing condition of requiring approval only from Director, SFIO is because, originally, the investigation is entrusted by the Central Government under Section 212 to SFIO only and not to any Inspector. The Inspector is specified, further, only by the SFIO. Hence, being delegate of Director, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ubstance in the argument of the learned Counsel for the SFIO that the twin conditions prescribed under section 212(6) of the New Companies Act, 2013 start with negation of bail to the accused and the court could grant bail to such an accused only if the court records a satisfaction qua the accused being not guilty of the alleged offence and also a satisfaction that if released on bail the accused is not likely to commit any similar offence again. Also this court does not find substance in the insistence of the learned counsel for the SFIO that the application of the twin conditions, as prescribed under Section 212(6), are mandatory and have to be applied to all the considerations of grant of bail to the accused facing charge covered by section 447 of the New Companies Act. No doubt the statutory language of section 212 (6) has prescribed the twin conditions to be considered by the court, in case the prosecutor raises his objection to the grant of bail, however a similar language existing in the Prevention of Money Laundering Act, which was para materia to the language of the twin conditions contained in section 212(6) of the new Companies Act, had earlier come-up for consideratio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of the twin conditions might be considered by some other court in some other appropriate proceedings, the state could not be permitted to take the twin conditions as an objection to the grant of the bail to the accused. This court does not find any reason to take a different view now. This judgment of this court was even challenged before the Hon ble Supreme Court in case of SLP(Criminal) Diary No. 42609 of 2018, State of Punjab V/s Ankush Kumar @ Sonu . However, the Hon ble Supreme Court had not found any reason to interfere with that judgment of this court; and SLP was, accordingly, dismissed by the Supreme Court. It would not be appropriate to reproduce only some part of that judgment of this court in a mutilated form, lest the essence of the matter should be lost in the process. Rather to truly appreciate the matter of the operational functionality of the twin conditions; the said judgment has to be read as an organic whole. Since the said judgment is reported one, thus, the reasoning given in that judgment can be taken as a supplement to the decision of the present case as well. Although the learned Counsel for the SFIO has, additionally, referred to the language used ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the offence. Both these provisions are perfectly in tandem with the other provisions of Cr.P.C. relating to the stages and progress of trial, like framing of charge, discharge and acquittal of an accused as per the progress of trial and availability of evidence on record. On the other hand, section 212(6) of the Companies Act requires from the court; at the start of the trial itself; what section 437(7) requires from the court at the end of the trial. Even if, by hook or crook, the court manages to record, while granting bail to an accused, as is required under section 212(6), that the accused is not guilty , then it negates the entire process of further trial of that accused. It goes against framing of the charge by the same court and it may require even discharge of such an accused; because by recording a satisfaction that a person is not guilty the court surpasses the level of satisfaction required for framing charge itself; and goes near to recording the satisfaction required for his discharge. Similarly, holding the twin conditions to be mandatorily followed in all situations for release of an accused on bail; can lead the court to hit against the wall in a given situ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e conditions; like the ones prescribed under section 212(6); to deny even the bail to such an accused? Even if the courts are to stick to such condition; then how much injustice to the accused would be sufficient to off-set or to balance with the rigor of the twin condition? This court finds the answer to these inconvenient questions to be in negative and, therefore, constrained to observe that in humble view of this court; the twin conditions mentioned in section 212(6) are not mandatory in their compliance. Although learned Counsel for the SFIO has submitted that in the case of Nitin Johari (Supra) the Hon ble court has remanded the matter to the Delhi High Court for reconsideration on bail by considering the scope and effect of the twin conditions, as laid down in the section 212(6) of the Companies Act, however, this court finds that; in that case, the Hon ble Supreme Court has also observed that even if conditions prescribed under section 212(6) are not to be followed, still the criteria meant for bail in cases of economic offences was required to be considered by the High Court of Delhi. Hence, the primary reason for remand in that case was that the High Court of Delhi had ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The economic offences having deep-rooted conspiracies and involving huge loss of public funds need to be viewed seriously and considered as grave offences affecting the economy of the country as a whole and thereby posting 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. Therefore this court is under obligation to consider the nature of offence and the material placed on record before the special court, by way of charge-sheet against the petitioner, for consideration of question of granting bail to petitioner. To discredit the concept of economic offences being a class apart; learned Counsel for the petitioner has submitted that concept of economic offences constituting a class apart has not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns of the offence and the fraud, size of the Company, Nature of the Business of the Company and the Injury to the Public Interest; to be the guiding factor to grade the quantum of the punishment to be awarded accused by the Court. Hence there is no doubt that the offences under the Companies Act constitute a class apart and these offences are prescribed by the Companies Act itself as to be treated as the serious economic offences. So far as the seriousness of the offences and the material against the petitioner is concerned, this court finds weight in the arguments of the learned Assistant Solicitor General representing SFIO that there are serious allegations against the petitioner and there is enough material inculpating the petitioner in the offence. As per the allegations the petitioner and his companies have been instrumental in swindling of a huge amount about 17Crores of out of total swindled amount of ₹ 1700 Crors (₹ 4140Crores including interest); which was, allegedly, swindled by the Adarsh Group of Companies through their subsidiaries and co-conspirators. The petitioner or his companies are alleged to have conspired with Vivek Harivyasi to defraud the CUIs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iture take place; (ii) all sales and purchases of goods and services by the company; (iii) the assets and liabilities of the company; and (iv) the items of cost as may be prescribed under section 148 in the case of a company which belongs to any class of companies specified under that section; Books of Account Section 128:- Books of account, etc., to be kept by company:- (1) Every company shall prepare and keep at its registered office books of account and other relevant books and papers and financial statement for every financial year which give a true and fair view of the state of the affairs of the company, including that of its branch office or offices, if any, and explain the transactions effected both at the registered office and its branches and such books shall be kept on accrual basis and according to the double entry system of accounting: Provided that all or any of the books of account aforesaid and other relevant papers may be kept at such other place in India as the Board of Directors may decide and where such a decision is taken, the company shall, within seven days thereof, file with the Registrar a notice in writing giving the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in charge of finance, Chief Financial officer or such other person of the company shall be punishable with imprisonment for a term which may extend to one year or with fine which shall not be less than fifty thousand rupees but which may extend to five lakh rupees or with both. Therefore it is clear that if the money was advanced as loan, even if unsecured, or the money so advanced was given from the money received by his companies on account of receipt of returned loan amounts, then the companies of the petitioner were required to maintain all the deeds, vouchers, writings, documents, minutes, resolutions and registers regarding all the sums of money received and expended by his companies and matters in relation to which the receipts and expenditure had taken place and also qua all the agreements of loans. Not keeping of these records itself is punishable under section 128 above. Similar corresponding records were required to be maintained in the company of Co-accused Vivek Harvyasi. Not only this, all such records, for the past 8 years; were to be kept safe and ready for inspection of the authorities. However, no such records are available or even claimed to have been maintai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itioner and his co-accused Vivek Harivyasi by squandering the money of the CUIs of the Adarsh Group, cannot be easily brushed aside. Although the counsel has much stressed upon the fact that these transactions and income arising there-from is reflected in the bank accounts and in the income tax returns of the companies, however, this is only an argument in futility. The very allegation against the petitioner is that his companies colluded with co-accused Vivek Harivyasi in creating these artificial entries to route and adjust the cash given to him. The cash might have been utilized by the petitioner somewhere else in a different manner or might have been put into the corpus of the funds of his companies by showing the entries of recoveries of amounts from other companies through cobweb of transactions entries, where his companies are showing advancement and recovery of loan to and from the same companies on the same date or in quick succession. Thereafter, the fake transaction to reflect in the tax record has been created. Those transactions/ entries are not under investigation because the affairs of the companies of the petitioner were not under investigation directly. However, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vidence Act, dealing with the same aspect. Otherwise also, to repose confidence in and to provide due protection to the corporate world, unlike the free-hand powers of the police qua arrest, search and seizure, the powers of the investigating officers under the Companies Act are far more controlled and circumscribed by the conditions, restrictions and even the prohibitions under the relevant provisions of the Companies Act. Accordingly, under the Companies Act the investigating officer has also been conferred commensurate sanctity and his work has been conferred more authenticity as compared to that of the ordinary police officers. Therefore, under the provisions of the section 217(4) and section 217(5) Companies Act the investigating Officers has been given the power to record even the statements on oath and to summon person as the civil court does. The statement recorded by an authority having powers to record the statement on oath can never be put at par with the one recorded by an ordinary police officer. Such a statement recorded by the investigating officer under Companies Act, even if it is of admission of certain fact; though could not be taken as sufficient for convictio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ercion is inbuilt in this procedure; is the coercion of law and not of the individual investigating officer. Legal coercion to speak the truth; accompanied by the legal protection against unjust harassment; cannot be branded as unfair process. If at all the individual investigating officers is alleged to have exercised actual coercion as of fact or the pressure in some case, the accused would be at liberty to expose such aspect by getting an opportunity to cross-examine such an investigating officer and by leading other evidence to this effect. Hence this court finds no ground to discard the statement of the petitioner and his co-accused; even for the purpose of consideration of bail. Still further the charge-sheet against the petitioner under section 447 of the Companies Act, which is a serious offence, inviting punishment of imprisonment up to 10 years. Although a Counsel for the petitioner had submitted that the petitioner is not directly involved in embezzlement of the cash-in-hand of the companies of the Adarsh Group, however, the fraud, as defined under the new Companies Act, 2013 does not contemplate any gain by one person and the loss by another person or a company. Part ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... beyond his brief of investigation and should try to find out or even to create some evidence or material to ensure that the accused could be denied bail. Unfortunately, if he succeeds in bringing some such material before the court and the court believes the same for denying bail to the accused, would not the same create a totally uncalled for bias against the accused during the trial? Only a mind which thinks of human thought process to be a compartmentalized aspect and in distinct water-tight segments, instead of being a rational and interdependent continual process, can deny this logical conclusion. Conspiracies and the designed intentions; being those aspects of human psychology which are concealed deep within the grey matter; normally do not have easy external direct material to manifest. Even the Social or the political status of a person; or his economic clout; are no more easy indicators of moral moorings of a person; when it comes to crime, particularly the economic crime. After all, no investigating officer could have any material or anticipation that a Member of Parliament would flee from the country after committing alleged huge economic crime and the country would be ..... X X X X Extracts X X X X X X X X Extracts X X X X
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