TMI Blog2021 (10) TMI 1069X X X X Extracts X X X X X X X X Extracts X X X X ..... gue belief that he will tamper with evidence cannot be a ground to deprive a person of his liberty. Gravity of the offence cannot be the sole ground to deny bail to the accused. The investigation against the accused has been completed and the charge sheet has been filed as on 11.11.2019. The further investigation that is being carried out is with respect to other authorities and the accused has no role to play therein. The evidences are documentary in nature and all the relevant documents are within the custody of the prosecution. Therefore, there is no likelihood of tampering of evidence. This court is inclined to grant bail, subject to the conditions imposed - application allowed. - BAIL APPLN. 1947/2021 & CRL.M.As. 10935/2021 & 10937/2021 - - - Dated:- 25-10-2021 - HON'BLE MR. JUSTICE SUBRAMONIUM PRASAD Petitioner Through : Mr. Dayan Krishnan, Senior Advocate with Mr. Sunil Jain, Mr. Rahul Goel, Mr. M.P. Srivignesh, Mr. Nitish Sharma and Mr. Sajeevi Sheshadri, Advocates Respondent Through : Ms. Kusum Dhalla, APP for the State Mr. Vijay Kumar Aggarwal, Mr. Mudit Jain, Mr. Hardik Sharma, Mr. Parth Parashar and Mr. Shekhar Pathak and Ms. Barkha Rastogi, Advo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ber agreement dated 14.11.2017 entered into between IL FS and AFSPL, the investment was then transferred to IL FS as collateral. Thereafter, the securities were offered to NSCCL (National Securities Clearing Corporation Limited) as collateral. e) However, the director of AFSPL through his email dated 31.01.2019 again confirmed the complainant s holding in the above DMAT accounts and regretted delay in the processing of redemption request. It assured that the same would be processed by 06.02.2019. As per the allegations, no such redemptions were made as on that date or any time afterwards. f) The accused has been arrested as on 16.08.2019 and the chargesheet has been filed as on 11.11.2019. 3. Mr. Dayan Krishnan, learned Senior Counsel appearing for the petitioner, contends that the petitioner herein is the managing director of AFSPL, which is a depository participant, that facilitates derivative trading on the NSDL platform. The mutual fund units were given to the petitioner herein by the complainant in the capacity of a depository participant. 4. Mr. Krishnan contends that the mutual fund units in question were voluntarily transferred by OCL and DCEL to three comp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cused does not have any possession or control over the said mutual fund units. 8. The learned Senior Counsel further contends that bail is the rule and jail is the exception. He states that if the petitioner is made to suffer custody in the present case which is pending trial, then the same shall amount to inflicting punishment, which defeats the presumption of innocence. To support his contention, the learned Senior Counsel placed reliance on the judgment of Dataram Singh v. Union of India (2018) 3 SCC 22. The learned Senior Counsel, relying on Sushila Agarwal v. State (NCT) of Delhi, (2020) 5 SCC 1, further contends that for the purpose of grant of bail, economic offences do not constitute a separate class of offences. 9. The learned Senior Counsel also contends that in terms of Aditya Kumar Bhandari v. SFIO, 2020 SCC Online Del 588, there is no prospect of this trial proceeding further on account of the ongoing covid-19 pandemic. Therefore, if the bail application is dismissed, the accused will remain in custody, unnecessarily, for a prolonged period of time which shall curtail his right to personal liberty under Article 21 of the Constitution of India. 10. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as first transferred to the accounts of Money Mishra Financial Services, Money Mishra Overseas Private Ltd. and the petitioner herein and from there it was transferred to IL FS, as collateral. The learned counsel for the complainant, relying on the FSL report dated 06.09.2019, contends that all sixty-six-delivery instruction slips, through which transactions were initiated from the said accounts, were alleged to be forged and fabricated. He further submits that as per the investigation, securities which were transferred on 13.07.2017 and 17.07.2017 (Instruction Nos. 28818-19 and 28924-26 as reflected in the ledger account of the NSDL) were transferred without any delivery instruction slips. Therefore, there was no authorization on behalf of the complainant for any of the above transfer of securities. 14. The learned counsel for the complainant contends that for the sole purpose of his personal gain, the petitioner herein transferred the securities to its own accounts and those of its related entities and then subsequently offered the same as collateral to IL FS, without any mandate, consent and knowledge of the complainant. He further submits that the petitioner received a premi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... contends that the petitioner sent forged and fabricated client master list to the complainant and forged holding statements dated 31.03.2017 and 01.07.2017 with the purpose to give a false picture that correct details of the complainant vide KYC and Account opening forms were uploaded to NSDL s server. He further submits that the petitioner also sent forged and fabricated holding statements of the Complainant s Demat Account in order to give a false assurance to the complainant that its securities are intact. He states that the attached holding statements of the Demat accounts of OCL and DCEL as on 31.12.2018 showed that the mutual funds were intact, however, the holding statement collected from NSDL showed that there were no mutual fund units available in the Demat Accounts of OCL and DCEL. 18. The learned counsel for the complainant also brought to the attention of the court that on 08.02.2019 SEBI was apprised of the matter and vide order dated 02.07.2021, it confirmed the allegations against the accused and held that the accused caused fraudulent and unfair treatment to DECL and OCL. He states that the SEBI restrained AFSPL and the petitioner herein from accessing the secur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he learned counsel for the complainant contends that as mentioned in the charge sheet, in light of serious complications in the matter and the involvement of various authorities, further investigation is still going on to unearth any criminality in the fraudulent transfer of the Mutual Fund units in question. During this crucial stage, if the petitioner is released on bail, then he will attempt to tamper evidence, influence the witnesses and is likely to abscond, thereby, will hinder the entire proceedings. 23. The learned counsel for the complainant contends that the bail application for the petitioner must be dismissed since the petitioner is involved in grave economic offences, for which the punishment is severe, particularly, for Section 409 and 467 of the Indian Penal Code, 1860, which prescribe a period of imprisonment which may extend to life. In order to support his contention, the counsel placed reliance on Religare Finvest Ltd. v. State of NCT Delhi, Crl (MC) 796/2021 decided on 14.06.2021 . 24. The learned counsel relying on YS Jagan Mohan Reddy v. CBI (2013) 7 SCC 439, State of Gujarat v. Mohanla Jiamalji Porwal, (1987) 2 SCC 364, Nimmagadda Prasad v. CBI, (2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... custodian of the complainant s securities valued at ₹ 344.07 Crores. However, the petitioner committed gross breach of trust by fraudulently transferring the said securities to his own accounts and accounts of his own companies in order to use them for his personal gain. This was done on the basis of forged and fabricated documents which not only kept the complainants in the dark but also made it seem as if the transactions, which were carried out by the accused, were authorized by the complainant. By utilizing the securities of the complainant as their own, the petitioner, along with the other co-accused, gained ₹ 380 Crores and caused an illegal and wrongful loss to the petitioner to the tune of ₹ 344.07 Crores. 29. Charge-sheet has been filed. It is stated in the charge-sheet that the petitioner is the Director of AFSPL and he is responsible for day to day affairs of the company. It is stated that the petitioner induced the complainant to open Demat accounts of OCL and DCEL with his company and further induced them to transfer their Mutual Fund units in their Demat accounts. It is stated that the petitioner manipulated the credentials namely, correspondence ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly stamped and signed by NSDL, which was provided by AFSPL to DCEL and OCL at their request, was non-genuine and misleading In nature and did not reflect the true status of the holdings In the accounts of DCEL and OCL. 85.5. This conduct of AFSPL in actively concealing the status of the holdings of DCEL and OCL can also be seen In its email dated November 09, 2018, wherein It has confirmed that the holdings of DCEL and OCL are Intact with It, whereas actually these accounts had nil holdings as on that date and had been posted as collateral with the clearing member, ISSL. 85.6. Just before quarter end 31/12/2017 and financial year end 31/03/2018, AFSPL ensured that It fraudulently transferred these MF units to the accounts of DCEL and OCL. As explained above, the reason could be to escape scrutiny of independent auditor verification when finalizing financial statements. It is seen that immediately after the quarter and financial year ends, the MF units are again moved out of the accounts. It is noted that without prejudice to the above reason, the conduct of transfer of MF units was to only conceal the true state of affairs i.e., that the MF units were encumbered and that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Section 15HB of the SEBI Act, 1992 ₹ 50,00,000/- (Rs. Fifty lakhs only) ₹ 50,00,000/-(Rs. Fifty lakhs only) ₹ 2,00,000/-(Rs. Two lakhsonly) ₹ 1,00,000/- (Rs. One lakh only) Section 19G of the Depositories Act, 1996 ₹ 50,00,000/- (Rs. Fifty lakhs only) ₹ 50,00,000/-(Rs. Fifty lakhs only) ₹ 2,00,000/- (Rs. Two lakhs only) ₹ 1,00,000/-(Rs. One lakh only) Total ₹ 3,00,00,000/-(Rs. Three Crores only) ₹ 3,00,00,000/-(Rs. Three Crores only) ₹ 14,00,000/(Rs. Fourteen lakhs only) ₹ 7,00,000/- (Rs. Seven lakhs only) 151. Needless to say that in view of the prohibition on sale of securities, during the period of restraint, the existing holding. Including units of mutual funds, of ail the Noticees shall remain frozen. 152. The penalty shall be paid by the Noticees within a period of forty-five (45) days, from the date ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ie or reasonable ground to believe that the accused had committed the offence; ii. nature and gravity of the accusation; iii. severity of the punishment in the event of conviction; iv. Danger of the accused absconding or fleeting, if released on bail; v. character, behavior, means, position and standing of the accused; vi. Likelihood of the offence being repeated; vii. Reasonable apprehension of the witnesses being influenced; and viii. Danger, of course, of justice being thwarted by grant of bail. 34. Undoubtedly, the petitioner is accused of an economic offence of about ₹ 344 Crores. The charge-sheet has been filed on 11.11.2019. The charge-sheet details out the role of the petitioner. The SEBI appointed a Forensic Auditor to look into the aspect. Its report has been submitted and the SEBI has held the petitioner guilty of various acts which are in violation of various statutes of the SEBI Act. The SEBI has also restrained the petitioner and his company, AFSPL, from accessing the securities market and from buying, selling or dealing in securities, either directly or indirectly, in any manner whatsoever, for a period of seven (07) ye ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the pointing finger of accusation against the appellants is the seriousness of the charge . The offences alleged are economic offences which have resulted in loss to the State exchequer. Though, they contend that there is a possibility of the appellants tampering with the witnesses, they have not placed any material in support of the allegation. In our view, seriousness of the charge is, no doubt, one of the relevant considerations while considering bail applications but that is not the only test or the factor : the other factor that also requires to be taken note of is the punishment that could be imposed after trial and conviction, both under the Penal Code and the Prevention of Corruption Act. Otherwise, if the former is the only test, we would not be balancing the constitutional rights but rather recalibrating the scales of justice . 25. The provisions of CrPC confer discretionary jurisdiction on criminal courts to grant bail to the accused pending trial or in appeal against convictions; since the jurisdiction is discretionary, it has to be exercised with great care and caution by balancing the valuable right of liberty of an individual and the interest of the soc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any opinion on the merits of the allegations made by the parties against each other at this stage. 39. The order of the Supreme Court has been passed after the dismissal of the bail application of V. Hansprakash in BAIL APPLN No.1097/2020 on 24.11.2020. By its order dated 16.03.2021 after being made aware filing of the charge sheet, the Apex Court has held that mere filing of the charge sheet does not constitute material change in circumstances showing mala fide on the part of the IL FS. The same logic would also apply to the AFSPL. In addition to this, SEBI vide order dated 02.07.2021 has restrained the accused from accessing and dealing in the securities market and associating with entities or registered intermediaries therein, for a period of seven years from the date of the order. This order has also been passed after the dismissal of the BAIL APPLN No.1097/2020 of V. Hansprakash. There is, therefore, change in circumstances after the dismissal of BAIL APPLN 1097/2020 inasmuch as the securities have been handed over to the complainant and SEBI has restrained the petitioner from accessing securities market and the petitioner cannot commit the same offence again. 40. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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