TMI Blog2023 (6) TMI 73X X X X Extracts X X X X X X X X Extracts X X X X ..... alse representations in the financials for the Financial Year 2017-18, under Sections 129 and 448 read with 447 of the Companies Act - Falsification of books of accounts for not providing true and fair view of financials of BPSL for the financial year 2009-10 to 2016-17, liable for penal action under Section 129, 448 read with 447 of the Companies Act and Sections 211 and 628 of Companies Act, 1956 - Other fraudulent transactions punishable under Section 447 of the Companies Act - liability under Section 447 of the Companies Act, for misuse and fraudulent abuse of the structure of audit committee. HELD THAT:- This Court has to examine the case of the applicant with respect to the twin conditions contained in Sections 212(6)(i) and (ii) of the Companies Act, which are in addition to conditions for bail under Section 439 of the CrPC As mentioned hereinabove, the foundation of the case of the respondent with respect to the present applicant is that he was the Chief Financial Officer and being a Key Managerial Person had signed the financial statements of the year 2013-14 to 2016-17. The entire case of the respondent is primarily on the basis of aforesaid status of the present appl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o sureties of like amount to the satisfaction of the learned Trial Court/Link Court, further subject to the conditions imposed - bail application allowed. - BAIL APPLN. 3178/2022 - - - Dated:- 1-6-2023 - HON BLE MR. JUSTICE AMIT SHARMA For the Applicant Through: Mr. Arvind K. Nigam, Senior Advocate with Mr. Abhir Datt, Mr. Manu Padalia, Mr. Bhanu Sanoriya and Mr. Rohit Hooda, Advocates. For the Respondent Through: Mr. Ripu Daman Bhardwaj, CGSC, with Mr. Kushagra Kumar, GP, Mr. Nitin Agnihotri, Prosecutor SFIO, Mr. Shriram Mr. Salman, Advocates. JUDGMENT AMIT SHARMA, J. 1. The present application under Section 439 of the Code of Criminal Procedure, 1973 ( CrPC ) read with Section 212(6) of the Companies Act, 2013 seeks grant of regular bail in Complaint Case No. 374/2022 titled Serious Fraud Investigation Office v. Bhushan Airways Services Pvt. Ltd. Ors., registered under Section 120B read with Sections 417 and 420 of Indian Penal Code ( IPC ), Section 36(c) read with Section 447 of the Companies Act, 2013 ( Companies Act ); Sections 129 and 448 read with Section 447, and Sections 211 and 628 of the Companies Act, 1956, pending before the Court of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t a huge amount of funds was diverted to various paper companies and through a myriad of companies, it was infused back to associated companies of the former Chief Managing Director ( CDM ) of BPSL, Sanjay Singal. The investigation revealed siphoning of monies by creating bogus capital advances to paper companies through a web of complex transactions by the controllers of BPSL. In pursuance thereof, the same funds were introduced in the accounts of Adarsh Infotech Pvt. Ltd. (A7) that made payment to BPSL on behalf of Shree Ankleshwar Pvt. Ltd. (A33) for purchase of immovable property from BPSL situated at Flat No. 109 to 112 at International Trade Tower, Nehru Place, New Delhi. The funds so siphoned were also given to Silver Star Commercial Company Pvt. Ltd. (A34) through BSN Enterprise Pvt. Ltd. (A-3), it has been alleged that both the end receiver companies are managed by Sanjay Singal, the former CMD of BPSL. 8. The report alleges that the promoters and controllers of BPSL induced the banks to sanction loans on the basis of false financial statements and bogus infusion of equity that had been bought by diversion of BPSL money and materials to circumvent the BPSL bank accounts ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onduct of Forensic Audit and supplying response/documents on behalf of BPSL to Forensic Auditor and he himself submitted response of BPSL vide its letter dated 2l.06.2017 to SBI in response to clarifications sought on the issues related to Forensic Auditor, wherein he had justified that the capital advances made to parties were in the normal course of business for purchase of raw-material, equipment, and ongoing capex. However, these parties are not genuine and the funds transferred to these parties were siphoned off from the accounts of BPSL for providing accommodation entries to BPSL group entities. 137. He had signed the balance sheet for F.Y 2016-17 knowing that the financials are not reflecting a true and fair view of BPSL He used to attend the meetings of bankers held to discuss the forensic report of E Y along with Sh. Sanjay Singal, Ex-CMD,BPSL and sometimes with sh. Amarjeet Sharma and sh. RP. Goyal also used to attend the meetings with the bankers. 10.1.2. Charge 1, Instance III: Siphoning off funds from BPSL in the form of bogus advances to suppliers. The relevant allegations read as under: Arun Kumar Agrawal 154. Arun Agrawal, CFO had signed the b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ument of LCs by using false documents and other fraudulent activities punishable under Section 36(c) read with 447 of the Companies Act. The relevant allegations read as under: Arun Kumar Agrawal 259.Arun Kumar Agrawal, was CFO of BPSL and was looking after the loan and financing of the company. He was well aware that LCs as mentioned above, were accommodation LCs opened without any underlying transactions only in order to avoid NPA He was also aware that there was no actual delivery of goods against those LCs as they were accommodation LCs. He along with R.K. Rastogi was authorized by committee on Borrowings in the meeting on 26.06.2013 to open the LCs and execute all LC related documents. He confirmed that on the advice of the banks and as per the instructions of Sanjay Singal, MD, BPSL and R. P. Goyal, Director (Commercial), they were undertaking those LC transactions only in order to avoid NPA. 10.3. Charge 3: Cheating upon the banks liable to be punished under Sections 120B, 417 and 420 of the Indian Penal Code, 1860. The relevant allegations read as under: Arun Kumar Agrawal 269. As submitted hereinabove, in order to achieve the said objective t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gations read as under: Arun Kumar Agrawal 271. As submitted hereinabove, during FY 2014-15 to 2016-17, Sanjay Singal (erstwhile CMD of BPSL) and Aarti Singal connived with KMPs/employees namely Amarjeet Sharma (the then Executive Director, BPSL), Alkesh Sharma (the then President AccountsFinance of BPSL), R.K. Gupta, Company Secretary, R.P. Goyal (the then Director Commercial of BPSL), H. C. Verma (the then Director Marketing of BPSL), Arun Kumar Agrawal (the then CFO of BPSL),R.K. Mehra (Statutory Auditor, since deceased) and Entry Operators namely Himanshu Verma Devesh Upadhyaya, Krishan Kumar Khadaria and Vikash Chowdhary to commit the fraud upon banks inducing the banks to sanction loans on the basis of false financial statements and bogus infusion of equity or unsecured loans. In order to achieve the said objective, the funds of BPSL were diverted in form of capital advances as well as advances to suppliers to various paper entities managed and controlled by aforesaid entryoperators and after placing and layering through web of entities, the funds were infused in the Companies including four front companies namely Diyajyoti, Jasmine, Marsh and vision and ultimately ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the course of investigation, it was revealed that the ex-promoter of BPSL, Sanjay Singal with the connivance of R.P. Goyal (the then WTD of BPSL), Amarjeet Sharma (Director Finance of BPSL) and Arun Kumar Agarwal (the then CFO) and statutory auditor of BPSL, R.K. Mehra (Deceased), Partner Mehra Goel Co. for F.Y. 2009-10 to FY 2016-2017 and S.K. Mittal , partner S.K. Mittal co. (2015-16 to 2016-17), knowingly manipulated the books of accounts ledger accounts showing false entries, capital advances as well as advances to suppliers and not issuing invoices of the material dispatch through railways and booking the sales in the books of BPSL and capitalizing the freight charges paid to railways for dispatch of material without raising invoices. The financials of BPSL for F-Y.2009-10 to FY 2016-2017 thus did not reflect true and fair view about the fairs of BPSL. 289. All the signatories of the balance sheet of BPSL were well aware that amounts were fabricated with regard to Capital advances as well as advances to suppliers. The statutory Auditors of BPSL also failed to perform their duties as required under the Companies Act. 290. Therefore, the accused persons have fal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 11: liability under Section 447 of the Companies Act, for misuse and fraudulent abuse of the structure of audit committee. The relevant allegations read as under: 297. During the F.Y. 2016-17, Dinesh Kumar Behal, R.P. Goyal and Anil S. Supanekar were the members of the Audit Committee of BPSL. Investigation established that Anil S Supanekar resigned from the above committee on 30.06.2017. Further, the financial statements of F.Y. 2016-17 was put before the Audit Committee in a meeting held on 06.07.2017. Investigation also established that the said financials which were placed before the Audit Committee purportedly showed the provision for advances of Rs.3079.39 crore. Investigation established that the provision made for parties under the head Capital Advances and Advances to Suppliers, were found to be bogus. 298. The Board had entrusted the Audit Committee with specific duties in terms of Section 177 of companies Act, 2013 with regard to the correctness and completeness of financial results. Investigation established that Sanjay Singal erstwhile CMD of BPSL connived with R.P. Goyal, Ex- Whole Time Director, BPSL for misusing the structure of Audit Committee for perp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... including Praveen Kumar Tavatiya (A-54), Dilip Kumar Nahata (A-62), Praveen Kumar Agarwal, Himansu Verma (A-57), R. K. Kedia (A-58), B.D. Agarwal (A-88), Jagdish Prasad Purohit (A-70) and Vikash Chowdhary (A-56) recorded by respondent. It is pointed out that they have named Alkesh Sharma (A-42) as their immediate contact person from whom they received funds through BPSL or in cash. It is submitted that these entry operators do not name the present applicant in their statements. 12.1.1 It is submitted that the case of the respondent is that the balance sheets and financial reports were prepared at the Chandigarh office of the BPSL under the supervision of Amarjeet Sharma (A-43), whereas the present applicant was working from the Delhi office. The attention of this Court has been drawn to the various statements of Amarjeet Sharma and H.C. Verma recorded in the investigation report. 12.1.2. It is submitted that the present applicant, in his statement categorically states that he did not verify the figures in the balance sheets and relied upon co-accused Amarjeet Sharma (A-43) for their veracity. It was also pointed out that it is the case of the respondent itself that primary ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rd to preparation of financial statements, it is submitted by learned Senior Counsel that such statements and balance sheets were prepared by Amarjeet Sharma (A-43), in his capacity as Executive Director (Finance). This fact has been recorded in the investigation report, on the basis of his own statements. It is argued on behalf of the applicant that the case of the respondent against the applicant concerns only his signing of balance sheets and providing documents to forensic auditors, and the same does not show his knowledge or involvement in relation to their falsity. 12.3. Charge 1, Instance IV: The allegation of the respondent under the present charge is that certain funds siphoned off from BPSL through capital advances and advances to suppliers were used to purchase a property situated at Worli, Mumbai through Assurity Real Estate LLP. 12.3.1. It is submitted that there is no finding against the applicant under the present charge in the investigation report and that the implication of the applicant is on the basis of self-serving statements of Sanjay Singal (A36) and Aarti Singal (A-37), which have ultimately been disbelieved by the respondent. No other employee or pers ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rastogi (A-46) also stated that the banks were aware of the bogus nature of the LCs and they also wanted to avoid the account from becoming an NPA, by regularizing them. However, the respondent has only vaguely referred to the role of bankers in the investigation report and no bank or banker was arraigned as an accused in the present case. Attention of this Court has also been drawn to the Gist of Statements of Bankers in the investigation report, wherein it is stated that R.K. Rastogi used to come to the branches, and the applicant has not been named. 14. Charges 3 4: The investigation report alleges cheating and fraudulent inducement of banks. The learned Senior Counsel for the applicant has submitted that the present charge is an extension of the previous charges and alleges that financial statements and balance sheets of BPSL which did not reflect a true and fair picture of the affairs of the company were used to induce banks to sanction loans to BPSL. It is reiterated that the applicant did not have knowledge of the capital advances and advance to suppliers as being bogus. There is no evidence linking the applicant to the present charge. 14.1. It is argued that the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rned Senior Counsel has submitted that the present charge has not been alleged against the applicant. The allegations under the said charge are that the audit committee was not functioning independently. The audit committee of BPSL consisted of three members, namely, Anil S. Supanekar, R.P. Goyal (A-41) and one Dinesh Kumar Behal. It is alleged that the same was misused and manipulated by Sanjay Singal (A-36) and R.P. Goyal (A-41). It has been submitted that the applicant did not attend any of the board meetings or meetings of the audit committee. Reliance is placed on the statement of Anil S. Supanekar, an audit committee member, who does not name the applicant in any manner. 17.1. It is further submitted that by alleging that the audit committee was not functioning independently and committee members were merely following the instructions of Sanjay Singal and R.P. Goyal, the respondent itself admits that there were no detailed discussions regarding the financials of the company in the audit committee meetings. The same clearly corroborates the contention of the applicant that majority of the activities were directly controlled by Sanjay Singal, and he was not involved in the prep ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion of innocence is a human right. (See Narendra Singh v. State of M.P. [(2004) 10 SCC 699: 2004 SCC (Cri) 1893], SCC para 31.) Article 21 in view of its expansive meaning not only protects life and liberty but also envisages a fair procedure. Liberty of a person should not ordinarily be interfered with unless there exist cogent grounds therefore. Sub-Section (4) of Section 21 must be interpreted keeping in view the aforementioned salutary principles. Giving an opportunity to the Public Prosecutor to oppose an application for release of an accused appears to be reasonable restriction but clause (b) of sub-Section (4) of Section 21 must be given a proper meaning. 36. Does this statute require that before a person is released on bail, the court, albeit prima facie, must come to the conclusion that he is not guilty of such offence? Is it necessary for the court to record such a finding? Would there be any machinery available to the court to ascertain that once the accused is enlarged on bail, he would not commit any offence whatsoever? 37. Such findings are required to be recorded only for the purpose of arriving at an objective finding on the basis of materials on record ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... judgment of acquittal and conviction and an order granting bail much before commencement of trial. Similarly, the court will be required to record a finding as to the possibility of his committing a crime after grant of bail. However, such an offence in futuro must be an offence under the Act and not any other offence. Since it is difficult to predict the future conduct of an accused, the court must necessarily consider this aspect of the matter having regard to the antecedents of the accused, his propensities and the nature and manner in which he is alleged to have committed the offence. 45. It is, furthermore, trite that for the purpose of considering an application for grant of bail, although detailed reasons are not necessary to be assigned, the order granting bail must demonstrate application of mind at least in serious cases as to why the applicant has been granted or denied the privilege of bail. 46. The duty of the court at this stage is not to weigh the evidence meticulously but to arrive at a finding on the basis of broad probabilities. However, while dealing with a special statute like MCOCA having regard to the provisions contained in sub-Section (4) of Secti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... least a prima facie finding in regard to these allegations because they go to the very root of the right of the accused to seek bail. The non-consideration of these vital facts as to the allegations of threat or inducement made to the witnesses by the respondent during the period he was on bail has vitiated the conclusions arrived at by the High Court while granting bail to the respondent. The other ground apart from the ground of incarceration which appealed to the High Court to grant bail was the fact that a large number of witnesses are yet to be examined and there is no likelihood of the trial coming to an end in the near future. As stated hereinabove, this ground on the facts of this case is also not sufficient either individually or coupled with the period of incarceration to release the respondent on bail because of the serious allegations of tampering with the witnesses made against the respondent. 21.2. The Hon'ble Supreme Court, in Vijay Madanlal Choudhary and Ors. v. Union of India Ors., (2022 SCC Online SC 929), after examining the ratio in Ranjitsing Brahmajeetsing Sharma (supra) held as under: 401. We are in agreement with the observation made ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed as grave 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. (emphasis supplied) 403. This Court has been restating this position in several decisions, including Gautam Kundu and Amit Kumar. Thus, while considering the application for bail under Section 45 of the 2002 Act, the Court should keep in mind the abovementioned principles governing the grant of bail. The limitations on granting bail as prescribed under Section 45 of the 2002 Act are in addition to the limitations under the 1973 Code. 404. As aforementioned, similar twin conditions have been provided in several other special legislations validity where ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his backdrop, in the absence of a fair likelihood of the trial being completed within a reasonable period, this Court must be mindful of the need to protect the personal liberty of the accused in the face of a delay in the conclusion of the trial. We are inclined to grant bail on the above ground having regard to the fact that the appellant has been in custody since 28 August 2019. In Nittin Johari (supra), this Court has held: 24. At this juncture, 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 CrPC. Thus, it is necessary to advert to the principles governing the grant of bail under Section 439 of CrPC. Specifically, heed must be paid to the stringent view taken by this Court towards grant of bail with respect of economic offences. 9. While the provisions of Section 212(6) of the Companies Act 2013 must be borne in mind, equally, it is necessary to protect the constitutional right to an expeditious trial in a situation where a large number of accused implicated in a criminal trial would necessarily result in a delay in its conclusion. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eror v. Hutchinson [AIR 1931 All 356, 358 : 32 Cri LJ 1271] it was said that it was very unwise to make an attempt to lay down any particular rules which will bind the High Court, having regard to the fact that the legislature itself left the discretion of the court unfettered. According to the High Court, the variety of cases that may arise from time to time cannot be safely classified and it is dangerous to make an attempt to classify the cases and to say that in particular classes a bail may be granted but not in other classes. It was observed that the principle to be deduced from the various Sections in the Criminal Procedure Code was that grant of bail is the rule and refusal is the exception. An accused person who enjoys freedom is in a much better position to look after his case and to properly defend himself than if he were in custody. As a presumably innocent person he is therefore entitled to freedom and every opportunity look after his own case. A presumably innocent person must have his freedom to enable him to establish his innocence. 21.7. A coordinate bench of this Court in Bindu Rana v. Serious Fraud Investigation Office, 2023 SCC Online Del 276 held as un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... apprehend any tampering with the evidence or influencing of the witnesses. From the perusal of the complaint the role of Applicant does not appear to be graver than other co-accused persons. In fact the same has not even been contended by SFIO during the course of arguments. 63. As reiterated by the Hon'ble Apex Court from time to time, the object of bail is neither punitive nor preventive and deprivation of liberty must be considered as a punishment. Submissions on behalf of the Respondent/SFIO 22. Per Contra, learned Central Government Standing Counsel ( CGSC ) appearing on behalf of the SFIO has opposed the bail based on the charges made in the SFIO complaint filed before the learned Additional Sessions Judge 03/Special judge (Companies Act), Dwarka Court, New Delhi. 23. Learned CGSC advanced detailed arguments pertaining to each charge as under: 23.1. Charge 1, Instance II: It has been submitted that the present charge pertains to commission of fraud with the intent to injure interest of the company and is punishable under Section 447 of the Companies Act. The investigation established that Sanjay Singal (A-36), his wife Aarti Singal (A-37) and his ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e receiving entities to be the same. It was further submitted that these entities were controlled by entry-operators , i.e., dummy persons as directors/proprietors. 23.3. Charge 1, Instance IV: Learned CGSC submitted that the KMPs of BPSL, including the applicant, together with Assurity Real Estate LLP were involved in committing fraud upon BPSL by rotating the funds through circuitous transactions and investing the same for creating an asset in the form of property at Ceejay House, Worli, Mumbai in the name of Assurity Real Estate LLP. With regard to the above, it has been submitted that in case of unsecured loans arranged from Kolkata based companies, Alkesh Sharma, President (Accounts) BPSL Kolkata (A-42) assisted Sanjay Singal (A-36), in managing funds through Kolkata based companies. Since the applicant plays a pivotal role in the BPSL and its group companies, he used to look after equity infusion with Amarjeet Sharma (A-43) and also used to attend the meetings with bankers on behalf of BPSL. He was completely aware of the affairs of the company. Thus, the applicant alongwith other accused persons connived with each other to commit a fraud upon BPSL. 24. Charge 2: Learn ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pproximately Rs. 1023 crores. Therefore, the aforementioned persons falsified the books and accounts of BPSL for financial year 2017-18, by knowingly creating false documents which did not reflect a true and fair picture of the affairs of BPSL. Hence, it was submitted that they are liable for punishment under the abovementioned Sections of the Companies Act. 27. Charge 10: Learned CGSC submitted that the factual matrix and findings of the investigation with respect to the present charge revealed fraudulent transactions punishable under Section 447 of the Companies Act. Charge 10 demonstrates how Sanjay Singal (A-36) and the applicant, with others committed fraud upon BPSL, by way of handing over cash to Narendra Kumar Jain (A-71) who placed and layered it thorough a web of entities controlled and managed by him. Thereafter, the same was rotated in the group companies of BPSL namely Vintage Steel Ltd. and Olympian Finvest Pvt. Ltd. It has been submitted though the applicant denies the presence of any specific findings against him, his role of being responsible for handling financial matters of BPSL and raising funds from banks has to be considered. He was instrumental in obtainin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t, are mandatory in nature and as such, in the facts and circumstances pertaining of the present case, the applicant is not entitled to be released on bail. 30. It is further submitted that the legislative intent in prescribing a higher threshold is amply clear from a bare perusal of the provisions of Section 212(6) of the Companies Act, which mandates that the twin conditions therein be satisfied before a person accused for an offence under Section 447 of the Companies Act can be released on bail. It is also pertinent to note that Section 212(7) of the Companies Act, provides that the limitation on granting bail, under Section 212(6) is in addition to the limitation in the CrPC, or any other law for the time being in force, for granting the bail. 31. Attention of this Court was drawn to the fact that vide a common judgment dated 03.11.2022 in BAIL APPLN. 2707/2022 and BAIL APPLN. 2709/2022, a coordinate bench of this Court dismissed the bail applications filed on behalf of co-accused Amarjeet Sharma Alkesh Sharma. 32. Since the complaint, along with the investigation report and annexures were filed within the stipulated time frame of 60 days from the date of first judic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... plicant was a key personnel in the audit committee meetings is misplaced, as in the attendance registers of the board meetings and that of the meetings of the audit committee, the name of the applicant does not find mention. Pertinently, the first two statements of Dinesh Kumar Behal do not name the applicant. It is only after the arrest of the applicant on 21.03.2022 that improved statements of Dinesh Kumar Behal were recorded. It is argued that in any case, Dinesh Kumar Behal was the chairman of the audit committee and he ought to have been made an accused. His statements are not reliable and are currently of an unpardoned accomplice. Reliance of the respondent on the minutes of board meetings and minutes of audit committee meetings to show that the applicant attended such meetings is misplaced. The attendance registers are much more reliable as they were signed by the attendees, as opposed to the minutes of the meetings which only contained names without signatures. Analysis and Findings 35. Heard the learned counsel appearing on behalf of the parties and perused the record. 36. For the purpose of present bail application, to bring home the allegations with respect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent that the said advances were given to various entities through entry operators. It is also alleged that four group companies of BPSL being accused nos. 14, 17, 19 and 30, referred to as four front companies , received accommodation entries from several entry operators and that Sanjay Singal, Aarti Singal alongwith their children Aniket Singal (A-38) and Priyanka Miglani (A-39) were directors/share holders in the four companies. 37.3. Under Charge I instance IV, it is alleged that funds were siphoned from BPSL through purchase of property at Bombay through Assurity Real Estate LLP. It is alleged that by using mode of capital advances or advances to suppliers, cash generated through sale or theft of goods and by rotating those funds through those companies in circuitous transaction an asset was created in form of Ceejay House, Worli, Mumbai in the name of said Assurity Real Estate LLP. It is alleged that the entry operators connived with the present applicant for the said purpose. 38. A perusal of the record with respect to the aforesaid allegations made under Charge 1 Instance II with regard to the present applicant reflects that none of the entry operators through whom th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r entry operator being Dilip Nahata (A62) stated that Alkesh Sharma (A-42) was contact person for receiving funds and cash and providing accommodation entries to entities of BPSL. It is the case of the respondent that financial statements and balance sheets were prepared by Amarjeet Sharma (A-43) in his capacity as Executive Director Finance. 38. 4. Charge 1 Instance IV relates to siphoning of funds from BPSL through purchase of a property at Mumbai through Assurity Real Estate LLP. A perusal of the investigation report with respect to the aforesaid charge reflects that there is no finding against the present applicant. For the purpose of this charge the fact that none of the entry operators name the present applicant would also be relevant. Statement of entry operators named Dilip Nahata, Praveen Kumar Tavatiya, R.K. Kedia reflect that they had provided loan to the said firm in the form of accommodation entries on the request of Alkesh Sharma (A-42) and Sanjay Singal. However, the aforesaid company Assurity Real Estate LLP (A-35) was a partnership firm incorporated in the name of Priyanka Miglani (A-39) as a Partner. As stated above, the said Priyanka Miglani (A-39) was not arr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sheets and fraudulent reports of the BPSL. It is alleged that the present applicant being the CFO was aware of fact that the SAP/ERP data did not crash rather new client code was created and data in the old client was deleted, but the applicant signed the financial report for the year 2016-2017 mentioning the crash of ERP data. It is alleged that the ERP data was manipulated only to conceal the siphoning of stock amounting to Rs. 1023 crores. 41.1. The attention of this Court has been drawn to the fact that the case of respondent was that the said balance sheets and financial reports were prepared at Chandigarh office and the applicant was working out of Delhi office. It was also pointed out that under charge 6 in the investigation report related to destruction of SAP/ERP Data 2017, in order to manipulate the records of the company, but the present applicant has not been named in the said charge as an accused. 42. Charge 10 relates to commission of fraud upon BPSL wherein it is alleged that cash was handed over to one entry operator namely Narender Kumar Jain (A-71), who then placed and layered the same through web of entities controlled and managed by him and subsequently ro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er, after the arrest of the present applicant, the statements of aforesaid Dinesh Kumar Behal have been recorded, who in response to pointed question by the respondent has named the present applicant. It is further pointed out that Dinesh Kumar Behal, who was the chairman of the audit committee has not been made an accused and therefore statement made by him is a self serving one and cannot be relied upon. 44. Perusal of the record further reveals that most of the co-accused persons in the present complain are on bail or were not arrested. It has been pointed out that Sanjay Singal (A-46), H.C. Verma (A-40) and R.P. Goel (A-41) have not been arrested by respondent in pursuance to interim protection granted to them by the Hon ble Supreme Court vide order dated 17.02.2020, passed in Writ Petition (CRL.) 36/2020. Similarly, it has been pointed out that Aarti Singal (A-37) who was a direct beneficiary of the alleged siphoning of funds was released on bail by learned Special Judge. On the same lines, it has been argued that Aniket Singal (A-38), who was also a direct beneficiary has not been arrested during trial and was granted anticipatory by learned Special Judge. The other benefi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g with the investigation, not fleeing from justice : even in serious offences like murder, kidnapping, rape, etc. On the other hand, the court in these cases under such special Acts, have to address itself principally on two facts: likely guilt of the accused and the likelihood of them not committing any offence upon release. This court has generally upheld such conditions on the ground that liberty of such citizens have to - in cases when accused of offences enacted under special laws - be balanced against the public interest. 20. A plain and literal interpretation of the conditions under Section 37 (i.e., that Court should be satisfied that the accused is not guilty and would not commit any offence) would effectively exclude grant of bail altogether, resulting in punitive detention and unsanctioned preventive detention as well. Therefore, the only manner in which such special conditions as enacted under Section 37 can be considered within constitutional parameters is where the court is reasonably satisfied on a prima facie look at the material on record (whenever the bail application is made) that the accused is not guilty. Any other interpretation, would result in complete ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dividual is accused of committing an offence as mentioned in the said Section, viz. Section 447 of the 2013 Act. However, what is stated in a complaint or the FIR are only allegations, which may or may not be founded on evidence or material. To borrow the words of the Supreme Court in Noor Aga (supra), superficially a case may have an ugly look and thereby, prima facie, shaking the conscience of any court but it is well settled that suspicion, however high it may be, can under no circumstances, be held to be a substitute for legal evidence. Unlike cases of preventive detention, this is not a jurisdiction of suspicion. Indeed, the more severe the punishment, the greater must be the care taken to see that all safeguards in a statute are scrupulously followed.( State of Punjab v. Baldev Singh, (1999) 6 SCC 172 ) 30. Therefore, to assess whether the State has been able to prima-facie make-out a case against an accused and for the additional twin conditions to apply, there must be (i) a specific allegation against the accused; (ii) which allegation must find place in the complaint/FIR; (iii) there must be material in support of such allegation; and (iv) the combined reading of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ficer and being a Key Managerial Person had signed the financial statements of the year 2013-14 to 2016-17. The entire case of the respondent is primarily on the basis of aforesaid status of the present applicant. The material on record, by way of statements made by the entry operators, co-accused, employees of the companies, documents including the attendance registers of the board meetings as well as meetings of audit committee, as noted in the preceding paragraphs, prima facie indicates to the contrary. Reliance placed by the respondent on the statement made by Dinesh Kumar Behal to show that the present applicant attended the meetings is contradictory to their own documents which are contemporaneous in nature, which shows that the present applicant never attended the board meetings as well as audit committee. The veracity of the statement made by aforesaid Dinesh Kumar Behal will be tested at the time of his examination. 49. It is also pertinent to note that the name of the applicant on the minutes of meeting sans his signature prima facie vindicates his stand that he was namesake CFO. In this context, it is pertinent to note that the case of the respondent as noted hereinab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tions 212(6)(i) and (ii) of the Companies Act, are satisfied. 52. In view of the facts and circumstances of the present case, the application is allowed and the applicant is admitted to bail upon furnishing a personal bond in the sum of Rs. 5,00,000/- alongwith two sureties of like amount to the satisfaction of the learned Trial Court/Link Court, further subject to the following conditions: i. In case of any change of address, the applicant is directed to inform the same to the learned Trial Court/Investigating Officer, with a prior notice of seven days. ii. The applicant shall not leave India without the prior permission of the learned Trial Court. iii. The applicant is directed to give all his mobile numbers to the Investigating Officer and keep them operational at all times. iv. The applicant shall not, directly or indirectly, tamper with evidence or try to influence the witness in any manner. v. In case it is established that the applicant tried to tamper with the evidence, the bail granted to the applicant shall stand cancelled forthwith . 53. Needless to state, nothing mentioned hereinabove is an opinion on the merits of the case pending before ..... X X X X Extracts X X X X X X X X Extracts X X X X
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