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TMI Blog2023 (7) TMI 1187X X X X Extracts X X X X X X X X Extracts X X X X ..... s issued on 02.06.2022; consequent whereupon the respondent/Serious Fraud Investigation Office ("SFIO" for short) has filed reply/counter-affidavit dated 11.11.2022 opposing grant of bail. 4. Nominal Roll dated 25.02.2023 has been received from the Jail Superintendent, which shows that the petitioner has been in custody for 6 months and 28 days as of that date, and that he has been released on bail in two other matters, and that his jail conduct is 'satisfactory'. Brief Overview 5. Briefly, the petitioner was summonsed in the matter vide summoning order dated 07.03.2022 made by the learned Special Judge (Companies Act), Dwarka Courts (SW), taking cognisance of offences inter-alia under section 447 of the Companies Act, 2013 ("Companies Act" for short), the essential imputation against the petitioner being that he was director of M/s Parul Polymers Pvt Ltd. (accused No. 1) when the offences are alleged to have been committed. 6. Accused No. 1 company was engaged principally in the trade of plastic granules, and the gravamen of the offences alleged inter-alia under section 447 of the Companies Act are that the company indulged in cash sales, in fictitious sale of food grain and i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in compliance of summons issued to him by the learned Special Judge, the petitioner appeared before the court on 25.05.2022, the bail application filed by him was rejected by the learned Special Judge there-and-then; he was "taken into custody and sent to J/C" on the spot; and the petitioner has been in prison ever-since. As of today therefore, the petitioner has spent about 14 months in jail as an under-trial. 13. It is further submitted that no material has been cited by the SFIO to support the contention that the petitioner is either a flight-risk or that he may influence witnesses or destroy evidence or commit any offence, if he is enlarged on bail. It is pointed-out that this is very relevant, especially since there is no allegation against the petitioner having done so even during the period of investigation which spanned almost 4 years. 14. On the merits of the case, counsel submits that there is no specific role attributed to the petitioner either in the final Investigation Report dated 16.03.2019 or in the summoning order. It is stated that the final investigation report proceeds essentially on the petitioner's statement recorded under oath; and it is alleged that the pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the twin-conditions as specified in section 212(6)(ii) of the Companies Act, since on the date when the petitioner appeared before the learned Special Judge, he was not under incarceration. It is also submitted that at the time when he appeared before the learned Special Judge, the SFIO had not even sought that the petitioner be detained in judicial custody. It is therefore argued, that the order of the learned Special Judge denying bail to the petitioner by applying the twin-conditions, is bad in law. SFIO's Contentions 20. On the other hand, opposing the grant of bail, Mr. Shankar, learned CGSC has urged that since the petitioner is the main accused in the case; that charges are yet to be framed against the petitioner; and evidence is yet to be recorded, there is reasonable apprehension that if released on bail, the petitioner would attempt to intimidate or influence witnesses, especially since the witnesses are either his employees or his close associates. It is also alleged that the petitioner was the 'mastermind' on whose directions the other co-accused worked; and therefore, the petitioner cannot seek bail on grounds of parity. 21. The learned CGSC also submits that a str ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... us Fraud Investigation Office vs. Nittin Johari & Anr. (2019) 9 SCC 165, Prahlad Singh Bhati vs. NCT. Delhi & Anr. (2001) 4 SCC 280, Gudikanti Narashimhulu & Ors. vs. Public Prosecutor, High Court of Andhra Pradesh (1978) 1 SCC 240 at para 7 and Rohit Tandon vs. Directorate of Enforcement (2018) 11 SCC 46 at para 21. Discussion & Conclusions 25. To begin with, a brief recap of the principles for grant of bail as enunciated by the Supreme Court, including in the context of the stringent, additional twin-conditions imposed under section 212(6) of the Companies Act, as relevant for the present petition, would be useful : 25.1. In Moti Ram & Ors. vs. State of Madhya Pradesh (1978) 4 SCC 47 at para 14. the Supreme Court has observed that the consequences of pre-trial detention are grave, since they subject an undertrial to psychological and physical deprivations of jail life, which are usually even more onerous than those imposed on convicts. It has further been observed that an undertrial in custody is prevented from contributing to the preparation of his defence at the trial, which burden then falls heavily upon innocent family members. 25.2. Furthermore, in a matter concerning a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 48 at para 35(ii) it has been observed that equally it cannot be overlooked that theoretically every undertrial is a flight-risk if granted bail. 25.8. It may also be noticed that though the gravity of an offence is certainly one of the considerations for deciding bail, in P. Chidambaram vs. Directorate of Enforcement 2020) 13 SCC 791 at para 12, the Supreme Court has also observed that the gravity of the offence will beget the length of the sentence, meaning thereby that merely because an offence alleged is serious, does not mean that the court should necessarily deny bail and pre-emptively make an undertrial suffer a sentence, even though such sentence may eventually be awarded to him if he is convicted. 25.9. Most pertinently, interpreting the additional conditions imposed by section 37 of the NDPS Act for grant of bail, which conditions are worded exactly as those in section 212(6) of the Companies Act, in its recent decision in Mohd. Muslim alias Hussain vs. State (NCT of Delhi) 2023 SCC OnLine SC 352, the Supreme Court has said this : "19. The conditions which courts have to be cognizant of are that there are reasonable grounds for believing that the accused is "not guilt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , would result in complete denial of the bail to a person accused of offences such as those enacted under Section 37 of the NDPS Act. "21. The standard to be considered therefore, is one, where the court would look at the material in a broad manner, and reasonably see whether the accused's guilt may be proved. The judgments of this court have, therefore, emphasized that the satisfaction which courts are expected to record, i.e., that the accused may not be guilty, is only prima facie, based on a reasonable reading, which does not call for meticulous examination of the materials collected during investigation (as held in Union of India v. Rattan Malik (2009) 2 SCC 624). Grant of bail on ground of undue delay in trial, cannot be said to be fettered by Section 37 of the Act, given the imperative of Section 436A which is applicable to offences under the NDPS Act too (ref. Satender Kumar Antil supra). Having regard to these factors the court is of the opinion that in the facts of this case, the appellant deserves to be enlarged on bail." (emphasis supplied) 25.10. In fact in Mohd Muslim (supra) the Supreme Court also cites certain observations of the Kerala High Court that brin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e has been obtained to raise a suspicion that the accused may have committed an offence, and it appears likely that further evidence may be obtained by a remand, this is a reasonable cause for a remand. Explanation 2.-The terms on which an adjournment or postponement may be granted include, in appropriate cases, the payment of costs by the prosecution or the accused." (emphasis supplied) 25.12. In State through CBI vs. Dawood Ibrahim Kaskar & Ors. (2000) 10 SCC 438, the following observations of the Supreme Court must also be noted : "11. There cannot be any manner of doubt that the remand and the custody referred to in the first proviso to the above sub-section are different from detention in custody under Section 167. While remand under the former relates to a stage after cognizance and can only be to judicial custody, detention under the latter relates to the stage of investigation and can initially be either in police custody or judicial custody. Since, however, even after cognizance is taken of an offence the police has a power to investigate into it further, which can be exercised only in accordance with Chapter XII, we see no reason whatsoever why the provisions of Se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a duly authorised officer"." (emphasis supplied) 26. Another important decision of the Supreme Court which enunciates the distinction between custody, detention and arrest is also pertinent for purposes of this matter. The following relevant para of Sundeep Kumar Bafna vs. State of Maharashtra & Anr. (2014) 16 SCC 623 may be referred to for this purpose : "16. It appears to us from the above analysis that custody, detention and arrest are sequentially cognate concepts. On the occurrence of a crime, the police is likely to carry out the investigative interrogation of a person, in the course of which the liberty of that individual is not impaired, suspects are then preferred by the police to undergo custodial interrogation during which their liberty is impeded and encroached upon. If grave suspicion against a suspect emerges, he may be detained in which event his liberty is seriously impaired. Where the investigative agency is of the opinion that the detainee or person in custody is guilty of the commission of a crime, he is charged of it and thereupon arrested. In Roshan Beevi [Roshan Beevi v. State of T.N., 1984 Cri LJ 134 : (1984) 15 ELT 289 (Mad)], the Full Bench of the High ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed to be in judicial custody when he surrenders before the court and submits to its directions.'" (emphasis supplied) If the third sentence of para 48 is discordant to Niranjan Singh [Niranjan Singh v. Prabhakar Rajaram Kharote, (1980) 2 SCC 559 : 1980 SCC (Cri) 508], the view of the coordinate Bench of earlier vintage must prevail, and this discipline demands and constrains us also to adhere to Niranjan Singh [Niranjan Singh v. Prabhakar Rajaram Kharote, (1980) 2 SCC 559 : 1980 SCC (Cri) 508]; ergo, we reiterate that a person is in custody no sooner he surrenders before the police or before the appropriate court. This enunciation of the law is also available in three decisions in which Arijit Pasayat, J. spoke for the two-Judge Benches, namely, (a) Nirmal Jeet Kaur v. State of M.P. [Nirmal Jeet Kaur v. State of M.P., (2004) 7 SCC 558 : 2004 SCC (Cri) 1989], (b) Sunita Devi v. State of Bihar [Sunita Devi v. State of Bihar, (2005) 1 SCC 608 : 2005 SCC (Cri) 435], and (c) Adri Dharan Das v. State of W.B. [Adri Dharan Das v. State of W.B., (2005) 4 SCC 303 : 2005 SCC (Cri) 933], where the co-equal Bench has opined that since an accused has to be present in court on the moving of a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t from his power to do so. Arrest and detention in police lock-up of a person can cause incalculable harm to the reputation and self-esteem of a person. No arrest can be made in a routine manner on a mere allegation of commission of an offence made against a person. It would be prudent for a police officer in the interest of protection of the constitutional rights of a citizen and perhaps in his own interest that no arrest should be made without a reasonable satisfaction reached after some investigation as to the genuineness and bona fides of a complaint and a reasonable belief both as to the person's complicity and even so as to the need to effect arrest. Denying a person of his liberty is a serious matter. The recommendations of the Police Commission merely reflect the constitutional concomitants of the fundamental right to personal liberty and freedom. A person is not liable to arrest merely on the suspicion of complicity in an offence. There must be some reasonable justification in the opinion of the officer effecting the arrest that such arrest is necessary and justified. Except in heinous offences, an arrest must be avoided if a police officer issues notice to person to a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... son why at this stage he must be arrested before the charge-sheet is taken on record. We may note that the learned counsel for the appellant has already stated before us that on summons being issued the appellant will put the appearance before the trial court." (emphasis supplied) 26.2. The observations of the Supreme Court in Manubhai Ratilal Patel vs. State of Gujarat & Ors. (2013) 1 SCC 314 on the necessity of application of mind before remanding an accused are also extremely relevant : "23. Keeping in view the aforesaid concepts with regard to the writ of habeas corpus, especially pertaining to an order passed by the learned Magistrate at the time of production of the accused, it is necessary to advert to the schematic postulates under the Code relating to remand. There are two provisions in the Code which provide for remand i.e. Sections 167 and 309. The Magistrate has the authority under Section 167(2) of the Code to direct for detention of the accused in such custody i.e. police or judicial, if he thinks that further detention is necessary. "24. The act of directing remand of an accused is fundamentally a judicial function. The Magistrate does not act in executive capa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the SFIO has the power to arrest an accused if he has reason to believe on the basis of material available with him that the person is guilty of commission of an offence under section 212(6). Though, no doubt, this power of arrest is meant to enforce 'police custody' in aid of investigation, what is important to note is that arrest is permissible if the investigating officer has reason to believe that the accused is guilty of the offence based on available material. In the present case, the record shows that the investigating officer never arrested the petitioner throughout the investigation, further investigation and other pre-cognizance stages, all of which took more than 06 years. Even at the stage when the final investigation report was filed before the learned Special Judge, the investigating officer did not seek that the petitioner be either arrested or remanded to judicial custody. This was presumably guided by the words of the Supreme Court in Joginder Kumar (supra) and Siddharth (supra). 27.2. When the petitioner appeared before the learned Special Judge on having been summonsed, he was not under arrest. No prayer for either arresting or remanding him to judicial custod ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... incarceration" means " ... imprisonment or confinement in jail or penitentiary; or, "For purpose of statute governing computation of terms of imprisonment, "incarceration" means to confine in prison or jail, and it does not encompass pre judgement house arrest". 27.4. Therefore, taking cue from what the Supreme Court has held in Satender Kumar Antil (supra), evidently when the petitioner appeared before the learned Special Judge in compliance of the summons issued to him, he was 'in custody' of the court but not 'under incarceration'. Accordingly, the twin-conditions contained in section 212(6) of the Companies Act did not get actuated. Furthermore, in the context of section 170 Cr.P.C, in Siddharth (2022) 1 SCC 676; para 9 (supra) the Supreme Court has held that custody does not contemplate either police custody or judicial custody. Also, as held in Manubhai Ratilal Patel (2013) 1 SCC 314; para 24 (supra), remand requires application of mind on the part of the court, and is not to be dealt-with lightly or in a mechanical manner. Incarceration therefore must be for some justifiable and articulated reason, based upon material available against a person. 27.5. The decisions of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... takes the view that the opposition by the public prosecutor contemplated in section 212(6) must be reasoned opposition. In the present case, a perusal of the order of the learned Special Judge declining bail shows that no reasoned opposition was offered by the public prosecutor in relation to the offence alleged under the Companies Act, except a pedantic recitation that the allegations inter-alia against the petitioner " ... are of grave nature ... "; that the investigation in the matter was initiated as per directions of the Delhi High Court; and that, according to the final investigation report filed in the matter inter-alia the petitioner has " ... committed offence punishable under Section 447 of Companies Act, 2013 alongwith other offences ... ". 27.9. Though detailed submissions have been made on behalf of the SFIO to urge that since the petitioner was the main person incharge of the affairs of the company, he is guilty of commission of the offence inter alia under section 447 of the Companies Act, suffice it to say that as observed by the Supreme Court in Sanjay Chandra (supra) and P Chidambaram (supra), seriousness of the allegations is not the only test or factor to deny ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... application seeking that the petitioner be placed in judicial custody, even upto the stage when the petitioner appeared before the learned Special Judge on being summonsed. Since the Investigating Officer did not arrest the petitioner during the more than 06-year long proceedings and investigation, evidently, the Investigating Officer did not consider it necessary to do so based on the material in his possession collected in the course of investigation. 27.14. As observed by this court in Komal Chadha vs. Serious Fraud Investigation 2022 SCC OnLine Del 4543 at para 30.7, without any additional material or evidence having been placed before the learned Special Judge, there was no basis for the court to draw any inference other than the reasonable belief entertained by the Investigating Officer, who never considered the petitioner being a flight risk, or otherwise being likely to tamper with evidence or influence witnesses, for which reason he had never arrested the petitioner. 27.15. To add to this, trial in the matter is bound to take considerable time; and this court sees no reason to wait for further time to elapse before lamenting that the petitioner has suffered pre-trial det ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , who are concerned with the subject matter of the case, whether in India or abroad; and
28.6. The investigating officer is further directed to issue a request to the Bureau of Immigration, Ministry of Home Affairs of the Government of India or other appropriate authority, to forthwith open a 'Look-out-Circular' in the petitioner's name, to prevent the petitioner from leaving the country, without the permission of the learned Special Judge.
29. Nothing in this judgment shall be construed as an expression of opinion on the merits of the pending matter.
30. Needless to add, that nothing in this judgment should be taken to detract from the position that economic offences are serious in nature, and the allegations against the petitioner and other co-accused, if proved at the trial, must be met with requisite punishment. However, that punishment must follow conviction, and the severity of the allegations by themselves cannot be justification for pre-trial incarceration.
31. The petition stands disposed-of in the above terms.
32. Pending applications, if any, also stand disposed-of.
33. Let a copy of this judgment be sent to the concerned Jail Superintendent forthwith. X X X X Extracts X X X X X X X X Extracts X X X X
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