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TMI Blog2022 (10) TMI 1276X X X X Extracts X X X X X X X X Extracts X X X X ..... nder:- (i) The Ministry of Corporate Affairs (hereinafter referred to as "MCA"), Government of India (GOD), vide order No.F.No.3/61/2018/CL-II dated 28.03.2019, ordered an investigation into the affairs of Surana Industries Limited and 14 other companies (hereinafter referred to as Surana Group of Companies or Surana GOC) by Serious Fraud Investigation Office under Section 212(1)(c) of the Companies Act of 2013. The details of Companies under Surana Group of Companies are as under: S.No. COMPANY 1. Surana Industries Limited (SIL) 2. Surana Power Limited (SPL) 3. Surana Corporation Limited (SCL) 4. Surana Green Power Limited (SGPL) 5. Vinayaga Infra Limited (VIL) 6. Surana Green Energy Limited (SGEL) 7. SSS Tech Engineers Private Limited (SSSTECH) 8. BLS Power Solution Limited (BL SPL) 9. R.R.Tools Private limited (RR TPL) 10. V.N.R. Infrastructures Limited (VNRIL) 11. Patheypori Gardens Private Limited (FGPL) 12. Grant Logistics Limited (GLL) 13. Natural Coal Private Limited (NCPL) 14. Sayso Exim Private Limited (SAYSO) 15. Thribhuvan Enterprise Private Limited (TEPL) (ii) On the basis of the SFIO Investigation Report into the affairs of Surana I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ad the creditors and shareholders and thereby they have cheated the banks to the tune of Rs.10,238 crores. (vi) The petitioner was appointed as Group CEO of Surana Group (SIL & SPL) on 27.05.2015 as approved in the BOD of SIL dated 22.05.2015. Email pertaining to this taking charge as Group CEO from DES confirms the same. The specific role role of the petitioner in fraudulent conduct of affairs of SIL is as listed below: ● The petitioner (A6), in connivance with his father Dinesh Chand Surana (A4), had utilized Puppet-II managed by his maternal uncle Deepak Kothari (A22) as a tool to inflate revenue figures of SIL during F.Y. 2015-16 and 2016-17 by showing paper trade. Statutory Auditors of SIL have given adverse opinion for both financial years as they were unable to conclude that the financial statements reflect true and fair view of the affairs of SIL. RDS had controlled the affairs of puppet entities SAYSO, TEPL. ● The petitioner, in connivance with his father Dinesh Chand Surana and Yashpal, had siphoned out Rs.115.99 Crores from SIL to RIPL and RVPL. ● The petitioner, in connivance with his father Dinesh Chand Surana and Anandh, had willfully mismana ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . ● The petitioner had connived with Dinesh Chand Surana & Deepak Kothari to appoint employees as directors of SAYSO & TEPL, these BOD were accustomed to act on the direction of Dinesh Chand Surana, the petitioner & PK either directly or indirectly. 7. The petitioner, a key management personnel and son of Dinesh Chand Surana M.D of SIL & SPL, was appointed as Vice President (Projects) in SPL in the Board of Directors Meet dated 28.12.2008. The petitioner looked after the implementation of the 420MW power plant of SPI. He has been disclosed as Key Management Personnel in the related party disclosures for F.Y. 2010-11, 2011-12, 2012-13 & 2013- 14. It is to be noted that both the hiving off 35MW and the plan to establish 420MW power plant happened after appointment of RDS as VP (Projects). The audit documentation 11101.06 Org chart SPL CHO.pdf for FY 2014-15 of SPL shows the overall control of the petitioner over Technical Department, Finance Department, Accounts Department, HR & Admin. Department, Systems Department and Company Secretary. He not only attended most of the BOD Meetings of SPL, but was also part the Management Committee, Steering Committee of SPL. His role in f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... w a promoter, who had defaulted in bank borrowing, acquires the same asset by proxy using the siphoned off funds of banks. e. The petitioner, in connivance with his father Dinesh Chand Surana, had also siphoned out funds (a) Rs.8.25 Crores to the bank accounts of Dinesh Chand Surana; (b) Rs.2 Crores to Sakthi GOC through BELL, which was partly repaid after the commencement of investigation. Dinesh Chand Surana and the petitioner had also conceived an implemented manner utilizing employees to transfer siphoned out bank borrowings from BELL to Radha GOC and RAI Ispat. Dinesh Chand Surana and the petitioner had carried out these acts, in connivance with Yashpal of Radha Group, Ritesh Rai & Kanniah Anandh. 9. Hence, the respondent has filed the complaint against the petitioner and others, citing 125 witnesses, annexing 532 documents and 115 statements of witnesses. 10. Learned Senior Counsel Mr.N.R.Elango appearing for the petitioner would submit his arguments as under:- (i) The petitioner was appointed as a Vice President (Projects) of Surana Power Limited and he is neither a member of Board of Directors of Surana GOC nor a key managerial personnel as required under Section 203 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pplication vide its order dated 27.06.2022 in MA/244/2019 in CP 646/IB/2017, finding that there was no fraud in the management of the Company. (iv) The loans have been issued pursuant to the due diligence exercised by the lending Banks. Mott MacDonald, a Global Engineering and Management Consultant was appointed by IDBI, the lead bank of SPL consortium lender as Lender's Independent Engineer (LIE) for due diligence, construction monitoring, performance testing and annual operation monitoring (5 phases) and only based on the Report issued by the Engineers, the loans were disbursed. (v) From 07.03.2022 to 13.07.2022 the petitioner was summoned for investigation by the respondent and the petitioner had appeared before the respondent for more than 7 times and the petitioner has not evaded summons or absconded. He had duly cooperated with the respondent in his investigation, however, he was arrested on 13.7.2022 and remanded to judicial custody on 14.7.2022. Even thereafter the respondent had taken custody of the petitioner for two days for the purpose of investigation. After investigation in respondent's custody, the petitioner was sent back to judicial custody. When the NC ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Term Loan from the Lenders. 2) Monitoring and releasing the payments to the agencies involved in the project and operations as per the internal schedules. 3) Overseeing all other matters pertaining to finance which are required to be performed in the Company for the successful project implementation. 4) Monitoring the finance and accounts team for maintaining the proper books of accounts and making inspections of records as and when required. 5) Formulating and implementing the investment strategies for meeting the needs and contingencies of the company. 6) Planning and Monitoring the Cash Flows in the Company and forecasting the future Cash flow requirement as against the actuals. 7) Formulated various strategies to ensure effective control and monitoring system for finance and accounting in the Company. 8) Identify and exploring avenues for Private Equity participation into the Company. 9) Overviewing the day to day financial operations of the Company. (iii) Apart from the above, he is the person coordinating with various contracts in the operation. The petitioner, in connivance with other accused, had floated shell Companies by inducting employees of Surana gr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sed, by using shell and puppet companies has involved in round tripping of monies and thereby embezzled the amounts. The accused, by various fraudulent activities had caused monetary loss to the tune of Rs.10,000 crores to the consortium of banks. (xi) Though the petitioner claims to be not in charge of Finance, there are materials by way of oral and documentary evidence to show that the petitioner had indulged in fraud as explained under Section 447 of theCompanies Act. (xii) Various statements recorded from the witnesses with regard to the involvement of the petitioner and the fraud committed by him would reveal that the respondent has made out grounds for believing that the petitioner is guilty of the offence. (xiii) The petitioner cannot claim bail on the ground of parity. The co-accused who has been granted bail was a statutory auditor. This court, while granting bail to the co-accused, finding that the co-accused was never shown as a key managerial person and that he was not the Founder or Promoter of the Company and he is only a Chartered Accountant by profession and he has done his duty as a Chartered Accountant without knowing the physical activities of the Company, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n into affairs of company by Serious Fraud Investigation Office. ........ ......... (6) Notwithstanding anything contained in the Code of Criminal Procedure, 1973 (2 of 1974), 1[offence covered 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." 17. On a perusal of the materials available, this court finds that the offence is a serious economic offence of grave magnitude involving around 10,000 crores of hard earned public money. Among other crimes, this sort of white-collar crimes are particularly harmful to society as they are committed by not just literated, but, well educated and influenced persons, who are expected to set a moral example and behave responsibly. The fraudulent activity in siphoning of pubic money by defr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Companies, the petitioner and other accused, were round tripping the money and the money borrowed were projected as capital to inflate and show profit in the Companies and contracts were entered between the benami Companies at high rates and the monies were returned back to Surana for business activities. 21. Sofar as the stand taken by the petitioner that he has got a clean chit in the writ petition filed by him challenging the Look Out Circular issued against him, it is seen that he was not an accused in the case connected with such proceedings and therefore, he cannot claim such an order as an immunity for him in the bail application of the current proceedings, where he is arrayed as an accused, alleged to have indulged in fraudulent activities against the banks to siphon the money to a very large extent and especially, when the prosecution has come out with a prima facie materials against his role in such offence. 22. Similarly, the petitioner cannot take a shelter by contending that the loans were disbursed only on the basis of the Report of the Lender's Independent Engineer and thus, he had not defrauded the Banks as the correspondences produced by the respondent revea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g 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. In this regard, it is pertinent to refer to the following observations of this Court in Y.S. Jagan Mohan Reddy [Y.S. Jagan Mohan Reddy v. CBI, (2013) 7 SCC 439 : (2013) 3 SCC (Cri) 552] : (SCC p. 449, paras 34-35) "34. Economic offences constitute a class apart and need to be visited with a different approach in the matter of bail. 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 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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