2019 (10) TMI 1556 - HC - Companies Law

Jurisdiction granted in fraud case, petitioner gets anticipatory bail under Article 21. Liability as tech expert to be determined at trial.

Bharat Kumar Mardia Versus Serious Fraud Investigation Office (SFIO)

The court held that the Special Court at Gurugram had jurisdiction over the case due to the main company involved in the fraud being situated there. The ... Seeking grant of anticipatory bail - company SEL had neither repaid the principal amount nor the interest accruing thereon (loan taken from Co-operative society) - money of the Cooperative Society siphoned off - jurisdiction of the court at Gurugram to entertain a complaint, the office of the company of the petitioner, namely, Sambhav Energy Limited, is situated at Chennai - HELD THAT:- This court does not find any substance in the question of Jurisdiction. Rather, this court finds substance in the argument of the learned counsel for the SFIO, wherein by relying upon the judgment of the Supreme Court in SERIOUS FRAUD INVESTIGATION OFFICE VERSUS NITTIN JOHARI & ANOTHER [2019 (9) TMI 570 - SUPREME COURT], he has submitted that the courts at Gurugram have the jurisdiction. As held by the Hon’ble Supreme Court, since the office of the main company, controlling all the companies involved in the fraud, are situated at Gurugram, and all other coconspirators are participants in the chain of sequences, constituting the offences, therefore, it cannot be said that the Special Court at Gurugram does not have the jurisdiction. Whether the petitioner is entitled to be protected against his arrest or not? - HELD THAT:- This court is of the view that although right to seek anticipatory bail is not a fundamental right, yet an individual is having a right to life and liberty, as granted by Article 21 of the Constitution of India. However, the said right can very well be curtailed by the procedure established by law. The normal procedure for curtailing the liberty of a person accused in offence is that the accused can be arrested even without warrants from the court. Same is the situation under the new Companies Act as well and the authorized officer/designated officer can arrest a person even without warrants issued from a court. However, to ensure that an innocent person is not unduly harassed by taking him into custody, the courts have been conferred a special power under Section 438 Cr. P.C. - So far as the present case is concerned, the investigation of the case is already complete. The investigating officer of the case had not even considered it appropriate to arrest the petitioner during the investigation. Therefore, the investigation of the case is not going to be hampered in any manner if the petitioner is granted concession of anticipatory bail. So far as the allegations against the petitioner are concerned, this court is of the considered opinion that for the purpose of anticipatory bail, the petitioner has been able to explain his position to a considerable degree, so as to make this court exercise its power under Section 438 Cr.P.C.; for protecting him against his arrest. Although even the counsel for the SFIO has not disputed the fact that the twin conditions, as prescribed under Section 212 (6) are not attracted in the case against the petitioner, however, keeping in view the education, antecedents and character of the present petitioner, this court is of the opinion that the petitioner is not likely to flee from the course of justice. There is nothing on record to suggest that if the petitioner is granted concession of anticipatory bail, he would influence any witness in the case. As stated above, he had already left the company much before the start of the investigation. The petitioner may appear before the trial court on or before the next date of hearing fixed before the trial court - Petition allowed. Issues Involved:1. Jurisdiction of the Special Court at Gurugram.2. Entitlement of the petitioner to anticipatory bail.3. Petitioner's involvement and liability in the alleged offences.4. Applicability of twin conditions under Section 212(6) of the Companies Act, 2013.5. Petitioner's right to life and liberty under Article 21 of the Constitution of India.6. Maintainability of the petition in light of the Supreme Court judgment in Satpal Singh vs. State of Punjab.Issue-wise Detailed Analysis:1. Jurisdiction of the Special Court at Gurugram:The petitioner argued that the Special Court at Chennai should have jurisdiction since the office of Sambhav Energy Limited (SEL) is located there. However, the court found substance in the argument by the SFIO, citing the Supreme Court's decision in Serious Fraud Investigation Office v. Rahul Modi, which established that since the main company involved in the fraud, Adarsh Group of Companies, is situated at Gurugram, all related offences can be tried at Gurugram. Thus, the court at Gurugram has jurisdiction.2. Entitlement of the Petitioner to Anticipatory Bail:The court noted that the right to seek anticipatory bail is not a fundamental right but is essential to protect an individual's right to life and liberty under Article 21 of the Constitution of India. The investigation was complete, and the petitioner was not arrested during the investigation, indicating that granting anticipatory bail would not hamper the investigation. The court found the petitioner had sufficiently explained his position, making him eligible for anticipatory bail.3. Petitioner's Involvement and Liability in the Alleged Offences:The petitioner was a Director and equity holder in SEL but had sold his equity in 2011, before the fraudulent loans were availed. The petitioner resigned as Director in 2017, before the investigation began. The court noted that the petitioner did not draw any benefit from the company and was involved primarily as a technical expert. The SFIO did not dispute that the petitioner was not a signatory to the loan resolutions and was not being prosecuted as an 'officer in default' but merely as a Director. The court concluded that the petitioner's liability as a Director would be determined during the trial.4. Applicability of Twin Conditions under Section 212(6) of the Companies Act, 2013:The SFIO acknowledged that the twin conditions under Section 212(6) were not applicable to the petitioner. The court considered the petitioner's education, antecedents, and character, concluding that he was not likely to flee from justice or influence any witnesses.5. Petitioner's Right to Life and Liberty under Article 21 of the Constitution of India:The court emphasized that the petitioner's right to life and liberty should not be compromised without due process. Given that the petitioner was not required for further investigation and had explained his position, the court found it appropriate to grant anticipatory bail to protect his fundamental rights.6. Maintainability of the Petition in Light of the Supreme Court Judgment in Satpal Singh vs. State of Punjab:The court distinguished the present case from the Satpal Singh judgment, noting that the petitioner had not been granted anticipatory bail previously and was seeking protection against arrest following the summoning order for non-bailable offences. The court held that the petitioner should not be taken into custody before being adjudged guilty, especially given the mitigating circumstances.Conclusion:The petition was allowed, and the petitioner was directed to appear before the trial court. The court ordered that the petitioner should not be kept in custody and should be released on bail upon furnishing bail bonds/sureties to the satisfaction of the trial court/Duty Magistrate.