2019 (11) TMI 254 - HC - Companies Law

Court denies anticipatory bail, stays NBWs, petitioner can seek bail later.

The court denied the anticipatory bail application due to the serious nature of the allegations, emphasizing the impact of economic offenses on society. ... Anticipatory bail - Section 438 CrPC - economic offences - non-bailable offences - Non-Bailable Warrant (NBW) - service of summons - custodial arrest - keeping NBWs in abeyanceNon-Bailable Warrant (NBW) - service of summons - keeping NBWs in abeyance - custodial arrest - Whether the NBWs issued against the petitioner should be allowed to be executed immediately or be kept in abeyance pending his opportunity to apply to the trial court. - HELD THAT: - The High Court examined the process-server report and the parties' contentions on service. Although the petitioner did not produce the report of service for inspection before this Court, the record indicated that the process server reported non-availability at the given address and the Special Judge proceeded to issue NBWs on the basis that the accused was allegedly avoiding appearance. The Court observed that, if the petitioner is correct that summons were not duly served, the trial court is competent to consider that contention on the report of service and pass appropriate orders. In view of the reasonable apprehension of arrest before the petitioner could approach the trial court, the High Court exercised its supervisory jurisdiction to protect the petitioner from immediate arrest by directing that the NBWs be kept in abeyance until the next date of hearing before the Special Judge so that the petitioner may appear and move for cancellation of NBWs and for bail which the trial court shall consider uninfluenced by this Court's observations. [Paras 12]NBWs issued by the Special Judge are ordered to be kept in abeyance until 11.11.2019 to enable the petitioner to appear before the trial court and move for cancellation of NBWs and for bail.Anticipatory bail - Section 438 CrPC - economic offences - non-bailable offences - Whether the petitioner is entitled to anticipatory bail in this case involving alleged economic offences and allegations of forgery and large-scale fraud. - HELD THAT: - The Court noted the gravity of the allegations - involvement as a director, signing of allegedly forged documents and letters of credit, and a fraud of very large magnitude - and that the offences charged are non-bailable. Applying settled principle that Section 438 CrPC is an extraordinary remedy to be exercised sparingly, particularly in economic offences which affect the economic fabric of society, the Court held that no grounds for anticipatory bail were made out. Reliance was placed on established authority that economic offenders are ordinarily not entitled to anticipatory bail and the Court found the prima facie material disclosed serious allegations of deliberate fraud and conspiracy. Accordingly, anticipatory bail was refused while leaving the trial court to consider any bail application made by the petitioner on its merits. [Paras 13, 14, 15]Anticipatory bail is refused in view of the serious nature of the alleged economic offences and prima facie material; the petitioner may seek regular bail/cancellation of NBWs before the trial court.Final Conclusion: The High Court kept the NBWs issued against the petitioner in abeyance until 11.11.2019 to permit the petitioner to appear before the Special Judge and move for cancellation of NBWs and for bail, but declined to grant anticipatory bail under Section 438 CrPC on the ground of serious economic offences and prima facie material of fraud. Issues Involved:1. Application for anticipatory bail by the petitioner.2. Seriousness of allegations and nature of the offences.3. Non-service of summons and issuance of Non-Bailable Warrants (NBWs).4. Applicability of twin conditions for bail under Section 212(6) of the Companies Act, 2013.5. Legal precedents and arguments presented by both parties.6. Court's decision on the anticipatory bail application.Detailed Analysis:1. Application for Anticipatory Bail:The petitioner sought anticipatory bail in the event of arrest in Complaint Case No. 770/2019, titled SFIO v. Bhushan Steel Ltd. & Ors., pending in the Court of Ms. Neelam Singh, Ld. ASJ/Special Judge (Companies Act). The offences alleged include violations under Sections 36(C), 89, 90, 128, 129, 229, 447, 448 of the Companies Act, 2013, Sections 209, 211 read with 628 of the Companies Act, 1956, and Sections 409, 467, 468, 471 read with 120-B of the Indian Penal Code, 1860. The petitioner argued for bail on the grounds of his advanced age (65 years) and severe health issues, including chronic diabetes, renal cell carcinoma, lung cancer, high blood pressure, and a recent heart attack requiring medical treatment.2. Seriousness of Allegations and Nature of Offences:The allegations against the petitioner were serious, involving fraud amounting to approximately Rs. 45,818 Crores. The petitioner, as a whole-time Director, was accused of submitting false documents to avail illegitimate funds from banks and failing to discharge his duties under the Companies Act. The court noted that the allegations included signing forged letters of credit and other documents for availing credit facilities from banks on behalf of the company.3. Non-Service of Summons and Issuance of NBWs:The petitioner contended that he was not served with the summons and was unaware of the NBWs issued against him. The court observed that the petitioner had not been arrested during the investigation and that the issuance of NBWs by the Ld. ASJ/Special Judge was without legal justification. The petitioner argued that the service of summons was not properly effected as per Section 65 CrPC, and the Ld. ASJ/Special Judge should have issued bailable warrants first. The court noted that the petitioner had a reasonable apprehension of arrest before he could approach the Ld. Special Court.4. Applicability of Twin Conditions for Bail under Section 212(6) of the Companies Act, 2013:The petitioner argued that the twin conditions for bail under Section 212(6) of the Companies Act, 2013, were not applicable to anticipatory bail applications. The petitioner relied on several legal precedents, including 'Nikesh Tarachand Saha Vs. Union of India' and 'Dalip Singh Man and Anr. vs. Niranjan Singh,' to support his argument.5. Legal Precedents and Arguments Presented by Both Parties:The petitioner cited cases like 'Inder Mohan Goswami & Anr. v State of Uttaranchal & Ors.' and 'Court on its Own Motion v. CBI' to argue against the issuance of NBWs and for the grant of anticipatory bail. The respondent opposed the bail application, highlighting the serious nature of the fraud and the petitioner's involvement. The respondent also pointed out that the Supreme Court had stayed the bail granted to a co-accused, indicating the gravity of the case.6. Court's Decision on the Anticipatory Bail Application:The court considered the rival submissions and noted the serious nature of the allegations against the petitioner. It observed that economic offences, such as the one in question, affect the economic fabric of society and should be treated with utmost seriousness. Citing the Supreme Court's stance on economic offences, the court held that anticipatory bail should be exercised sparingly in such cases. Consequently, the court did not find grounds for granting anticipatory bail to the petitioner. However, it ordered that the NBWs issued against the petitioner be kept in abeyance until the next hearing date, allowing the petitioner to approach the Ld. ASJ/Special Judge and move an application for cancellation of NBWs and grant of bail.Conclusion:The anticipatory bail application was disposed of with the court denying the bail but providing temporary relief by keeping the NBWs in abeyance, allowing the petitioner to seek further legal recourse before the Ld. ASJ/Special Judge (Companies Act).