2020 (2) TMI 406 - HC - Companies Law

Court denies bail in economic offences case under Companies Act, 2013.

Nittin Johari Versus Serious Fraud Investigation Office

The court dismissed the bail application, highlighting the seriousness of the economic offences alleged and the stringent bail conditions under Section ... Bail application - investigation by SFIO - Section 212 (6)(ii) of the Companies Act, 2013 - HELD THAT:- The present bail application has to be decided on the basis of its own facts and keeping in mind the proposition of law that economic offences constitute a class part and need to be visited with a different approach in the matter of bail and since these kind of offences cause irreparable harm to the economic system and, therefore, required to be considered seriously. Perusal of Section 212 (7) of the Companies Act, 2013 reveals that limitation on granting bail is in addition to the Limitation provided under Section 439 Cr.P.C. This court has now to decide the bail application in the light of the provisions of bail enunciated in the Companies Act as well as Cr.P.C. This court has, thus, to be satisfied that there are reasonable grounds for believing that petitioner is not guilty of the offences alleged against him and that he is not likely to commit any offence while on bail. It is a settled law that at the time of consideration of bail application, it is neither necessary nor desirable to weigh the evidence meticulously to arrive at a positive finding as to whether or not the accused has committed offence. What is to be seen is whether there is reasonable ground for believing that accused is not guilty of the offence(s) he is charged with. There are serious allegations against the petitioner regarding manipulation and fabrication of financial documents by way of which, the fund was siphoned off to other companies and therefore, it cannot be held that there are no reasonable grounds to believe that accused is not guilty of the offences alleged against him - in view of the allegations appearing on record and active participation of the petitioner in alleged commission of the offence i.e. in fabrication of documents in opening LCs and discounting of the same, manipulation of accounts and siphoning of the funds worth several crores and keeping in mind the fact that all fraudulent activities were allegedly planned in advance and executed carefully and with deliberate design and further taking overall view of the matter, it is difficult to hold that petitioner will not commit any offence under the Act while on bail. On the basis of allegations appearing on record, it cannot be held that there are no reasonable grounds to believe that the accused is not guilty of the offences alleged against him and that he is not likely to commit any offence under the Act while on bail and thus, twin conditions for grant of bail as envisaged under Section 212(6) (ii) are not satisfied. This court is of the opinion that offences alleged against the petitioner are serious in nature which involve fraud to the tune of several crores and the offence being an economic one which affects the economy of the nation, the petitioner is not entitled for bail under Section 439 Cr.P.C. - Petition dismissed - decided against petitioner. Issues Involved:1. Bail application under Section 439 Cr.PC read with Section 212(6) of the Companies Act, 2013.2. Allegations of fraudulent activities and manipulation of financial documents.3. Application of twin conditions for bail under Section 212(6)(ii) of the Companies Act, 2013.4. Consideration of medical grounds for bail.Issue-wise Detailed Analysis:1. Bail Application under Section 439 Cr.PC read with Section 212(6) of the Companies Act, 2013:The petitioner filed a bail application under Section 439 Cr.PC read with Section 212(6) of the Companies Act, 2013. The petitioner, an ex-CFO and whole-time Director of Bhushan Steel Ltd. (BSL), was accused in a complaint involving 284 persons. He was taken into custody on 02.05.2019 and has been in judicial custody since then. The petitioner argued that he had fully cooperated with the investigation and that the case was based on documentary evidence, making tampering with evidence unlikely. He also highlighted his clean antecedents, health issues, and non-involvement in the alleged fraudulent activities.2. Allegations of Fraudulent Activities and Manipulation of Financial Documents:The petitioner was accused of being involved in fraudulent activities, including the manipulation of financial statements and books of accounts of BSL. Specific allegations included the use of false documents to obtain credit from banks, manipulation of accounts, and siphoning off funds through a complex web of companies. The petitioner was alleged to have been a signatory to financial statements and part of the 'Committee of Board of Directors on Borrowing, Investment and Loans.' The Serious Fraud Investigation Office (SFIO) claimed that the petitioner, along with other accused, used deceptive methods to avail illegitimate funds amounting to Rs. 45,818 crores.3. Application of Twin Conditions for Bail under Section 212(6)(ii) of the Companies Act, 2013:The court examined the twin conditions under Section 212(6)(ii) of the Companies Act, 2013, which mandate that the court must be satisfied that there are reasonable grounds for believing that the accused is not guilty of the offence and that he is not likely to commit any offence while on bail. The court noted that the allegations against the petitioner were serious, involving economic offences that affect the national economy. The court concluded that there were no reasonable grounds to believe that the petitioner was not guilty of the offences alleged and that he was not likely to commit any offence while on bail. The court emphasized that economic offences require a different approach in bail matters due to their impact on the economy.4. Consideration of Medical Grounds for Bail:The petitioner argued for bail on medical grounds, citing his diabetes and other health issues. However, the court found no documentary evidence to suggest that the petitioner was not receiving adequate medical treatment in jail or that his condition necessitated bail. The court held that the serious nature of the economic offences alleged against the petitioner outweighed the medical grounds presented.Conclusion:The court dismissed the bail application, emphasizing the serious nature of the allegations involving economic offences and the stringent conditions for bail under Section 212(6) of the Companies Act, 2013. The court concluded that the petitioner did not meet the twin conditions for bail and that the allegations against him warranted a stringent approach. The petitioner's medical grounds were also found insufficient to justify bail.