2020 (10) TMI 1181 - HC - Companies Law

Court grants bail in forgery & misappropriation case under Companies Act, emphasizing trial cooperation.

The court granted bail to the applicant in a case involving allegations of forgery and misappropriation of company funds, dispute over directorship, and ... Companies Act, 2013 as a complete code for investigation into affairs of a company - Exclusivity of Serious Fraud Investigation Office for certain company investigations and procedure under Section 212 - Limited prohibition on grant of bail in respect of offences triable under the Companies Act - Application of Code of Criminal Procedure to proceedings before Special Court - Article 21 and the Dataram Singh principles governing grant of bail - Procedural infirmity in criminal investigation where specific statutory machinery existsCompanies Act, 2013 as a complete code for investigation into affairs of a company - Exclusivity of Serious Fraud Investigation Office for certain company investigations and procedure under Section 212 - Procedural infirmity in criminal investigation where specific statutory machinery exists - Limited prohibition on grant of bail in respect of offences triable under the Companies Act - Article 21 and the Dataram Singh principles governing grant of bail - Whether the applicant should be released on bail in Case Crime No. 1590 of 2019 in view of the nature of allegations relating to company affairs, the statutory scheme under the Companies Act, 2013 and the manner in which the investigation was conducted - HELD THAT: - The court found that the allegations arise from mismanagement and alleged fraud in the affairs of a private limited company and that the Companies Act, 2013 contains a comprehensive code for investigation, arrest and prosecution in such matters, including the role of the Serious Fraud Investigation Office and the special procedure and limitations for bail in offences under that Act. The investigation in the present matter, however, was conducted by the police rather than under the machinery envisaged by the Companies Act (including any authorisation by the Central Government or SFIO), pointing to procedural infirmity. While Section 212(6) of the Companies Act restricts grant of bail for offences under Section 447, that limitation is subject to specified exceptions (including where the accused is a woman) and does not wholly exclude application of Cr.P.C. In the facts of this case the applicant is a woman, there are procedural flaws in the investigation, the offences are alleged to be triable by a Magistrate, and the court must balance the liberty interest under Article 21. Having regard to these factors and the principles laid down by the Apex Court in Dataram Singh, the court concluded that, without expressing any opinion on merits, the applicant had made out a case for bail. [Paras 5, 7, 8, 9]Bail granted to the applicant in Case Crime No. 1590 of 2019 on furnishing personal bond and two sureties, subject to enumerated conditions including non-tampering with evidence, cooperation in trial, presence at specified stages and travel restrictions; liberty to impose short-term bail modalities as stated.Final Conclusion: The bail application is allowed: having regard to the statutory scheme under the Companies Act, procedural flaws in the police investigation, the applicant's status as a woman, the nature of the offences and Article 21 jurisprudence (including Dataram Singh), the High Court directed release on bail subject to specified conditions. Issues Involved:1. Allegations of forgery and misappropriation of company funds.2. Dispute over the directorship and management of the company.3. Procedural flaws in the investigation under the Companies Act, 2013.4. Consideration of bail for the applicant.Issue-Wise Detailed Analysis:1. Allegations of Forgery and Misappropriation of Company Funds:The FIR alleges that Ravindra Kumar Maurya, a director of Vaishali Real Estate Pvt. Ltd., prepared forged documents to oust his wife, Smt. Pratima Verma, from the directorship without discussing with other directors. Ravindra Kumar Maurya and the applicant allegedly opened a separate account in State Bank of India and transferred the company's profits to this account, thereby misappropriating the funds. The applicant, in collusion with other directors, also lodged an FIR against the informant, which was later dismissed by the Investigating Officer.2. Dispute Over Directorship and Management of the Company:The applicant's counsel argued that the applicant was falsely implicated due to a previous FIR lodged against the informant. It was claimed that Smt. Pratima Verma resigned from her position as director, and her resignation was duly accepted and reported to the Registrar of Companies. The informant, with the help of an advocate, implicated the applicant and Ravindra Kumar Maurya in multiple FIRs. A company petition filed before the National Company Law Tribunal in Allahabad is pending.3. Procedural Flaws in the Investigation Under the Companies Act, 2013:The court noted that the dispute relates to the mismanagement of the company's affairs, and the FIR was lodged under IPC provisions with the Cr.P.C. procedure adopted for prosecution. However, the Companies Act, 2013 provides a complete code for investigating company affairs involving fraud. The court highlighted relevant sections of the Companies Act, including Sections 210, 212, 217, 219, 229, 436, 438, 446-A, and 447, which outline the procedures for investigation and prosecution of company-related offences. The court emphasized that the investigation should have been conducted by the Serious Fraud Investigation Office (SFIO) as per the Companies Act, and the central government's approval was necessary for such an investigation. The court found procedural flaws as the investigation was conducted by a police officer instead of an SFIO officer.4. Consideration of Bail for the Applicant:The court considered the nature of the offence, procedural flaws, arguments from both parties, the spread of COVID-19 in jails, and the evidence on record. The court referred to the larger mandate of Article 21 of the Constitution of India and the Supreme Court's dictum in the case of Dataram Singh Vs. State of U.P. and another. The court observed that the applicant, being a woman, could be considered for bail under Section 437(1) Cr.P.C. Given the procedural flaws and the applicant's status, the court granted bail with specific conditions to ensure the applicant's cooperation in the trial and prevent tampering with evidence or committing further offences.Conclusion:The court allowed the bail application, directing the applicant to furnish a personal bond and two reliable sureties. The court imposed several conditions, including cooperation in the trial, non-tampering with evidence, and regular court appearances. The court also provided specific instructions for verifying the authenticity of the bail order and conditions for the applicant's travel abroad. The bail would be effective after the period of any short-term bail due to COVID-19 ends, and sureties must be furnished once normal court functioning resumes. The court emphasized that any breach of conditions could result in bail cancellation.