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of <h1>Denial of Bail for Company Director in Fraud Case</h1> <h3>Sujay U. Desai Versus Serious Fraud Investigation Office</h3> Sujay U. Desai Versus Serious Fraud Investigation Office - TMI Issues Involved:1. Bail application under Section 439 of the Code of Criminal Procedure.2. Allegations of fraudulent Merchanting Trade (MT) business and financial misrepresentation.3. Submission of false documents and financial statements to banks.4. Economic offences and their impact on the national economy.5. Medical grounds for bail.Detailed Analysis:1. Bail Application under Section 439 of the Code of Criminal Procedure:The applicant sought bail under Section 439 Cr.P.C. in connection with Sessions Trial No. 577 of 2020, arising from a complaint under Section 212(14) of the Companies Act, 2013, involving offences under Sections 36(c) r/w/s. 447, 448 of the Companies Act, 2013, and Section 211 r/w/s 628 of the Companies Act, 1956. The application was filed after the Apex Court directed the applicant to approach the High Court for bail.2. Allegations of Fraudulent Merchanting Trade (MT) Business and Financial Misrepresentation:The applicant, a Director and CEO of Frost International Limited (FIL), was accused of running a fraudulent MT business. The investigation revealed that the applicant and co-accused submitted false and deceptive financial statements to banks to avail credit facilities, causing significant losses to public sector banks. The applicant allegedly manipulated the books of FIL, showing fake and unrecoverable MT trade receivables amounting to Rs. 3537.74 crores.3. Submission of False Documents and Financial Statements to Banks:The applicant, along with co-accused, knowingly submitted false documents to banks to induce them to provide credit facilities. The financial statements submitted did not reflect the true and fair accounts of their affairs. The applicant was also accused of speculative currency trading with bank money, resulting in heavy losses and siphoning off Rs. 845 crores.4. Economic Offences and Their Impact on the National Economy:The court emphasized that economic offences constitute a class apart and require a stringent approach in bail matters. The applicant's actions were seen as having a grave impact on the economy, with the fraudulent activities causing a wrongful loss of Rs. 4041 crores to public sector banks. The court referenced cases like P. Chidambaram vs. Directorate of Enforcement and Y.S. Jagan Mohan Reddy vs. Central Bureau of Investigation to support the need for a different approach to economic offences.5. Medical Grounds for Bail:The applicant claimed to suffer from diabetes and other ailments, seeking bail on medical grounds. However, the court noted that no documentary evidence was provided to show that the applicant was not receiving proper medical treatment in jail. The court cited Anil Kumar Yadav vs. State (N.C.T.) of Delhi, stating that mere custody duration is not a sufficient reason for bail in serious economic offences.Conclusion:The court, after considering the nature and gravity of the offences, the evidence available, and the impact on the national economy, concluded that the applicant did not satisfy the conditions for bail under Section 212(6)(ii) of the Companies Act, 2013, and Section 439 Cr.P.C. The bail application was rejected. The court urged the trial court to expedite the trial proceedings and conclude them within six months.
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