2022 (7) TMI 1073 - HC - Companies Law

Chartered Accountant Granted Bail Despite Fraud Allegations; Court Prioritizes Personal Liberty Amid Trial Delays.

Vinay Kumar Jain Versus Serious Fraud Investigation Office

The HC granted bail to the applicant, a Chartered Accountant, under Section 447 of the Companies Act, 2013, despite allegations of fraud. The court ... Seeking grant of regular bail - allegation is that the applicant has played an active role in the fraud committed by the company along with ex-promoters and its associates as he was the statutory auditor for 18 companies - fraud of siphoning of money availed through Credit facilities from banks and then investing the same in the preference shares of BSL for managing its debt equity ratio - HELD THAT:- As regards the legal embargo of Section 212(6), Sub-section-(i) has duly been complied with, as the Public Prosecutor (Ld. CGSC) has been given a chance to oppose the bail application. The Applicant is not guilty of the offence of which he are charged with, and therefore, it is also opined, that he is not likely to commit any further offence while on bail. Hence, sub-section (ii) of Section 212(6) is also complied with, notwithstanding the observations of JAINAM RATHOD VERSUS STATE OF HARYANA & ANR [2022 (4) TMI 1421 - SUPREME COURT], where it was held that While the provisions of Section 212(6) of the Companies Act 2013 must be borne in mind, equally, it is necessary to protect the constitutional right to an expeditious trial in a situation where a large number of accused implicated in a criminal trial would necessarily result in a delay in its conclusion. The role of the appellant must be distinguished from the role of the main accused. The Applicant is enlarged on bail subject to the terms and conditions imposed - application disposed off. Issues:Application for regular bail under Section 447 of the Companies Act, 2013 - Allegations of active role in fraud - Compliance with legal requirements for bail - Precedents of bail granted to co-accused - Legal embargo of Section 212(6) - Protection of personal liberty in the face of trial delay.Analysis:1. Bail Application: The judgment addresses the bail application of the applicant in a case involving alleged fraud under Section 447 of the Companies Act, 2013. The applicant, a Chartered Accountant, sought bail contending that he did not sign any documents or conduct audits related to the accused company's financial statements.2. Allegations of Active Role in Fraud: The respondent argued that the applicant played an active role in the fraud by being a statutory auditor for multiple companies involved in the fraudulent activities. The respondent highlighted instances where the applicant allegedly failed to exercise professional skepticism and did not ensure the disclosure of the true financial state of the companies.3. Compliance with Legal Requirements: The judgment discusses the legal requirements for granting bail, emphasizing the need for compliance with Section 212(6) of the Companies Act, 2013. The Public Prosecutor was given the opportunity to oppose the bail application, and the court found the applicant not guilty prima facie, indicating a lack of likelihood of committing further offenses while on bail.4. Precedents of Bail Granted to Co-Accused: The judgment cites several instances where co-accused individuals, including auditors and bank officials, were granted bail by the court. These precedents were considered in the context of the current bail application to ensure consistency in decisions regarding bail for individuals involved in the same case.5. Protection of Personal Liberty: In light of delays in trial proceedings and the need to protect personal liberty, the court granted bail to the applicant with specific terms and conditions, including the furnishing of a personal bond, appearance before the court as directed, and informing authorities of any address changes. The court clarified that the bail decision was solely for the purpose of the application and not a final adjudication.6. Conclusion: The judgment concludes by disposing of the application in the specified terms and conditions, ensuring the applicant's release on bail while upholding legal requirements and considering the principles of personal liberty and expeditious trial proceedings. The detailed analysis of the issues involved provides a comprehensive overview of the court's decision in the case.