2022 (12) TMI 982 - HC - Companies Law

Petitioner granted bail under Cr.P.C, citing Companies Act provision for women, despite serious allegations.

The court granted the petitioner regular bail under section 439 of the Cr.P.C, emphasizing the applicability of the proviso to section 212(6) of the ... Seeking grant of Regular bail - misuse of cheque discounting facilities - diversion and siphon-off the borrowed funds - fictitious sale of food grain and in creation of accommodation/adjustment accounting entries - section 447 of the Companies Act - HELD THAT:- There is no allegation by the SFIO that during the course of the investigation, the petitioner attempted to destroy evidence or intimidate witnesses, or that she otherwise interfered in the course of investigation - It is apparent that the essence of the allegation against the petitioner is, that being the wife of the main accused Suman Chadha and a director of the company, the petitioner signed various papers, documents and records in her capacity as a co-director, and is therefore an ‘officer who is in default’ in relation to the affairs of the company within the meaning of section 2(60) of the Companies Act. Despite having the power under section 212(8) of the Companies Act, to arrest the petitioner in the course of investigation, the investigating officer did not arrest the petitioner, by which it can reasonably be inferred that the officer did not have reason to believe that the petitioner was guilty of any offence punishable under the concerned sections of the Companies Act. Even when the report under section 212(12) of the Companies Act was filed, there is nothing on record to show that the investigating officer sought for the petitioner to be remanded to judicial custody - In the opinion of this court, the petitioner’s conduct cannot have a worse effect now, than it possibly could have had during the course of investigation, since all the purportedly incriminating evidence and material has already been collected and placed before the learned Special Judge as part of the criminal complaint. The proviso to section 212(6) of the Companies Act cannot be treated as nugatory or dead letter. By way of the proviso, the Legislature has specifically carved-out an exception to the otherwise strict provision for bail, to say that though the twin conditions in section 212(6)(i) and (ii) of the Companies Act must otherwise be satisfied before a person is released on bail, those conditions would not apply inter-alia to a woman. In view of the proviso, it would be anathema to the legislative intent to not grant the benefit of the relaxation to a woman accused. The notion that a person summonsed after cognisance must necessarily be remanded to judicial custody, simply because the allegation relates to a ‘serious offence’, must be disabused. Merely because the offence is cognizable and non-bailable, it is not essential that an accused must be taken into custody when the charge-sheet is filed. Bail, it is trite to say, is the rule and not the exception. Arrest at the hands of the investigating officer and remand by the court must not be done on a whim or without reason. The petitioner is entitled to benefit of the proviso to section 212(6) of Companies Act - the court is persuaded to admit the petitioner to regular bail, subject to the conditions imposed. Application allowed. Issues Involved:1. Grant of regular bail under section 439 of the Code of Criminal Procedure, 1973.2. Applicability of section 212(6) of the Companies Act, 2013.3. Allegations against the petitioner.4. SFIO's opposition to bail.5. Judicial precedents cited by both parties.6. Consideration of pre-trial detention.Issue-wise Detailed Analysis:1. Grant of Regular Bail under Section 439 of Cr.P.C.:The petitioner sought regular bail under section 439 of the Cr.P.C. The petitioner, accused No. 3 in CC No. 245/2021, was implicated in a case involving multiple allegations under section 447 of the Companies Act, 2013. The petitioner had not been arrested during the investigation but was remanded to judicial custody upon appearing before the Special Judge.2. Applicability of Section 212(6) of the Companies Act, 2013:The petitioner argued that as a woman, she is entitled to bail under the proviso to section 212(6) of the Companies Act, which allows for the release of women on bail notwithstanding the twin conditions otherwise stipulated. The court emphasized that the proviso to section 212(6) must be given effect and cannot be treated as a dead letter.3. Allegations Against the Petitioner:The petitioner was accused of being a director of M/s Parul Polymers Pvt. Ltd., involved in fraudulent activities such as cash sales, fictitious sales, and misuse of cheque discounting facilities. The company allegedly manipulated financial statements to mislead banks and siphoned off funds. The petitioner, as a director, was considered an 'officer who is in default' under section 2(60) of the Companies Act.4. SFIO's Opposition to Bail:The SFIO opposed the bail, arguing that the petitioner could influence witnesses and interfere with the trial. They emphasized the seriousness of economic offences and the potential for the petitioner to use her influence over other accused persons, who were employees or auditors of the company.5. Judicial Precedents Cited by Both Parties:The petitioner cited several judicial precedents, including:- *Priyanka Modi vs. SFIO*: Emphasizing the protection for women under section 212(6).- *Sanjay Chandra vs. CBI*: Highlighting that bail should be granted if the petitioner was neither named nor arrested.- *Rana Kapoor vs. Directorate of Enforcement*: Supporting bail for women not arrested during the investigation.The SFIO cited precedents, including:- *Priyanka Modi vs. SFIO (Punjab & Haryana High Court)*: Arguing that being a signing authority does not entitle the petitioner to bail.- *State of U.P. through CBI vs. Amarmani Tripathy*: Stressing the need for courts to apply their mind and determine the merits of the evidence before granting bail.6. Consideration of Pre-trial Detention:The court noted that the petitioner had not been arrested during the investigation and that there were no allegations of her intimidating witnesses or tampering with evidence. The court emphasized that pre-trial detention should not be used as a form of pre-trial punishment and that the petitioner's continued detention served no discernible purpose.Conclusion:The court granted the petitioner regular bail, subject to conditions, including furnishing a personal bond, surrendering her passport, and not contacting prosecution witnesses. The court highlighted that bail is the rule and not the exception and that the petitioner's liberty should not be curtailed without reasonable cause. The petition was disposed of, and the pending applications were also disposed of.