2023 (5) TMI 103 - HC - Companies Law

Court Upholds Bail under Companies Act despite SFIO Challenge

The court upheld the bail granted to the respondent/accused under Section 212(6) of the Companies Act, 2013, emphasizing the liberal interpretation of the ... Seeking grant of Regular Bail - Corporate Structure repeatedly abused for various fraudulent purposes - books of accounts of BPSL were manipulated and various paper/shell companies were used for routing of funds in a deceptive manner - Siphoning of materials from BPSL Plant, Sambalpur, Orissa - Diversion of funds from BPSL in the form of bogus capital advances and routing the same as equity or unsecured loans in related entities of BPSL - Bogus advances to suppliers - Issue and negotiation of Inland Letters of Credit by Bhushan Power & Steel Limited - Diversion of BPSL funds for purchase of. Shares by Promoters & Family Members for Long-Term Capital Gains - Bogus purchase of capital goods - Purchase of property at Mumbai by Assurity Real Estate LLP. HELD THAT:- In the present case the petitioner has sought to invoke the inherent jurisdiction of this Court under section 482Cr.P.C. This Court thus has to analyse if the order granting bail is perverse, without jurisdiction or based on irrelevant material on record. A perusal of the impugned order reflects that the order is neither unsubstantiated nor perverse. The order granting bail is a well-reasoned order and has been based on proper material on record taking into account several incidental aspects around the case. There is no infirmity with the order which so requires the interference of this Court. The Ld. Special Court has after correctly appreciating the special benefit conferred on a woman and after considering the role of the Respondent and upon its satisfaction, has duly exercised its discretion in favour of the present Respondent thereby granting her bail. Moreover, it is not in dispute that SFIO complaint has been filed, cognizance taken and accused persons have been summoned. Thus in absence of any legal infirmity or perversity, this Court cannot interfere with the order of the Ld. ASJ granting regular bail to the respondent/accused. This Court does not sit as a court of appeal and cannot reappreciate evidence and substitute its view with that of the subordinate court merely because another plausible view was taken. Further, in absence of any cogent, supervening circumstances necessitating cancellation of bail of the respondent/accused, this Court cannot merely cancel the bail so granted. There is nothing on record to show that the accused has misused her bail or has not adhered to the conditions so imposed. Petition dismissed. Issues Involved:1. Interpretation and application of Section 212(6) of the Companies Act, 2013.2. Consideration of the role of the respondent/accused in the alleged fraud.3. Evaluation of the respondent/accused's risk of flight, tampering with evidence, and influencing witnesses.4. Examination of the legal basis for cancellation of bail under Section 482 Cr.P.C.Summary:1. Interpretation and Application of Section 212(6) of the Companies Act, 2013:The petitioner, SFIO, challenged the bail granted to the respondent/accused under Section 212(6) of the Companies Act, 2013, arguing that the Ld. Spl. Judge misinterpreted the beneficial proviso and diluted the mandatory twin conditions for bail. The court, however, upheld the bail, noting that the proviso to Section 212(6) allows for the release of certain categories of persons, including women, on bail. The court emphasized that the proviso should be given a liberal interpretation to extend its benefits.2. Consideration of the Role of the Respondent/Accused in the Alleged Fraud:The SFIO alleged that the respondent/accused, as a director and authorized signatory of BPSL, was actively involved in various fraudulent activities, including siphoning of materials, diversion of funds, and bogus advances. The respondent/accused argued that she was merely a housewife acting on her husband's instructions and had not independently engaged in fraudulent activities. The Ld. Spl. Judge considered these arguments and granted bail, noting that the respondent/accused's role was primarily documented and that she was not a flight risk or likely to evade trial.3. Evaluation of Risk of Flight, Tampering with Evidence, and Influencing Witnesses:The court assessed whether the respondent/accused posed a flight risk, would tamper with evidence, or influence witnesses. The Ld. Spl. Judge found that the respondent/accused had not evaded justice and had cooperated with the investigation. The court also noted that the main accused, including the respondent/accused's husband, had been granted interim protection by the Supreme Court, which reduced the likelihood of tampering with evidence or influencing witnesses. The court imposed conditions to ensure the respondent/accused's presence and cooperation.4. Examination of Legal Basis for Cancellation of Bail under Section 482 Cr.P.C.:The petitioner sought to set aside the bail order under Section 482 Cr.P.C., arguing that the Ld. Spl. Judge's order was perverse and based on irrelevant material. The court, however, found that the bail order was well-reasoned, based on relevant materials and evidence, and did not exhibit any serious infirmity or perversity. The court emphasized that cancellation of bail requires cogent and overwhelming circumstances, which were not present in this case. The court upheld the bail, noting that the respondent/accused had adhered to all conditions and there was no evidence of misuse of bail.Conclusion:The court dismissed the petition, upholding the order dated 28.03.2022 of the Ld. ASJ granting bail to the respondent/accused. The court found no legal infirmity or perversity in the bail order and emphasized that the special benefit conferred on a woman under Section 212(6) of the Companies Act was correctly applied. The court also noted the absence of any supervening circumstances necessitating cancellation of bail.