2023 (5) TMI 251 - HC - Companies Law

Petitioner Granted Anticipatory Bail in Fund Siphoning Case

The court granted anticipatory bail to the petitioner in a case involving allegations of siphoning funds from a cooperative society. The court considered ... Seeking grant of anticipatory bail - Money Laundering - collection of huge amounts and after collecting these amounts floating of various companies numbering more than 100 in which said Mukesh Modi or his relatives were the Directors and the Co-operative society advanced loans to the said companies which were never repaid and thus the amount collected from innocent investors was siphoned off. HELD THAT:- Although right to seek anticipatory bail is not a fundamental right, yet an individual is having a right to life and liberty, as granted by Article 21 of the Constitution of India. However, the said right can very well be curtailed by the procedure established by law. The normal procedure for curtailing the liberty of a person accused in an offence is that the accused can be arrested even without warrants from the court. Same is the situation under the new Companies Act as well and the authorized officer/designated officer can arrest a person even without warrants issued from a Court. However, to ensure that an innocent person is not unduly harassed by taking him into custody, the Courts have been conferred a special power under Section 438 CrPC. But this power has to be exercised sparingly by the courts, keeping in view the mitigating circumstances showing the ex facie innocence of the accused vis-a-vis the allegations leveled against him and further, that in case the accused is granted protection, the investigation of the case would not be unduly hampered. In the present case, the petitioner was not apprehending his arrest so far as the investigation was over. The apprehension has arisen only from the impugned order issued by the Court for non-bailable offences. The petitioner is seeking protection against his arrest so as to appear before the trial court to face further proceedings in accordance with law. Hence, on its own facts, the present case stands on an altogether different footing. It is trite that grant of anticipatory bail, at the stage of investigation may frustrate the investigating agency in interrogating the accused and in collecting the useful information and also the materials which might have been concealed and grant of anticipatory bail, particularly in economic offences would definitely hamper the effective investigation. Admittedly, the investigation of the present case is already complete and no further recovery is to be made from the petitioner. In that eventuality, it would not be justified to put the petitioner put that bars as no useful purpose would be served. The Supreme Court in Siddharth vs. State of Uttar Pradesh & Ors. [2021 (8) TMI 977 - SUPREME COURT] while observing that it is not essential in every case involving cognizable & non-bailable offence to take the accused into custody at the time of filing of filing of charge-sheet especially where the accused have cooperated throughout the investigation, held that If the Investigating Officer has no reason to believe that the accused will abscond or disobey summons and has, in fact, throughout cooperated with the investigation we fail to appreciate why there should be a compulsion on the officer to arrest the accused. Considering the fact that investigation of the case is complete; nothing more is to be recovered from the petitioner; undisputedly the petitioner fully cooperated with the investigating agency; apart from the undertaking given before this Court to the effect that the petitioner is ready and wiling to join the investigation, if any; and also keeping in view the education, antecedents and character of the present petitioner, the petitioner is not likely to flee from the course of justice since there is nothing on record to suggest that if the petitioner is granted concession of anticipatory bail, he would influence any witness in the case; and that admittedly, the petitioner has already left the company much before the start of investigation, this Court is of the considered view that the petitioner deserves to be granted the concession of anticipatory bail, at this stage. The petitioner shall be released on bail, at this stage, by the trial court on his furnishing bail bonds/sureties to its satisfaction - Petition allowed. Issues Involved:1. Grant of anticipatory bail.2. Allegations of siphoning funds.3. Applicability of Companies Act provisions.4. Investigation status and petitioner's role.5. Comparison with other legal precedents.Summary:1. Grant of Anticipatory Bail:The petitioner sought anticipatory bail for a complaint involving multiple sections of the Companies Act, 1956 and 2013, and the IPC, pending before the Special Judge, Gurugram. The court acknowledged that while the right to anticipatory bail is not fundamental, it is a safeguard under Section 438 CrPC to prevent undue harassment, provided the accused's innocence is evident and the investigation would not be hampered.2. Allegations of Siphoning Funds:The prosecution alleged that the petitioner, associated with Adarsh Credit Co-operative Society Ltd. (ACCL) and its related entities, siphoned off Rs.30.21 crores. The petitioner argued that he was not involved with the implicated companies and had no role in the alleged siphoning. The respondent contended that the petitioner misused his position to siphon funds through fraudulent transactions.3. Applicability of Companies Act Provisions:The petitioner argued that the term 'deposit' under Rule 2(b) of the Companies (Accepting of Deposit) Rules, 1975, did not apply as the funds were loans from another legal entity. The court agreed, stating that the word 'deposit' in this context could not implicate the petitioner under the alleged offences.4. Investigation Status and Petitioner's Role:The investigation was complete, and no further recovery was needed from the petitioner. The petitioner had cooperated with the investigation and was not arrested during this period. The court noted that the petitioner had resigned from the implicated company before the fraudulent activities were discovered.5. Comparison with Other Legal Precedents:The court considered precedents like Vijay Madanlal Choudhary & Ors. vs. UOI & Ors., noting that the Companies Act differs from the PMLA Act in terms of investigation needs. The court emphasized that economic offences should be evaluated on a case-by-case basis, and anticipatory bail should not be denied solely based on the gravity of the offence. The court also referenced cases where co-accused were granted bail, reinforcing the petitioner's eligibility for bail.Conclusion:Given the completed investigation, the petitioner's cooperation, and lack of evidence suggesting he would flee or influence witnesses, the court granted anticipatory bail. The petitioner is to be released on bail by the trial court upon furnishing bail bonds/sureties.