2023 (6) TMI 73 - HC - Companies Law

Applicant Granted Bail with Conditions

The court granted bail to the applicant, subject to conditions, including furnishing a personal bond, not leaving India without permission, and not ... Seeking grant of Regular Bail - alleged illegal movement of the goods worth Rs. 1,023 crores from the plant without raising invoices inter alia caused wrongful loss to BPSL - Fraud with the intent to injure interest of company punishable under Section 447 of the Companies Act - Siphoning off funds from BPSL in the form of bogus capital advances and routing the same as equity or unsecured loans to related entities of BPSL - Siphoning off funds from BPSL in the form of bogus advances to suppliers - Siphoning of funds through purchase of property through Assurity Real Estate LLP at Mumbai - Fraudulently availing the credit facilities from banks through the instrument of LCs by using false documents and other fraudulent activities punishable under Section 36(c) read with 447 of the Companies Act - Cheating upon the banks liable to be punished under Sections 120B, 417 and 420 of the Indian Penal Code, 1860 - Fraudulent inducement of banks as laid down in Section 36(c) of the Companies Act, punishable under Section 36(c) read with 447 of the Companies Act - Liability for making false representations in the financials for the Financial Year 2017-18, under Sections 129 and 448 read with 447 of the Companies Act - Falsification of books of accounts for not providing true and fair view of financials of BPSL for the financial year 2009-10 to 2016-17, liable for penal action under Section 129, 448 read with 447 of the Companies Act and Sections 211 and 628 of Companies Act, 1956 - Other fraudulent transactions punishable under Section 447 of the Companies Act - liability under Section 447 of the Companies Act, for misuse and fraudulent abuse of the structure of audit committee. HELD THAT:- This Court has to examine the case of the applicant with respect to the twin conditions contained in Sections 212(6)(i) and (ii) of the Companies Act, which are in addition to conditions for bail under Section 439 of the CrPC As mentioned hereinabove, the foundation of the case of the respondent with respect to the present applicant is that he was the Chief Financial Officer and being a Key Managerial Person had signed the financial statements of the year 2013-14 to 2016-17. The entire case of the respondent is primarily on the basis of aforesaid status of the present applicant. The material on record, by way of statements made by the entry operators, co-accused, employees of the companies, documents including the attendance registers of the board meetings as well as meetings of audit committee, as noted in the preceding paragraphs, prima facie indicates to the contrary. Reliance placed by the respondent on the statement made by Dinesh Kumar Behal to show that the present applicant attended the meetings is contradictory to their own documents which are contemporaneous in nature, which shows that the present applicant never attended the board meetings as well as audit committee. The veracity of the statement made by aforesaid Dinesh Kumar Behal will be tested at the time of his examination. The conspicuous absence of the present applicant’s name from the attendance registers of board meetings and audit committee will have a bearing for the purposes of deciding the present application. It is pertinent to note that while grave allegations have been made qua the applicant with regard to connivance/conspiring with the promoters and other co accused, but no allegation with regard to his receiving benefits have been made. Admittedly, the evidence in the present case is predominantly documentary in nature and it has been pointed out by learned Senior Counsel, the complaint is accompanied with documents contained in 09 trunks. It is common knowledge that the trial is likely to take a long time. The reliance placed by the respondents on the orders with regard to co-accused Amarjeet Sharma and Alkesh Sharma, dismissing their bail applications by a coordinate bench of this court is misplaced. The aforesaid order of the coordinate Bench was with respect to the contention of the said co-accused with regard to Section 167(2) of the CrPC In any case the present application is being decided on the basis of its own facts. It is further noted that the present applicant was granted interim bail during the pendency of the present bail application and he surrendered in time without misusing the liberty granted. In the present case, in view of the discussion made herein before, this Court is of the opinion that from the material brought on record, the requirements of Sections 212(6)(i) and (ii) of the Companies Act, are satisfied. The applicant is admitted to bail upon furnishing a personal bond in the sum of Rs. 5,00,000/- alongwith two sureties of like amount to the satisfaction of the learned Trial Court/Link Court, further subject to the conditions imposed - bail application allowed. Issues Involved:1. Grant of Bail under Section 439 of CrPC read with Section 212(6) of the Companies Act, 2013.2. Allegations of Fraud under various sections of the Companies Act and IPC.3. Role of the Applicant in the alleged fraudulent activities.4. Assessment of Evidence and the applicant's involvement.5. Application of Legal Principles for granting bail in economic offences.Summary:Issue 1: Grant of BailThe applicant sought regular bail under Section 439 of CrPC read with Section 212(6) of the Companies Act, 2013. The court examined whether the applicant satisfied the twin conditions under Section 212(6) of the Companies Act, which imposes stringent conditions for granting bail in cases involving economic offences.Issue 2: Allegations of FraudThe applicant, a Chartered Accountant associated with BPSL, faced allegations of fraud involving siphoning off funds, falsification of financial statements, and cheating banks. The specific charges included:- Charge 1: Fraud with intent to injure the company's interest under Section 447 of the Companies Act.- Charge 2: Fraudulently availing credit facilities from banks under Section 36(c) read with Section 447 of the Companies Act.- Charge 3: Cheating banks under Sections 120B, 417, and 420 of IPC.- Charge 4: Fraudulent inducement of banks under Section 36(c) read with Section 447 of the Companies Act.- Charge 7 & 8: Making false representations in financials under Sections 129 and 448 read with Section 447 of the Companies Act.- Charge 10: Other fraudulent transactions under Section 447 of the Companies Act.- Charge 11: Misuse and fraudulent abuse of the audit committee structure under Section 447 of the Companies Act.Issue 3: Role of the ApplicantThe applicant was alleged to have played a significant role in the fraudulent activities as the Chief Financial Officer (CFO) of BPSL. However, the applicant argued that he was merely a namesake CFO and not involved in the day-to-day financial operations or decision-making processes. The applicant's defense included:- No Direct Involvement: The applicant claimed that the financial statements were prepared under the supervision of Amarjeet Sharma at the Chandigarh office, while he worked from the Delhi office.- No Knowledge of Fraud: The applicant argued that he relied on others for the veracity of financial figures and was not aware of any fraudulent activities.- No Beneficiary: The applicant contended that there was no material evidence to show that he benefited from the alleged siphoned funds.Issue 4: Assessment of EvidenceThe court analyzed the evidence presented, including statements from entry operators and co-accused, attendance registers of board meetings, and the applicant's role in the company. Key findings included:- Statements of Entry Operators: None of the entry operators named the applicant in their statements.- Preparation of Financial Statements: The financial statements were prepared under the supervision of Amarjeet Sharma, and the applicant was not directly involved.- Attendance at Meetings: The applicant's name did not appear in the attendance registers of board meetings or audit committee meetings, contradicting the respondent's claims.Issue 5: Application of Legal PrinciplesThe court considered various legal precedents and principles, emphasizing the need for a prima facie assessment of the material on record. The court noted that:- Presumption of Innocence: The applicant is presumed innocent until proven guilty, and the stringent conditions for bail should be interpreted reasonably.- No Tampering or Flight Risk: The applicant had cooperated with the investigation, and there was no evidence of tampering with evidence or being a flight risk.- Delay in Trial: Given the voluminous documents and the likelihood of a prolonged trial, the applicant's right to personal liberty was considered.Conclusion:The court granted bail to the applicant, subject to conditions, including furnishing a personal bond, not leaving India without permission, and not tampering with evidence. The decision was based on the prima facie assessment of the evidence, the applicant's cooperation with the investigation, and the absence of any direct involvement or benefit from the alleged fraudulent activities.