2025 (4) TMI 640 - SC - Companies Law

SC denies anticipatory bail to accused in economic offences who avoided warrants under Section 212(6) Companies Act

SERIOUS FRAUD INVESTIGATION OFFICE Versus ADITYA SARDA

SC set aside HC orders granting anticipatory bail to accused in economic offences case. Accused had avoided court proceedings despite non-bailable ... Grant of anticipatory bail - Avoidance of legal proceedings - no non-bailable warrant issued against the respondent - HELD THAT:- It is no more res integra that economic offences constitute a class apart, as they have deep rooted conspiracies involving huge loss of public funds, and therefore such offences need to be viewed seriously. They are considered as grave and serious offences affecting the economy of the country as a whole and thereby posing serious threats to the financial health of the country. The law aids only the abiding and certainly not its resistants. When after the investigation, a chargesheet is submitted in the court, or in a complaint case, summons or warrant is issued to the accused, he is bound to submit himself to the authority of law. If he is creating hindrances in the execution of warrants or is concealing himself and does not submit to the authority of law, he must not be granted the privilege of anticipatory bail, particularly when the Court taking cognizance has found him prima facie involved in serious economic offences or heinous offences - The High Courts should also consider the factum of issuance of non-bailable warrants and initiation of proclamation proceedings seriously and not casually, while considering the anticipatory bail application of such accused. In the instant case, as stated earlier, the Ministry of Corporate Affairs had directed the Appellant – SFIO to investigate into the affairs of 125 companies and on the completion of the investigation, the SFIO had lodged the private complaint before the Special Court against the accused including the respondents, alleging various serious offences under the Companies Act including Section 447 thereof and the offences under the IPC. It is pertinent to note that as per sub-section (6) of Section 212 the offence covered under Section 447 of the Companies Act has been made cognizable and the person accused of the said offence is not entitled to be released on bail or on his bond, unless twin conditions mentioned therein are satisfied. In a recent case in Union of India through Assistant Director vs. Kanhaiya Prasad, [2025 (2) TMI 563 - SUPREME COURT] it has been observed by this Court that cryptic orders granting bail without adverting to the facts or the consideration of such restrictive conditions with regard to the bail are perverse and liable to be set aside. Coming back to the facts of the present case, though the Special Court had taken cognizance of the alleged offences under the Companies Act including under Section 447 and other offences under the IPC, and even though the non-bailable warrants were issued from time to time against the Respondents, and even though the proclamation proceedings were initiated against them, the High Court has passed the impugned orders. In none of the impugned orders, the High Court has bothered to look into the proceedings conducted, and the detailed orders passed by the Special Court for securing the presence of the Respondents – Accused. It cannot be gainsaid that the judicial time of every court, even of Magistrate’s Court is as precious and valuable as that of the High Courts and the Supreme Court. The accused are duty bound to cooperate the trial courts in proceeding further with the cases and bound to remain present in the Court as and when required by the Court. Not allowing the Courts to proceed further with the cases by avoiding execution of summons or warrants, disobeying the orders of the Court, and trying to delay the proceedings by hook or crook, would certainly amount to interfering with and causing obstruction in the administration of justice. In the instant case, the Special Court considering the seriousness of the alleged offences had initially issued bailable warrants, however, the Respondents kept on avoiding the execution of such warrants and did not appear before the Special Court though fully aware about the pendency of the complaint proceedings against them. The Special Court therefore had to pass detailed orders from time to time for the issuance of non-bailable warrants, and thereafter had also initiated the Proclamation proceedings under Section 82 of the Code, for requiring respondents to appear before it. The High Court however without paying any heed to the proceedings conducted by the Special Court against the respondents, and ignoring the well settled legal position, granted anticipatory bail to the Respondents vide the impugned orders. As discussed earlier, the said Orders being perverse and untenable at law, cannot be allowed to be sustained, and deserve to be set aside. Conclusion - The High Court's orders granting anticipatory bail were in disregard of the mandatory conditions of Section 212(6) of the Companies Act and were therefore perverse and untenable. The impugned orders set aside - appeal allowed. 1. ISSUES PRESENTED and CONSIDEREDThe core legal issues considered in this judgment include:(i) Whether the issuance of non-bailable warrants and initiation of proclamation proceedings against the respondents was justified given their alleged avoidance of legal proceedings.(ii) Whether the High Court's decision to grant anticipatory bail to the respondents was in disregard of the mandatory conditions set forth in Section 212(6) of the Companies Act, 2013.(iii) The appropriateness of granting anticipatory bail in cases involving serious economic offences and the legal standards applicable to such decisions.2. ISSUE-WISE DETAILED ANALYSIS(i) Issuance of Non-Bailable Warrants and Proclamation Proceedings- Relevant Legal Framework and Precedents: Section 82 of the Cr.P.C. allows for proclamation proceedings when a person against whom a warrant has been issued is believed to be absconding or concealing themselves. The Court cited the case of Inder Mohan Goswami, which emphasizes the discretion of courts to issue non-bailable warrants under certain circumstances.- Court's Interpretation and Reasoning: The Court found that the respondents were actively avoiding legal proceedings by not appearing in court despite knowledge of the summons and pending complaint proceedings. This justified the issuance of non-bailable warrants and proclamation proceedings.- Key Evidence and Findings: The respondents were found to have avoided the execution of warrants and concealed themselves, as evidenced by the reports of unexecuted warrants.- Application of Law to Facts: The Court applied the principles from Inder Mohan Goswami to determine that the issuance of non-bailable warrants was appropriate given the respondents' conduct.- Treatment of Competing Arguments: The respondents argued they were unaware of the proceedings, but the Court rejected this, noting their anticipatory bail applications indicated awareness.- Conclusion: The Court concluded that the issuance of non-bailable warrants and initiation of proclamation proceedings were justified.(ii) High Court's Grant of Anticipatory Bail- Relevant Legal Framework and Precedents: Section 212(6) of the Companies Act mandates that certain conditions be met before granting bail for offences under Section 447. The Court referenced cases such as P. Chidambaram and Y.S. Jagan Mohan Reddy, which emphasize the cautious approach required for granting anticipatory bail in economic offences.- Court's Interpretation and Reasoning: The Court held that the High Court's orders granting anticipatory bail were in violation of Section 212(6) of the Companies Act, as the mandatory conditions were not considered.- Key Evidence and Findings: The High Court's orders were found to disregard the respondents' conduct and the legal requirements under Section 212(6).- Application of Law to Facts: The Court applied the principles from relevant precedents to determine that the High Court's orders were perverse and untenable.- Treatment of Competing Arguments: The respondents' reliance on precedents suggesting summons should precede warrants was dismissed as lacking merit.- Conclusion: The Court set aside the High Court's orders granting anticipatory bail, directing respondents to surrender.3. SIGNIFICANT HOLDINGS- The Court emphasized that economic offences constitute a class apart, requiring a different approach to bail, particularly anticipatory bail.- It reiterated that anticipatory bail is an extraordinary remedy and should be granted sparingly, especially in cases involving serious economic offences.- The Court held that the High Court's orders granting anticipatory bail were in disregard of the mandatory conditions of Section 212(6) of the Companies Act and were therefore perverse and untenable.- The Court directed the respondents to surrender before the Special Court and clarified that their bail applications should be decided in accordance with the law.- The Appeals arising out of certain Special Leave Petitions were allowed, while others were dismissed, reflecting the Court's nuanced approach to the different circumstances of each respondent.