TaxTMI 
TaxTMI 
TaxTMI 
2018 (5) TMI 330
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....s, who filed these applications, have not indulged in the fraud said to have taken place in respect to Gitanjali Group Companies. 2. Their common grievance is that they have been put to such a hardship that they could not even withdraw money from their Bank Accounts and deal with their assets for the fraud said to have been played by somebody else. Their common submission is that though no allegation has been made against them and no incriminating material being placed before this Bench showing these Respondents indulged or participated in anything that assisted or aided the culprits indulged in the fraud, henceforth sought for vacation of the order dated 23.02.2018 against the Applicants/Respondents. 3. Since the grievance of all these Respondents being more or less common, instead of passing separate orders repeating same discussion in each of the applications, we hereby pass common order dealing with pleadings of each of the Applicants/Respondents separately. 4. For the Counsel appeared in various applications having adopted the arguments made by Sr. Counsel Mr. Iqbal Chhagla in MA 182/2018, we first deal with MA 182/2018, thereafter deal with remaining applications. 5. One ....
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....6, he retired from Pepsico as Vice President-Strategy and Business Transformation for Pepsico India, Middle East and North Africa. All through his life, he is free from any blemish. He was in fact informed through a friend in the year 2016 that Nirav Modi scouting for persons to serve as Non-Executive Independent Directors in his companies, that is how he was introduced to Nirav Modi vide an email dated 21.9.2016. An email exchange took place, until such time, he did not have any kind of contact with Mr. Nirav Modi. When this issue came out, Mr. Nirav Modi spoke to him on 3.2.2018, assuring that CBI investigation was not against Firestar, he says however he would resolve the matter with his bankers but finally this issue has come out reporting that Mr. Nirav Modi himself was involved in the fraud. As soon as this information came to him, he tendered his resignation on 7.2.2018. Subsequent to this, i.e. Union of India filed this case including this applicant as R52 on 23.2.2018. Above this, PNB has filed another complaint dated 4.3.2018 leading to the registration of FIR wherein he has not been made as accused nor there is any averment to the effect that he was complicit in the frau....
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....n the present Company petition. 11. When the Applicant Counsel has made his argument, the officer appearing on behalf of Union of India has stated that investigation is in progress therefore they need some time to respond to the submissions of the Applicant Counsel. When this Bench has put it to the said officer as to whether any material has been gathered to say that this applicant is involved in the fraud taken place, no answer has come from the said officer except arguing on legal propositions such as doctrine of preponderance of evidence against proof beyond reasonable doubt and its application and showing some citations not connected to the present application filed by this applicant. The said officer has not shown any incriminating material against this Applicant save and except saying that he is an Independent Director of Firestar at the time when fraud took place, therefore restraint order should not be vacated unless investigation is complete. 12. One thing is pertinent to note that this ex parte order was given on 23.2.2018, by now already one month is over, when such an ex parte restraint order is in force against somebody upon whom no specific allegation has been made....
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....ning such removal or transfer etc. 18. For passing this order under this Section, it need not be looked into as to whether enough material is placed before this Bench at the time of passing this order, because at the time of investigation, the investigating agency will proceed with investigation with the leads come to it, in a position like that, it need not be seen whether it is governed by civil jurisprudence or criminal jurisprudence. I can rather say that elements of the section are akin to the procedure laid under CrPC. For this section is clear to pass an order, if this Bench is of the view that there is a reasonable ground to believe the assets are likely to be dissipated if immediate action is not taken, it can pass such an order. 19. Since it is a web of companies involved in committing fraud against public sector bank causing colossal loss to the public institution, there is every chance to believe that the persons involved in those companies can be at fault in respect to this fraud. One fact we should not forget is, that all the companies referred in the petition, prima facie we are of the view, are handwork of either Nirav Modi or Mehul Choksi. In this complexity, it ....
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....nst the culprits hidden under it? That money is not in the books of at least companies in India. Linchpins in this fraud are not in India. Everybody knows it goes without saying that when granting consequential relief is imperative to attain the purpose of main relief, courts can reach out to pass such reliefs as well. 22. This relief u/s. 221 cannot be conceived as relief like in civil case asking for filing reply, rejoinder - the reason is, it is not on adjudication of rights of the parties, it is an aid to action under criminal law, because as I said earlier this procedure is akin to the procedure under CrPC, investigating officer of SFIO on the direction of Central Government will file its report before special court as police officer files charge sheet (final report) u/s. 173 of CrPC to prosecute the accused as mandated u/s. 212 of Companies Act, 2013, moreover it is a temporary injunction not culminating into a permanent order, therefore even for a moment, this order can't be seen as akin to an order in civil nature, when that being the intendment of the statute, for granting an aid to investigation, I don't believe it is imperative to hear such people who indulged i....
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...., it is important to examine the facts before applying the reasons given in MA 182/2017. 26. This applicant is also an Independent Director of Firestar (R8) and Firestar Diamond (R9). He was appointed as Independent Director in July, 2015 and resigned on 5.2.2018 from both the companies. He says he has over 37 years of professional experience and has served well reputed multinational companies including Wipro in senior position in India. He is a Chartered Accountant with distinguished track record, Member of Board in Wipro till his superannuation in March, 2015. He is also a Member in SEBI's Committee on Disclosure & Accounting standards and national Advisory Committee on Accounting Standard set up by Government of India, currently this applicant is Chairman of Audit Committee as well as a Director of Wipro Enterprise Pvt Ltd. This gentleman also having come to know fraud happened in PNB, he tendered his resignation to position of Independent Director in R8 and R9 on 5.2.2018. He also submits like other persons the order dated 23.2.2018 has caused tremendous distress to this applicant and he is not permitted to operate his accounts and deal with his properties because of this ....
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....t this Respondent is hereby vacated. 30. As to MA 184/2018, it is an MA filed by a person called Sanjay Rishi (R53), represented by Senior Counsel Mr. Seervai, submits that he continued as Independent Director of R8 from 6.12.2016 till 7.2.2018. During this period, he says, he did not come across suspicious transactions warranting his interference. As soon as the news of fraud has come out on 5.2.2018, he immediately tendered his resignation on 7.2.2018. He says that he has no association whatsoever with any of Nirav Modi or Choksy Companies except to the extent worked as Non-Executive Independent Director for the period mentioned above. During the period of his engagement as Non-Executive Independent Director of R8, he attended board and committee meetings for which he received remuneration approved by the Board of Directors from time to time in accordance with the provisions of Companies Act, 2013. 31. As to his personal position, it has been said he has over 36 years' professional experience, served in well reputed multinational companies including American Express Banking Corporation at senior position in India and overseas. He completed MBA in the faculty of Management S....
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....n the year 2013, the applicant who was due to retire by rotation did not offer for himself for re-appointment and necessary resolution was passed in AGM on 30.9.2013 and also filed form 32 reflecting cessation of directorship from the year 2013, ever since he has no connection with this company. He says inspite of it, in the Company Petition this applicant has been shown as one of the Director/Key Managerial person of R-l company during which period financial fraud was committed. His name was not mentioned in the PNB letters or the FIR filed by PNB. 34. This applicant submits that the order dated 23.02.2018 is contrary to law as well as to the facts and material available on record, hence it is arbitrary, unreasonable, unwarranted, baseless, and erroneous. He says that section 221 itself says that it is not applicable against individuals, however this Bench still passed blanket order injuncting individuals from dealing with their assets, hence order to be quashed and set aside. Since this order has been communicated to various banks and authorities, applicants credit card has been blocked causing hardship to his life and privacy because he is required to provide food for his famil....
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....e says that other than the customer sitting fees in respect of attending the meeting of Rl and Nakshatra World, the applicant has not received any benefit whatsoever from Rl, Nakshatra World, R14 or any of R14 companies, concerns, associated with or belonging to R14. 38. The argument of the advocate on behalf of this Applicant (R38) is investigation against Independent Director in respect of act of omission or commission by a company can only be initiated where there is at least a prima facie proof that such acts occurred with his knowledge. He also argued referring the circular issued by MCA on 25.3.2011 and also a circular issued by RBI on 1.7.2015 under the caption of "Master Circular on Wilful Defaulters" to say that this kind of action should not be taken against Independent Directors unless prima facie some proof is available to say that the Independent Director is involved in the fraud set to have committed by the persons mentioned in the Company Petition, in view of the same, this Counsel has sought for vacation of restraint order dated 23.2.2018 against this applicant and also delete her name from the parties of the captioned petition. 39. In support of this Application ....
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....ication is hereby disposed of. 42. As to MA 219/2018 filed by Mr. Anil Haldipur (R35), he says that he joined as an Independent Director of Rl and R3 and ceased to be Non-Executive Independent Director with effect from 14.2.2018. He says that he acquired 40 years' experience in the banking and finance sector for he worked as Assistant General Manager of Canara Bank until he retired from the said bank from 31.10.2011. In the month of September, 2016 through somebody, he was being informed about need of an Independent Director in Gitanjali Group companies. For he was asked to become Independent Director of this Gitanjali Group companies, he consented to become an Independent Director of R3. Accordingly, he was appointed as Independent Director on the board of R3 on 16.12.2016, likewise he became an Independent Director in two more companies i.e. Nakshatra World Ltd. and Bezal Jewellery Pvt. Ltd. 43. He says his wife is diabetic patient and had undergone a spine surgery on 15.11.2017, since his services were acquired to spare to his wife, he tendered his resignation on 20.12.2017, however, that being neglected to be sent to ROC, he once again sent his resignation letter through ....