TaxTMI 
TaxTMI 
TaxTMI 
2019 (9) TMI 570
X X X X Extracts X X X X
X X X X Extracts X X X X
.... fraudulently availed of credit from various lender banks and manipulated the books of accounts and financial statements of BSL, causing wrongful loss to banks and financial institutions amounting to Rs. 20,879 crores and causing wrongful gain to the promoters and their family members, amounting to around Rs. 3500 crores. Respondent No. 1 herein, Nittin Johari, who was the Chief Financial Officer and Whole Time Director (Finance) of BSL, as well as a member of the Committee of the Board of Directors on Borrowing, Investment and Loans during the relevant period, was alleged to have been a close associate of the promoters and to have played a central role in perpetrating these frauds. In particular, it is alleged that Respondent No. 1 played an active role in using fraudulent letters of credit to avail of credit from lender banks, in inflating Stock-in-Transit figures to avail of greater Drawing Power from banks, and in manipulating statements of accounts and other financial statements of BSL in the garb of adopting the Indian Accounting Standards. Investigation into the affairs of BSL and certain associated companies had been initiated by the Serious Fraud Investigation Office (....
X X X X Extracts X X X X
X X X X Extracts X X X X
....set, learned Solicitor General Shri Tushar Mehta, appearing on behalf of the Appellant, requested that as the proceedings in SFIO v. Neeraj Singal (Crl. Appeal No. 1114 of 2018) might be referred to by Respondent No. 1 to buttress his claim for bail on the ground of parity, it may be appropriate for this bench to also take up the proceedings related to the grant of interim bail to Neeraj Singal, currently pending before a coordinate bench of this Court, alongside the present petition. As of now, we do not find any ground to accept this request, and are therefore constrained to turn it down for the present. Learned Solicitor General also submitted that the relief of interim bail had been wrongly granted to co-accused Neeraj Singal by the High Court of Delhi when he mounted a challenge to the constitutionality of Section 212(6)(ii), (7) and (8) of the Companies Act, and not on merits. This order had thereafter been criticized by this Court in Criminal Appeal No. 1114 of 2018 in its order dated 04.09.2018, inter alia on the ground that the High Court should have at least considered the case for interim relief by applying the broad contours of Section 439 of the Cr.P.C. In this respect....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e High Court had erred in selectively referring to certain portions thereof, and had not appreciated that the extent of the role of Respondent No. 1 in the alleged offences had been made out extensively throughout the complaint. Additionally, reference was made to the mandatory conditions under Section 212(6)(ii) of the Companies Act, which require the Court to record its satisfaction that there exist reasonable grounds for believing that the accused is not guilty of the alleged offence and is not likely to commit any offence while on bail. It was argued that these conditions do not imply that an applicant would be kept in custody indefinitely. In this respect, our attention was drawn to the decision in Collector of Customs, New Delhi v. Ahmadalieva Nodira, (2004) 3 SCC 549, pertaining to an analogous provision (i.e. Section 37(1)(b)(ii) of the Narcotic Drugs and Psychotropic Substances Act, 1985), in which it was held that the term "reasonable grounds" refers to something more than prima facie grounds, and contemplates substantial probable causes for believing that the accused is not guilty of the offence concerned. Learned Solicitor General also referred to Nikesh Tarachand S....
X X X X Extracts X X X X
X X X X Extracts X X X X
....r Counsel also referred to Y.S. Jagan Mohan Reddy (supra), where the Court had given the accused therein liberty to renew his prayer for bail once the chargesheet had been filed. He also highlighted that bail had been granted within five days after the chargesheet had been filed. The decision of this Court in Sanjay Chandra v. Central Bureau of Investigation, (2012) 1 SCC 40, was also referred to, wherein bail had been granted since custody was felt to be unnecessary after the chargesheet had been filed. It was also contended that since BSL has been taken over by the Tata Group, there was no possibility of tampering with any evidence, as all relevant documents were either in the possession of the new owners of BSL or of the Court. Learned Senior Counsel further submitted that the Appellant had unfairly targeted Respondent No. 1 by arresting only him, although 287 parties, including 157 companies and 130 individuals, were named in the complaint. Further, he drew our attention to the order dated 16.08.2019 vide which the Special Judge has directed the parties to be summoned in batches until December 2019. It was further contended that the documents sought to be submitted by the A....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... particularly in the aftermath of the decision of this Court in Nikesh Tarachand Shah (supra) pertaining to a similar provision in the PMLA, we do not find it appropriate to make any observations in this regard in light of the pendency of the challenge to the constitutionality of the said provision of the Companies Act before this Court. 11. At this juncture, it must be noted that even as per Section 212(7) of the Companies Act, the limitation under Section 212(6) with respect to grant of bail is in addition to those already provided in the Cr.P.C. Thus, it is necessary to advert to the principles governing the grant of bail under Section 439 of the Cr.P.C. Specifically, heed must be paid to the stringent view taken by this Court towards grant of bail with respect of economic offences. In this regard, it is pertinent to refer to the following observations of this Court in Y.S. Jagan Mohan Reddy (supra): "34. Economic offences constitute a class apart and need to be visited with a different approach in the matter of bail. The economic offences having deep-rooted conspiracies and involving huge loss of public funds need to be viewed seriously and considered as grave offences aff....
X X X X Extracts X X X X
X X X X Extracts X X X X
....n our considered opinion, this vague observation demonstrates non-application of mind on the part of the Court even under Section 439 of the Cr.P.C., even if we keep aside the question of satisfaction of the mandatory requirements under Section 212(6)(ii) of the Companies Act. 14. Moreover, the fate of the co-accused promoters alleged to be the "mind and will" of the accused companies seems to have played heavily on the Court's mind. The High Court observed that while co-accused Brij Bhushan Singal had not been arrested due to his old age, co-accused Neeraj Singal had already been granted bail, vide order dated 29.08.2018. The Court noted that the order dated 29.08.2018 primarily dealt with the challenge mounted to the constitutional validity of various subsections of Section 212 of the Companies Act, and that though the operation of that order had been stayed by the Supreme Court, this was only because the observations made by the High Court in its order dated 29.08.2018 were of far-reaching consequences, and the release of such co-accused on bail had not been reversed. We refrain from making any observations with respect to the proceedings pertaining to Neeraj Singal, particu....