TaxTMI 
TaxTMI 
2019 (12) TMI 396
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....t the outset that this case is one of the cases in a bunch; which were heard together. However, for making the things more distinct these cases are being decided vide separate judgments. However, since several aspects of the matter are common to all the cases and have even been argued on similar lines and even jointly, therefore, some aspects of the matter would form part of all the judgments. The brief facts constituting allegations in this case are that one Multilevel Co-operative Society was got registered by one Mukesh Modi and family in the name of Adarsh Credit Co-operative Society Ltd. (hereinafter referred to as the Co-operative Society or (ACCSL). That Co- operative Society collected deposits from about 22 lakh investors. In the process about Rs. 5000Crores were collected from investors from general public; which remained unreturned to the investors and, accordingly an amount of approximately Rs. 9253Crores, including interest, is reflected in the accounts of the Society ACCSL, as payable to the investors. After collecting this money from the public, Mukesh Modi and family created a large number of Companies under the aegis of Adarsh Group of Companies Ltd. (AGCL), with....
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....t under Section 447 of Companies Act, 2013 and under Sections 417, 418, 420, 467, 468, 471, 474 and 477 of the IPC, some of which are cognizable and non-bailable as per the provisions of the New Companies Act, 2013; and which are punishable with upto 10 years of imprisonment. However, during investigation the investigating officer had not arrested the present petitioner. But since the petitioner was also summoned for non-bailable offences, inviting severe punishments, therefore after appearing before the Special Court the petitioner applied for bail pending trial before the Special Court. Since the case involved a large number of accused and their bail applications were being taken-up by the Special Court for decision collectively, which would have taken lot of time for final decision, therefore, in the first instance; the petitioner was granted the interim bail by the trial court, however, ultimately the bail was declined by the Special Court vide order dated 28-08-2019. Hence, the present petition has been filed by the petitioner seeking bail pending trail. Further elaboration of the allegations of the prosecution, specific to the petitioner is; that when the account of the ab....
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....ort receipts; which were recovered from the records of the Cooperative Society; were admitted by the petitioner to have been transacted by him. The receipts were verified from the mentioned transporter; J. K. Movers. The said transporter denied having transported any material; which was reflected in the transportation receipts showing his company to be the transporter. These entries were not even reflected in his ledger for the relevant financial year 2016-17. Hence, these fake transport receipts showing transport of suit lengths; created doubt about the actual supply and transport of the suit lengths by or through the petitioner or his Companies. On further verification of the accounts of the co-operative society, it was allegedly found; and it was so confirmed by the accounting software used by the Co-operative Society; for maintaining its accounts; that all these entries regarding the purchase of suit lengths were actually made within a few days after the announcement of demonetization by the Central Govt., whereas, these were shown in the records for different dates; by ante-dating the entries as per the dates mentioned on the allegedly fake invoices and bills issued by the pet....
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....omplaint or the proceedings are initiated as on the police report, the court takes cognizance under section 190 of Cr.P.C. and the process is to be issued against the accused under section 204 of Cr.P.C. The provision of section 204 (5) of Cr.P.C. makes the issuance of the summons or warrants of process subject to the provision of section 87 of Cr.P.C. which contains the rules regarding process. Section 87 empowers the court to issue summons or warrant, as the case may be. But section 87 is followed by section 88 of Cr.P.C. which prescribes that when a person against whom the court is empowered to issue summons or warrant; is present in the court the court may require him to execute a bond with or without sureties for his appearance. Hence it is argued that when an accused is already present before the court then the court is not empowered to issue warrant for taking a person in custody. Such a person is entitled to be released on bail on bonds or sureties. Therefore, once the petitioner had appeared before the trial court, pursuant to the summons issued by that court, then the petitioner had got an un-defeatable right to get bail as per the provisions contained in section 88 of Cr....
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....he petitioner that the trial court has wrongly taken into consideration the twin conditions, as prescribed under section 212 (6) of the new Companies Act for declining bail to the petitioner. Referring to the judgment of the Hon'ble Supreme Court, in case of Nikesh Tara Chand Shah V/s Union of India and another (2018) 11 SCC 1, learned Counsel for the petitioner has submitted that the Language of section 212 (6) of the new Companies Act is pari- materia with the languages of section 45 of the Prevention of Money Laundering Act. However the Supreme Court has already declared the language of the twin conditions used in the Prevention of Money Laundering Act, as ultra vires. Hence the twin conditions, as contained in section 212 (6) of the new Companies Act, has also to be treated as ultra vires the Constitution of India and as infringing upon the rights of the individual. Hence the trial court could not have invoked the twin conditions, as prescribed under section 212 (6) of the new Companies Act, for declining bail to the petitioner. Referring to the same judgment, and Counsel for the petitioner has submitted that even if those twin conditions are to be applied, those would have bee....
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....f the case also had the power of recording the statement on oath and also very wide power to arrest a person during the investigation, therefore he had the potential to pressurize the accused, and hence any inculpating statement, allegedly recorded by him during the investigation; cannot be relied upon against the petitioner. Besides the disclosure of the statement of the petitioner, there is either the statement of the co-accused, which again, is not admissible in evidence against the petitioner, or there is statement of one more witness, which is nothing but the hearsay account of the incident, as might have been put up to the said witness by the investigating officer of the case by referring him to the alleged computer records of the petitioner. Therefore even the statement of the said witness is no evidence in the eyes of law. Still further it is submitted by the Counsel for the petitioner that the petitioner is not involved in directly dealing with the public money, which was allegedly in the hands of the Company of Adarsh Group of Companies. The embezzlement of the money, even as per the case of the prosecution, has been committed by the controllers of the Adarsh Group of Com....
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....ch a person has got a right to be released on bail, in case the charge-sheet is filed against such person and he is produced or appears before the court. Once a person facing the charge-sheet appears before the trial court or he is brought before the court, thereafter it is for the Court to take a call on custody of the accused. If the court finds it appropriate to release such a person on bail, keeping in view the facts and circumstances of the case, then he may be released on bail. However, if the court comes to the conclusion otherwise, then court may send the person to the custody during the pendency of the trial. Just for example, learned Counsel for the SFIO has submitted that even section 437 Cr.P.C. contemplate such a situation; where a person appears before a Magistrate and such a person is accused of the offences specified therein, then there is a prohibition in that provision that such a person is to be released on bail, unless the Magistrate had some special reasons for granting bail. Elaborating further it is submitted that even where there is prohibition against the grant of the bail, law contemplates situations where the court can grant bail if there are some special....
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....re the court pursuant to the summons issued by a court. As submitted above, and as clarified by the judgments of the Supreme Court mentioned herein above, it is the discretion of the court whether to grant bail to the accused or not. In case of Pankaj Jain (Supra) even the judgment in case of Dalip Singh (Supra), being relied upon by the petitioner, has been considered by the Supreme Court. Therefore, while considering the question of bail to the accused, the court has to take into consideration the relevant factors; meant for consideration of the bail with reference to the provision under which the accused is sought to be prosecuted, besides the other factors, as has been specified by the judicial pronouncements from time to time. Coming to the factors required to be taken into consideration in case of the petitioner; for granting bail, the Counsel for the SFIO has submitted that the petitioner has been charge-sheeted under section 447 of the new Companies Act. Section 212(6) of the new Companies Act provides that in case of chage-sheet being filed for the offences covered by section 447 no court shall grant bail to the accused unless the twin conditions prescribed under sectio....
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....prescribed under section 212 (6) of the new Companies Act; as well as by taking into consideration the other relevant factors; which were spelt out in case of Y.S. Jagan Mohan Reddy V/s Central Bureau of Investigation, (2013) 7 SCC 439, and which have been reiterated in case of Nitin Johari (supra). Hence this court should also take into consideration the scope and effect of the twin conditions as prescribed under section 212(6) of the Companies Act. On the point of evidence against the petitioner, the counsel for the SFIO has submitted that the petitioner and his companies have been instrumental in swindling of an amount of Rs. 90 Crores approximately out of total swindled amount of Rs. 4140Crores; which was swindled by the Adarsh Group of Companies through their subsidiaries. The petitioner has issued fake bills for an amount of space 223.775 Crores to the Co-operative Society and to Companies of the Adarsh Group of Companies, for supply of the suit lengths and some other cloth materials. Most of these transactions are stated to be in cash. However there is no deposit of the corresponding amounts in the account of the petitioner or his Companies. The petitioner has been indulg....
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....the Company of one Ajay Agrawal. However, the owner of the said company has also been joined into the investigation and he has also stated that neither he had ever supplied the said material to the Co-operative Society, nor had he ever authorized the petitioner to issue any bills / invoices on behalf of his Companies. Hence the petitioner has been found to be creating the bills/invoices on behalf of other persons also, which has been totally denied by the concerned persons. The petitioner has made admission regarding the said entries and the data was taken from his computer in his presence and was also sealed in his presence. All the requisite certificates under section 65-B of the Evidence Act has been duly submitted to the court qua all the electronic records. Hence there is a disclosure statement of the petitioner and also the disclosure statement of the co-accused, which have led to the recoveries. Beside this there are independent witnesses who have deposed against the petitioner. Therefore if the entire material on record against the petitioner is taken into consideration, by any means; it cannot be said that petitioner is not guilty of the offences under the Companies Act. S....
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....etitioner to collect cash from 30 companies of the Adarsh Group of Companies. That cash amount is stated to have been received by the petitioner, but is not found to have been deposited in the bank accounts. These facts were confirmed even by the confirmation ledger signed by the petitioner. The participation of the petitioner has duly been established as per the record. Conduct of the petitioner has also not been exemplary in the past. Appreciating it from the disposition of the petitioner, it cannot be ruled out that the petitioner is likely to influence the witnesses and to destroy the evidence against him. Hence the petitioner does not deserve to be granted bail. The court below has rightly dismissed the bail application filed by the petitioner. Hence the present petition be also dismissed. Replying to the argument of the counsel for the SFIO, Ld. Counsel for the petitioner submitted that there is absolutely no evidence against the petitioner. There has been no irregularity in the accounts of the petitioner for the year 2014-2016. The antedated entries, if any, are found only in the accounts of the Co-operative Society and not in the accounts of the petitioner or his comp....
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....ourt has to be liberal in granting the bail, because bail is the rule and the jail is only an exception. This court has heard the learned Counsel for the parties at length and has perused the record. But at the outset it deserves mention that although the counsel for the parties have raised the arguments in extensive details; concerning all the aspects of the matter, including those of the facts and the questions of law, including the ones touching upon the constitutional validity of certain provisions involved in this case, however this court is of the opinion that it may not be appropriate to deal with and decide all the arguments in the same extensive details; in the present proceedings, lest the case of either side should be prejudiced at this stage itself. However, since in this fiercely contested matter the parties have pressed the arguments, therefore, this court is, obviously, expected to deal with the same, at least, in skeletal manner. Accordingly, the arguments are being considered by this court. First of all, although it is much stressed by the counsel for the petitioner that since he was not arrested during the investigation by the investigating officer and he hi....
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.... only thereafter the issuance of the non- bailable warrant. However, section 87 of the Cr.P.C. creates an exception to this general procedure and empowers the court to issue warrant of arrest in the first instance itself; if it is of the opinion of the existence of the factors mentioned in this section. Likewise, Section 88 contemplates a general provision for making sure that a person whom the court has already called through the summons or warrant or whom the court considered appropriate to remain present in subsequent dates; can be bound down for such appearance. In fact, this section is more in the nature of inclusive power of the criminal court to seek presence of any person connected with the case, in any manner whatsoever, even if such person may not be mentioned in the case; either as an accused or as a witness. This provision is intended to include even those persons who may be present before the court by chance or who might be watching the proceedings as such. Even if a person is otherwise present before the court, the court may ask such a person to execute the bonds or the securities for his appearance in future. The only requirement is that court requiring such bonds an....
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....lied upon by the petitioner, has been considered by the Supreme Court and it has been held that question of grant of bail is primarily a matter of judicial discretion of the court and not any right of the accused. Although learned Counsel for the petitioner has also raised an allied argument on the same lines, by submitting that question of 'Bail' would arise only if a person is first arrested by the investigating officer and then he is brought before the court, and further that if a person himself has appeared before the court; pursuant to the summons issued by the court, then he is not to be sent to the custody, rather, he should be released on bail by asking him to furnish the bonds/sureties under section 88 of Cr.P.C. However, this court does not find any substance even in this allied argument. As observed above, Chapter VI; which contains section 88, is relating only to ensure the presence of a person before the court. If a person is summoned by the court as an accused, then the question of bail to him is to be decided by the court as per the provisions contained in Chapter XXXIII of Cr.P.C. This is so made clear by the bare language of sections 436 and 437 and the Section ....
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.... with death, imprisonment for life or imprisonment for seven years or more, or he had been previously convicted on two or more occasions of a cognizable offence punishable with imprisonment for three years or more but not less than seven years. Provided that the Court may direct that a person referred to in clause (i) or clause (ii) be released on bail if such person is under the age of sixteen years or is a woman or is sick or infirm : Provided further that the Court may also direct that a person referred to in clause (ii) be released on bail if it is satisfied that it is just and proper so to do for any other special reason : Provided also that the mere fact that an accused person may be required for being identified by witnesses during investigation shall not be sufficient ground for refusing to grant bail if he is otherwise entitled to be released on bail and gives an undertaking that he shall comply with such directions as may be given by the Court] : [Provided also that no person shall, if the offence alleged to have been committed by him is punishable with death, imprisonment for life, or imprisonment for seven years or more, be released o....
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....e recorded in writing, the Magistrate otherwise directs. (7) If, at any time after the conclusion of the trial of a person-accused of a non-bailable offence and before judgment is delivered, the Court is of opinion that there are reasonable grounds for believing that the accused is not guilty of any such offence, it shall release the accused, if he is in custody, on the execution by him of a bond without sureties for his appearance to hear judgment delivered. SECTION 439 : SPECIAL POWERS OF HIGH COURT OR SESSIONS COURT REGARDING BAIL:- (1) A High Court or Court of Session may direct - (a) that any person accused of an offence and in custody be released on bail, and if the offence is of the nature specified in subsection (3) of Section 437, may impose any condition which it considers necessary for the purposes mentioned in that sub-section. (b) that any condition imposed by a Magistrate when releasing any person on bail be set aside or modified : Provided that the High Court or the Court of Session shall before granting bail to a person who is accused of an offence which is triable exclusively by the Court of Session or which, though not ....
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....ences under the New Companies Act 2013. However, before proceeding further, it would be appropriate to have a reference to the relevant provisions of the new Companies Act 2013, which are as reproduced hereinbelow:- "SECTION 210. Investigation into affairs of company.- (1) Where the Central Government is of the opinion, that it is necessary to investigate into the affairs of a company,- (a) on the receipt of a report of the Registrar or inspector under section 208; (b) on intimation of a special resolution passed by a company that the affairs of the company ought to be investigated; or (c) in public interest, it may order an investigation into the affairs of the company. (2) Where an order is passed by a court or the Tribunal in any proceedings before it that the affairs of a company ought to be investigated, the Central Government shall order an investigation into the affairs of that company. (3) For the purposes of this section, the Central Government may appoint one or more persons as inspectors to investigate into the affairs of the company and to report thereon in such manner as the Central Government may ....
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....Criminal Procedure, 1973, (2 of 1974) (offences covered under section 447) of this Act shall be cognizable and no person accused of any offence under those sections shall be released on bail or on his own bond unless - (i) the Public Prosecutor has been given an opportunity to oppose the application for such release; and (ii) where the Public Prosecutor opposes the application, the court is satisfied that there are reasonable grounds for believing that he is not guilty of such offence and that he is not likely to commit any offence while on bail: Provided that a person, who, is under the age of sixteen years or is a woman or is sick or infirm, may be released on bail, if the Special Court so directs : Provided further that the Special Court shall not take cognizance of any offence referred to this sub-section except upon a complaint in writing made by - (i) the Director, Serious Fraud Investigation Office; or (ii) any officer of the Central Government authorised, by a generalor special order in writing in this behalf by that Government. (7) The limitation on granting of bail specified in sub-section (6) is in addition t....
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.... directly or indirectly connected with the affairs of the company. (15) Notwithstanding anything contained in this Act or in anyother law for the time being in force, the investigation report filed with the Special Court for framing of charges shall be deemed to be a report filed by a police officer under section 173 of the Code of Criminal Procedure, 1973. (16) Notwithstanding anything contained in this Act, anyinvestigation or other action taken or initiated by Serious Fraud Investigation Office under the provisions of the Companies Act, 1956 shall continue to be proceeded with under that Act as if this Act had not been passed. (17) (a) In case Serious Fraud Investigation Office has been investigating any offence under this Act, any other investigating agency, State Government, police authority, income-tax authorities having any information or documents in respect of such offence shall provide all such information or documents available with it to the Serious Fraud Investigation Office; (b) The Serious Fraud Investigation Office shall share any information or documents available with it, with any investigating agency, State Government, police a....
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....uire any of those persons to appear before him personally: Provided that in case of an investigation under section 212, the prior approval of Director, Serious Fraud Investigation Office shall be sufficient under clause (b). (5) Notwithstanding anything contained in any other law for the time being in force or in any contract to the contrary, the inspector, being an officer of the Central Government, making an investigation under this Chapter shall have all the powers as are vested in a civil court under the Code of Civil Procedure, 1908 (5 of 1908), while trying a suit in respect of the following matters, namely:- (a) the discovery and production of books of account and other documents, at such place and time as may be specified by such person; (b) summoning and enforcing the attendance of persons and examining them on oath; and (c) inspection of any books, registers and other documents of the company at any place. (6) (i) If any director or officer of the company disobeys the direction issued by the Registrar or the inspector under this section, the director or the officer shall be punishable with imprisonment which may extend....
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....e deemed expedient for implementing the agreement with that State. (11) Notwithstanding anything contained in this Act or in the Code of Criminal Procedure, 1973 (2 of 1974) if, in the course of an investigation into the affairs of the company, an application is made to the competent court in India by the inspector stating that evidence is, or may be, available in a country or place outside India, such court may issue a letter of request to a court or an authority in such country or place, competent to deal with such request, to examine orally, or otherwise, any person, supposed to be acquainted with the facts and circumstances of the case, to record his statement made in the course of such examination and also to require such person or any other person to produce any document or thing, which may be in his possession pertaining to the case, and to forward all the evidence so taken or collected or the authenticated copies thereof or the things so collected to the court in India which had issued such letter of request: Provided that the letter of request shall be transmitted in such manner as the Central Government may specify in this behalf: Provided furth....
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....as at any relevant time been the company's managing director or manager or employee, he shall, subject to the prior approval of the Central Government, investigate into and report on the affairs of the other body corporate or of the managing director or manager, in so far as he considers that the results of his investigation are relevant to the investigation of the affairs of the company for which he is appointed." "Section 229 "Penalty for furnishing false statement, mutilation, destruction of documents- Where a person who is required to provide an explanation or make a statement during the course of inspection, inquiry or investigation, or an officer or other employee of a company or other body corporate which is also under investigation, (a) destroys, mutilates or falsifies, or conceals or tampers or unauthorisedly removes, or is a party to the destruction, mutilation or falsification or concealment or tampering or unauthorised removal of, documents relating to the property, assets or affairs of the company or the body corporate; (b) makes, or is a party to the making of, a false entry in any document concerning the company or body corporate; ....
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....it thinks fit, try in a summary way any offence under this Act which is punishable with imprisonment for a term not exceeding three years: Provided that in the case of any conviction in a summary trial, no sentence of imprisonment for a term exceeding one year shall be passed: Provided further that when at the commencement of, or in the course of, a summary trial, it appears to the Special Court that the nature of the case is such that the sentence of imprisonment for a term exceeding one year may have to be passed or that it is, for any other reason, undesirable to try the case summarily, the Special Court shall, after hearing the parties, record an order to that effect and thereafter recall any witnesses who may have been examined and proceed to hear or rehear the case in accordance with the procedure for the regular trial." "Section 438 of the Companies Act, 2013 : Application of Code to proceedings before Special Court.- Save as otherwise provided in this Act, the provisions of the Code of Criminal Procedure 1973 (2 of 1974), shall apply to the proceedings before a Special Court and for the purposes of the said provisions, the Special Court shall be deemed to ....
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....r not there is any wrongful gain or wrongful loss; (ii) "wrongful gain" means the gain by unlawful means of property to which the person gaining is not legally entitled; (iii) "wrongful loss " means the loss by unlawful means of property to which the person losing is legally entitled;" Referring to the provision of the section 212 the counsel for the petitioner has laid stress on the above-mentioned argument that the Investigating Officer has vast powers to arrest the accused if he had the valid reasons and material with him to justify the arrest. If during the investigation he had the material and he did not find the arrest of the petitioner to be justified then there is no reason for the court to take the petitioner into custody on the basis of the same material which the investigation officer had placed on record before the Court. In effect, the argument of the counsel is that the same material cannot be interpreted in two different manners, one by the Investigating Officer and the other by the Trial Court. However, this court does not find any substance in this argument as well. The provision regarding arrest of a person during investigation under the new C....
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....not arrested by the investigating officer under Section 212(8) during the investigation, does not show either the non-existence of the material sufficient to arrest such an accused nor does such a non-arrest, necessarily, has any reference to any application of mind by the Investigating Officer; to the material available with him; qua the guilt of the accused. Needless to say, that under section 212(8) the investigating officer of the case is required to consider the material and record reasons only when he decides to arrest a person and not otherwise. But when the matter comes to the court, it becomes otherwise. While considering the question of bail to the accused, who has appeared or been produced before the court, the court would be, necessarily, required to apply its judicial mind before arriving at the conclusion, whether to grant bail to such a person, on merits, or not. Therefore there is a whole lot of difference in the requirements for and actual consideration, quantitatively as well as qualitatively; and in nature and scope thereof, qua the same material, by the investigating officer on the one hand and by the Special Court on the other hand. There can't be any compariso....
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....to the knowledge of Inspectors, on that the investigation can be started under Section 208 of the Companies Act. If certain other misconduct or fraud in the affairs of a Company comes to the knowledge of the Central Government, and for the reasons mentioned therein, the Central Government can order investigation under Section 210 of the Companies Act. Still further, if during some proceedings some default or even fraudulent affairs in relation to the conduct of affairs of the company comes to the knowledge of the Company Tribunal then under Section 213, the Tribunal can require the investigation. However, all these investigations, ordered by the Government under Sections 208 or 210 or ordered by the Tribunal under Section 213, are to be conducted by ordinary Inspector of Companies. But 'serious frauds' in relation to affairs of companies have been carved out as separate and distinct category for their investigation and punishment. For investigating serous frauds a separate investigating agency, called 'Serious Fraud Investigation Office' has been provided under Section 211 of the Companies Act. The investigation in serious frauds is to be ordered by Central Governme....
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....ionally he can also record statement on Oath of any other person or body corporate, which is not directly connected with, or controlled by the Company under investigation. At this stage of investigation, the provisions of Section 217(4) makes a distinction between the ordinary Inspector of Companies, investigating as per the mandate of Sections 208, 210 and 213 on the one hand; and the Officer of SFIO investigating the serious fraud as per the mandate of Section 212 on the other hand. If a statement on Oath is to be recorded, of a person who is officer or employee etc., of the Company under investigation, then Ordinary Inspector and Officer of SFIO, both are authorised to record the same under provision of Section 217(4)(a), being a person already covered by Section 217(1). But if the statement of any other person, who is not the employee or Officer etc. of the Company under investigation, is to be recorded on Oath then under provisions of Section 217 (4) (b) the ordinary Inspector of Companies shall be required to obtain prior approval from the Central Government. However, if the Officer of the SFIO, investigating the case under approval granted under Section 212 is to record stat....
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....w Companies Act, 2013 start with negation of bail to the accused and the court could grant bail to such an accused only if the court records a satisfaction qua the accused being 'not guilty' of the alleged offence and also a satisfaction that if released on bail the accused is not likely to commit any similar offence again. Also this court does not find substance in the insistence of the learned counsel for the SFIO that the application of the twin conditions, as prescribed under Section 212 (6), are mandatory and have to be applied to all the considerations of grant of bail to the accused facing charge covered by section 447 of the New Companies Act. No doubt the statutory language of section 212 (6) has prescribed the twin conditions to be considered by the court, in case the prosecutor raises his objection to the grant of bail, however a similar language existing in the Prevention of Money Laundering Act, which was para materia to the language of the twin conditions contained in section 212(6) of the new Companies Act, had earlier come-up for consideration of the Supreme Courts in case of Nikesh Tarachand Shah (Supra) case and such language has already been declared to be ultra ....
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.... permitted to take the twin conditions as an objection to the grant of the bail to the accused. This court does not find any reason to take a different view now. This judgment of this court was even challenged before the Hon'ble Supreme Court in case of SLP(Criminal) Diary No. 42609 of 2018, State of Punjab V/s Ankush Kumar @ Sonu. However, the Hon'ble Supreme Court had not found any reason to interfere with that judgment of this court; and SLP was, accordingly, dismissed by the Supreme Court. It would not be appropriate to reproduce only some part of that judgment of this court in a mutilated form, lest the essence of the matter should be lost in the process. Rather to truly appreciate the matter of the operational functionality of the twin conditions; the said judgment has to be read as an organic whole. Since the said judgment is reported one, thus, the reasoning given in that judgment can be taken as a supplement to the decision of the present case as well. Although the learned Counsel for the SFIO has, additionally, referred to the language used in Section 437 of Cr.P.C to argue that a similar language is already used in the said provision of bail; and has also relied upon ....
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....ess of trial, like framing of charge, discharge and acquittal of an accused as per the progress of trial and availability of evidence on record. On the other hand, section 212(6) of the Companies Act requires from the court; at the start of the trial itself; what section 437(7) requires from the court at the end of the trial. Even if, by hook or crook, the court manages to record, while granting bail to an accused, as is required under section 212(6), that the accused 'is not guilty', then it negates the entire process of further trial of that accused. It goes against framing of the charge by the same court and it may require even discharge of such an accused; because by recording a satisfaction that a person 'is not guilty' the court surpasses the level of satisfaction required for framing charge itself; and goes near to recording the satisfaction required for his discharge. Similarly, holding the twin conditions to be mandatorily followed in all situations for release of an accused on bail; can lead the court to hit against the wall in a given situation. This can be clear from another inconvenient question, which has not been shown by the learned Counsel for the SFIO to have b....
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....ick to such condition; then how much injustice to the accused would be sufficient to off-set or to balance with the rigor of the twin condition? This court finds the answer to these inconvenient questions to be in negative and, therefore, constrained to observe that in humble view of this court; the twin conditions mentioned in section 212(6) are not mandatory in their compliance. Although learned Counsel for the SFIO has submitted that in the case of Nitin Johari (Supra) the Hon'ble court has remanded the matter to the Delhi High Court for reconsideration on bail by considering the scope and effect of the twin conditions, as laid down in the section 212(6) of the Companies Act, however, this court finds that; in that case, the Hon'ble Supreme Court has also observed that even if conditions prescribed under section 212(6) are not to be followed, still the criteria meant for bail in cases of economic offences was required to be considered by the High Court of Delhi. Hence, the primary reason for remand in that case was that the High Court of Delhi had not considered the material on record of the case and had granted bail even without adverting to the factors considered relevant b....
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....idered as grave offences affecting the economy of the country as a whole and thereby posting serious threat to the financial health of the country." 35. While granting bail, the court has to keep in mind the nature of accusations, the nature of evidence in support thereof, the severity of the punishment which conviction will entail, the character of the accused, circumstances which are peculiar to the accused, reasonable possibility of securing the presence of the accused at the trial, reasonable apprehension of the witnesses being tampered with, the larger interests of the public/state and other similar considerations." Therefore this court is under obligation to consider the nature of offence and the material placed on record before the special court, by way of charge-sheet against the petitioner, for consideration of question of granting bail to petitioner. To discredit the concept of economic offences being a class apart; learned Counsel for the petitioner has submitted that concept of economic offences constituting a class apart has not been carried forward consistently even by the Supreme Court. He has also submitted that the Supreme Court has granted bail to t....
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....st; to be the guiding factor to grade the quantum of the punishment to be awarded accused by the Court. Hence there is no doubt that the offences under the Companies Act constitute a class apart and these offences are prescribed by the Companies Act itself as to be treated as the serious economic offences. So far as the seriousness of the offences and the material against the petitioner is concerned, this court finds weight in the arguments of the learned Assistant Solicitor General representing SFIO that there are serious allegations against the petitioner and there is enough material inculpating the petitioner in the offence. As per the allegations the petitioner and his companies have been instrumental in swindling of an amount of about Rs. 90Crores out of total swindled amount of Rs. 1700 Crors (Rs. 4140 Crores including interest); which was, allegedly, swindled by the Adarsh Group of Companies through their subsidiaries and co-conspirators. The petitioner or his companies are alleged to have issued fake bills for an amount of space 223.77 Crores to the Co-operative Society and to Companies of the Adarsh Group of Companies, for supply of the suit lengths and some other mater....
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....perative Society. Still further, some of the bills/invoices were showing that although the said material was arranged by the petitioner or his Companies, but actually the said material was shown to have been supplied by the Company of one Ajay Agrawal. However, the owner of the said company, Ajay Agrawal, has also been joined into the investigation and he has also stated to have made a statement that neither he had ever supplied the said material to the Co-operative Society, nor had he ever authorized the petitioner to issue any bills/invoices behalf of his Companies. Hence the petitioner has, allegedly, been found to be creating the bills/invoices on behalf of other persons as well, which bills/invoices have been totally denied by the concerned persons. The petitioner himself has also made admission regarding the said entries and the concerned data has, statedly, been taken from his computer in his presence and was also sealed in his presence. All the requisite certificates under section 65-B of the Evidence Act have been duly submitted to the court qua all the electronic records. Hence there is a disclosure statement of the petitioner and also the disclosure statement of the co-a....
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....orded by an authority having powers to record the statement on oath can never be put at par with the one recorded by an ordinary police officer. Such a statement recorded by the investigating officer under Companies Act, even if it is of 'admission' of certain fact; though could not be taken as sufficient for conviction on its own, however, the same would not be discarded as a 'confession' hit by section 25 of the evidence Act. As per the mandate of the section 217(7) of the Companies Act, this can certainly be relied upon as evidence against the petitioner. Therefore, the same can be considered for the purpose of bail as well. For the same reasons, even the statement of a co-accused would be relevant under section 10 of the Evidence Act, and the same can be relied upon under section 30 of the Evidence Act. Although, the question of reliance upon such statement as 'evidence' would come-up during the trial only after the same is 'proved', however, for the purpose of bail its 'relevance' as 'material' against the petitioner cannot be excluded at this stage. There is nothing on record that the prosecution shall not prove this statement during the trial or that it would be prohibited f....
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....rawal is also on record of the case in which he has stated that bills which are alleged to have been raised by the petitioner in the name of his Companies were never issued by his Companies, nor had he ever authorized the petitioner to issue these bills. Hence these bills; some of which have even been admitted by the petitioner are shown to be fake. In view of this, the court finds that there is material against the petitioner showing his culpability in the heinous economic crime. Still further the charge-sheet against the petitioner under section 447 of the Companies Act, which is a serious offence, inviting punishment of imprisonment up to 10 years. Although a Counsel for the petitioner had submitted that the petitioner is not directly involved in embezzlement of the cash-in-hand of the companies of the Adarsh Group, however, the fraud, as defined under the new Companies Act, 2013 does not contemplate any gain by one person and the loss by another person or a company. Participation of the petitioner in the crime of embezzlement of the money, per se, is sufficient for conviction of the petitioner, if otherwise proved. It is also alleged; that as per the record; the companies ha....
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.... the accused during the trial? Only a mind which thinks of human thought process to be a compartmentalized aspect and in distinct water-tight segments, instead of being a rational and interdependent continual process, can deny this logical conclusion. Conspiracies and the designed intentions; being those aspects of human psychology which are concealed deep within the grey matter; normally do not have easy external direct material to manifest. Even the Social or the political status of a person; or his economic clout; are no more easy indicators of moral moorings of a person; when it comes to crime, particularly the economic crime. After all, no investigating officer could have any material or anticipation that a Member of Parliament would flee from the country after committing alleged huge economic crime and the country would be forced to contest his extradition proceeding in a foreign land for years together; just to bring him to the justice, or that the business tycoons owning hundreds of companies and business of hundreds of billions of rupees would flee from the country after committing the alleged crime and would even start denying their Indian Citizenship. Although one can sa....