TaxTMI 
TaxTMI 
2019 (12) TMI 1097
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....5) of the Companies Act, 2013 and Section 193 of the Cr.P.C., 1973 bring forth that pursuant to WP(C) No.818/2015 Ranvir Singh vs. UOI filed in the Hon'ble Supreme Court of India pursuant to the order dated 14.12.2015 wherein it was alleged that Mohd. Iqbal, a resident of Saharanpur had : * Amassed disproportionate assets; * Incorporated a number of sham companies under the Companies Act, 1956, many of which have dummy directors or fictitious shareholders. * Acquired lands & buildings in the names of these companies, using laundered money earned from illegal mining through contracts taken in the names of Companies/partnership firms owned by his family members, investigations were made into allegations against the accused No.1 Mohd. Iqbal and others and investigation was permitted to be made and thereafter the Ministry of Corporate Affairs (MCA)Government of India vide the letter dated 8.1.2016 ordered investigation by SFIO into the affairs of the six companies owned by the accused No.1 Mohd. Iqbal and subsequently the Hon'ble Supreme Court ordered extended investigation vide the order dated 8.2.2016 qua other companies accused including accused No.1 as well and vide order da....
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....goal Mohd. Iqbal and his network of companies/family members/key associates (hereinafter referred to as the Group) created a complex grid of EUIs to camouflage the source of funds. It has been alleged, however, through the complaint that the fictitious assets acquired through accommodation entry operators were liquidated to create real assets and a set of dummy/ghost shareholders and directors were used as a front to facilitate the liquidation and acquisition of assets. The said Group is alleged to have indulged in the large scale falsification of the books of accounts and as per the complaint pliable auditors and accounting professionals including the present applicant have totally disregaded the fundamental principles of accounting to please the kingpin of the Group and that many illegal acts were committed by the Group including, inter alia, stockpiling of unaccounted money and large-scale money laundering for legitimizing the proceeds of crime. The SFIO has further submitted that on the investigation report being submitted before the Hon'ble Supreme Court vide order dated 31.07.2017, the MCA was directed to take into consideration the investigation report of the SFIO to take a ....
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....at such financial statements do not reflect a true and fair view of the companies. The statutory auditors were also stated to have not audited the financial affairs of the companies as per prescribed manner nor as per the guidelines of ICAI. 5. As per the SFIO the flow of funds in the said companies reflected the following attributes: * No company did substantial business except Safety Plus Power Limited. * The companies allotted shares on high share premium without any appropriate underlying worth of the company. The investigation revealed such inflow of funds as accommodation entries. * The inflow of funds in the companies of this cluster was basically from Share Premium & Share Application Money (51%), Loans from other EUI, related parties or unrelated parties (37 %). * There is no operational inflow of fund through the business activities of the companies, except in the case of Safety Plus Power Limited and Enchant Infrastructure Private Limited. * The profit earned by the companies was either "from agriculture or from interest on the FDRs, which was not the primary objective of the companies. * The control over the companies of the Group in this cluster was eviden....
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.... taken from the MCA website and no original documents were provided to them and as they could not prepare the registers for all 58 companies, therefore some records were returned incomplete. It is alleged by the SFIO that the assignments were handed in piecemeal to VS Associates till June 2016. However, V S Associates again requested CS Shruti Kumari in the first week of February 2017 to provide soft-copies of the same work which was sent to them on 06.02.2017 through email. 8. The SFIO further states that during the course of investigation, as per documents collected from the office of the co-accused, the CS Jitender Kumar Sharma and other materials clearly indicated that the statutory records like minute books were prepared much after occurrence of the events in order to complete the legal formalities and were not the documents prepared during the course of the actual functioning of the companies. 9. It was further submitted by the SFIO that further investigation revealed that these records/ registers were prepared by CS Vijay Kumar Sharma, the co-accused and his associates. It has been submitted further by the SFIO that during examination on oath u/s 217 (4) of the Companies A....
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....ase the king pin of the group. It was further submitted by the SFIO that the Group had scant regard and fear of the laws of the land and that investigation reveal that among the many illegal acts committed by the group included a stockpiling of unaccounted money and large-scale money laundering for legitimizing the proceeds of crime. 13. The order dated 24.1.2019 of the learned Special Judge (Companies Act), District Courts, Dwarka Delhi vide which the applicant has been summoned vide para 4.5. thereof observes to the effect that: "A-86, Company Secretary, Shri Vijay Kumar Sharma entered into an oral agreement with A-79 Jitender Kumar Sharma for completion of statutory registers of 58 entities for back date period and he further deputed his junior A89 Shriti Kumari and her friend A-88 to complete the registers.", the applicant being A-88. 14. The applicant has submitted that he is in judicial custody since 24.5.2019 with the SFIO and that the SFIO has filed the investigation report dated 6.7.2019 and that cognizance was taken of the investigation report vide order dated 24.1.2019 by the learned Special Judge Special Judge (Companies Act). The applicant submits that even as per ....
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....port dated 6.6.2017 that the applicant fabricated the statutory records of the EUI as per directions of CS Vijay Kumar Sharma (A86) and thus has been charged u/s 628 Companies Act, 1956, u/s 448, Companies Act, 2013 and Section 477A r/w Section 120B IPC, 1860. 18. The Applicant submits that he is alleged to have also given his statement purportedly u/s 217 (4) of the Companies Act, 2013 wherein he has allegedly stated that he got the assignment of preparing the statutory registers and records for the year 2008-2009 to 2014-15 during the period of February-March 2016 and states that he did this only to gain experience and not for any monetary gain and he was never paid for this work and that he only prepared this on the basis of the documents downloaded from the Website of the Ministry Corporate Affairs i.e MCA. He also stated that he does not know anyone from these companies. The Applicant further submits that though he is named qua Charge No. 6 for falsifying of statutory registers, the applicant submits that none of the charges mentioned in the complaint, investigation report or summoning order are substantiated by any material documents nor are they made out against the applica....
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....icant has further submitted that the offence under Section 477A IPC is not made out against the Applicant since the applicant has not falsified any document and that as stated through the investigation report, the documents were seized from the possession of Jitender Kumar Sharma (Accused No. 79) and all these documents were unsigned and unfiled and admittedly do not bear the signature of the applicant or any other person and none of them have been seized from the possession of the applicant and no material has been placed on record to substantiate the said offence. The applicant has further submitted that the offence under Section 120B, IPC is also not made out against the him since his role only began in February or March 2016, only pursuant to the orders passed by the Government for initiating the investigation by the SFIO which was much after the period of the alleged conspiracy which is the subject matter of the present complaint. The applicant has also submitted that he is admittedly not related to any of the accused co-conspirators and had only been in touch with Accused No 86 and Accused No 89 who have both been granted bail on 15.07.2019 by the learned trial Court. Relianc....
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....ere replaced with "offence covered under section 447". 26. It has thus been submitted by the applicant that the amended Section 212(6) of the Companies Act, 2013 along with the Statement of Objects and Reasons to Section 212(6) makes it amply clear that the rigour of the said Section would only be applicable if a person has been charged under Section 447 Companies Act, 2013,which is not the case in the present matter. 27. Inter alia, the applicant submitted that even if it is assumed that the rigours of Section 212(6) Companies Act apply even to Section 448 of the Companies Act, the test is satisfied as there is no reasonable ground to believe that the applicant is guilty of the commission of the offence of section 448, as he has not made any false statement, the only allegation against him being that he made some draft documents on the basis of documents already filed with the MCA. 28. The applicant has further sought grant of bail on the principles of parity submitting to the effect that the trial Court has granted bail vide order dated 15.7.2019 to the accused No.86 V. K. Sharma and to Shriti Kumari Accused No.89 were similarly placed as the applicant. 29. The applicant furt....
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....0. Inter alia, the applicant submits that the charge sheet i.e. the investigation report in the present matter has been filed and the investigation is complete and nothing more qua the applicant is left to be investigated and the investigation is wholly documentary in nature and is already on record and thus there is no risk of the same being tampered with by the applicant. Inter alia, the applicant submits that the investigating agency has not relied on any private witness and thus there is no scope of the applicant influencing any witness in as much as the said personnel are officers of the SFIO. 31. Qua the contention that the unsigned documents do not fall within the ambit of the culpability under Section 448 or 447 of the Companies Act, 2013, on behalf of the SFIO it was sought to be contended that that the applicant was one of the perpetrators of the larger conspiracy of the Group and committed various fraudulent acts caused loss to the exchequer and relied upon the observations in the case of Rohit Tandon v. Directorate of Enforcement reported as (2018) 11 SCC 46 to the effect: "21. The consistent view taken by this Hon'ble Court is that economic offences having deep-root....
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....o, as held by the Hon'ble Supreme Court in PUCL versus Union of India, reported as (2005) 5 SCC 363. It is further submitted that where the grammatical construction is clear and manifest and without doubt, that construction ought to prevail unless there are some strong and obvious reasons to the contrary. It is further submitted that in the instant case, once the legislature clearly uses the words 'offence covered, under section 447' and 'no person accused of an offence under those sections', it is amply clear that the plain reading of the statute suggests that the intention of the legislature is to ensure that more than one offence is covered under the ambit of Section 212(6). 35. The SFIO further submits that as laid down by the Hon'ble Supreme Court in "Y.S. Jagan Mohan Reddy Vs. Central Bureau of Investigation" 2013 (7) SCC 439, economic offences constituted a class apart and need to be visited with a different approach in the matter of bail and that the economic offences have deep rooted conspiracies and involved huge loss of public funds and thus, needed to be viewed seriously and considered as grave offences affecting the economy of the country as a whol....
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....nless- (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 subsection 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 general or special order in writing in this behalf by that Government. (7) The limitation on granting of bail specified in subsection (6) is in addition to the limitations under the Code of Criminal Procedure, 1973 (2 of 1974) or any other law for the time being in force on granting of bail.", and that in as much as the case of the applicant falls under the provisions of Section 212(6)(ii) of the Companies Act, 2013....
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.... national interest. ......" 42. On a consideration of the submissions that have been made on behalf of either side, in terms of Section 212 (6) of the Companies Act, 2013, the offence prescribed under Section 448 of the Companies Act, 2013 which relates to making of a statement which is false in any material particulars knowing it to be false or which omits any material fact, knowing it to be material in any return, report, certificate, financial statement, prospectus, statement or other document required by, or for, the purpose of any of the provisions of this Act or the rules made thereunder makes a person culpable under Section 447 of the Companies Act, 2013. 43. Section 448 of the Companies Act, 2013 reads to the effect: "448. Save as otherwise provided in this Act, if in any return, report, certificate, financial statement, prospectus, statement or other document required by, or for, the purposes of any of the provisions of this Act or the rules made thereunder, any person makes a statement,- (a) which is false in any material particulars, knowing it to be false; or (b) which omits any material fact, knowing it to be material, he shall be liable under section 447." 4....
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....ns submitted by the SFIO bring forth that the petitioner was given an assignment of preparing statutory registers and records for the financial year 2008-09 to 2014-15 of some 58 companies during February-March, 2016 and the required details and information to prepare such records and registers were taken from the MCA website and no original documents were provided to V S Associates with whom the partner of the petitioner Shriti Kumari had worked and as some of the registers could not be completed for all the 58 companies, some records were returned incomplete and the assignment was returned in piecemeal to VS Associates till June, 2016 and VS Associates had again requested Shriti Kumari, the co-accused in the first week of January, 2017 to provide soft copies of the same, which were sent to them on 16.02.2017 through email. The relevant documents attributed against the applicant were stated to have been collected from the office of Jitender Kumar, Chartered Accountant, the co-accused (A-79), which the SFIO submitted were statutory records like minutes book prepared after the occurrence of the event in order to complete the legal formalities but were not the documents prepared duri....
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....aid down by the Hon'ble Supreme Court in "Y.S. Jagan Mohan Reddy Vs. Central Bureau of Investigation" 2013 (7) SCC 439, economic offences constituted a class apart and need to be visited with a different approach in the matter of bail and that economic offences have deep rooted conspiracies and involved huge loss of public funds and thus, needed to be viewed seriously and considered as grave offences affecting the economy of the country as a whole and thereby posing serious threat to the financial health of the country, in as much as, they tend to seriously prejudice/ destroy the economy of a country and thus, caused immense irreversible damage to the larger public interest with reliance having been placed on behalf of the SFIO on the verdict of the Hon'ble Supreme Court in "Rohit Tandon Vs. Directorate of Enforcement" (2018) 11 SCC 46 to contend to similar effect. On a consideration of the submissions made on behalf of either side, it is essential to observe at the outset that the charges in the matter are yet to be framed by the learned Trial Court in relation to CC No.720/2017. 50. Thus without any observations on the merits or demerits of the aspect of framing of charges or ot....