TaxTMI 
TaxTMI 
2020 (6) TMI 261
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.... 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. 5000 Crores 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 their associates and relatives as the Directors.....
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....ct. The petitioner was summoned by the Special Court under Sections Section 447 of Companies Act, 2013, read with section 120-B IPC and sections 418 and 420 IPC read with section 120-B 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 / Sessions Judge vide order dated 30-08-2019. Hence, the present petition has been filed by the petitioner seeking bail pending trail. Further elaboration of the ....
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....entries; and was ultimately; utilized to purchase the above-said Farm House in the name of Cynosure Real Estates Pvt. Ltd (CREP), the company controlled by Vivek Harivyasi. In his statement made to the investigating office petitioner is alleged to have admitted that his companies Dinkar Commercial Private Limited (DCPL) and Amarendra Financials Private Limited (AFPL) provided unsecured loans for amounts mentioned above; to Cynosure Real Estates Pvt. Ltd (CREP), the company controlled by Vivek Harivyasi. It was claimed that the loan was given for a period of 3 months at the rate of 15% per annum but when he was asked to produce the relevant agreement, deeds and documents regarding the same, he denied having executed any such agreements deeds or the documents. He said the source of this money with his companies was the recovery of loans which were received back by DCPL and AFPL from other loanee companies. When further coordinated investigation of the CUIs and alleged conspirators was carried out then it was found that the above-said Farm House Riyasat Green was under some Bank loan advanced to the earlier owner. The said loan having been defaulted, the said Farm House was to be p....
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.... the complaint was filed by the investigating officer, then the Special Court had taken cognizance of the offence on 03-06-2019, that is, after about 5 months of the petitioner last joining the investigation. The petitioner was summoned by the special court. The petitioner appeared before the special court in compliance of the summons issued by the court. Even at that stage the petitioner was granted interim bail by the trial court. Although there was not even any allegation that the petitioner had misused his liberty or the interim bail granted by the trial court, yet the application for bail pending trial, moved by the petitioner, was finally dismissed on 30-08-2019. Although, at the time of filing of the present petition before this court; the petitioner had not appeared before the trial court; so was not in custody, however, during the pendency of this petition the petitioner had appeared before the trial court and then petitioner has been taken into custody. Since then he is suffering incarceration. Continuing his argument, learned Counsel for the petitioner submitted that section 4 of Cr.P.C. provides that except as otherwise provided in some special statute, the trial of cri....
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....e has been conferred power to examine a person on oath and under section 217(5) the investigation officer has been given enormous powers of the civil court as well; for summoning the witnesses and for enforcing their presence. Therefore the investigating officer had the trappings of the court also, besides being an investigating officer who could have arrested the petitioner; if he had some material in his possession. Under the provisions of the section 439 Cr.P.C. the bail pending trial is to be considered by the trial court by applying the criteria as prescribed in section 439 Cr.P.C. The requirements prescribed for arresting a person during investigation under section 212(8); by the investigating officer; for the offences under new Companies Act, stand at much higher pedestal than the conditions required to be considered by the trial court for releasing such an accused on bail pending trial by exercising powers under section 439 Cr.P.C. Hence, if the investigating officer himself had not arrested the petitioner during the investigation; that shows he did not have the requisite material in his possession to justify the arrest of the petitioner, as required under the Act. The comp....
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....21 of the Constitution, rather, are also in violation of the provisions of Article 14, being irrational, illogical and requiring the court to record something which is impossible by any means. The learned Counsel for the petitioner has relied upon the judgment of this court rendered in Ankush Kumar @ Sonu V/s State of Punjab, 2018 SCC Online P&H 1259 to support his argument. Again referring to the judgment of the Supreme Court rendered in case of Nikesh Tara Chand Shah (Supra) the learned Counsel for the petitioner has further argued that even if the applicability of twin conditions, as prescribed under section 212(6) of the new Companies Act; is to be invited to the case of the petitioner, then interpretation of these conditions has to be toned down to see only the probability of conviction of the petitioner; and the probability of conviction under the new Companies Act only. However, the evidence, allegedly collected by the prosecution, against the petitioner is not sufficient to bring out the probability of conviction of the petitioner for the offences under the Companies Act, nor is there any material on record; to show that the petitioner is likely to commit the offence under ....
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....ere conducting the business only through legitimate business transactions and through legitimate means. The petitioner had only taken a business risk by advancing loan to Cynosure Real Estates Private limited, knowing fully well that the property which that company was purchasing for Rs. 24.49Crores was; actually; worth Rs. 50 Crores in the Market. Hence, the petitioner had advanced the unsecured loan to that company. As per the Rules and the authorization by the RBI; the companies of the petitioner are entitled to advance unsecured loans as well. In fact, Cynosure Real Estates Private limited is not the only company to whom the companies of the petitioner advanced unsecured loan. Rather, all of the loans for an amount of about 175Crores, advanced by the companies of the petitioner to about 1000 companies; were unsecured loans only. All the transactions of advancement of loans to Cynosure Real Estates Private limited are duly reflected in the bank accounts, ledgers and the statement of accounts filed with the income tax returns of his companies. There is no evidence that the money had come in cash to the petitioner and that money was routed through his companies. Sourav Gupta, who ....
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....However, even if there are reasons to believe that such a person is guilty of the offence under the Companies Act and even if the investigating officer had the necessary material to support the allegations against such person, investigating officer may not arrest such a person, keeping in view various other factors, including the co-operation during the investigation and any undertaking by such a person that he would be appearing before him or before the court, as and when he is required. However, that does not mean that such 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 SFI....
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....e very well; led to denial of bail in that case. Still further, relying upon the judgment of the Supreme Court rendered in Pankaj Jain V/s Union of India and another, 2018 (5) SCC 743 and another judgment of Delhi High Court in case of Court on its own Motion V/s State, 2018 SCC Online Del 12306, counsel for the SFIO has submitted that section 88, Cr.P. C. itself gives discretion to the court. That section itself uses the word 'may'. Hence there is no question of an accused getting automatic right to bail if he appears before 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 factor....
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.... the twin conditions would be considered by the appropriate Court / Bench in some appropriate matter. But now the validity of the twin conditions is very much under challenge before the Supreme Court. However, despite pendency of the challenge to the vires of the twin conditions, the Supreme Court has set aside the order of the High Court granting bail in case of Nitin Johari (Supra) and has remanded the matter to the High Court for reconsideration; with a direction to consider the scope and effect of the twin conditions as 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 role of and evidence against the petitioner, the counsel for the SFIO has submitted it has come during investigation that the co-accused Vivek Harivyasi, was authorized signatory/Director in the C....
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....nied having executed any such agreements deeds or the documents. The above-said Farm House Riyasat Green was under some Bank loan advanced to the earlier owner. The said loan having been defaulted, the said Farm House was to be put to auction by the Corporation Bank on 04-04-2017. At about the same time the company Cynosure Real Estates Pvt. Ltd (CREP) was created on 24-03-2017 with a paid up capital of only Rs. 1.0 Lakh. The share-holders in this company, as per the original certificates, signed by Vivek Harivyasi as Director, were, Paramvir Singh Sangwan: 45%, Vivek Harivyasi: 35%, and Peeyush Aggerwal: 20%. However, in the records submitted to the Registrar of Companies the shareholders of this company were shown as, Paramvir Singh Sangwan: 45% and Garima Sharma: 55%. The Directors shown in this company were; Vivek Harivyasi, Paramvir Singh Sangwan and Garima Sharma. So Vivek Harivyasi and Peeyush Aggerwal were controlling 55% equity through Benami; Garima Sharma. This Company purchased the said Farm House in auction from Corporation Bank on 04-04-2017 for an amount of Rs. 24.49 Crores. Immediately before and after this auction purchase; the funds were transferred from the two c....
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....ch show their collusion in fraud. 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. Still further since the petitioner is given to manipulations, for earning commissions, therefore by nature the petitioner is manipulative. Hence if the petitioner is released on bail, he is most likely to influence the witnesses of the case and also to destroy the evidence against him. The argument of the learned Counsel for the petitioner that the petitioner had been joining the investigation and was released on interim bail as well; and that during that duration he had not made any attempt to influence the witnesses or to destroy the evidence, is totally irrelevant. At that time the petitioner was not sure of him being made an accused in the case. Therefore he might not have resorted to that exercise. But now, when the petitioner knows that his crime has been detected, no straightforward conduct is expected from the petitioner, who is manipulative by disposition. In the same vein, the counsel for the SFIO has also submitted that since the vocation of t....
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....no evidence against the petitioner. 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. So far as the evidence in the form of the statements and the witnesses is concerned, it is submitted by the Counsel for the petitioner that since the investigating officer has the power akin to the police, therefore, any self-incriminating statement of the petitioner recorded by the investigating officer cannot be relied upon against him. For the same reason the confession of the co-accused cannot be relied against the petitioner. It has also been submitted by the Counsel for the petitioner that even the Supreme Court has granted bail in case of Sanjay Chandra V/s Central Bureau of investigation, (2012) 1 SCC 40 despite the fact that the offences in that case involved economic offences. The Supreme Court has granted bail even by observing in para No.46 of that judgment that it was conscious of the fact that the offences involved were the economic offences of huge magnitude, and if proved, may even jeopardize the economy of the country. Still the accused in that case were released on bail. The ....
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....nder Section 88 of Cr.P.C., however, this court does not find any substance in the arguments raised by the Counsel for the petitioner. Chapter VI of Cr.P.C. wherein the section 88 is contained; itself speaks that it deals with 'Processes to compel appearance'. Even a co- joint reading of the provisions contained in this chapter shows that it is restricted to the aspect of bringing a person to the door of the court; and nothing more. The provisions of this chapter do not have anything to do with release of a person on bail as such. Rather; the provisions of this chapter are neutral to the status of a person as an 'accused', as a 'witness', or simply as only a 'person present in the court'; without any legal capacity qua trial as such. The sections included in this chapter do not even use the word 'accused', except in some sections relating to a person, who has already avoided ordinary process of the summons or warrant and therefore; is to be dealt with through the proceedings for proclamation. Hence; this chapter is prescribing simply the procedure for ensuring the presence of a person before the court, whether as an accused or as a witness. Once a person is brought to or appears be....
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....urt can lead to his being bound down for appearance in future, if the court considers his presence as relevant to the case, either as an accused or as witness or otherwise. This strand of general power of the court, qua 'chance presence' is not restricted only to Section 88 of the Cr.P.C. This power is available to the criminal court throughout the proceedings of the trial and at all stages thereof. Besides power of asking to furnish the bonds or sureties for appearance; under section 88, similar power is found in section 311 Cr.P.C.; where the court can require the deposition as witness from any person in attendance of the court, though such a witness may not have been cited as a witness by either side. Not only this, section 319 Cr.P.C. also empower the court to add any person in attendance of the court as an additional accused in the trial, if in the opinion of the court such person is required to be added as an accused as per the standards prescribed for such addition. Hence, under Cr.P.C.; a criminal court always have a power to deal with a person, who is otherwise present in the court; maybe even by chance. Section 88 is only one manifestation of such power of the criminal co....
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.... a person accused of a non-bailable offence is arrested or detained without warrant by an officer in charge of a police station, or appears or is brought before a Court, and is prepared at any time while in the custody of such officer or at any stage of the proceeding before such Court to give bail, such person shall be released on bail : Provided that such officer or Court, if he or it thinks fit, [may, and shall, if such person is indigent and is unable to furnish surety, instead of taking bail] from such person, discharge him on his executing a bond without sureties for his appearance as hereinafter provided : Provided further that nothing in this section shall be deemed to affect the provisions of sub-section (3) of section 116 [or section 446A [Explanation. - Where a person is unable to give bail within a week of the date of his arrest, it shall be a sufficient ground for the officer or the Court to presume that he is an indigent person for the purposes of this proviso.] (2) Notwithstanding anything contained in sub-section (1), where a person has failed to comply with the conditions of the bail-bond as regards the time and place of attendan....
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.... of the investigation, inquiry or trial, as the case may be, that there are no reasonable grounds for believing that the accused has committed a non-bailable offence, but that there are sufficient grounds for further inquiry into his guilt, subject to the provisions of section 446A and pending such inquiry, be released on bail, or, at the discretion of such officer or Court on the execution by him of a bond without sureties for his appearance as hereinafter provided. (3) When a person accused or suspected of the commission of an offence punishable with imprisonment which may extend to seven years or more or of an offence under Chapter VI, Chapter XVI, or Chapter XVII or more or conspiracy or attempt to commit, any such offence, is released on bail under sub-section (1) the Court shall impose the condition:- (a) that such person shall attend in accordance with the conditions of the bond executed under this chapter, (b) that such person shall not commit an offence similar to the offence of which he is accused or suspected, of the commission of which he is suspected, and (c) that such person shall not directly or indirectly make any inducement, thre....
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....ing, of opinion that it is not practicable to give such notice (2) A High Court or Court of Session may direct that any person who has been released on bail under this Chapter be arrested and commit him to custody. A bare reading of the language of sections 436 and 437 of the Cr.P.C. show that these sections provide for dealing with bail not only of those persons who are arrested by the investigating officer during the investigation, but also provide for dealing with bail to that person who 'appears or is brought before the court'. It is a different matter whether such a person would get the concession of bail or not, depending upon the facts and circumstances of the case. But mere fact that the investigating officer had not arrested the accused during the investigation is, ipso facto, no ground to exclude the discretion of the court in the matter of grant of bail. Such an argument not only tends to make discretion of the court subservient to the discretion of the Investigation Officer in the matter of bail to the accused, but also is in direct negation of language of section 436 and 437 of the Cr.P.C. Only section 439 contemplates a person being arrested and being in c....
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....nt is of the opinion, that it is necessary to investigate into the affairs of a company by the Serious Fraud Investigation Office:- (a) on receipt of a report of the Registrar or inspector under section 208; (b) on intimation of a special resolution passed by a company that its affairs are required to be investigated; (c) in the public interest; or (d) on request from any Department of the Central or a State Government, the Central Government may, by order, assign the investigation into the affairs of the said company to the Serious Fraud Investigation Office and its Director, may designate such number of inspectors, as he may consider necessary for the purpose of such investigation. (2) Where any case has been assigned by the central government to the serious fraud investigation office for investigation under this act, no other investigating agency of central government or any state government shall proceed with investigation in such case in respect of any offence under this act and in case any such investigation has already been initiated, it shall not be proceeded further with and the concerned agency shall transfer the relevant docum....
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....irector of Serious Fraud Investigation Office authorised in this behalf by the Central Government by general or special order, has on the basis of material in his possession reason to believe (the reason for such belief to be recorded in writing) that any person has been guilty of any offence punishable under sections referred to in sub-section (6), he may arrest such person and shall, as soon as may be, inform him of the grounds for such arrest. (9) The Director, Additional Director or Assistant Director of Serious Fraud Investigation Office shall, immediately after arrest of such person under sub-section (8), forward a copy of the order, along with the material in his possession, referred to in that sub-section, to the Serious Fraud Investigation Office in a sealed envelope, in such manner as may be prescribed and the Serious Fraud Investigation Office shall keep such order and material for such period as may be prescribed. (10) Every person arrested under sub-section (8) shall within twenty- four hours, be taken to a Judicial Magistrate or a Metropolitan Magistrate, as the case may be, having jurisdiction: Provided that the period of twenty-four hours ....
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.... matter being investigated or examined by it under any other law. 217. Procedure, powers etc., of inspectors.- (1) It shall be the duty of all officers and other employees and agents including the former officers, employees and agents of a company which is under investigation in accordance with the provisions contained in this Chapter, and where the affairs of any other body corporate or a person are investigated under section 219, of all officers and other employees and agents including former officers, employees and agents of such body corporate or a person- (a) to preserve and to produce to an inspector or any person authorised by him in this behalf all books and papers of, or relating to, the company or, as the case may be, relating to the other body corporate or the person, which are in their custody or power; and (b) otherwise to give to the inspector all assistance in connection with the investigation which they are reasonably able to give. (2) The inspector may require any body corporate, other than a body corporate referred to in sub-section (1), to furnish such information to, or produce such books and papers before him or any person au....
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....been convicted of an offence under this section, the director or the officer shall, on and from the date on which he is so convicted, be deemed to have vacated his office as such and on such vacation of office, shall be disqualified from holding an office in any company. (7) The notes of any examination under sub-section (4) shall be taken down in writing and shall be read over to, or by, and signed by, the person examined, and may thereafter be used in evidence against him. (8) If any person fails without reasonable cause or refuses- (a) to produce to an inspector or any person authorised by him in this behalf any book or paper which is his duty under sub- section (1) or sub-section (2) to produce; (b) to furnish any information which is his duty under sub- section (2) to furnish; (c ) to appear before the inspector personally when required to do so under sub-section (4) or to answer any question which is put to him by the inspector in pursuance of that sub-section; or (d) to sign the notes of any examination referred to in sub- section (7), he shall be punishable with imprisonment for a term which may extend to six months and ....
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....) Upon receipt of a letter of request from a court or an authority in a country or place outside India, competent to issue such letter in that country or place for the examination of any person or production of any document or thing in relation to affairs of a company under investigation in that country or place, the Central Government may, if it thinks fit, forward such letter of request to the court concerned, which shall thereupon summon the person before it and record his statement or cause any document or thing to be produced, or send the letter to any inspector for investigation, who shall thereupon investigate into the affairs of company in the same manner as the affairs of a company are investigated under this Act and the inspector shall submit the report to such court within thirty days or such extended time as the court may allow for further action: Provided that the evidence taken or collected under this sub-section or authenticated copies thereof or the things so collected shall be forwarded by the court, to the Central Government for transmission, in such manner as the Central Government may deem fit, to the court or the authority in country or place outside I....
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.... SECTION 436. OFFENCES TRIABLE BY SPECIAL COURTS:- (1) Notwithstanding anything contained in the Code of Criminal Procedure, 1973 (2 of 1974): (a) all offences specified under sub-section (1) of section 435 shall be triable only by the Special Court established for the area in which the registered office of the company in relation to which the offence is committed or where there are more Special Courts than one for such area, by such one of them as may be specified in this behalf by the High Court concerned; (b) where a person accused of, or suspected of the commission of, an offence under this Act is forwarded to a Magistrate under sub-section (2) or sub-section (2A) of section 167 of the Code of Criminal Procedure, 1973 (2 of 1974), such Magistrate may authorise the detention of such person in such custody as he thinks fit for a period not exceeding fifteen days in the whole where such Magistrate is a Judicial Magistrate and seven days in the whole where such Magistrate is an Executive Magistrate: Provided that where such Magistrate considers that the detention of such person upon or before the expiry of the period of detention is unnecessary, he ....
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....le deciding the amount of fine or imprisonment under this Act, shall have due regard to the following factors, namely:- (a) Size of the company; (b) nature of business carried on by the company; (c) injury to public interest ; (d) nature of the default ; and (e) repetition of the default. Section 447: Punishment for fraud:- Without prejudice to any liability including repayment of any debt under this Act or any other law for the time being in force, any person who is found to be guilty of fraud, shall be punishable with imprisonment for a term which shall not be less than six months but which may extend to ten years and shall also be liable to fine which shall not be less than the amount involved in the fraud, but which may extend to three times the amount involved in the fraud: Provided that where the fraud in question involves public interest, the term of imprisonment shall not be less than three years. Provided further that where the fraud involves an amount less than ten lack rupees or one per cent of the turnover the company, whichever is lower, and does not involve public interest, any person guilty of su....
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.... the material in his possession justifying the arrest of a person, the investigating officer under the Companies Act may not choose to arrest a person, so as to avoid onerous duty of recording reasons. The section itself confers discretion upon the investigating officer; to arrest or not to arrest an accused. This again; is clear from the fact that the section is using the word 'may' and it is not casting any mandatory duty upon the Investigating Officer to arrest the accused. On the other hand, after the investigation report is filed before the court, which is given a deeming fiction of being a charge-sheet filed under Section 173 of Cr.P.C. under section 212(15) of the Companies Act, the Special Court would have that entire material before it on the basis of which such a person is sought to be prosecuted. The trial court is under a mandatory duty to appreciate the said material in the manner a judicially trained minds should appreciate, while considering the matter for grant of bail to such an accused. Otherwise also, provision of section 212(6), if read as it is, requires consideration for grant of bail by much higher standards as compared to the standards prescribed for conside....
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....efore it in the form of the charge-sheet, despite the fact that the accused was not arrested by the investigating officer even in the face of the availability of the same material before him. However, whether there is any material available against the petitioner in this case, is separately argued by the Counsel for the petitioner and, therefore, would be dealt with in the coming paragraph separately. This Court does not find any force in the other argument of the counsel for the petitioner as well, that since the investigating officer had not obtained prior approval from Central Government for investigating the petitioner or his companies separately, therefore, the investigation qua him is unauthorized and, hence, even the cognizance by the Court taken upon such investigation stands vitiated. To understand this argument one need to read the Chapter XIV of the Companies Act relating to Inspection, Inquiry and Investigation, as a whole. Rather the entire Act has to be gone through. There are lot many provisions in the Companies Act which make various Acts, omissions, non-filing, non-disclosure, not keeping proper records and other defaults and defects qua affairs of a Company as ....
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....ment under Section 208 or Section 210 or acting at the instance of Tribunal under Section 213 or acting at the instance of SFIO under Section 212, are to be known as 'Inspector' and are to conduct investigation as per procedure prescribed under Section 217. But Officer of SFIO, authorized to conduct investigation under Section 212; is further bound by the restrictions and prohibitions as prescribed under Section 212 of Companies Act as well. One more fact which comes out is that if an investigation is ordered by the Central Government, whether under Sections 208, 210, 213 or 212, and in the process the affairs of some other subsidiary or controlled company of the company under investigation are also found worth investigation, then even for the investigation of the affairs of subsidiary or controlled company; a separate approval from the Central Government is required and the same is to be granted by the Government, as required under Section 219 of the Companies Act. Again, whether it is the investigation originally initiated under Section 208, 210, 212 or 213 or approved additionally under Section 219, all have to be conducted under the procedure given under Section 217 of ....
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....vernment under Section 212 to SFIO only and not to any Inspector. The Inspector is specified, further, only by the SFIO. Hence, being delegate of Director, SFIO, the Inspector requires prior approval only from the Director, SFIO under Section 217(4)(b) proviso. In the present case the approval from the Director SFIO has been obtained by the investigation officer. Therefore, there is nothing wrong with joining the petitioner also qua the investigation of affairs of the Companies of the Adarsh Group. Since, as per the provisions of Section 212 (14), on receipt of investigation report the Central Government can order initiation of prosecution; not only against the officers and employees etc. of the Company under investigation; but also against 'any person' directly or indirectly connected with affairs of the company under investigation as well, therefore, if a person, not otherwise the employee or officer etc. of the Company under investigation, is also found colluding or conspiring in perpetuation of serious fraud; in relation to the affairs of the Company under investigation, then prosecution can be initiated against such person as well, despite the fact that the affairs of ....
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....t, 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 vires by the Supreme Court in that case. Not only this, even this court had an occasion of considering the nature and scope and the operational functionality of the language of these twin conditions, as contained in the Narcotic Drugs and Psychotropic Substances Act, in case of Ankush Kumar (supra). After threadbare analyzing the operational functionality of the language of the twin conditions, as used in the statute, this court had come to conclusion that the language of the twin conditions requires impossibility from the court, besides defying the human logic in its operational functionality. This language, if made operational in a case, even by adopting the semi-cooked concept of 'reading down' the language - and thereby ignoring the celebrated 'Doctrine of Severability' and the touchstone of Articles 14 & 21; both, qua test of constitutional validity, then also it turns on their head some well establis....
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.... 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 the judgment of the Supreme Court rendered in Kartar Singh V/s State of Punjab, 1994 (3) SCC 569, wherein referring to the language of section 437 Cr.P.C. the para materia language of twin conditions used in Terrorist and Disruptive Activities Act was upheld. However, although this court has no competence to comment upon this judgment of the Supreme Court, yet it has to be noted that the same judgment was cited even before the Supreme Court in Nikesh Tarachand Shah (Supra) case and the Hon'ble Supreme Court had not found it worth reliance to the extent of being sufficient for upholding the para-materia language of twin conditions used in the Prevention of Money Laundering Act. Beyond that; this court can only observe that any further relevance of this judgment can be assessed only by the Hon'ble Supreme Court in the case which is now stated to be pending before the Supreme Court itself and in which the con....
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....nditions 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 been answered by any court so far, including the Hon'ble Supreme Court. The question is - for how long an accused can be kept in custody on the basis of non-fulfillment of the requirement prescribed under section 212(6)? This question was specifically referred to Delhi High Court by way of reference by a judicial officer, in case of Court on its Own Motion (Supra) case. However, even there the question does not find any answer. Unless this question is categorically answered to say that till the conclusion of the trial such a person cannot be released on bail without satisfying the conditions mentioned in section 212(6), the twin condition cannot be held to be mandatory. This is so because if a person can be released on bail without satisfying the twin conditions of the section 212(6), say, after 3 years, then there is no reason why he cannot be released without complying the said twin condition today itself. B....
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....es 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 by the Supreme Court for economic offences. Additionally, the Supreme Court had also directed the Delhi High Court to consider the 'scope and effect' of the twin conditions prescribed under section 212(6) of the Companies Act. However, in the present case, as mentioned above, this court has already considered the 'scope and effect' of the operational functionality of the language para materia to the one contained in the twin conditions, as prescribed under section 212(6) of the Companies Act and has found in the case of Ankush Kumar (Supra) that the languages is in conflict with the right of the accused guaranteed under Article 14 and Article 21 of the Constitution and thus has to give way to the fundamental rights of the accused; qua his consideration for grant of bail. That 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 P....
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....ic 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 the accused in cases involving economic offices. Not only this, the Supreme Court has granted bail to such accused even by writing that it was conscious of the fact that the offences involved in those cases were economic offences and that offences would have an adverse effect upon the economy as such. The counsel has relied upon the judgment in case of Sanjay Chandra (Supra) and in case of D. K. Sethi (Supra). Therefore, it is submitted that applying the concept of economic offences selectively would tantamount to discrimination in application of law. Hence it is submitted by the Counsel for the petitioner and the distinction between 'economic offences' and the other offences; qua the consideration of bail to the accused; no more holds good. Saying otherwise would give an impression that the courts are adopting a different approach in case of rich and high-ups and a different approach qua ordinary mortals. How....
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....their subsidiaries and co-conspirators. The petitioner or his companies are alleged to have conspired with Vivek Harivyasi to defraud the CUIs of Adarsh Group. As mentioned above, the petitioner is not even denying the facts alleged against him qua transactions of money with the company of Vivek Harvyasi but has taken a stand regarding nature and purpose of transactions. But there is no record qua such nature and purpose in the of books of account of his companies or of the company of Vivek Harvyasi; to substantiate his stand, despite the fact that maintaining and keeping such records was mandatory; as discussed below. The charge-sheet against the petitioner is under section 447 of the Companies Act, which is a serious offence, inviting punishment of imprisonment up to 10 years. Although the Counsel for the petitioner has 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 even 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, ....
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....n India as the Board of Directors may decide and where such a decision is taken, the company shall, within seven days thereof, file with the Registrar a notice in writing giving the full address of that other place: Provided further that the company may keep such books of account or other relevant papers in electronic mode in such manner as may be prescribed. (2) Where a company has a branch office in India or outside India, it shall be deemed to have complied with the provisions of sub-section (1), if proper books of account relating to the transactions effected at the branch office are kept at that office and proper summarized returns periodically are sent by the branch office to the company at its registered office or the other place referred to in sub-section (1). (3) The books of account and other books and papers maintained by the company within India shall be open for inspection at the registered office of the company or at such other place in India by any director during business hours, and in the case of financial information, if any, maintained outside the country, copies of such financial information shall be maintained and produced for inspect....
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.... Vivek Harvyasi. Not only this, all such records, for the past 8 years; were to be kept safe and ready for inspection of the authorities. However, no such records are available or even claimed to have been maintained in this regard; either in the companies of the petitioner or in the Cynosure Real Estate company of the co-accused Vivek Harivyasi. Ledger and financial statements were prepared by concealing or not preparing these relevant records. This omission/concealment is despite the fact that under section 448 of the Companies Act, even any omission of facts or false claim or making wrong representation in any return or records or any document; required by provisions of this Act, in itself is an offence which is punishable under section 447 only. Even the fact that petitioner and his companies transferred Rs. 4 Crores to a one week old company having paid up capital of only Rs. 1Lakh, even that as unsecured, also adversely reflects upon the petitioner. In the present case, not keeping the books and records qua the dealings between the Cynosure Real Estate Company of the co-accused Vivek Harivyasi and the companies of the petitioner, in their respective offices; despite impend....
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....to reflect in the tax record has been created. Those transactions/ entries are not under investigation because the affairs of the companies of the petitioner were not under investigation directly. However, the fakeness of these entries and tax return transaction is exposed by the fact that there are no records of any agreements of loans, claimed to be as such in the income tax return. Nor is there any record showing that the companies of the petitioner ever initiated any proceedings for recovery of the said loans. The proceedings before the NCLT has been initiated only after the investigation in the matter had been started by the SFIO. Coming to the material against the petitioner, learned Counsel for the SFIO has pointed out that investigation has led to the seizure of the material and recovery of fudged entries and the data. The petitioner himself has also made admission regarding the said transaction and entries and the concerned data. Hence there is an admission on oath by the petitioner and also the admission of the co-accused Peeyush Aggarwal; who has specifically stated that the petitioner had got the cash from him and that cash was supplied to him by the co-accused Vivek....
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....y 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 from proving the same during the trial. Although in the first blush it can occur to the mind that such provision; wh....
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....-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. Cash amount is stated to have been received by the petitioner, but is not found to have been directly deposited in his bank accounts or returned to the company of the co-accused Vivek Harivyasi. Rather, a route was; allegedly; adopted to show the same as loan to his company Cynosure Real Estate Private Ltd. The said loan is not finding support from any contemporary loan agreement nor is any effort to recover the said alleged loan reflected in the records of the company of the petitioner. Therefore, the participation of the petitioner in the alleged fraud, if any, has duly been reflected as for the record. Lastly, this court also does not find any substance in the argument of the counsel for the petitioner that since the petitioner had joined investigation, was never arrested by the arresting officer and has never made any effort to ....
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....fter 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 say that a few individuals cannot be made example to deny bail in deserving cases, but then, there is no pressing necessity for the courts to create concepts which neither withstands test of logic nor are contemplated by the statutory law. Grant or not to grant bail is discretion of the court. This discretion is better left to be guided by the material on record qua the crime and the attending possible conclusion which can be drawn therefrom than to be pushed to frontiers unchartered for the investigating agency. Therefore in view of this court; the possibility of the petitioner influencing the witnesses, fleeing from the process of t....