TaxTMI 
TaxTMI 
2021 (3) TMI 1091
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....le under Sections 36(c), 128, 129, 134, 188(5), 447, 448 of the Companies Act, 2013 and Section 211, 217, 628 of the Companies Act, 1956. 2. As per the observations in the order on summoning dated 29.02.2020 of the learned Special Judge, Companies Act, the Central Government under powers conferred under Section 206 (4) directed the conducting of an inquiry vide order dated 20.11.2017 which culminated into submission of an inquiry report dated 19.02.2018 under Section 208 of the Companies Act to the Central Government as a consequence of which the Ministry of Corporate Affairs, Government of India in terms of the exercise of power under Section 212(1)(a), (b) & (c) of the Companies Act, 2013 assigned the investigation into the affairs of Rockland Hospitals Limited (RHL) now M/s Medeor Hospital Limited vide order dated 31.05.2018 and also accorded approval to carry out the investigation into the affairs of four other group companies of the complainant i.e. Rockland Hotels Limited (RHOL), Somya Constructions Private Limited (SMCL), Rockland Media and Communication Private Limited (RMCPL) and RSH Meditech Systems Pvt. Ltd. vide order dated 30.09.2019 and that the Director SFIO in tu....
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....nto individual account of FARC on 26.03.2015, and on the same day, the entire amount of Rs. 13.17 Crore was transferred, under the signature of Prabhat Kumar Srivastava/applicant, to the personal Saving Bank Account of co-accused Rishi Kumar Srivastava. Further, on the next day, the same amount of Rs, 13.17 Crore was transferred from the account of Rishi Kumar Srivastava as unsecured loan to RHL. The said unsecured loan of Rs. 13.17 Crore was gradually repaid by RHL to Rishi Kumar Srivastava in the financial year 2014-15, 2015-16 & 2016-17, which were actually the funds of RHL itself. By transferring the amounts from FARC to Rishi Kumar Srivastava and then further transferring it to RHL as unsecured loan, a false facade was created to show that the amount has been transferred through Rishi Kumar Srivastava to RHL, as disclosed in the FARC financial statements, whereas in truth RHL was burdened with an additional liability of Rs. 13.17 Crore, the amount which otherwise belonged to RHL. B. Second Instance: Investigation established that RHL maintained a Hospital Information System (HIS) wherein details of patients availing facilities/ services at its hospitals are captured a....
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....n FY 2013-14 to FY 2015-16. Investigation established that these accounts were operated by accommodation entry operators, who masquerade the source and destination of funds by transferring entries through a web of parties. Investigation established that applicant between FY 2013-14 to FY 2015-16 was in-charge of the day-to-day affairs of RHL. He was a signing and approving authority for disbursements made against expenditure in RHL. He was also one of the authorized signatories to the Bank Accounts of RHL through which payments to the 71 accounts/ entities were made. It was on his directions that bogus expenses, siphoning off Rs. 76.03 Crore were recorded in the Books of RHL. D. Fourth Instance: The books of accounts of RHL established that, a total of Rs. 9.61 Crore were brought in as share capital by the promoters and a total of Rs. 168.38 Crore were brought into the company through 21 Companies (Layer -1) controlled by the promoters, including the applicant, of RHL during the FYs 2004-05 to 2014-15, whereas the net income earned by all promoters of RHL and their spouses shown in the income tax returns filed by them during the period 2005-06 to 2016- 17 was Rs. 8.53 Cror....
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.... Srivastava/applicant signed a Letter of Intent (LOI) with VPS Health Care Limited ('VPS'), to sell 100% equity shares of RHL to it, at that time the applicant was not holding all the shares. The shares of IFC were purchased by the promoters only on 27.06.2016 at a cost of Rs. 11 Crores. Prabhat Kumar Srivastava/applicant chose not to inform IFC of the deal with VPS and entered a separate deal with IFC for Rs. 11 Crore to purchase its shares in RHL, so that they could obtain undue benefit from the sale at the expense of the minority shareholder (IFC). VPS has transferred Rs. 19.5 crores to escrow account held by Prabhat Kumar Srivastava/applicant, Rishi Kumar Srivastava & Mala Srivastava and thereafter Rs. 11 Crore was paid to IFC. These shares were, thereafter, sold within 2 days to VPS for a price of Rs. 47.45 per share which translated to a total amount of Rs. 19.15 Crore. In this regard it is to be noted that the share sale agreement dated 27.06.2016 between IFC and Mala Srivastava had stated unequivocally that the purchaser was not purchasing the same for resale. Thus the aforesaid facts established that the applicant was having full knowledge of sale of share of RHL to VPS, a....
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.... fair picture of their affairs of these companies and the applicant was a signatory to the financial statements, despite having complete knowledge that the financial statements were false, in the sense that the assets (Building and Medical Equipment) recognized were inflated, expenses in Profit and Loss account were bogus etc." 5. The petitioner in response to the written submissions of the SFIO specifically in relation to the transactions detailed in paragraph 4 hereinabove has submitted as under:- "Allegation A: Applicant, in conspiracy with Aditya Kr Bhandari, Rishi Kumar Srivastava (Charge Sheet/ Complaint filed without Arrest), allegedly siphoned off funds of RHL to the tune of Rs. 13.21 Cr belonging to RHL, the applicant has committed an offence u/s 447 and 448 of the Companies Act, 2013. Applicants Reply: After obtaining this amount on loan from Bank, RHL paid the same to MCD for sanction of Additional Constructible Area/ FAR for Qutab Institutional Area Hospital as RHL was occupying the Hospital on Licensee Basis from Far Trust, however, when MCD refunded this amount, the same was received by FARC Trust as the said Trust was the Landowner/ Lessee of DDA....
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....allegedly directed the preparation of false implant bills go the tune of Rs. 76.03 Cr of RHL and therefore such amount has been allegedly Siphoned-Off from RHL and Entry Operators have stated that the said amount has been paid back in Cash to the accused persons and therefore the applicant has committed an offence u/s 447 and 448 of the Companies Act, 2013. Applicants Reply: Payments to Vendors (who have been alleged to be Entry Operators) were only made through Banks and not in cash. The allegation that the Entry Operators returned Cash to the accused persons does not stand on its legs as there is no proof of cash transactions such as "Source'/ "Cash Receipt" on record. The Hon'ble Delhi High Court in Bai App No.434/2020 titled Pradeep Sherawat Vs. State has granted Anticipatory Bail as no proof of cash such as "Source and/ or Cash Receipt" was available. MOST IMPORTANTLY, even if the allegations of SFIO are considered to be gospel truth, it is reiterated that as against alleged Siphoned-Off amount of 76.03 Cr, a sum of Rs. 145.59 Cr has already been collected by RHL in the above said Instance of alleged Non Existent Doctor Referred Patients Sale, hence the question of th....
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....ch may extend upto ten years and fine not less than the amount involved. Thus the judgments relied upon by the respondent are not applicable in the facts and circumstances of this case as petitioner is concerned....". 6. The petitioner has submitted further that RHL was established in 2004 and being led by Srivastava Family as its Directors and Majority Share Holders, RHL availed Bank loans to the tune of 430 Cr approximately, that in 2016, the minority Share Holding of RHL which was owned by International Finance Corporation (IFC) were purchased by Mala Srivastava and thereafter 100 % Shares of RHL were sold to VPS Healthcare; that as a part of consideration purchasing the 100% Shares of RHL, after taking over RHL, during January, 2017, the Srivastava Family paid the entire loans of RHL out of their sales consideration from 100% shares of RHL which were obtained by RHL during the tenure of Srivastava Family and discharged the guarantees of the Srivastava Family; that thereafter various disputes arose and VPS Healthcare by themselves and through its Auditor filed a complaint before the ROC in respect to the manner in which the affairs of RHL were managed by Srivastava Family in ....
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....d considering that there are 46 witnesses that are to be examined and the trial will take a long time, the applicant be released on bail. 7. Inter alia the petitioner submits that the medical document in relation to his ailments established that he is a sick/infirm person suffering from Major medical ailments i.e. Type 2 - Diabetes Mellitus, Hypertension, Coronary Heart Disease, 'Severe' Non Proliferative Diabetic Retinopathy (NPDR), Hypothyroidism, Benign Prostate Hyperplasia (BPH), derailment of LFT Parameters and that, his urine flow is also stated to be insufficient. It is further submitted that the applicant suffers from attacks of benign paroxysmal positional vertigo and has developed a problem in walking properly and has disk bulge at L3, L4 and L5 S.1 which are ailments of such irreversible nature that the same require continuous follow-ups and treatment and lapse of treatment could be fatal to the life of the applicant and the factum of the applicant being highly co-morbid has also not been denied by the SFIO. The applicant thus, submits that he is a sick/ infirm person and therefore falls within the proviso to Section 212(6) of the Companies Act, 2013 which is a provis....
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....et has been filed against the appellant and other coaccused on 18.10.2019. The appellant is in custody from 21.08.2019 for about two months. The co-accused were already granted bail. The appellant is said to be aged 74 years and is also said to be suffering from age related health problems. Considering the above factors and the facts and circumstances of the case, we are of the view that the appellant is entitled to be granted bail." 9. It is submitted on behalf of the applicant that he is neither a flight risk nor is there any allegation against him of tampering any evidence and that the investigation in the matter is complete and the charge sheet has already been filed and thus, he be granted regular bail. 10. It is further submitted on behalf of the applicant/petitioner that the order dated 14.05.2020 granting regular bail to the co-accused Aditya Kumar Bhandari takes into account the factum that there was no public money involved and all bank loans stood fully paid back and that the bankers did not file any complaint and no loss had been caused to any financial institution or Central Government, which factors apply even qua the present applicant/petitioner. 11. A conte....
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.... petitioner cannot be granted without reference to the provisions of Section 212(6) and Section 212(7) of the Companies Act, 2013 without recording a written finding on the required level of satisfaction of the Court that there are reasonable grounds for believing that the petitioner is not guilty of the offence alleged to have been committed by him and that the petitioner is not likely to commit any offence whilst on bail. 12. Section 212(7) of the Companies Act, 2013 reads to the effect:- "212. Investigation into affairs of Company by Serious Fraud Investigation Office.- ....... ........ ....... (7) The limitation on granting of bail specified in sub-section (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. 13. It is further submitted on behalf of the SFIO that the applicant is an accused against whom offences under Sections 447, 36 r/w/s 447/448 r/w/s 447 have been invoked separately for distinct fraudulent transactions wherein he is allegedly involved and thus the satisfaction required by Section 212(6) (ii) of the....
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....prescribing that no bail ought to be granted except for reasons detailed by the statute, the negation of bail is the rule and its grant an exception and that a liberal approach in the matter of bail under the said enactment i.e. the NDPS Act, 1985 and consequentially likewise qua the offence punishable under Section 448 of the Companies Act, 2013 is wholly uncalled for. Reliance was also placed on behalf of the SFIO on the observations of the Hon'ble Supreme Court in the said case, which read to the effect:- "A perusal of Section 37 of the Act leaves no doubt in the mind of the court that a person accused of an offence, punishable for a term of imprisonment of five years or more, shall generally be not released on bail. Negation of bail is the rule and its grant an exception under subclause (ii) of clause (b) of Section 37(1). For granting the bail the court must, on the basis of the record produced before it, be satisfied that there are reasonable grounds for believing that the accused is not guilty of the offences with which he is charged and further that he is not likely to commit any offence while on bail. It has further to be noticed that the conditions for granting t....
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....of the matter, the order releasing the accused on bail by the Special Judge as well as the order of the High Court in revision are quashed. The accused should be taken into custody forthwith. After the accused is taken into custody, the trial may commence". 17. Reliance was also placed on behalf of the SFIO on the verdict of the Hon'ble Supreme Court in "State of Kerala etc. v. Rajesh etc." (2020 SCC OnLine SC 81) with specific reference to observations therein, which read to the effect:- "2. The appellant-prosecution has challenged the discretion exercised by the learned Single Judge of the High Court of Kerala in granting post-arrest bail to the accused respondents without noticing the mandate of Section 37(1)(b)(ii) of the Narcotic Drugs and Psychotropic Substances Act, 1985 (hereinafter being referred to as "NDPS Act") under the order impugned dated 10th May, 2019 followed with 12th June, 2019 rejecting the application filed by the appellant under Section 482 of the Code of Criminal Procedure (hereinafter being referred to as "CrPC") for recalling the order of post-arrest bail dated 10th May, 2019. ...... ...... 18. The jurisdiction of the....
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....s of the accused respondents stand cancelled and they are directed to be taken into custody. The trial Court is directed to proceed and expedite the trial." 18. Reliance was also placed on behalf of the SFIO on the verdicts in "Union of India Vs. Rattan Mallik @ Habul-(2009) 2 SCC 624, "Narcotics Control Bureau v. Kishan Lal (1991) 1 SCC 705, "Customs New Delhi v. Ahmadalieva Nodira" 2004 3 SCC 549, "Union of India v. Shiv Shanker Kesari" (2007) 7 SCC 798, "Satpal Singh v. State of Punjab" (2018) 13 SCC 813, "Union of India v. Niyazuddin" (2018) 13 SCC 738. Reliance was also placed on behalf of the SFIO on the verdict in "Serious Fraud Investigation Office v. Nittin Johari & Anr." SCC Online SC 1178 to reiterate its contention that Section 212(6) of the Companies Act, 2013 is mandatory in nature and as in the facts and circumstances of the instant case which have been explained in detail, the applicant is not entitled to be released on bail as there is no reasonable ground for believing that he has not committed any fraud in view of ample evidence available on record. 19. The observations of the Hon'ble Supreme Court in "Rohit Tandon v. Directorate of Enforcement, (2018) 11 S....
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....s or otherwise and the trial, if any, in the circumstances, in as much as, it has been laid down by the Hon'ble Supreme Court in "P. Chidambaram Vs. Central Bureau of Investigation" 2019 (14)SCALE 157 that the basic jurisprudence relating to bail remains the same, in as much as the grant of bail is the rule and refusal is the exception, so as to ensure that the accused has the opportunity to securing a fair trial and that even though, economic offences fall under the category of a grave offence and the said circumstance is to be considered at the time of consideration of an application for bail, even if the allegation is one of a grave economic offence, it is not a rule that bail should be denied in every case since there is no bar created in the relevant enactment passed by the legislature nor does the bail jurisprudence provide so. 51. Furthermore, it is in these circumstances that the provisions of Section 212(6) of the Companies Act, 2013 in the facts and circumstances of the instant case would have also to be considered and thus, it cannot be contended that the embargo of Section 212(6) would essentially operate in the instant case., and vide verdict dated 20.12.2019 ....
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....een laid down by the Hon'ble Supreme Court in "P. Chidambaram Vs. Central Bureau of Investigation" 2019 (14)SCALE 157 that the basic jurisprudence relating to bail remains the same, in as much as the grant of bail is the rule and refusal is the exception, so as to ensure that the accused has the opportunity to securing a fair trial and that even though, economic offences fall under the category of a grave offence and the said circumstance is to be considered at the time of consideration of an application for bail, even if the allegation is one of a grave economic offence, it is not a rule that bail should be denied in every case since there is no bar created in the relevant enactment passed by the legislature nor does the bail jurisprudence provide so. 32. Furthermore, it is in these circumstances that the provisions of Section 212(6) of the Companies Act, 2013 in the facts and circumstances of the instant case would have also to be considered and thus, it cannot be contended that the embargo of Section 212(6) would essentially operate in the instant case." 24. On behalf of the SFIO, it was however submitted that the transactions in which the petitioner is involved whic....
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....o the effect vide order dated 02.07.2020 that in case the petitioner was not administered injection in the eye on 15th July, 2020 and on 17th July, 2020 his catheter angiography was not performed, the petitioner would surrender to custody on 19th July, 2020 and it was only vide order dated 16.07.2020 in view of the orders in W.P.(Crl.)3037/2020 that interim bail granted to the applicant was extended in CRL.M.A.9213/2020 till 31.08.2020 on the same terms and conditions as imposed vide order dated 08.04.2020 in Bail Appl. No.418/2020 and that in as much as W.P.(Crl.)3037/2020 was disposed of vide order dated 20.10.2020 directing surrender of all prisoners on interim bails in a phased manner and no further extension having been granted with it having been directed that the litigants were at liberty to move the Courts concerned for extension of interim orders which could be considered by the Courts concerned uninfluenced by the order passed dated 20.10.2020 in W.P.(Crl.)3037/2020 by the Hon'ble Full Bench of this Court and coupled with the factum that vide order dated 01.03.2021 in a Petition for Special Leave to Appeal (C) No.13021/2020 whereby there has been no further extension of i....
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....13, he may be released on bail without consideration of the twin considerations that he is not guilty of such offence and that he is not likely to commit any offence whilst on bail as requisite under Section 212(6)(ii) of the Companies Act, 2013, it is essential to observe that the applicant had submitted that he had to undergo a coronary heart angiography test in the first week of April, 2021 as per the document issued by the Human Care Medical Trust which document was directed to be verified by the SFIO and furthermore, a report was also called vide order dated 09.03.2021 from the jail authorities where the applicant was lodged as to whether the said test was requisite and whether it could be conducted at the jail premises. The SFIO had also been called upon to submit a verification report in relation to the physical condition of the applicant. 29. The SFIO verified the document issued by the Human Care Medical Trust, Dwarka with a questionnaire dated 10.03.2021 to the effect:- "No.SFIO/INV/RHL/838/2018/1/21796/2021 dated 10/03/2021 To HUMAN CARE MEDICAL TRUST PALAM VIHAR, SECTOR-6 DWARKA, NEW DELHI-110075 Subject:....
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.... intervention/CABG depending on procedure. (D) Yes Angiography requires Hospitalization Angiography on day, other procedure may take time depending on procedure required and kidney function test etc. (E) It is planned in first week of April on patients choice, he wants eye treatment first." 30. The report that was received from the Medical Officer, Incharge, Central Jail-07, Tihar, New Delhi pursuant to order dated 09.03.2021 was to the effect:- "D.No./SMO/CENTRAL JAIL-07/2021/539 dated 12/03/2021 To, The Superintendent (COURT MATTER) Central Jail-07 Tihar, New Delhi-110064 Sub:- REGARDING REPORT OF INMATE PRABHAT KUMAR SRIVASTAVA S/O SARJU PRASAD SRIVASTAVA SOUGHT BY HON'BLE COURT OF MS. JUSTICE ANU MALHOTRA, HIGH COURT OF DELHI, NEW DELHI. In reference to the subject cited above, it is hereby submitted that the aforesaid inmate PRABHAT KUMAR SRIVASTAVA (60 years old Male) S/o SARJU PRASAD SRIVASTAVA was previously lodged in CENTRAL JAIL-07, Tihar. In reference to the court order dated 09/03/2021, Where in the HON"BLE HIGH COURT wants to know two issues/....
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....ed that the petitioner could be provided adequate treatment whilst being lodged at the jail itself, in as much as he could be sent from the jail to the concerned hospitals i.e. Safdarjung Hospital and AIIMS Hospital for his catheter angiography as well as for his intravitreal injections in the eye. It was submitted on behalf of the SFIO that the observations in the report of the Medical Officer, In-charge, Central Jail-07, Dispensary to the effect:- "In case of emergency related to Cardiology and Ophthalmology (Eye) ailments, the patient does not reach super specialty within the time limits (60 mins) then permanent disability of eyes and possibility of paralysis or even death cannot be ruled out.", are only general in nature and would apply to any inmate of the jail. CONCLUSION 33. On a consideration of the submissions that have been made on behalf of either side, this Court is of the considered view that the applicant cannot be considered to be a person so sick to fall within the ambit of grant of regular bail till disposal of the proceedings in the complaint case for all that he needs is the intravitreal injections and the angiography which he himself has chosen....
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....ue advantage from or to injure the interests of the company or its shareholders or its creditors or any other person. Qua the same, the observations of this Court in Bail Appln. No.639/2020 qua the coaccused Aditya Kumar Bhandari since released on bail cannot be overlooked wherein it has been expressly observed to the effect that the main beneficiary of all the seven instances of fraud is Prabhat Kumar Srivastava i.e. the petitioner herein and his family. 36. The status report that has been submitted by the SFIO specifically alleges incidence of Rs. 13.17 Crores transferred under the signatures of the petitioner to the personal savings bank account of the co-accused Rishi Kumar Srivastava which amount was transferred from the account of Rishi Kumar Srivastava as an unsecured loan to RHL which was gradually being paid by the RHL to Rishi Kumar Srivastava in the year 2014-15, 2015-16 & 2016-17 which are stated to be actually funds of RHL itself with the allegations against the petitioner that by transferring the amounts from FARC to Rishi Kumar Srivastava and that further transferring it to the RHL as unsecured loan, a false facade was created to show that the amount had been tran....