TaxTMI 
TaxTMI 
2021 (6) TMI 795
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.... of the Indian Penal Code, 1860. 2. Briefly stated, the facts as mentioned in the above-referred complaint relevant for disposal of the present petition are that one Multi State Credit Co-operative Society was got registered under the Multi State Co-operative Societies Act, 2002 by Mukesh Modi and his family members in the name of Adarsh Credit Co-operative Society Ltd. (hereinafter referred to as ACCSL). ACCSL accepted deposits from its members, who were marginally low to middle income group individuals. ACCSL had more than 800 branches, about 20 lakh members, 3.7 lakh advisors/agents and outstanding deposit liability of Rs. 9253/- crores payable to the investors/members as on 31.05.2018. After collecting money from the public, Mukesh Modi and his family members and associates created a large number of Companies under the aegis of Adarsh Group of Companies Ltd. (hereinafter referred to as AGCL) with their associates and relatives as the Directors. The money deposited with ACCSL was allegedly siphoned off through the Companies created under the aegis of the AGCL. When the matter came to knowledge of the Central Government, the Central Government, through Ministry of Corporate Aff....
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....al of India assisted by Mr. Alok Jain, Senior Panel Counsel for UOI and Sh. Parshant Balian, Deputy Director and Mr. Hari Kishan, Prosecutor, Serious Fraud Investigation Office and Mr. Deepak Sabharwal, learned Additional Advocate General Haryana and have gone through the relevant record. 5. Learned Senior Counsel for the petitioner has submitted that the petitioner is an alumnus of IIT, Delhi and a Telecom Engineer and Research and Development professional who worked for 7 years in reputed telecom organizations in India and the U.S. The petitioner was introduced to Mukesh Modi in the year 2011. As per discussions between them the project of a Technology Company was started by the AGCL in which the petitioner was to build/lead the technology team while other aspects of incorporation, fund infusion, accounting, finances etc. were to be the responsibility of the AGCL/Mukesh Modi. The above said company was incorporated on 15.06.2011 with registered head office at Gurugram, Haryana but the finances, accounting and auditing etc. were the responsibility of the AGCL/Mukesh Modi and were dealt with by Jaipur office of the AGCL. The petitioner was given sweat equity of 25 per cent which ....
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....eing arbitrary, unreasonable and violative of Articles 14 and 21 of the Constitution of India are ultra vires thereto and being liable to be ignored can not be invoked to deny bail to the petitioner. 7. In support of these arguments learned Senior Counsel for the petitioner has also relied on the following observations in Jainam Rathod Vs. State of Haryana (P&HHC) : 2020 (1) RCR (Criminal) 241:- "26. At the same time this court does not find any substance in the argument of the learned Counsel for the SFIO has that the twin conditions prescribed under section 212 (6) of the New Companies Act, 2013 start with negation of bail to the accused and the court could grant bail to such an accused only if the court records a satisfaction qua the accused being 'not guilty' of the alleged offence and also a satisfaction that if released on bail the accused is not likely to commit any similar offence again. Also this court does not find substance in the insistence of the learned counsel for the SFIO that the application of the twin conditions, as prescribed under Section 212 (6), are mandatory and have to be applied to all the considerations of grant of bail to the accused facing ch....
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....nflict between the rights guaranteed by the Articles 14 & 21 of the Constitution on one hand and the language in a statute on the other hand, the latter has to give in to the former. This has also been so held by the Supreme Court in another case where the Supreme Court has held that despite prohibition of suspension of sentence under NDPS Act, the Courts can suspend the sentence. Hence it was held by this court that, despite the fact that the constitutional vires of the language of the twin conditions might be considered by some other court in some other appropriate proceedings, the state could not be permitted to take the twin conditions as an objection to the grant of the bail to the accused. This court does not find any reason to take a different view now. This judgment of this court was even challenged before the Hon'ble Supreme Court in case of SLP (Criminal) Diary No. 42609 of 2018, State of Punjab v. Ankush Kumar @ Sonu. However, the Hon'ble Supreme Court had not found any reason to interfere with that judgment of this court; and SLP was, accordingly, dismissed by the Supreme Court. It would not be appropriate to reproduce only some part of that judgment of this c....
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....rson; requires the satisfaction and belief of the court that the said person 'has been guilty' of the offence mentioned in that provision. On the other hand Section 437(7) deals with a situation where the trial stands concluded but the decision is not yet pronounced. In this Situation; this provision provides that the accused need not be unnecessarily incarcerated and he can be released on bail if the court has a satisfaction and belief; on the basis of the evidence of the prosecution; that the accused 'is not guilty' of the offence. Both these provisions are perfectly in tandem with the other provisions of Cr.P.C. relating to the stages and progress of trial, like framing of charge, discharge and acquittal of an accused as per the progress of trial and availability of evidence on record. On the other hand, section 212(6) of the Companies Act requires from the court; at the start of the trial itself; what section 437(7) requires from the court at the end of the trial. Even if, by hook or crook, the court manages to record, while granting bail to an accused, as is required under section 212(6), that the accused 'is not guilty', then it negates the entire pr....
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....g the police officers into custody and keeping them in custody till their examination and cross examination before the trial court, as prosecution witnesses, was completed, because in those cases only the police persons were the witnesses and they were not appearing before the trial court, for 19 dates in one case and for 41 dates in another case; despite the fact that the accused was in continuous custody or was regularly appearing before the trial court. Such kind of cases does galore. In such a situation the court would do substantial justice; or would stick to the conditions; like the ones prescribed under section 212(6); to deny even the bail to such an accused? Even if the courts are to stick to such condition; then how much injustice to the accused would be sufficient to off-set or to balance with the rigor of the twin condition? This court finds the answer to these inconvenient questions to be in negative and, therefore, constrained to observe that in humble view of this court; the twin conditions mentioned in section 212(6) are not mandatory in their compliance. 29. Although learned Counsel for the SFIO has submitted that in the case of Nitin Johari (Supra) the Hon'b....
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....s Act, 2013 are not attracted to his case. In support of this argument learned Senior Counsel for the petitioner has placed reliance on the following observations of Hon'ble Supreme Court in Nikesh Tarachand Shah v. Union of India : 2018(2) R.C.R.(Criminal) 232:- "35. Another conundrum that arises is that, unlike the Terrorist and Disruptive Activities (Prevention) Act, 1987, there is no provision in the 2002 Act which excludes grant of anticipatory bail. Anticipatory bail can be granted in circumstances set out in Siddharam Satlingappa Mhetre v. State of Maharashtra, 2011(1) R.C.R.(Criminal) 126 : (2011) 1 SCC 694 (See paragraphs 109, 112 and 117). Thus, anticipatory bail may be granted to a person who is prosecuted for the offence of money laundering together with an offence under Part A of the Schedule, which may last throughout the trial. Obviously for grant of such bail, Section 45 does not need to be satisfied, as only a person arrested under Section 19 of the Act can only be released on bail after satisfying the conditions of Section 45. But insofar as pre-arrest bail is concerned, Section 45 does not apply on its own terms....." 9. Learned Senior Counsel for the pe....
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....ntion of the Legislature. Section 21(4) of MCOCA, therefore, must be construed reasonably. It must be so construed that the Court is able to maintain a delicate balance between a judgment of acquittal and conviction and an order granting bail much before commencement of trial. Similarly, the Court will be required to record a finding as to the possibility of his committing a crime after grant of bail. However, such an offence in futuro must be an offence under the Act and not any other offence. Since it is difficult to predict the future conduct of an accused, the court must necessarily consider this aspect of the matter having regard to the antecedents of the accused, his propensities and the nature and manner in which he is alleged to have committed the offence. 52. It is, furthermore, trite that for the purpose of considering an application for grant of bail, although detailed reasons are not necessary to be assigned, the order granting bail must demonstrate application of mind at least in serious cases as to why the applicant has been granted or denied the privilege of bail. 53. The duty of the court at this stage is not to weigh the evidence meticulously but to arrive at....
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....ommitted by others. The petitioner has clean antecedents and was not involved in any un-lawful activity. The petitioner has not committed any offence covered by Section 447 of the Companies Act, 2013 and is not likely to commit any offence under the Companies Act, 2013. Both the conditions laid down in Section 212 (6) of the Companies Act, 2013 for grant of bail are satisfied. There is no cogent evidence of any fraudulent act/omission and mens rea on the part of the petitioner and on broad probabilities of the case the petitioner may not be ultimately convicted in the case and the petitioner deserves grant of anticipatory bail on this ground. 12. Learned Senior Counsel for the petitioner has further argued that during the course of investigation the petitioner was not summoned for giving any statement nor any query was made from him. Investigation has already been completed and on completion of investigation complaint has also been filed. Without joining him in investigation and ascertaining the facts and circumstances regarding his alleged involvement, the petitioner has been arbitrarily implicated as an accused in the complaint. The petitioner was not arrested during investigat....
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....e accused was arrested during investigations when that person perhaps has the best opportunity to tamper with the evidence or influence witnesses. If the investigating officer does not find it necessary to arrest an accused person during investigations, a strong case should be made out for placing that person in judicial custody after a charge sheet is filed. Similarly, it is important to ascertain whether the accused was participating in the investigations to the satisfaction of the investigating officer and was not absconding or not appearing when required by the investigating officer. Surely, if an accused is not hiding from the investigating officer or is hiding due to some genuine and expressed fear of being victimised, it would be a factor that a judge would need to consider in an appropriate case. It is also necessary for the judge to consider whether the accused is a first-time offender or has been accused of other offences and if so, the nature of such offences and his or her general conduct. The poverty or the deemed indigent status of an accused is also an extremely important factor and even Parliament has taken notice of it by incorporating an Explanation to Section 436....
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....yvyasi Vimal S Sharma Petitioner herein Number of CUIs associated with as a Director 1 7 4 1 Loan from ACCSL in associated CUIs Yes Yes Yes Yes Loan Amount (in crores) 62 103 72 14 Non-repayment of loans till March 2017 Yes Yes Yes Yes Signatory on balance sheets of the accociated CUIs Yes Yes Yes Yes Whether any active role or involvement in conspiracy alleged No No No No Whether alleged to be beneficiary of fraud No No No No Identified by SFIO as alleged associate of Mr. Mukesh Modi Yes Yes Yes No Summoned to join investigation by SFIO Yes No No No Anticipatory bail status Granted Granted Granted Denied The petitioner is entitled to grant of anticipatory bail on parity with the above-said similarly placed persons who have been granted anticipatory bail by this Court. 18. Learned Senior Counsel for the petitioner has also asserted that the petitioner is sole bread earner of his family comprising his old mother, wife and minor children and is not likely to abscond. The case is based largely on documentary evidence which is already seized by and in possession of the complainant and the qu....
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....r the respondent have further argued that Section 212 (6)(ii) of the Companies Act, 2013 bars grant of bail to person accused of having committed offence covered under Section 447 of the Companies Act, 2013 unless 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. The twin conditions thereby laid down are mandatory and being conditions precedent, bar release of such person on bail unless the same are satisfied. In Nikesh Tarachand Shah Vs. Union of India : 2018(2) R.C.R.(Criminal) 232, Hon'ble Supreme Court declared Section 45 of the Prevention of Money Laundering Act, 2002 to be unconstitutional but the Parliament has subsequently amended Section 45 of the Prevention of Money Laundering Act, 2002 and the amended provision was considered by Hon'ble Supreme Court in P. Chidambaram Vs. Directorate of Enforcement : (2019) SCC Online SC 1143 (Supreme Court). Section 37(1)(b) of the Narcotic Drugs and Psychotropic Substances Act, 1985, Section 20(8) of the Terrorist and Disruptive Activities (Prevention) Act, 1987 and Section 21(4) of the Maharashtra Control o....
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.... Act, 2013 also apply to persons accused of the offences mentioned therein seeking grant of anticipatory bail. Anticipatory bail can be granted for limited duration till filing of charge-sheet or taking of cognizance. Since the complaint has already been filed, the petitioner has to surrender and then apply for regular bail. In support of these arguments, learned Additional Solicitor General and learned Senior Panel Counsel for the respondent have placed reliance on the observations in Arun Sharma Vs. Union of India and others : (2016) 3 RCR (Criminal) 883 (DB) (Punjab & Haryana High Court); Pankaj Jain Vs. Union of India : (2018) 5 SCC 743 (Supreme Court); Ankush Kumar @ Sonu Vs. State of Punjab; (2018) SCC Online P & H 1259 (Punjab and Haryana High Court); Satpal Singh Vs. State of Punjab : (2018) 13 SCC 813 (Supreme Court); HDFC Bank Ltd. Vs. J.J. Mannan @ J.M. John Paul and Another : (2010) 1 SCC 679 (Supreme Court) and Sushila Aggarwal Vs. State (NCT of Delhi) : 2020 (1) RCR (Criminal) 337 (Supreme Court). 23. Learned Additional Solicitor General of India and learned Senior Panel Counsel for the respondent have further argued that the petitioner has not placed any material on....
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....of Gujarat Vs. Mohanlal Jitamalji Porwal : (1987) 2 SCC 364 (Supreme Court). 26. In support of their arguments, learned Additional Solicitor General and learned Senior Panel Counsel for the respondent have also placed reliance on observations in Jainam Rathod Vs. State of Haryana (Punjab and Haryana High Court) : 2020 (1) RCR (Criminal) 241 and Raj Kumar Modi Vs. Serious Fraud Investigation Office : (2019) SCC Online P & H 4987 (Punjab and Haryana High Court) where regular bail was denied by the Co-ordinate Bench of this Court in similar matters of co-accused Jainam Rathod and Raj Kumar Modi. 27. Learned Additional Solicitor General of India and learned Senior Panel Counsel for the respondent have further argued that Bhart Kumar Mardia and Leena Harivyasi were granted bail as there were no allegations of commission of offence punishable under Section 447 of the Companies Act, 2013 against them and Section 212(6) of the Companies Act, 2013 was not applicable to them. Vimal S Sharma was granted bail under the proviso to Section 212(6) of the Companies Act, 2013 which permitted grant of bail to a person on the ground of being a sick or infirm or a woman. The case of the petitioner s....
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....y person whom he believes on the basis of material in his possession and for reasons to be recorded in writing to be guilty of any offence punishable under sections referred to in Section 212(6) of the Companies Act, 2013 but use of word 'may' in Section 212(8) of the Companies Act, 2013 by the Parliament makes it discretionary for him to arrest or not to arrest such person and it is not mandatory for him to arrest such person. Therefore, the mere fact that the petitioner was not summoned or arrested by the Investigating Officer during investigation does not entitle the petitioner to grant of bail. Reference for judicial precedents in this regard may be made to Jainam Rathod Vs. State of Haryana (P&HHC) : 2020 (1) RCR (Criminal) 241 and Raj Kumar Modi Vs. Serious Fraud Investigation Office : (2019) SCC Online P & H 4987 (Punjab and Haryana High Court). 31. The question of bail is primarily a matter of judicial discretion and not any right of the accused. The question of grant of bail to the accused has to be decided by the Court on the facts and circumstances of the case in accordance with the provisions regarding grant of bail contained in Chapter XXXIII of the Cr.P.C. an....
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....a Control of Organised Crime Act, 1999 was not doubted although the same was toned down as observed in paras No.45 and 51 to 53 of the judgment extracted hereinabove. 37. In Nikesh Tarachand Shah Vs. Union of India : 2018(2) R.C.R.(Criminal) 232, Hon'ble Supreme Court declared Section 45 of the Prevention of Money Laundering Act, 2002 to be unconstitutional but the Parliament has subsequently amended Section 45 of the Prevention of Money Laundering Act, 2002. The amended provisions were considered by Hon'ble Supreme Court in P. Chidambaram Vs. Directorate of Enforcement : (2019) SCC Online SC 1143 (Supreme Court). 38. In Ankush Kumar @ Sonu Vs. State of Punjab : (2018) SCC Online P & H 1259 (Punjab and Haryana High Court), the Coordinate Bench of this Court while considering the provisions of Section 37(1)(b) of the Narcotic Drugs and Psychotropic Substances Act, 1985 observed that the operational functionality of the language of twin conditions is based upon totally indeterminate criteria which are required for exercise of this power by the court and also expects the impossible from the Court and that the language of these twin conditions is in direct conflict with the r....
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....ality of the said provision of the Companies Act before this Court. 11. At this juncture, it must be noted that even as per Section 212(7) of the Companies Act, the limitation under Section 212(6) with respect to grant of bail is in addition to those already provided in the Cr.P.C. Thus, it is necessary to advert to the principles governing the grant of bail under section 439 of the Cr.P.C., 1973 Specifically, heed must be paid to the stringent view taken by this Court towards grant of bail with respect of economic offences. In this regard, it is pertinent to refer to the following observations of this Court in Y.S. Jagan Mohan Reddy (supra): "34. Economic offences constitute a class apart and need to be visited with a different approach in the matter of bail. The economic offences having deep-rooted conspiracies and involving huge loss of public funds need to be viewed seriously and considered as grave offences affecting the economy of the country as a whole and thereby posing serious threat to the financial health of the country. 35. While granting bail, the court has to keep in mind the nature of accusations, the nature of evidence in support thereof, the severity of the p....
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....e on bail, have to be satisfied. It is manifest that the conditions are cumulative and not alternative. The satisfaction contemplated regarding the accused being not guilty, has to be based on "reasonable grounds". The expression 'reasonable grounds' has not been defined in the said Act but means something more than prima facie grounds. It connotes substantial probable causes for believing that the accused is not guilty of the offence he is charged with. The reasonable belief contemplated in turn points to existence of such facts and circumstances as are sufficient in themselves to justify satisfaction that the accused is not guilty of the alleged offence. [Vide Union of India v. Shiv Shanker Kesari, 2007(4) RCR (Criminal) 186 : 2007(5) RAJ 134 : (2007)7 SCC 798]. Thus, recording of satisfaction on both the aspects, noted above, is sine qua non for granting of bail under the Narcotic Drugs And Psychotropic Substances Act." 44. Rigors of Section 37(1)(b) of the Narcotic Drugs and Psychotropic Substances Act, 1985 are not restricted in application only to person, accused of having committed offence punishable under Section 19, Section 24 or Section 27A thereof or offence inv....
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....e present case as per the version of the respondentcomplainant the investigation revealed that ACCSL accepted deposits from its members, mostly low to middle income group individuals and had outstanding deposit liability of Rs. 9253/- crores as on 31.05.2018. AGCL, a group of 126 companies, was being managed/controlled by Mukesh Modi, his family members and associates. 70 out of the aforesaid 126 CUIs had, despite being ineligible, fraudulently/illegally obtained loans from ACCSL to the tune of Rs. 1700/- crores and amount of Rs. 4120/- crores was the outstanding balance against the above-said loans as on 31.03.2018. Section 25 of the Multi-State Cooperative Societies Act, 2002 did not allow a company to be a member of Credit Co-operative Society. Amendment of the bye-laws of ACCSL for making companies eligible for membership of ACCSL was rejected by the Central Registrar vide order dated 19.04.2012. Investigation revealed that the petitioner was a Director in Fracton Technologies Pvt. Ltd., one of the aforesaid 70 CUIs of AGCL, from 15.06.2011 to 14.08.2018 and was managing the affairs of the company during the said period. Fracton Technologies Pvt. Ltd., using the above modus op....
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....ancial institution in all the above-said balance sheets was false in material particulars. Since in balance sheets for the financial years 2013-14, 2014-15 and 2015-16 ending on 31.03.2014, 31.03.2015 and 31.03.2016 name of ACCSL, from which the term loan was taken, was not mentioned, the facts which were material were omitted. The petitioner has claimed that the petitioner was told by Abhay Shah, Chartered Accountant of the AGCL that the ACCSL by virtue of amendment of its bye-laws was authorized to give loan to the companies and that loan being taken by Fracton Technologies Pvt. Ltd. from the ACCSL would be subsequently converted into equity in accordance with the relevant statutory provisions and that the petitioner having no reasons to doubt him accepted his explanation at face value due to lack of knowledge and inability to understand the intricacies involved in financial matters/accounting process but in view of Section 166(3) of the Companies Act, 2013, the petitioner was under obligation to exercise his duties with due and reasonable care, diligence and independent judgement. 48. Sections 447 and 448 of the Companies Act, 2013 read as under:- "447. Punishment for fraud.-....
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....s Act, 2013 to which the rigors of twin conditions laid down in Section 212 (6) (ii) of the Companies Act, 2013 are applicable. The Court can not presume absence of guilty mind/mens rea at this stage. There are no reasonable grounds for believing that the petitioner has not committed offence under Section 448 punishable under Section 447 of the Companies Act, 2013. Since the first condition laid down in Section 212 (6) (ii) of the Companies Act, 2012 for release on bail is not satisfied the petitioner is not entitled to grant of anticipatory bail even if in view of the fact that the petitioner does not have any criminal antecedents, the second condition be considered to be satisfied that the petitioner is not likely to commit any offence under the Companies Act, 2013 after his release on bail. Even otherwise, the case involves serious economic offences affecting large number of individuals from low and middle income groups and also adversely affecting the national economy. The offences under the Companies Act, 2013 are required by the said Act itself to be treated as serious economic offences and constitute a class apart. For judicial precedents in this regard reference may be made....