TaxTMI 
TaxTMI 
2022 (7) TMI 413
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.... and the Punjab National Bank to conduct the stock audit of BSL for the Financial Year's 2014-2015 and 2015-2016 respectively. The Accused had no role whatsoever over the filing of the actual stock statements. The role of the Accused was only limited to data aggregation by physically visiting the various locations of the Company and verifying the stocks and debtors' report in the stock statement, which was duly signed by the senior officials of the Company and have already been submitted to the Banks. Upon the completion of the said assignment, the Report was submitted by the Accused to Punjab National Bank and State Bank of India. While the applicant has been made as accused, but SFIO has failed to array as accused, the erring officials of Punjab National Bank and State Bank of India, who were the employers of the accused. Despite being aware that the accused has conducted the Stock Audit solely on the basis of the information provided by the Companies. The Central Government/Ministry of Corporate Affairs ("MCA") in exercise of powers under Section 212(1) (c) and 219 of the Companies Act, 2013 initiated investigation in the affairs of M/s. Bhushan Steel Ltd("BSL") and other Compan....
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.... to accused was carried out diligently by adhering to the highest standards of work and have duly followed the guidelines/ standards/ guidance notes issued by Institute of Chartered Accountants of India ("ICAI") of which the applicant was a member. The accused was never involved in any inducement to creditors or lenders. The Stock Audit was conducted using professional scepticism, as is required for conducting stock audits. The Guidance Notice issued by the Institute of Chartered Accountants of India ("ICAI") regarding the conduct of Stock Audits categorically provides that conducting Stock Audit does not necessarily guarantee absolute veracity of the stock records or even healthy financial position. It also provides that the Auditors appointed cannot be expected to be aware of the industry scenario precisely. The scope of the auditor's work is limited and is not allowed to delve deep into the technical aspects. Moreover, it is not humanely possible for the Auditor to be conversant with the technical details. Furthermore, the Guidance Note observes that the system of allocation of Stock Audit is not based on a well worked out methodology and the audit should be designed in such a m....
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..../s. Heera Gold Exim pvt. Ltd. & Ors, Siddharth vs. State of Uttar Pradesh reported as (2022) 1 SCC 676,' Aman Preet Singh vs. C.B.I through Director' reported as [2021 SCCOnline SC 941], Anil Kumar Yadav vs. State (NCT of Delhi)' reported as [(2018) 12 SCC 129], 'Neeru Yadav vs. State of Uttar Pradesh' reported as [(2016) 15 SCC 422], 'Prasanta Kumar Sarkar vs. Ashish Chaterjee and Anr. 'reported as [(2010) 14 SCC 496], 'CBI vs. K. Narayan Rao' reported as [((2012) 9 SCC 512)} 14. The respondent in its reply has explained that the investigations revealed that ex-promoters of BSL namely Neeraj Singal and Brij Bhushan Singal were controlling directly or indirectly 157 Companies including BSL, which were under investigation. The promoters of BSL needed to infuse capital in the Company in order to avail credit facilities from lender Banks for its steel plant, for which purpose they required a level of debt equity, therefore, the ex-promoters assisted by their employees and close associates, through a serious of concerted actions, using a complex web of Companies and financial transactions, siphoned off funds from BSL and Bhushan Energy Limited (BEL)....
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....ab National Bank based on these stock statements, allocated the sanctioned limit/DP to each of the lending consortium member banks, who required them to adhere to the sanctioned limit. The Banks reviewed the Drawing Power limits against the credit facilities using financial statements, and the periodic stock statements submitted by the Company to banks, and reports submitted by its appointed Stock Auditor in the subsequent periods/years. 18. The SIT figures in the books of accounts and in the stock statements were found to be inflated. The Stock Auditor did not raise any red flag or alarm in respect of inflated stock position and hereby huge amont of public money of the banks were lost since the banks were made to believe that the actual stock existed. The finances were given to the BSL on the basis of falsified and fabricated documents including the inflated SIT. 19. It is further asserted that during the course of investigation, the bank officers of the Punjab National Bank and the State Bank of India stated that they have relied on Stock Audit Report submitted by the Stock Auditor and the financial statements audited by Statutory Auditor for sanctioning of Drawing Power. It is....
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....ffects the prima facie, admitted to have been committed by the petitioner, one of the mandatory condition of Section 212 (6) is not satisfied and the accused is not entitled to bail. 23. The reliance has been placed on 'State of M.P vs. Kajad, (2001) 7 SCC 673', which is under NDPS Act and contains a similar provision for bail under Section 37 of the NDPS Act. Reliance has also been placed on 'Bijando Singh v. Md. lbocha (2004) 10 SCC 151', 'Union of India Vs. Rattan Mallik@ Habul-(2009) 2 SCC 624Narcotics ,' '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' 24. It is further submitted that the offence committed is economic offence with deliberate design with an eye on personal profit regardless to the consequence to the community and is not entitled to bail in such white collar crimes as has been held in 'State of Gujarat v. Mohanlal Jitamalji Porwal and others (1987) 2 SCC 364', 'Rohit Tandon v. Directorate of Enforcement, (2018) 11 SCC 46', . The bail application is therefore opposed. 25. Submissions heard and....