S. Muralidhar, J.

Crl.M.A.No.30267/2018

1. The prayer in the present application is for an ad interim order for release of the Petitioner from ‘illegal’ judicial custody.

Background facts

2. The background facts are that the Petitioner was arrested on 8th August 2018 pursuant to an investigation being carried out by the Serious Fraud Investigation Office (‘SFIO’) (Respondent No.2) into the affairs of Bhushan Steel Limited (‘BSL’) and Bhushan Steel and Power Limited (‘BSPL’). This investigation was pursuant to an order dated 3rd May 2016 issued by the Ministry of Corporate Affairs (‘MCA’), Government of India under Section 212 (1) (c) of the Companies Act, 2013 (‘Companies Act’) which directed investigation into not only the affairs of BSL and BSPL but thirteen other group companies, twelve of BSPL and one of BSL. The transactions which were asked to be investigated were for the period between Financial Years 2007-08 to 2014-15.

3. The broad allegations against the Petitioner, as stated by the SFIO in its application dated 9th August 2018 before the Special Judge (Companies Act), Dwarka Courts seeking his remand to judicial custody, are that he and his father Mr. B.B. Singal, the promoters of BSL, in connivance with its officials “used multitude of complex, fraudulent manoeuvres to divert/siphon off funds raised by BSL from banks using its more than 100 associate companies aimed at personal gain which led to wrongful loss to the banks and other investors in the companies.” It is further alleged that “the fraudulent activities of B.B. Singal, Neeraj Singal and his associates have extended over a long period of time. The amount diverted through these fraudulent manoeuvres would be anywhere between Rs. 2000 to Rs. 3000 crore.”

4. The remand application dated 9th August 2018 inter alia notes that since according to the SFIO, the Petitioner “appeared to have committed offences punishable under Section 447 of Companies Act 2013”, the Petitioner was arrested on 8th August 2017 at 1930 hours, in accordance with law. It is further averred: “He was explained the grounds of arrest. However he refused to sign the arrest memo.” Further the SFIO averred in the remand application that although the Petitioner, his father and the Chief Financial Officer appeared before the SFIO in response to summons issued to them from time to time, they did not divulge details and failed to co-operate.

5. On 9th August 2018, the Petitioner was produced before the Special Judge, who directed that he should be produced first before the Metropolitan Magistrate (MM). The Duty MM before whom he was then produced granted the SFIO judicial custody till 14th August 2018. The Petitioner was forwarded to the Special Judge in terms of the proviso to Section 436 (1) Companies Act.

6. On 14th August 2018, the SFIO filed an application for extension of judicial remand. The Petitioner was produced before the 1st Link Additional Sessions Judge, Dwarka who granted judicial custody till 18th August 2018. A further application for extension of judicial remand was filed by the SFIO before the Special Judge on 18th August 2018. In the meanwhile the present petition was filed on 16th August 2018.

7. On the 18th August 2018 the Special Judge noted in his order that apart from the application seeking extension of judicial remand, the SFIO had filed another application “for permission to examine the accused in judicial custody.” It was specifically stated that investigation was still under progress and a “number of statements of other persons and other relevant information/documents are to be put to the accused during examination sought under Section 217 (4) of the said Act.” The Special Court observed that the file of the IO had been perused. It was noted that statements of a few persons had been recorded on 11th, 13th, 16th and 17th August 2018. Consequently, the judicial custody was extended till 1st September 2018. The Special judge then noted: “In view of this, while exercising po