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2020 Supreme(Del) 1358
IN THE HIGH COURT OF DELHI AT NEW DELHI
Suresh Kumar Kait, J.
Aditya Kumar Bhandari - Appellant
Versus
Serious Fraud Investigation Office - Respondent
Bail Application No. 639 of 2020
Decided On : 14-05-2020
Rakesh Kr Khanna, Advocate, Vikas Pahwa, Advocate, Harsh Sethi, Advocate, Aanchal Basur, Advocate, Sarvapriya Makkar, Advocate, Maninder Acharya, Advocate, Jasmeet Singh, Advocate, Srivats Kaushal, Advocate, Viplav Acharya, Advocate, Arun Prasad, Advocate
The court's discretion to grant bail under Section 212(6) of the Companies Act, 2013, is not absolute and must be exercised in accordance with the principles of natural justice and fairness.
Headnote:
BAIL - COMPANY LAW - FRAUD - COMPANIES ACT, 2013 - SECTION 212(6) - OFFENCES UNDER SECTION 447 - TWIN CONDITIONS FOR GRANT OF BAIL - COURT'S DISCRETION - MEDICAL CONDITION OF THE ACCUSED - COVID-19 PANDEMIC - COURT HELD THAT THE ACCUSED WAS ENTITLED TO BAIL CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE CASE.
Fact of the Case:
The petitioner, a former director of Rockland Hospitals Limited (RHL), was arrested and charged with various offences under the Companies Act, 2013, including fraud and falsification of accounts. The petitioner sought bail on the grounds of his medical condition, the COVID-19 pandemic, and the fact that he had been in judicial custody for over 90 days. The prosecution opposed the bail application, arguing that the petitioner was a flight risk and could tamper with evidence.
Finding of the Court:
The court found that the petitioner was not a flight risk and was unlikely to tamper with evidence. The court also noted that the petitioner had been in judicial custody for over 90 days and that the trial was not likely to commence in the near future due to the COVID-19 pandemic. The court further found that the petitioner's medical condition made him more susceptible to COVID-19. Considering these factors, the court held that the petitioner was entitled to bail.
Issues: 1. Whether the petitioner was entitled to bail under Section 212(6) of the Companies Act, 2013? 2. Whether the petitioner's medical condition and the COVID-19 pandemic were relevant factors to be considered in determining whether to grant bail? 3. Whether the petitioner was a flight risk or was likely to tamper with evidence?
Ratio Decidendi: The court held that the petitioner was entitled to bail under Section 212(6) of the Companies Act, 2013, considering the following factors: * The petitioner was not a flight risk and was unlikely to tamper with evidence. * The petitioner had been in judicial custody for over 90 days and the trial was not likely to commence in the near future due to the COVID-19 pandemic. * The petitioner's medical condition made him more susceptible to COVID-19.
Final Decision: The court allowed the petitioner's bail application and directed that he be released on bail subject to certain conditions, including furnishing a personal bond and a surety.
JUDGMENT
Suresh Kumar Kait, J. - The present petition is filed seeking the indulgence of this Court for enlargement of the petitioner on bail in Reg. No.CC/149/2020.
2. The case of petitioner is that RHL was established on 04.08.2004. The eldest brother of Srivastava Family namely, Late Rajesh Srivastava was the ''Founder Chairman and Managing Director'' of Rockland Hospitals Limited (hereinafter referred to as "RHL'') and was solely managing the day-to-day affairs of RHL till the date of his demise i.e. 25.01.2016 and thereafter the same were handled by his younger brother namely Prabhat Kumar Srivastava till 30.06.2016. The Rockland Group was managed by Late Rajesh Srivastava and his family. The petitioner was a close friend of Srivastavas and was given employment by Late Rajesh Srivastava on this account. After 30.06.2016, RHL was taken over by VPS Healthcare Pvt. Ltd. and on the wishes and directions of Late Mr. Rajesh Srivastava, the Applicant, was designated on paper as a Director of RHL and some other group companies. But since this was primarily an honorary position given to the petitioner, on account of his continued years of service he was never involved in the day-to-day affairs of the said companies and his Share Holding was negligible. The petitioner was never a Guarantor of the Loans obtained by RHL.
3. The above said position of facts is squarely admitted by Serious Fraud Investigation Office (SFIO) inasmuch as the SFIO itself admits that even though the petitioner was a whole time Director of RHL/A1, he was not a signatory to the Financial Statements of RHL/Al (Page no.34 of the I.O. Report). Further, the petitioner has been found NOT GUILTY of the alleged offence under Sections 129, 134 and 448 of Companies Act, 2013 in respect of alleged ''False Statement in the Balance Sheets of RHL'' as per finding No.2 at Page No. 8 of complaint. In this regard, as per Section 134(1) Companies Act, 2013 the Balance Sheet of the company is required to be approved by the Board of Directors, meaning thereby that the SFIO admits that despite being a Director in the Board of RHL, the petitioner was not functioning as a decision making member of the Board of Directors and therefore he has admittedly not been held liable for alleged falsification of the balance sheets of the RHL.
4. After the demise of Rajesh Srivastava (Founder Chairman and Managing Director of RHL), Prabhat Srivastava obtained a P.O.A from the petitioner in relation to sale of Shares of RHL in his personal capacity and also in the name of Aditya Medicose Private Limited. This fact also establishes that the petitioner was only an inconsequential paper director since this was primarily an honorary position given to the petitioner on account of his continued years of service and negligible shareholder.
5. Mr.Rakesh Khanna and Mr.Vikas Pahwa, learned Senior Advocates appearing on behalf of the petitioner submitted that each and every director is not liable in criminal proceedings for the act of other director/offence committed. The Hon''ble Supreme Court in the case of Pooja Ravinder Devidasini vs. State of Maharastra & Anr. SLP No. 9133-39 of 2010 has held as under:
"...Simply because a person is a Director of a Company, does not make him liable... Every person connected with the Company will not fall into the ambit of the provision... A Director, who was not in charge of and was not responsible for the conduct of the business of the Company at the relevant time, will not be liable for an offence ...In National Small Industries Corporation (supra) this Court observed... A company may have a number of Directors and to make any or all the Directors as accused in a complaint merely on the basis of a statement that they are in charge of and responsible for the conduct of the business of the company without anything more is not a sufficient or adequate fulfilment of the requirements..."
6. Further submitted that the petitioner is aware about the total consideration for
