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2021 Supreme(Del) 355
IN THE HIGH COURT OF DELHI AT NEW DELHI
SURESH KUMAR KAIT, J.
Religare Finvest Ltd. - Appellant
Versus
State Of NCT of Delhi & Anr. - Respondents
Crl.M.C. 796 of 2021 & Crl.M.As. 3935, 7302, 7329 of 2021
Decided on : 14-06-2021
For the Appellant :Mr. Mohit Mathur, Senior Advocate with Mr. Sandeep D. Das, Mr. Siddharth Sharma, Mr. Harsh Gautam, Ms. Aishwarya Singh& Mr. Shashwat Sarin, Advocates
For the Respondent:Mr. G.M. Farooqui, Mr. Siddharth Aggarwal, Mr. Shri Singh, Mr. Abhishek Singh, Ms. Padma Venkataraman, Mr. Abhinav Sekhri & Ms. Arshiya Ghose, Advocates
Point of Law: Cancellation of Bail - Economic offences - Violation of Rules of RBI - Sanction of Loans - Continued detention of respondent No.2 in this FIR case is necessary not only to unearth the conspiracy hatched by him, but also to derive out/ trace the siphoned money which he has credited for his personal benefit.
Headnote:
Indian Penal Code, 1860 - Sections 409/420/120-B - Cancellation of Bail - Economic Offences - Non-banking financial company - Violation of RBI Rules - Internal inquiries showed that the poor financial condition of the complainant- company was to a large extent on account of wilful defaults on significant unsecured loans, defined for internal purposes as the Corporate Loan Book (CLB), by borrower entities either related, controlled or associated with the Promoters, All of them had been provided the subject loans from the complainant-company on a non-arms’ length basis, in violation of corporate governance norms and in contravention of policies and prudential behaviour expected of a NBFC registered with the RBI - Corporate Loan Policy, which formed the basis of CLB portfolio, did not specify the criteria for lending i.e. financial status of the borrower. Any loan being sanctioned by the company should be based on the purpose of the loan and repayment capacity of the borrower. The loan policy was deficient as it did not mandate calling of financial details of borrowers to ascertain their eligibility/repayment for loan, thus, making the loan sanction highly subjective. Such policies also reflect on the lack of corporate governance in the vital segment of company’s business
Finding of the Court: Plea of respondent No.2 that other co-accused have been granted bail in this FIR case, this Court finds that while granting or refusing bail, the role attributed to each accused has to be seen independently and reasoning for one may not be binding on the other - grant of bail in a case involving cheating, criminal breach of interest by an agent of such a large magnitude of money, affecting a very large number of people would also have an adverse impact not only on the progress of the case but also on the trust of the criminal justice system that people repose - impugned order suffers from serious infirmities, resulting in miscarriage of justice. Moreover, continued detention of respondent No.2 in this FIR case is necessary not only to unearth the conspiracy hatched by him, but also to derive out/ trace the siphoned money which he has credited for his personal benefit.
Result: Appeal allowed
JUDGMENT :
1. Petitioner, a non-banking financial company, is aggrieved by the order dated 03.03.2021 passed by the learned trial court, vide which respondent No.2-Shivender Mohan Singh, has been granted bail in FIR No. 50/2019, under Sections 409/420/120-B IPC, registered at Economic Offences Wing (EOW), New Delhi. The aforesaid order dated 03.03.2021 passed by the learned trial court is under challenge in this petition.
2. As per the final report dated 06.01.2020, the facts of the present case are that complainant-company-Religare Finvest Limited (RFL) is registered with the Reserve Bank of India (RBI) and is licensed to undertake the business of financial services as a non-deposit taking/lending Non-Banking Financial Company (NBFC). It operates as a small and medium enterprise (SME) financing focused NBFC and is in the business of extending SME working capital loans, secure SME business expansion, loans, short term trade finance and other loans to various entities. The complainant-company is classified as a ‘systematically important NBFC’ by the RBI and is a subsidiary of Religare Enterprises Limited (REL), which is a public company, listed on stock exchanges.
3. Pertinently, respondent No.2-Shivender Mohan Singh, the accused in FIR in question, was the Promoter along with the entities controlled by him and with persons acting in concert with him, owned the majority shareholding of REL till June 2017 and was as such classified as the Promoter of REL. Effectively, he continued to control REL till February, 2018, i.e. till the time he remained on the Board of Directors of REL and thereby, since the complainant-company was a subsidiary of REL, he also controlled the complainant-company i.e. RFL. Thus, he allegedly played a significant role in the management and conduct of affairs of the complainant-company and exercised deep and pervasive control over its management.
4. In February, 2018, respondent No.2-Shivender Mohan Singh and his brother, Malvinder Mohan Singh, who was also the Promoter, lost complete control over REL and its subsidiaries, including the complainant-company, pursuant to invocation of the shares pledged by them and other promoter entities with various banks. After their exit from the Board of Directors of REL, a fresh Board of Directors was constituted to manage the affairs of REL and its subsidiaries.
5. Upon taking over the reins, the new Board and management realized that REL and its subsidiaries were in terrible financial condition and they sought to ascertain the reason(s) for such bad financial position. Internal inquiries showed that the poor financial condition of the complainant-company was to a large extent on account of wilful defaults on significant unsecured loans, defined for internal purposes as the Corporate Loan Book (CLB), by borrower entities either related, controlled or associated with the Promoters. All of them had been provided the subject loans from the complainant-company on a non-arms’ length basis, in violation of corporate governance norms and in contravention of policies and prudential behaviour expected of a NBFC registered with the RBI. Further, the new Management of REL became aware of the investigations carried out by Serious Fraud Investigation Office (SFIO) and Securities and Exchange Board of India (SEBI) into various related party and non-arms' length transactions, involving REL and its subsidiaries, including the complainant-company.
6. From the review of the record, it came to be noted that RBI (being the regulator for NBFCs) had from time to time expressed concerns regarding the CLB portfolio of the complainant-company, but these concerns were not addressed by the Promoters. RBI had specifically raised concerns about the Promoters using their influence for disbursal of high value unsecured loans to entities with no financial standing (but controlled or associated with the Promoters) and breach of corporate governance norms.
7. The complainant-company believed that the illegal
