JUDGMENT :

AMIT MAHAJAN, J.

1. The present application is filed seeking regular bail in an arrest under Section 212(8) of the Companies Act, 2013 (hereinafter referred as “the Companies Act”), in relation to the investigation being conducted by Serious Fraud Investigation Office (“SFIO”) for offence(s) under Section 447 of the Companies Act, 2013. Section 447 of the Companies Act reads as under:

“447. Punishment for fraud

Without prejudice to any liability including repayment of any debt under this Act or any other law for the time being in force, any person who is found to be guilty of fraud, [involving an amount of at least ten lakh rupees or one per cent of the turnover of the company, whichever is lower], shall be punishable with imprisonment for a term which shall not be less than six months but which may extend to ten years and shall also be liable to fine which shall not be less than the amount involved in the fraud, but which may extend to three times the amount involved in the fraud:

Provided that where the fraud in question involves public interest, the term of imprisonment shall not be less than three years.

[Provided further that where the fraud involves an amount less than ten lakh rupees or one per cent of the turnover of the company, whichever is lower, and does not involve public interest, any person guilty of such fraud shall be punishable with imprisonment for a term which may extend to five years or with fine which may extend to [fifty lakh rupees] or with both.]

Explanation.- For the purposes of this section-

(i) "fraud", in relation to affairs of a company or any body corporate, includes any act, omission, concealment of any fact or abuse of position committed by any person or any other person with the connivance in any manner, with intent to deceive, to gain undue advantage from, or to injure the interests of, the company or its shareholders or its creditors or any other person, whether or not there is any wrongful gain or wrongful loss;

(ii) "wrongful gain" means the gain by unlawful means of property to which the person gaining is not legally entitled;

(iii) "wrongful loss" means the loss by unlawful means of property to which the person losing is legally entitled.”

2. The investigation was conducted pursuant to the order dated 17.08.2018, passed by Ministry of Corporate Affairs (hereinafter referred as “MCA”), under Section 212 (1)(c) of the Companies Act.

Brief Facts

3. By order dated 17.08.2018, MCA, Government of India, empowered under Section 212 (1)(c) of the Companies Act, had directed SFIO to conduct an investigation into the affairs of Educomp Solutions Limited (hereinafter referred as “ESL”). The said investigation was directed to be conducted within a period of four months.

4. The investigation is stated to have been carried out till December, 2022, which finally culminated into a criminal complaint under Section 439(2), read with Section 436, Section 212, Section 621(1) of the Companies Act, read with Section 193 of the Code of Criminal Procedure, 1973 (“Cr.P.C.”), before the Special Judge (Companies Act), alleging commission of offences by the accused persons including the applicant herein under Sections 129, 447, 448 of the Companies Act, under Sections 211, 628, 227/233 of the Companies Act, 1956 and under Sections 420, 120B of the Indian Penal Code, 1860 (“IPC”).

5. During the investigation, SFIO exercising power under Section 212(8), arrested the applicant on 14.10.2022.

6. The complaint is filed against 70 accused of which 15 accused are various companies and 55 accused are individuals.

7. As stated above, the investigation was ordered in relation to affairs of ESL. It is mentioned that the company ESL was incorporated on 07.09.1994 with an authorised capital of 40 crores and Mr. Shantanu Prakash was its Managing Director, w.e.f. 07.09.1994.

8. During the course of investigation, approval of the MCA was also obtained for investigating other companies such as Educomp Infrastructure and School Management