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IN THE HIGH COURT OF DELHI AT NEW DELHI
Anup Jairam Bhambhani, J.
Suman Chadha – Appellant
Versus
Serious Fraud Investigation Office – Respondent
Bail Appln. 1741 of 2022 & Crl.M.A. 14727 of 2022
Decided On : 19-07-2023
BAIL - COMPANIES ACT, 2013 - SECTION 447 - REGULAR BAIL - TWIN CONDITIONS - SECTION 212(6) - INTERPRETATION - ARREST - CUSTODY - REMAND - DISTINCTION - SATENDER KUMAR ANTIL (2022) 10 SCC 51 FOLLOWED.
Fact of the Case:
Petitioner, accused in complaint case under section 447 of the Companies Act, 2013, seeks regular bail. Petitioner was director of company engaged in plastic granules trade. Allegations that company indulged in cash sales, fictitious sale of food grain and creation of accommodation/adjustment accounting entries, apart from misuse of cheque discounting facilities. Petitioner implicated for his role as an "officer who is in default" within the meaning of section 2(60) of the Companies Act. Petitioner was never arrested throughout the course of investigation and proceedings. When petitioner appeared before the court on summons, bail application was rejected and he was taken into custody and sent to jail. Petitioner has been in prison ever-since.
Finding of the Court:
1. Twin-conditions in section 212(6) of the Companies Act would not apply to a case where the accused has never been arrested even till the stage of cognisance, and appears against summons issued by the court. 2. When the petitioner appeared before the learned Special Judge in compliance of the summons issued to him, he was not under arrest. 3. Learned Special Judge misdirected himself in applying section 212(6) of the Companies Act, on the flawed premise that that that was the stage for grant of bail, whereas, it was the stage of considering whether there was any need to remand the petitioner to judicial custody at all.
Issues: 1. Whether the twin conditions in section 212(6) of the Companies Act would apply to a case where the accused has never been arrested even till the stage of cognisance, and appears against summons issued by the court? 2. Whether the learned Special Judge misdirected himself in applying section 212(6) of the Companies Act?
Ratio Decidendi: 1. A reasonable interpretation of the twin-conditions leads to the conclusion that since the petitioner had not been arrested throughout the course of investigation; he had appeared before the learned Special Judge against summons - not arrest warrants - issued to him; and most importantly, when the investigating officer had not even sought police custody or judicial custody of the petitioner, the twin conditions would not apply. At that point in time, the twin- conditions stipulated in section 212(6) of the Companies Act did not automatically get actuated. 2. It was for the Investigating Officer to seek that the petitioner be remanded to judicial custody, for justifiable reasons based on material gathered during investigation, which he did not do.
Final Decision: Petition allowed. Petitioner admitted to regular bail on furnishing a personal bond of Rs. 5,00,000/- with 02 sureties in the like amount from family members, to the satisfaction of the learned Special Judge.
JUDGMENT
Anup Jairam Bhambhani J.
By way of the present petition under section 439 of the Code of Criminal Procedure, 1973 ("Cr.P.C." for short), the petitioner, who is accused in complaint case No. 245/2021 titled SFIO vs. Parul Polymers Pvt. Ltd & Ors. pending before the learned Special Judge (Companies Act), Dwarka Courts, New Delhi, seeks regular bail.
2. The petitioner is arraigned as accused No. 2 in the trial court proceedings, among 12 other accused; 07 of the accused have been granted bail or anticipatory bail either by the High Court or the Special Court, and cognizance has been declined against 01 accused.
3. Notice on this bail petition was issued on 02.06.2022; consequent whereupon the respondent/Serious Fraud Investigation Office ("SFIO" for short) has filed reply/counter-affidavit dated 11.11.2022 opposing grant of bail.
4. Nominal Roll dated 25.02.2023 has been received from the Jail Superintendent, which shows that the petitioner has been in custody for 6 months and 28 days as of that date, and that he has been released on bail in two other matters, and that his jail conduct is `satisfactory'.
Brief Overview
5. Briefly, the petitioner was summonsed in the matter vide summoning order dated 07.03.2022 made by the learned Special Judge (Companies Act), Dwarka Courts (SW), taking cognisance of offences inter-alia under section 447 of the Companies Act, 2013 ("Companies Act" for short), the essential imputation against the petitioner being that he was director of M/s Parul Polymers Pvt Ltd. (accused No. 1) when the offences are alleged to have been committed.
6. Accused No. 1 company was engaged principally in the trade of plastic granules, and the gravamen of the offences alleged inter-alia under section 447 of the Companies Act are that the company indulged in cash sales, in fictitious sale of food grain and in creation of accommodation/adjustment accounting entries, apart from misuse of cheque discounting facilities. It is also the allegation that the company manipulated financial statements in order to project substantial growth in its revenues, to mislead banks and to induce them to extend and enhance credit limits, which monies were however diverted and siphoned-off to other entities, with no genuine underlying business transactions. Thereby, it is alleged that the company indulged in fraudulent diversion of funds to sister concerns instead of applying the monies towards the business activities of the company.
7. A perusal of the summoning order, which is based upon the criminal complaint filed by the SFIO inter-alia under section 212(15) of the Companies Act, shows that the petitioner has been implicated for his role as an "officer who is in default" within the meaning of section 2(60) of the Companies Act, since the petitioner was a `director' of the company at the relevant time; and was therefore liable for the affairs of the company.
8. The court has heard Mr. Neeraj Kumar, learned counsel appearing for the petitioner; as well as Mr. Harish Vaidyanathan Shankar, learned CGSC appearing for the SFIO. Counsel have also filed their respective written submissions in the matter.
Petitioner's Contentions
9. Learned counsel for the petitioner contends that the offences are alleged to have been committed between 2011-14, and some of the allegations relate to the period even prior to the enactment of the Companies Act, 2013; and that investigation in the matter was commenced in compliance of order dated 07.12.2015 made by a Co- ordinate Bench of this court in Contempt Case (C) No. 531/2015; and after prolonged investigation and proceedings spanning more than 6 years, the SFIO filed the criminal complaint against the petitioner and other co-accused persons on 08.02.2021, which came to be registered as Complaint Case No. 245/2021.
10. It is submitted that cognisance of the offence was taken by the learned Special Judge vide order dated 07.03.2022, by which order the petitioner was directed to appear
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