J U D G M E N T

ANUP JAIRAM BHAMBHANI J.

By way of the present petition filed under section 439 of the Code of Criminal Procedure, 1973 („Cr.P.C.‟ for short) read with section 212(6) of the Companies Act, 2013, the petitioner seeks regular bail in criminal complaint case bearing Ct. Case No. 990/2022 filed by the respondent/Serious Fraud Investigation Office („SFIO‟ for short). The criminal complaint alleges offences under sections

420/120B of the Indian Penal Code 1860 („IPC‟ for short), sections 211/628/227/233 of the Companies Act, 1956 („1956 Act‟ for short) and sections 129/447/448 of the Companies Act, 2013 („2013 Act‟ for short).

2. Notice on this petition was issued on 25.01.2023; whereupon reply has been filed by the SFIO by way of counter affidavit dated 03.02.2023. Both parties have also filed their respective written submissions in the matter.

3. The court has heard Mr. N. Hariharan, learned senior counsel and Mr.

Tanveer Ahmed Mir, learned counsel on behalf of the petitioner. The court has also heard Mr. Ajay Digpaul, learned Central Government Standing Counsel on behalf of the SFIO.

BRIEF OVERVIEW

4. M/s. Educomp Solutions Ltd. („ESL‟ for short) was incorporated in the year 1994. One Shantanu Prakash was its managing director and his father Jagdish Prakash was a whole-time director. In 2013 ESL faced a severe liquidity crunch for various reasons and had to therefore opt for Corporate Debt Restructuring („CDR‟ for short) vide Master Restructuring Agreement dated 25.03.2014 („MRA‟ for short) signed with the consortium of lenders (banks) led by the State Bank of Patiala (which bank has later merged with State Bank of India).

5. Vide order dated 17.08.2018 bearing No. 1/52/2017 the Ministry of Corporate Affairs assigned the investigation into the affairs of ESL to the SFIO. After commencement of investigation against ESL, approval was also obtained for investigation into the affairs of two other companies M/s. Educomp Infrastructure and School Management Ltd („EISML‟ for short) and M/s. Edu Smart Services Pvt. Ltd. („ESSPL‟ for short), both of which are subsidiaries of ESL.

6. After a detailed investigation in the matter, the SFIO has filed a prosecution complaint under section 439(2)/436/212 of the 2013 Act, which is the equivalent of a chargesheet, arraigning 70 persons as accused. Of the accused, 15 are corporate entities and 55 are various persons alleged to have been associated with ESL and other subsidiary companies in various ways.

RELEVANT FACTUAL MATRIX

7. The factual matrix that is relevant for purposes of the present petition is that as part of the CDR proposal for ESL, its managing director Shantanu Prakash (A-16 in the prosecution complaint) was required to contribute Rs.240.76 crores out of his own funds towards „promoter contribution‟. The allegation goes that instead of investing his own funds towards promoter contribution, Shantanu Prakash siphoned-off Rs. 240.76 crores from ESL and received that money back into his personal bank accounts from some 65 companies/entities through dubious transactions, which money he then showed as promoter contribution towards the CDR process. The allegation accordingly is, that the investment made by Shantanu Prakash as promoter were not his funds; but were funds that Shantanu Prakash had siphoned-off through various companies into his personal accounts, with the intent to deceive investors and CDR lenders; and that Shantanu Prakash had then invested the same as part of the CDR process to fraudulently show that he had fulfilled the conditions.

8. The crux of the offence alleged against the accused persons is therefore, that by round-tripping funds, ESL and some of the other 69 accused (including companies and individuals), have committed „fraud‟ as contemplated under section 447 of the 2013 Act, apart from other offences under the 1956 Act and the IPC.

9. The petitioner is arraigned as A-18 in the criminal complaint.

10. In investigation report dated 30.11.20221 the SFIO has level