Gujarat High Court
Yatinkumar Chandulal Davda vs State Of Gujarat on 5 May, 2017
Author: N.V.Anjaria
Bench: N.V.Anjaria
R/CR.MA/389/2017 ORDER
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
CRIMINAL MISC.APPLICATION (FOR ANTICIPATORY BAIL ) NO. 389 of
2017
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YATINKUMAR CHANDULAL DAVDA....Applicant(s)
Versus
STATE OF GUJARAT....Respondent(s)
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Appearance:
MR ND NANAVATY, SR. ADVOCATE WITH MR CHETAN K PANDYA,
ADVOCATE for the Applicant(s) No. 1
MR SV RAJU, SR. ADVOCATE FORF J SAGAR ASSOCIATES, ADVOCATE
for the Respondent(s) No. 1
MR RONAK RAVAL, APP for the Respondent(s) No. 1
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CORAM: HONOURABLE MR.JUSTICE N.V.ANJARIA
Date : 05/05/2017
ORAL ORDER
The present is an application under section 438 of the Code of Criminal Procedure, 1973.
2. The applicant herein prayed for anticipatory bail in connection with the First Information Report bearing Crime Register No.I-58 of 2016 registered on 07th September, 2016 with Changodar Police Station, Ahmedabad Rural. The First Information Report is in connection with the offences under Sections 406, 409, 420, 465, 467, 468, 471, 477A, 403, 120B and 34 of the Indian Penal Code, 1860.
3. According to the case of the first informant, he was working as a Managing Director of a company named Iberchem India Limited at Changodar, Ahmedabad. It is the case that the parent company of Page 1 of 11 HC-NIC Page 1 of 11 Created On Sat May 06 02:16:37 IST 2017 R/CR.MA/389/2017 ORDER the said Iberchem India Limited is located in the foreign country Spain which is Iberchem S. A., and that both are engaged in the business of manufacturing of fragrance oil. According to the first informant, the parent company Iberchem S.A. developed a software by which 80% ingredients can be manufactured whereas 20% is to be manufactured by the said parent company on "key based formula". The first informant stated that after mixing the ingredients in a proper proportion, the final fragrance oil is manufactured at Chandogar which is sold in this country. According to the first informant, accused No.1 approached in July, 2010 to the company and represented to start a joint venture. An agreement for Share Holding was executed on 28th January, 2011 for undertaking a business on joint-venture basis, in which the accused Nos. 1 and 2, who are husband and wife, were allotted 24.9% share whereas the company Iberchem India Limited was allotted 75.1% share.
3.1 It is the allegations in the First Information Report that the accused No.1 who was appointed as Managing Director misused his position and misappropriated the money while in-charge of the company as Managing Director. It is the allegations in the FIR that during certain period, amounts were debited to the tune of Rs.09,75,000/- against the employees' salary who are the bogus employees. It is secondly stated that accused No.1 obtained loan for himself to the tune of Rs.15,75,000/- and in the name of accused No.2 for Rs.05,00,000/- without any resolution of the company. It is also the allegations Page 2 of 11 HC-NIC Page 2 of 11 Created On Sat May 06 02:16:37 IST 2017 R/CR.MA/389/2017 ORDER that the goods were sold to the fictitious companies for which the payments were not received. The allegations were also about the misappropriation in respect of the stock etc. 3.2 The gist of the allegations are that by committing such acts and also by developing formula, the accused No.1 acted contrary to the interests of the company and cheated the company Iberchem India Limited 3.3 It is the case that the Iberchem India Limited was a company, incorporated in the year 1994 and the accused No.1 was a founder Director of the company. It is the further case that the applicant has been in the business of manufacturing the fragrance oil in the domestic and export market. It is the further case that said Iberchem S.A. of Spain had approached the applicant to start business in India and the aforementioned Share Holding Agreement was executed. It is his case that the company Iberchem Limited in Spain and its Directors asked the accused No.1 to join as Managing Director and wanted the applicant to give up the entire control on the business of industrial fragrance in India, since the company had lucrative prospectus in the south Indian continents. As the applicant refused to resign and continued the business, the allegations in the FIR came to be made to pressurise.
4. Learned senior counsel Mr.N.D. Nanavaty with learned advocate Mr.Chetan Pandya submitted that there Page 3 of 11 HC-NIC Page 3 of 11 Created On Sat May 06 02:16:37 IST 2017 R/CR.MA/389/2017 ORDER was no acts or conduct on part of the applicant herein to misappropriate the money. He submitted that the majority of the payment was made at the time of tenure of the informant, who was at the helm of the affairs during the year 2014 to June, 2015. Learned senior counsel thereafter invited attention of the court to the Share Holding Agreement dated 28th January, 2011, copy of which is produced on record. He relied on several clauses thereof to submit that it was a business deal and business undertaking. From the said agreement he further pinpointed clause 12 which provides for arbitration in the event of disputes arising between the parties to agreement, to submit that the dispute which are raised as allegations in the FIR are of capable of being brought under the Arbitration Clause. It was submitted that the first informant, instead adverted to criminal machinery.
4.1 Learned senior counsel further submitted that information regarding the accounts was periodically furnished through E-mails and other sources. He also referred to the copies of the accounts. He invited attention of the court to E-mails (Page 81 onwards) as well as monthly cash flow statement (page 134 onwards). He invited attention of the court to the Directors report in respect of the accounts for year ending 31st March, 2015 (page 229) and submitted that the same was signed by the first informant as well, so also was signed the balance- sheet (page 208). The counsel also referred to the figures of profits. He next submitted that the first informant has filed a winding up petition against the Page 4 of 11 HC-NIC Page 4 of 11 Created On Sat May 06 02:16:37 IST 2017 R/CR.MA/389/2017 ORDER company named Elegant Fragrances and Flavours Limited Ltd., which is of son of accused No.1 and accused No.2, and that in order to pressurise to make the payment, the present First Information Report is filed.
4.2 Learned senior counsel for the applicant further submitted and stated that without prejudice to the rights and contentions of the applicant, the applicant is ready to deposit an amount of Rs.32,00,000/- or is ready to pay such amount directly to the company. He submitted that it was show bona fides of the applicant.
4.3 On the other hand, learned Additional Public Prosecutor Mr.Ronak Raval opposed the prayer by referring to the allegations in the F.I.R. and by placing reliance on the investigation papers he received from the investigating officer 4.4 Learned senior counsel Mr.S.V. Raju who appeared for the original complainant also opposed the prayer for anticipatory bail. He harped to state the elementary truth that a Director of the company is an agent and trustee of the company, for which proposition, he pressed into service the decision of the Apex court in R.K. Dalmia v Delhi Administration [AIR 1962 SC 1821]. He thereafter submitted by elaborating on the ingredients of the offences alleged that they were made out from the allegations itself. He submitted that the accused Nos.1 and 2 sold the goods to the company of accused No.3, who is the son Page 5 of 11 HC-NIC Page 5 of 11 Created On Sat May 06 02:16:37 IST 2017 R/CR.MA/389/2017 ORDER of accused Nos.1 and 2. Countering the submissions of the applicant that there was an arbitration clause in the Share Holding Agreement, learned senior counsel pressed into service the decision of the Apex court in Trisuns Chemical Industry v Rajesh Agarwal [(1998) 8 SCC 686] for its paragraph No.9. He further relied the decision of the Apex Court in State of Orissa v Ujjal Kumar Burdhan [(2012) 4 SCC 546] for its paragraph No.14 to highlight the proposition that provisions incorporated in the agreement for referring the dispute to arbitration cannot be said to an effective substitute for a criminal prosecution when the disputed act is an offence.
4.5 Learned senior counsel for the complainant next highlighted that the accused was a Managing Director at the relevant time and that the allegations are serious. He submitted that the accused sent the secrete formula. The secrete formula was tested by the accused No.1 though he had no authority to the same and thereafter sent it to his son's company. It was submitted that accused thus tempered with the formula systematically. According to the submissions of learned senior counsel, all the circumstances go to show that there is a need for custodial interrogation.
5. From the allegations in the F.I.R., attendant facts and material on record, it is abundantly clear that it was a business arrangement. Company of the applicant and the company of the first informant entered into a shareholders agreement whereby they shared a formula for manufacturing the Page 6 of 11 HC-NIC Page 6 of 11 Created On Sat May 06 02:16:37 IST 2017 R/CR.MA/389/2017 ORDER fragrance oil. The allegations essentially is that the formula was misused and was not kept secret and that it was diverted to another company called Elegant Fragrances and Flavours Limited. The shareholders agreement which contained business deal-cum- arrangement reflected the terms and conditions as well as the obligations which the parties were to abide by. It also included arbitration clause. Though the proposition is binding as laid down in the decisions of the Apex Court referred to by the other side, that where there are criminal element in the conduct, mere presence of arbitration clause in the agreement is no answer to defend the criminality, the aspect to be highlighted, however is about the conduct of the first informant. When the allegations alleged in the F.I.R. were all in the nature of the disputes which was fall under the arbitration clause which was a remedy contractually agreed between the parties, but instead of taking re-course to the same, a criminal machinery was invoked by filing the F.I.R.
5.1 A business transaction operates in its own sphere and has all the attributes of civil disputes. Such business-cum-civil dispute has remedies under the different law. Furthermore, in this case, the gist of the allegations was about misusing the secret formula and diverting the same. Such was the nature of the allegations in the F.I.R.
5.2 Mere possibility of criminal elements demonstrable in the conduct of the applicant is no ground by itself to deny the anticipatory bail. Denial Page 7 of 11 HC-NIC Page 7 of 11 Created On Sat May 06 02:16:37 IST 2017 R/CR.MA/389/2017 ORDER of anticipatory bail is not to become punishment before the trial.
5.3 Furthermore, the case can be said to be based on documentary material for the purpose of investigation. It was a dispute arising in course of business undertakings. Considering all these aspects, discretion deserves to be exercised in favour of the applicant for grant him the anticipatory bail.
6. The court also took note of the principles laid down by the Apex Court in Siddharam Satllingappa Mhetre v State of Maharashtra [AIR 2011 SC 312] and in Jai Prakash Singh v State of Bihar [AIR 2012 SC 1676] and other decisions in which parameters to be considered by the court for grant of anticipatory bail have been set out, and applied those parameters to the facts of the case.
6.1 In the facts and circumstances obtained and for the reasons recorded above, personal liberty of the applicant-accused deserves to be accorded primacy over his forced arrest. The investigational needs could be balanced by imposing appropriate conditions to be observed by the applicant-accused including the condition of keeping the right of the police open to ask for remand of the applicant-accused, if required.
7. As a result of above facts and aspects, present application is allowed and it is directed that in the event of the applicant's arrest in connection with the F.I.R. bearing bearing Crime Register No.I-58 of 2016 registered on 07th September, 2016 with Page 8 of 11 HC-NIC Page 8 of 11 Created On Sat May 06 02:16:37 IST 2017 R/CR.MA/389/2017 ORDER Changodar Police Station, Ahmedabad Rural, he shall be released forthwith on condition of his execution a personal bond of Rs.03,00,000/- (Rupees Three Lakhs Only) and further simultaneously furnish the solvent surety for equivalent amount.
7.1 The anticipatory bail granted by this Court shall be further governed and regulated by the following conditions.
[i] The applicant shall cooperate with the investigation. He will make himself available for interrogation and for all investigative purposes whenever required;
[ii] The applicant shall not obstruct the process of investigation in any manner. He shall not directly or indirectly induce threat or extend promise to any witness so as to dissuade and prevent such witness from disclosing such facts as may be required, to the Court or Police Officer;
[iii] The applicant shall at the time of execution of bond, furnish full address of his residence and stay to the Investigating Officer as well as to the Court concerned. He shall not change the residence without prior intimation to the Court concerned during the pendency of the prosecution in the criminal case;
[iv] The applicant shall not travel beyond the territory of the State of Gujarat without prior permission of the Court concerned;
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R/CR.MA/389/2017 ORDER
[v] The applicant shall surrender passport, if
any he is holding, before the Court concerned
immediately;
[vi] The applicant shall appear before the
concerned Police Station on 10th May, 2017 between
11.00 am and 02.00 pm.
[vii] It shall remain open to the Investigating
Officer to seek and file application for remand of the applicant, if in his discretion he considers the asking for remand of the applicant to be just and proper for the purpose of investigational needs. If such application for remand is made by the Investigating Officer, the learned Magistrate concern would consider the same on merits without being influenced by the anticipatory bail granted.
7.2 As stated and agreed by learned advocate for the applicant, applicant shall deposit Rs.32.00 Lakhs (Rupees Thirty Two Lakhs Only) with the trial court within two weeks from today and trial court thereupon shall invest the said amount in a fixed deposit with any nationalise bank, initially for a period of one year and renewable basis. This deposit shall be treated as part of the present bail order, for which the applicant has voluntarily agreed.
8. It is clarified that despite this order, the investigating agency is not precluded from applying before the competent Magistrate for police remand of the applicant. It is further provided that the applicant shall remain present before the Magistrate Page 10 of 11 HC-NIC Page 10 of 11 Created On Sat May 06 02:16:37 IST 2017 R/CR.MA/389/2017 ORDER concerned on the first day of such application, if made, and on all such subsequent occasions as may be directed by the learned Magistrate in such proceedings. This would be sufficient to treat the accused as in judicial custody for the purpose of entertaining the application for remand by the prosecution.
8.1 The liberty available to the prosecution to seek remand shall be without prejudice to the rights of the accused to contend against or to seek stay against the remand. It is further clarified that the applicant even if remanded to the police custody, after completion of the remand period; shall be set at liberty immediately, subject to other conditions of this anticipatory bail order, to be complied with.
8.2 It is clarified that the observations made in this order are for the purpose of granting pre- arrest protection only. It is further clarified that the trial court shall not be influenced by any of the observations made in this order and the same shall be treated for the purpose of dealing with the present application only.
9. The present application is allowed in the aforesaid terms. Rule is made absolute.
Direct service is permitted.
(N.V.ANJARIA, J.) Anup Page 11 of 11 HC-NIC Page 11 of 11 Created On Sat May 06 02:16:37 IST 2017