Delhi High Court - Orders
Rupesh Purwar vs Serious Fraud Investigation Office on 29 June, 2022
Author: Neena Bansal Krishna
Bench: Neena Bansal Krishna
$~28
* IN THE HIGH COURT OF DELHI AT NEW DELHI
+ CRL.M.C. 2878/2022
RUPESH PURWAR ..... Petitioner
Through: Mr. Arshdeep Singh, Mr. Anurag &
Mr. Hitesh Rai, Advocates.
versus
SERIOUS FRAUD INVESTIGATION OFFICE ..... Respondent
Through: Mr. Harish Vaidyanathan Shankar,
CGSC, Mr. Srish Kumar Mishra, Mr.
Sagar Mehlawat & Mr. Alexander
Mathai Paikaday, Advocates.
Ms. Shivani Sharma, Advocate with
Ms. Sonam Sharma, Sr. Assistant
Director.
CORAM:
HON'BLE MS. JUSTICE NEENA BANSAL KRISHNA
ORDER
% 29.06.2022 CRL.M.A. 11910/2022 (Exemption)
1. Allowed, subject to all just exceptions.
2. Application is disposed of.
CRL.M.C. 2878/20221. The present petition has been filed under Section 482 of the Code of Criminal Procedure, 1973 by the petitioner-Rupesh Purwar seeking quashing of order dated 01.06.2022 passed by learned Additional Sessions Judge-03- cum-Special Judge (Companies Act) in CC No. 770 of 2019 and as also to grant him bail in the facts and circumstances of this case.
Signature Not Verified Digitally Signed CRL.M.C. 2878/2022 Page 1 of 9 By:NIRMLA TIWARI Signing Date:02.07.2022 12:08:492. The facts in brief are that the Serious Fraud Investigation Office (in short "SFIO") started investigation in CC No. 770/2019 and submitted the report on 27.06.2019. Based on the Investigation Report the complaint dated 1.07.2019 was filed before the learned Additional Sessions Judge-03- cum- Special Judge (Companies Act), South- West District, Dwarka Courts, New Delhi. The petitioner was named as accused at serial no. A-203. He was not ever arrested during investigations and the chargesheet-cum- complaint was also filed without arrest of the petitioner.
3. The petitioner was summoned vide order dated 16.08.2019 for the offences under Sections 129/448 and Sections 209/211 read with Section 628 of the Companies Act, 1956.
4. The petitioner along with the counsel appeared before the learned Trial Court on 08.11.2019 and moved an application for bail which was considered on various dates and was last listed on 01.06.2022. The petitioner had sincerely attended personally ten hearings and there were covid prohibition at the time of two hearings.
5. On 08.04.2022, the learned ASJ had directed that first the applications under Section 207 Cr. P.C of the accused shall be considered and thereafter the main applications shall be heard. In case the arguments are not concluded, the same shall be continued for other remaining accused persons on 04.07.2022. The accused appeared before the learned Trial Court on 01.06.2022 and the bail application could not be taken up for arguments due to paucity of time and was adjourned to 02.06.2022 at 2:30 pm. However, the petitioner was taken into judicial custody by observing that there was no protection from the Superior Court.
6. The impugned order dated 01.06.2022, vide which the petitioner was Signature Not Verified Digitally Signed CRL.M.C. 2878/2022 Page 2 of 9 By:NIRMLA TIWARI Signing Date:02.07.2022 12:08:49 taken into judicial custody, has been challenged in the present petition.
7. It is asserted that the role of the accused as assigned in the complaint is that he was a signatory to the Financial Statements of the accused No. 2/Company for the FY 2013-14 and 2014-15 in his capacity as the Company Secretary, which he had signed for the purpose of regulatory filing of the Company. There is no active role assigned to the petitioner in the financial mismanagement of the Company. The respondent-SFIO had never requisitioned the petitioner for further investigations nor ever sought physical custody of the petitioner. The petitioner has been regularly appearing before the Trial Court on every date without any default. The investigations got completed and the complaint was filed in the year 2019. For three years thereafter, the petitioner has been regularly appearing in the Court and there is no circumstance for him to be sent to jail and he is not a flight risk. The petitioner has asserted that he had no role in the creation of financial accounts, which were created and maintained by the Charted Accountant, audited by the Auditor and approved and signed in the Board of Directors.
8. Furthermore, the Hon'ble Supreme Court vide Orders dated 04.09.2018 and 18.08.2021 granted interim bail to Neeraj Singhal (Accused No. 159) and Mr. Nitin Johari (Accused No. 160), who were the prime accused, being ex-promoter/Director and Ex-Chief Financial Officer/Whole Time Director (Finance) in BSL. A prayer is made that he may be granted bail on the grounds of parity.
9. Learned counsel for the petitioner has placed reliance on " Court in its Own Motion Vs. CBI (2004) 109 DLT 494", " Court in its Own Motion Vs. CBI (2017) 243 DLT 373", " Court in its Own Motion Vs. CBI (2018) 254 Signature Not Verified Digitally Signed CRL.M.C. 2878/2022 Page 3 of 9 By:NIRMLA TIWARI Signing Date:02.07.2022 12:08:49 DLT 641", " Satender Kumar Antil Vs. CBI& Anr (2021) 10 SCC 773", Dataram Singh Vs. State of UP and Anr (2018) 3 SCC 22"
10. The respondent in its detailed reply has stated that the Ministry of Corporate Affairs ("MCA") vide Order dated 03.05.2016 bearing Order No. 5/5/2016-CL-II in exercise of its powers under Section 212 (b) and (c) of the Companies Act ordered investigation into the affairs of Bhushan Steel Limited (BSL) and 14 other companies including Bhushan Energy Limited (BEL). During the investigation, it was revealed that Neeraj Singal, Brij Bhushan Singal and Sanjay Singal were controlling various companies which were being used for rotation and diversion of funds from BSL. Thereafter, the MCA vide its order dated 08.01.2018 bearing Order No. 5/5/2016-CL-II in exercise of its powers under Section 219 (b) and (c) of the Companies Act, 2013 ordered investigation into 46 other companies associated with BSL. Subsequently, on further revelations made, the MCA vide Order dated 18.01.2019 bearing Order No. 5/5/2016-CL-II in exercise of its powers under Section 219 of the Companies Act ordered investigation into the affairs of 46 other companies. During the investigations it was revealed that ex-promoters of BSL namely Neeraj Singal and Brij Bhushan Singal were controlling directly or indirectly 157 Companies including BSL, which were under investigation. The promoters of BSL needed to infuse capital in the Company in order to avail credit facilities from lender Banks for its steel plant, for which purpose they required a level of debt equity, therefore, the ex- promoters assisted by their employees and close associates, through a series of concerted actions, using a complex web of Companies and financial transactions, siphoned off funds from BSL and Bhushan Energy Limited Signature Not Verified Digitally Signed CRL.M.C. 2878/2022 Page 4 of 9 By:NIRMLA TIWARI Signing Date:02.07.2022 12:08:49 (BEL) starting from the year 2009-2010 and also used the funds to purchase immovable and movable properties.
11. During the year 2009-2010 and 2010-2011, an amount of Rs. 1150.58 Crore was transferred to different Companies and the ex-promoters invested these amounts in preference shares of BSL. During this period, BSL and BEL extended capital advances amounting to Rs. 1208.50 Crore to 18 Category B and Rs. 561.45 Crore 14 Category C Companies, controlled by the ex- promoters. The funds were transferred from the various Accounts of BSL and BEL. These Companies further transferred the funds to Category B and Category C Companies in the smaller amounts as loans and advances or as investments. The Companies further layered funds received to the tune of Rs. 1150.58 Crore, in single or multiple layers of another set of Category B or Category C Companies, before these were consolidated into the bank accounts of 19 Category B Companies of the ex-promoters. These 19 Category B Companies and the ex-promoters transferred the funds as investment in BSL, against which preference shares were issued in the respective names of the Companies/promoters.
12. BSL and BEL transferred the 'capital advances' to 'CWIP' during the F.Y. 2013-14 and 2014-15 in their books of accounts and thereby adjusted the receivables from the 18 Category B and 14 Category C Companies. These Companies, who were given the capital advances and had further transferred these to other Companies and continued to show them as Current/ Non- Current Liabilities with matching assets in the form of loans & Advances/ Investments as reflected in Financial Statements of the years 2009-2010 and 2010-2011. During the period of receiving of Capital Advances till the Financial Year 2013-2014 and 2014-2015, when the adjustments were done, Signature Not Verified Digitally Signed CRL.M.C. 2878/2022 Page 5 of 9 By:NIRMLA TIWARI Signing Date:02.07.2022 12:08:49 these Companies have not shown any expenditure or revenue evidencing supply or execution of any work in their Financial Statements.
13. It is asserted that the ex-promoters of Bhushan Steel Limited had established the fraudulent process for booking inflated entries of stock in Transit in the books of BSL. The fraudulently manipulated figures reported in the Financial Statements for the Year 2013-2014 were presented to the lender banks for enhancement of working capital facilities for the Financial Year 2014-2015 and 2015-2016. The lead Bank for working capital i.e. Punjab National Bank based on these stock statements, allocated the sanctioned limit/DP to each of the lending consortium member banks, who required them to adhere to the sanctioned limit. The Banks reviewed the Drawing Power limits against the credit facilities using Financial Statements, and the periodic stock statements submitted by the Company to banks, and reports submitted by its appointed Stock Auditor in the subsequent periods/years.
14. The role of the petitioner is that the petitioner is the Company Secretary and a signatory of the Financial Statements of FY 2013-14 and 2014-15 of BEL, which was a subsidiary of BSL. On examination of the Financial Statements, it was observed that investment in preference share against 'BSL' has been shown as NIL against the previous year figures of Rs. 3,00,00,00,000/-, BSL was under severe financial crunch but still it repaid the investment of Rs. 3,00,00,00,000/- to BEL. This was a result of circular transactions and without any actual flow of funds. Various transactions were found to have been undertaken by Brij Bhushan Singal and Neeraj Singal. It was claimed that the petitioner being the Company Secretary of BEL was privy to all Board meetings and was a signatory to the financial statement, wherein there was a major irregularity with respect to investment in BSL.
Signature Not Verified Digitally Signed CRL.M.C. 2878/2022 Page 6 of 9 By:NIRMLA TIWARI Signing Date:02.07.2022 12:08:4915. It is thus asserted that as per the investigations it is evident that he was actively involved in the commission of offence and has been declined bail by the learned Special Court. Section 212(6) of the Companies Act, starts with non-obstante clause and the twin conditions stipulated under this Section are mandatory in nature. These conditions are that the Public Prosecutor must be given an opportunity to oppose the application and the court has to be satisfied that there are reasonable grounds for believe that the accused is not guilty of such offence and that he is not likely to commit any offence while on bail.
16. It is further submitted that the bail application of the petitioner could not be heard on 01st June, 2022 as the main counsel of the petitioner could not appear and the proxy counsel had sought time from and the same was adjourned for 02nd June, 2022, on which date, the petitioner deliberately failed to appear before the learned Trial Court and has now directly approached this Court.
17. Submissions heard.
18. The role assigned to the petitioner is that he was the Company Secretary and had signed the Financial Statements of the accused no. 2- Company for the FY 2013-2014 and 2014-2015 in his capacity as the Company Secretary. He had no active role in the financial mismanagement of the Company. Though it may not be correct to say that he had no managerial position but at the same time it cannot be overlooked that he was signing the Financial Statements which were duly approved by the Board of Directors.
19. The, chargesheet had been filed in the court on 16.8.2019 when the cognizance was taken by the learned Trial Court. Even thereafter, the petitioner continued to appear before the learned trial court regularly. Bail Signature Not Verified Digitally Signed CRL.M.C. 2878/2022 Page 7 of 9 By:NIRMLA TIWARI Signing Date:02.07.2022 12:08:49 application was filed by the petitioner on 7.11.2019 which and was heard on various dates till 01.06.2022. However, on the said date, the learned Trial Court directed the accused to be taken into judicial custody since he had no interim protection from any superior Court.
20. It is significant to note that the accused had been summoned to appear before the Investigating Officer on 29.6.2018 and he thereafter, joined the investigation on 27.09.2018, 29.10.2018 and 20.03.2018. The statements of the petitioner were duly recorded under Section 207 of the Companies Act, 1956. It is evident that the petitioner had also co-operated and joined the investigations.
21. From the above narration, it is evident that the accused was not arrested either by the Investigating agency during the period of investigations or even thereafter when the charge-sheet was filed in the Court. In fact, the bail application was heard for about three years and the accused was not taken into judicial custody despite being present in Court on every date. The respondent has nowhere averred that the custody of the accused was required for the purpose of the investigations or thereafter not any assertion was made for taking the petition into consideration. Interestingly, the petitioner had "no interim protection of any superior Court" during investigation or while his bail was being heard by the learned Trial Court after taking cognizance, but was never, taken into custody for three years and suddenly on 01.06.2022 when the allegations were still continuing, he was abruptly taken into custody for a reason which existed since last about three years. Moreover, being the Trial Court, it was competent to pass appropriate orders in the circumstances. The bail application was listed for further arguments for 02.06.2022 on which date the application was dismissed.
Signature Not Verified Digitally Signed CRL.M.C. 2878/2022 Page 8 of 9 By:NIRMLA TIWARI Signing Date:02.07.2022 12:08:4922. The accused has been appearing before the Investigating Officer and thereafter before the Court diligently and his custody was never sought by the respondent. The petitioner was the Company Secretary in the Company of the accused no. 2 and his main accusation was that he had signed the Financial Statements in his capacity as the Company Secretary. The primary accused, namely, Mr. Neeraj Singhal and Mr. Nitin Johari have already been granted interim bail. The allegations pertain to years-2014-2015 and 2015-2016 and the petitioner neither before nor after has been involved in any criminal offence.
23. Considering all the circumstances, the petitioner is hereby admitted to bail on submitting a Bail Bond and Surety Bond in the sum of Rs.1,00,000/- (one lakh) to the satisfaction of the trial court/Special Judge.
24. The application is allowed accordingly.
NEENA BANSAL KRISHNA, J (VACATION JUDGE) JUNE 29, 2022/PA Signature Not Verified Digitally Signed CRL.M.C. 2878/2022 Page 9 of 9 By:NIRMLA TIWARI Signing Date:02.07.2022 12:08:49