Delhi High Court - Orders
Mr. Hem Singh Bharana vs Bank Of India & Ors on 20 February, 2024
$~74
* IN THE HIGH COURT OF DELHI AT NEW DELHI
+ W.P.(C) 2529/2024 & CM APPLs. 10311/2024, 10312/2024 &
10313/2024
MR. HEM SINGH BHARANA ..... Petitioner
Through: Mr. Dayan Krishnan, Mr. Apoorv
Agarwal, Ms. Prachi Darji, Mr.
Bhanu Karan Singh and Mr. Sukrit
Seth, Advocate
(M): 7984830374
versus
BANK OF INDIA & ORS. ..... Respondents
Through: Mr Yashu Rustagi, Advocate for
Respondent No. 1 and 2.
(M): 8882149812
Email: [email protected]
Ms. Anjali Jain with Mr. Sagar
Aggarwal and Ms. Swati Sood,
Advocates for Respondent No. 4.
Mr. Rajiv Kapur with Mr. Akshit
Kapur, Advocates for respondent no.
5/SBI.
(M): 9716076533
Email: [email protected]
Mr. V.K. Gupta with Ms. Kaushiki
Kashyap, Advocates for respondent
no. 7.
(M): 9582206578
Email: [email protected]
CORAM:
HON'BLE MS. JUSTICE MINI PUSHKARNA
This is a digitally signed order.
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The Order is downloaded from the DHC Server on 22/02/2024 at 21:14:14
ORDER
% 20.02.2024 CM APPL. 10312/2024 (For Exemption)
1. Exemption allowed, subject to just exceptions.
2. Application is disposed of.
CM APPL. 10313/20243. The present application has been filed seeking permission to file lengthy list of dates and synopsis.
4. Considering the submissions made in the present application, the present application is allowed.
5. Application is disposed of.
W.P.(C) 2529/2024 & CM APPL. 10311/2024
6. The present petition has been filed challenging the action of the respondent nos. 1 to 7 who are the member banks in the Consortium of Lenders of Era Infra Engineering Limited ("EIEL")/company.
7. It is the case of the petitioner that despite the Forensic Audit Report for the period of 01st April, 2013 till 31st March, 2016, not reaching any adverse conclusion amounting to 'fraud' against the company, and despite the legal opinion procured by the Consortium of Lenders, the action has again been initiated by respondent nos. 1 to 7 against the company.
8. Learned Senior Counsel appearing for the petitioner submits that the respondent banks had initiated the re-investigation through the following show cause notices:-
(i) Respondent No. 1 through its Show Cause notice dated 05th October, 2023.
(ii) Respondent No. 2 through its Show Cause notice dated 05th October, This is a digitally signed order.
The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 22/02/2024 at 21:14:14 2023 and 15th November, 2023.
(iii) Respondent No. 3 through its Show Cause notice dated 15th November, 2023.
(iv) Respondent No. 4 through its Show Cause notice dated 28th November, 2023.
(v) Respondent No. 5 through its Show Cause notice dated 27th December, 2023.
(vi) Respondent No. 6 through its Show Cause notice dated 29th December, 2023.
(vii) Respondent No. 7 through its Show Cause notice dated 08th February, 2024.
9. Learned Senior Counsel for the petitioner has drawn the attention of this Court to the order dated 15th February, 2024 passed in similar matter, being W.P. (C) No. 2240/2024, in which the action initiated by the lead bank had been challenged.
10. The relevant portion of the order dated 15th February, 2024 reads as under:-
"14. Learned Senior Counsel relies upon the Minutes of the Joint Lender's Meeting held on 27th September, 2018, wherein the following decisions were taken:
"xxx xxx xxx
7. Substantial funds are receivable from the Subsidiary /Sister/Associate/Concerns, Advances to Contractors, advances to Organizations for supply of material and for the clients for whom EIEL has. undertaken work but not billed due to un certification of work.
The Company's reply to various audit observations are already incorporated in the Forensic Audit Report and also submitted to lenders vide letter dated 17.07.2018.
This is a digitally signed order.
The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 22/02/2024 at 21:14:15 The Forensic Auditor has closed his report with the observations are that overall there has been complete mis-management of funds in EIEL, failure of internal controls and non-recovery of funds from the sister/subsidiary concerns and sundry debtors which led to total financial crunch in the Company. Further, during the course of discussion in the meeting held on 21.08.2018, he had confirmed that no fraudulent transaction was observed during the period of Audit conducted by him i.e. from 01.04..2013 fraudulent transaction was observed during the period of Audit conducted by him i.e. from 01.04.2013 to 31.03.2016. However, few of the lenders were of the view that legal opinion on the forensic Audit Report may be obtained to examine fraud as defined by RBI. Sh. Jain informed that they had approached their empanelled advocate for the same, who expressed their inability to do so considering that they had no past experience in forensic Audit. Thereafter they approached, Sh. Vivek Sood, Senior Advocate Delhi High Court through another advocate (as Sh. Vivek Sood cannot take any assignment directly) to examine the Forensic Audit Report of Era Infra Engineering Limited from fraud Angle as defined in RBI Master Directions on fraud dated 1st July 2016 and submit his legal opinion on the same. His opinion dated 17.09.2018 has been received and copy of the same has been shared with all the lenders.
The Advocate has examined the reports from the following aspects:
a) Dishonest misappropriation of Property defined and punishable u/s 403 IPC and/or cheating defined and punishable u/s 415-420 IPC, and criminal breach at trust defined and punishable u/s 405-409 of IPC: "The offence of dishonest misappropriation of property defined section 403 IPC is not established/proven from the said audit report of RBA, as against EIEL and its principal officers/directors/management/employees"
"In clause 1.4 of the Audit Report titled summary of findings, it has been inter alia observed that some of the traders/beneficiaries of LCs were not available at the addresses given in the documents. Merely because the beneficiaries/ traders were not available at the This is a digitally signed order.
The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 22/02/2024 at 21:14:15 addresses given in the documents, does not imply or prove that they did not exist. Even otherwise, the said finding does not establish or prove misappropriation of property by EIEL.
As per the report, the offence of cheating defined and punishable u/s 415-410 IPC is also not established proven against EIEL and Its principal officers/directors/management/employees, from the audit report of RBA. Further, none of the ingredients of the offence of criminal breach of trust are proven/established from the report of RBA, as against EIEL and its principal officer/directors/ management/ employees ...........
As per his, "There are no findings in the report of RBA as to any dishonestly or fraudulent intention as against EIEI and its principal officers/directors/ management/employees. Hence, in my opinion the audit report does not establish/ prove any fraud as against EIEL and its principal officers/directors/ management/employees.
................
Since as per the Legal Opinion on forensic Audit Report, the Report does not establish/prove any Dishonest misappropriation of Property defined and punishable u/s 403 IPC and/or cheatings defined and punishable u/s 415-420 IPC, criminal breach of trust defined and punishable u/s 405-409 of IPC and Fraud as defined by Reserve bank of India under Master Directions on Frauds classification and Reported by Commercial Banks and Select Fis dated July 01.2016 against EIEL and its principal officers/directors/management/ employee, the Forensic Audit Report is treated as closed.
xxx xxx xxx"
15. By reference to the aforesaid Minutes of the Joint Lenders' Meeting, learned Senior Counsel for the petitioner submits that no dishonest misappropriation or cheating was found against the company. Further, the Forensic Audit Report was treated as closed. Learned Senior Counsel for the petitioner further submits that the Forensic Report dated 01st May, 2018 which has formed the basis of the various Show Cause Notices to the petitioner was the same report that was considered in the Minutes of the Joint Lenders' Meeting held on 27th September, 2018 and This is a digitally signed order.
The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 22/02/2024 at 21:14:15 which has been treated to be closed. It is submitted that despite the Forensic Report having been put to an end, the proceedings have again been initiated against the petitioner in a total illegal manner.
16. The matter requires consideration.
17. Issue notice to the respondents by all modes.
18. Let reply be filed within four weeks. Rejoinder thereto, if any, be filed within two weeks thereafter.
19. Considering the submissions made before this Court, this Court stays the process of investigating, determining and declaring the accounts of the company and in consequence petitioner as 'fraud' by the respondent no. 2. "
11. Accordingly, issue notice to the respondents by all modes.
12. Notice is accepted by learned counsels appearing for respondent nos. 1, 2, 4, 5 and 7.
13. Let notice be issued to the other respondents.
14. Reply be filed within a period of four weeks. Rejoinder thereto, if any, be filed within two weeks thereafter.
15. Considering the fact that in the connected petition, this Court has already granted an interim relief, accordingly, in the present case also, this Court stays the process of investigating, determination and declaring the accounts of the company and in consequence the petitioner as "Fraud" by the respondents.
16. List on 19th July, 2024 along with W.P. (C) No. 2240/2024.
MINI PUSHKARNA, J FEBRUARY 20, 2024 c This is a digitally signed order.
The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 22/02/2024 at 21:14:15