Bombay High Court
Satish Kumar Pawa vs Serious Frad Investigation Office And ... on 6 November, 2023
Author: M. S. Karnik
Bench: M. S. Karnik
2023:BHC-AS:33925
PMB 29.ba.1068-23.doc
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
CRIMINAL APPELLATE JURISDICTION
BAIL APPLICATION NO.1068 OF 2023
SATISH KUMAR PAWA ..APPLICANT
VS.
1. SERIOUS FRAUD INVESTIGATION OFFICE
2. STATE OF MAHARASHTRA ..RESPONDENTS
------------
Mr. Ashok Mundargi, Senior Advocate a/w Adv. Sankalp
Sharma a/w Adv. Abhijeet Badar for the applicant.
Adv. H. S. Venegavkar for respondent No.1.
Mr. P. H. Gaikwad, APP for the State-respondent No.2.
------------
CORAM : M. S. KARNIK, J.
DATE : NOVEMBER 6, 2023.
P.C. :
1. Heard learned Senior Advocate for the applicant,
learned counsel for the respondent No.1-SFIO and learned
APP for the respondent No.2-State.
2. This is an application for bail in respect of the offence
punishable under Section 447 of the Companies Act, 2013
(hereafter 'the said Act' for short) registered at the instance
of the Serious Fraud Investigation Office (hereafter 'SFIO'
for short) in Special Company Case No.418 of 2022.
3. The applicant - Satish Kumar Pawa is the accused
No.4. So far as the accused No.2-Sant Lal Aggarwal is
1/21
PMB 29.ba.1068-23.doc
concerned, this Court by an order dated 03.10.2023 had
allowed the application for bail on the terms and conditions
mentioned therein.
4. The applicant's wife was the Director of Jagat Agro
Commodities Pvt. Ltd. (hereafter 'JACPL for short). The
applicant was the Chief Executive Officer. It is at the
instance of the present applicant that proceedings were
initiated before NCLT as there were some financial
irregularities on the part of accused No.2 in the matter of
dealings of the said company. The applicant had a grievance
against the accused No.2.
5. For ease of reference I reproduce the order dated
03.10.2023 passed in Bail Application No.785 of 2023 in
respect of Sant Lal Aggarwal Vs. Serious Fraud Investigation
Office and another. The relevant portion of the order dated
03.10.2023 reads thus :-
"2. This is an application for bail in respect of the offence
punishable under Section 447 of the Companies Act, 2013
(hereafter 'the said Act' for short) registered at the instance of
the Serious Fraud Investigation Office (hereafter 'SFIO' for
short) in Special Company Case No. 418/2022. The period in
respect of which the accusations are made pertain to the year
2013 to 2016. The complaint on the basis of which the
prosecution was initiated by the SFIO is dated 22/4/2022. The
applicant was, however, arrested on 8/3/2022. There are in all
2/21
PMB 29.ba.1068-23.doc
four accused of which one is granted bail by the trial Court and
one by this Court.
3. The applicant is a director of the company named Jagat
Agro Commodities Pvt. Ltd. (hereafter 'JACPL for short) which
was initially incorporated in the year 1984 by the Pawa Group
and in 1993, Aggarwal Group joined as the other shareholder.
JACPL was primarily engaged in rice production. It is the
contention of learned senior advocate for the applicant that the
bank auditors carried out repeated physical verification and vide
reports dated 12/2/2014, 5/12/2024, 15/6/2015 and 8/10/2025
categorically verified the physical existence of the godowns and
the value of the stocks. It is submitted that last of the Forensic
Audit Report dated 8/10/2015 found the losses incurred by
JACPL in the year 2014-2015 to be genuine and also found no
diversion of funds. While adjudicating a lis arising out of a
dispute between two shareholder groups, that is Pawa Group
and Aggarwal Group in JACPL, the Company Law Board ('CLB'
for short) directed SFIO to file a report with respect to the
position of stock. An assertion was made by Pawa Group that
stock worth Rs.201 crores was in the godowns. The Ministry of
Corporate Affairs passed a formal order on 7/3/2016 in exercise
of its powers under Section 212 (1) (c) of the said Act assigned
the investigation into the affairs of JAPCL to SFIO. According to
learned senior advocate, the order of the CLB was
misinterpreted.
4. On 18/4/2016 and 16/5/2016, SFIO conducted physical
verification at the company's godown and submitted its status
report. During verification, SFIO took Pawa Group's declaration
in CLB petition (that stock worth Rs.201 crores was in 36
godowns) as baseline and concluded that there was only 5%
variation between the declared stock and the stock found in the
godowns. The first investigation report dated 21/9/2016 was
submitted. On 8/3/2022, the applicant was arrested by SFIO on
his appearance in Special Court, New Delhi in another matter.
Learned senior advocate submitted that on several occasions the
applicant was called by SFIO at Mumbai prior to his arrest and
his statements were recorded. SFIO submitted a supplementary
investigation report to the Ministry of Corporate Affairs on
6/4/2022. The accusation is that the applicant defrauded the
bank by declaring false value of stock offered as collateral. It is,
thus, the submission of learned senior advocate that the stock
value of Rs.37.80 crores is arrived at based only on the
statements of JACPL's employees Suresh Kumar and Siya Ram
Tiwari and not on the basis of any Scientific Forensic Audit
independently conducted. Learned senior advocate urged that
no independent stock audit is conducted by SFIO.
5. The accusations of the SFIO primarily are that number of
3/21
PMB 29.ba.1068-23.doc
godowns are less than what was stated in the CLB petition filed
by Pawa Group and the value of the stock is much less than that
of the value of the stock worth Rs.201 crores mentioned before
CLB. It is further the accusation that an amount of Rs.550 crores
has gone to 'Jagat Overseas' from the account of the company
which amounts to siphoning.
6. One of the point urged by learned senior advocate is
about the applicability of the said Act. It is submitted that
commencement of investigation under Section 212(2) thereof
and the exercise of the power of arrest under Section 212(8)
and consequent prosecution under Section 447 of the said Act,
all proceedings under the Companies Act, 1956 will continue to
hold the field until 30/1/2019. It is, thus, the submission that
once the entire proceedings were initiated on the strength of the
Companies Act, 1956, there was no occasion, justification or
jurisdiction with the SFIO to commence and conclude its
investigations and prosecute the applicant under Section 447 of
the said Act. It is then submitted that even on the same set of
accusations, CBI has registered First Information Report (FIR)
under Sections 420, 467, 468, 471, 120-B of the Indian Penal
Code (IPC) at the instance of the bank defrauded. It is,
therefore, submitted that the question is whether prosecution
under Section 447 of the said Act would stand validated or not
would also require adjudication at an appropriate stage. In the
facts and circumstances of the present case, having regard to
the view that I am inclined to take, I do not propose to delve
into the aforesaid aspects of this paragraphs which could be a
subject matter of consideration in appropriate proceedings.
7. Mr. Hiten Venegavkar, learned counsel for the respondent
no.1-SFIO, vehemently opposed this application. It is submitted
that the applicant is facing serious accusations of financial fraud
in the company and there are materials to support the
accusations. It is submitted that though the company projected
that it has large number of godowns, but during investigation, it
is revealed that there are much lesser number of godowns. It is
further submitted that the financial statements are forged and
fabricated. It is submitted that the company falsely projected
that it had stocks over Rs.200 crores. However, investigation
revealed that there was stock of hardly Rs.37 crores. It is
submitted that the company inflated the value of its stock given
as collateral to the bank and taken enhanced credit facilities
from the bank. Relying on the materials, it is submitted that the
monies received from the bank have then been diverted by
JACPL to related parties thereby defrauding the bank. It is
submitted that the investigation report and the supplementary
investigation report by SFIO reveals that the applicant was
involved in day-to-day business, he has signed the stock
4/21
PMB 29.ba.1068-23.doc
statements and attended board meetings. During the
investigation when the applicant was confronted, he could not
identify all the godowns which were disclosed to the bank and
CLB. It is submitted that it is the company through the applicant
is responsible for the fraud worth approximately Rs. 349 crores.
8. Mr. Venegavkar, placing reliance on the statements of
Rajkumar dated 6/4/2022, who was the proprietor of 'Jai Shiv
Trading Co.' submitted that the bills are forged by the said Raj
Kumar at the behest of JACPL. It is submitted that the
statement of Vinod Kumar, who is a Chartered Accountant and
proprietor of 'Mukesh Vinod & Company' reveals that the stocks
were overvalued. He also relied on the statement of Vikas
Bansal, an employee, to show how financial irregularities are
committed by the applicant. It is submitted that there is ample
material in support of the accusations. It is further submitted
that there is a transfer of funds to the tune of Rs.550 crores
from one concern to another which amounts to siphoning. It is
then submitted that having regard to the serious nature of the
accusations and as the punishment prescribed for the offence is
minimum three years imprisonment, this is not a fit case to
enlarge the applicant on bail on the plea of having undergone
incarceration for more than 18 months. It is further submitted
that adequate medical facilities are made available to the
applicant and therefore, this is not a case where the applicant is
entitled to be enlarged on bail on medical grounds. It is then
submitted that though the properties are attached and an
affidavit has been filed to indicate that part of the amount
involved in the fraud can be covered up, however, this cannot be
a factor for enlarging the applicant on bail having regard to the
serious nature of the accusations.
9. Having heard learned counsel, while deciding the present
application I must bear in mind the provisions of sub-section (6)
of Section 212 of the said Act which reads thus:-
"212(6) Notwithstanding anything contained in the Code
of Criminal Procedure, 1973 (2 of 1974), [offences covered
under section 447] of this Act shall be cognizable and no person
accused of any offence under those sections shall be released
on bail or on his own bond unless-
(i) the Public Prosecutor has been given an opportunity to
oppose the application for such release; and
(ii) where the Public Prosecutor opposes the application, the
court is satisfied that there are reasonable grounds for believing
that he is not guilty of such offence and that he is not likely to
commit any offence while on bail:
PROVIDED that a person, who, is under the age of
sixteen years or is a woman or is sick or infirm, may be
released on bail, if the Special Court so directs:
5/21
PMB 29.ba.1068-23.doc
PROVIDED FURTHER that the Special Court shall not take
cognizance of any offence referred to this sub-section except
upon a complaint in writing made by-
(i) the Director, Serious Fraud Investigation Office; or
(ii) any officer of the Central Government authorised, by a
general or special order in writing in this behalf by that
Government."
10. From the record it is seen that the officers of the bank had
conducted physical audit of the stocks of the JACPL including
Forensic Audit done where stocks have been valued for over
Rs.200 crores. There is a status report dated 18/4/2016 of the
SFIO which mentions that there is only 5% variation in the
declared stock and the stock found in the godowns during
inspection. The Forensic Audit Report which SFIO is relying upon
indicates that JACPL has faced genuine business losses and that
there is no financial irregularities. It appears that there is no
independent stock audit done by SFIO. The SFIO has arrived at
value of the stock based on the statement of the store keepers
and I find some substance in the contention of learned senior
advocate for the applicant that SFIO did not carry out any
independent forensic analysis relating to valuation of the stock.
11. So far as the accusation that Rs.550 crores have gone to
'Jagat Overseas' from the account of the company which
amounts to siphoning is concerned, it appears that in the
financial year 2014-2015 Rs.522.60 crores were transferred
from Jagat Overseas' account to the account of JACPL and
Rs.552.41 crores was received back from JACPL to 'Jagat
Overseas'. Prima facie, this may be a transaction squaring up of
the amount credited and debited. In my prima facie opinion, I
am satisfied that there is a reasonable ground to believe that
the offence punishable under Section 447 of the said Act may
not be attracted in the present case.
15. Chapter XXIX of the said Act contains Section 447 which
provides for punishment for fraud. Section 447 reads thus:-
"447. Punishment for fraud.
Without prejudice to any liability including
repayment of any debt under this Act or any other law for
the time being in force, any person who is found to be
guilty of fraud [involving an amount of at least ten lakh
rupees or one per cent of the turnover of the company,
whichever is lower], shall be punishable with
imprisonment for a term which shall not be less than six
months but which may extend to ten years and shall also
be liable to fine which shall not be less than the amount
involved in the fraud, but which may extend to three
6/21
PMB 29.ba.1068-23.doc
times the amount involved in the fraud:
PROVIDED that where the fraud in question involves
public interest, the term of imprisonment shall not be less
than three years:
[PROVIDED FURTHER that where the fraud involves
an amount less than ten lakh rupees or one per cent. of
the turnover of the company, whichever is lower, and does
not involve public interest, any person guilty of such fraud
shall be punishable with imprisonment for a term which
may extend to five years or with fine which may extend to
[fifty lakh rupees] or with both.]
Explanation: For the purposes of this section -
(i) "fraud" in relation to affairs of a company or any
body corporate, includes any act, omission, concealment
of any fact or abuse of position committed by any person
or any other person with the connivance in any manner,
with intent to deceive, to gain undue advantage from, or
to injure the interests of, the company or its shareholders
or its creditors or any other person, whether or not there
is any wrongful gain or wrongful loss;
(ii) "wrongful gain" means the gain by unlawful means
of property to which the person gaining is not legally
entitled;
(iii) "wrongful loss" means the loss by unlawful means
of property to which the person losing is legally entitled."
16. Learned senior advocate submitted that the applicant is
now in custody for more than 18 months. Placing reliance on
Section 447 of the said Act it is submitted that the maximum
punishment for the offence is imprisonment for a term which
shall not be less than six months but which may extend to ten
years. Prima facie, I am of the opinion that having regard to the
nature of the accusations made in the case at hand, as per the
first proviso to Section 447 of the said Act, the alleged fraud in
question involves public interest, for which the term of
imprisonment shall not be less than three years. However, the
circumstance that the applicant has undergone custody as an
undertrial for more than 18 months which period is equivalent to
half of the minimum punishment for the offence, is the another
circumstance which I am inclined to consider in favour of the
applicant for enlarging him on bail.
17. One more aspect which needs consideration is an affidavit
of the applicant's son which has been filed on his behalf which
records thus:-
7/21
PMB 29.ba.1068-23.doc
"AFFIDAVIT OF THE APPLICANT'S SON ON HIS BEHALF
I, Gaurav Aggarwal, Aged 37 years, son of Shri Sant Lal
Aggarwal, presently residing at J-401, 4th floor, DLF City,
Ambience Caltriona, Section-24, Gurgaon, DLF Phase-III,
Gurgaon, Haryana 122010 do hereby solemnly affirm and
declare as under:-
1. I am the elder son of the Applicant Sant Lal Aggarwal who
is aged about 64 years. The Applicant's family comprises of his
wife Smt. Rajni Aggarwal (guarantor in Jagat Agro Commodities
Private Ltd. JACPL) who is also a senior citizen and suffering
from various old age-related ailments. That apart, the Applicant
has one daughter who is married and two sons namely Saurav
Aggarwal (guarantor in JACPL) and Gaurav Aggarwal (guarantor
& Deponent herein). While the younger son of the Applicant has
a wife and 7 year old school going son, the elder son l.e. the
deponent's family comprises of his wife and two minor children
i.e. a daughter aged 13 years and a son aged 5 years
respectively.
2. That the share of the Aggarwal Group in JACPL was
merely 42% out of which the individual shareholding of the
Applicant was to the extent of 10.61% only.
3. That on account of incessant losses to the rice industry
which has been widely recognized and accepted even by the
government agencies, JACPL suffered huge losses and the credit
facilities availed by the company from State Bank of India
("SBI") Primary Lender and Punjab National Bank ("PNB") -
Secondary Lender went away. In the present case, the
accusations by the SFIO are that Rs.349 crores of the bank
money having been siphoned off. The accusations are
vehemently denied by the Applicant.
4. That it is a matter of record that the Bank(s) have since
disposed of the properties that were mortgaged with them for
the purpose of sanction/grant of credit facilities for
approximately Rs.120 Crores.
5. That the record also reveals that on the basis of the FIR
registered by the CBI for offences u/s. 120-B, 420, 467, 468 &
471 IPC vide RC2202020E0013 dated 27.5.2020 and on account
of the invocation of Section 447 of Companies Act, 2013 by the
SFIO in the instant case, the Enforcement Directorate ("ED") has
also commenced its investigations under PMLA vide ECIR
/14/MBZO-1/2021 dated 31.3.2021. During the process of such
investigations, the ED has since provisionally attached the
following assets vide PAO No. 17/2022dated 24.11.2022, which
was confirmed by the Adjudicating Authority vide order dated
10.05.2023 in OC 1859/2022:
8/21
PMB 29.ba.1068-23.doc
Sr. Description of Property Valuation taken
by ED
1. Flat No.819, 8th floor, Amba Deep 15,18,173/-
Building, 14 Kasturba Gandhi Marg,
New Delhi measuring 562 Sq. Ft. in
the name of JACPL.
2. Flat No.801, 8th floor, Amba Deep 21,00,000/-
Building, 14 Kasturba Gandhi Marg,
New Delhi measuring 360 Sq. Ft. in
the name of JACPL.
3. Flat No.802, 8th floor, Amba Deep 12,31,827/-
Building, 14 Kasturba Gandhi Marg,
New Delhi measuring 456 Sq. Ft. in
the name of JACPL.
4. Flat No.803, 8th floor, Amba Deep 2,33,62,500/-
Building, 14 Kasturba Gandhi Marg,
New Delhi measuring 445 Sq. Ft. in
the name of JACPL.
5. Office Space no. 328, D. Mall, Plot 17,01,35,000/-
No.185, Twin District Centre, Sector
10, Rohini, Delhi 110 085 (Lease hold
property) in the name of M/s. Jagat
Overseas.
6. Office Space No.321, D. Mall, Plot 19,51,25,000/-
No.185, Twin District Centre, Sector -
10, Rohini, Delhi 110 085 (Lease hold
property) in the name of M/s. Jagat
Overseas.
7. Khewat No.601/531/439, Khasra 73,75,000/-
88/13 & 14, area - 12 kanal, Village
Kundli, Tehsil Rai, Dist. Sonipat,
Haryana vide deed registration
no.9369.
Total provisional attachment 38.86 Crores
confirmed in OC 1859/2022 vide
order dated 10.05.2023 (this
value may be lesser than the fair
market value)
6. That vide another PAO No. 11/2023 dated 27.7.2023,
further immovable assets have been attached by the ED, the
total value whereof is said to be approximately Rs. 10.50
Crores. The said PAO is pending adjudication before the
Adjudicating Authority, Delhi.
9/21
PMB 29.ba.1068-23.doc
7. That therefore, the total attachment by the ED
comes to Rs. 49.36 Crores. As stated above, the value
accorded by the ED may be less than the fair market value
8. That apart from the above, it is further humbly submitted
that the following properties of approximately Rs. 37.25 Crores
or more have been offered to the bank after mutual discussions
for the purpose of arriving at a One Time Settlement ("OTS") of
the entire dues, the details whereof are as under: -
Properties offered under OTS proposal dated 12.05.2023
to the Bank towards satisfaction of entire outstanding
debt:
S. No. Description Owner
1. Agricultural land measuring 50 kanal JACPL
17 marla (33184 sq. yds Kila
No.76/21/BG), 76/21/1(3-10), 76/23/2
(5-10), 78/24/1/1(3-6), 88/2(8-0),
88/7 (8-0), 88/9 (8-0), 88/8 (7-13,
85/10/2 (2-18) situated in village
Kundli District, Sonepat (Haryana).
2. Agricultural land at village Kohand, JACPL
Tehsil Gharaunda, District Karnal,
Haryana, Khewat no.132, Khatoji
No.235, Murabba no.14, Kila no.11/2
area measuring 1 kanal 10 marla.
3. Agricultural land at village Khoand, JACPL
Tehsil Gharaunda, Dist. Karnal,
Haryana. Khewat no. 152 measuring 5
Kanal 7 Marla.
4. Agricultural land situated at Karnal, JACPL
Haryana, Khewat no. 132, khatoni 238
admeasuring 75 kanal, 12 marla
5. Agricultural land situated at Singhu JACPL
Border, Delhi Khasra no:8/2, 11/1.
9. That total OTS Proposal after mutual discussion with the
Bank is for an amount of Rs. 37.25 Crores which includes the
value of the above unsold/unattached properties. This proposal
is under active consideration by the Bank which is evident from
its email correspondence dated 09.08.2023 which reads as
under:
"With reference captioned subject, you are requested to
provide us LEI number of above company to expediate
your request in the system. Please, Cooperate"
10/21
PMB 29.ba.1068-23.doc
10. That the Applicant or his family would have absolutely no
objection for the bank to dispose of the aforementioned assets
so as to realize its dues.
11. That the Applicant and his family members including his
wife and two sons namely Gaurav Aggarwal and Saurav
Aggarwal stand as guarantors in JACPL wherein bank has
already initiated recovery proceedings since 2017. It is humbly
submitted that majority of including as well as individual assets
are already auctioned and the remaining proceedings against all
the family members are undertaken by SBI.
12. That it is humbly submitted that during the course of
hearing of SA/40/2018 titled as "Jagat Agro Commodities Pvt.
Ltd. V/s State Bank of India" pending adjudication before Debt
Recovery Tribunal (DRT-III), New Delhi, respective statements
have been made by the counsel for the Company and the bank
accepting that the likelihood of matter being finally settled with
the Bank, in this context, the relevant contents of the order
08.08.2023, passed by the DRT relevant extract of the order
reads as under:
"3.Ld. Counsel for S. applicant submitted that the matter
is under settlement between the parties and there is
every likelihood that the matter will be settled between
the parties".
"4.Ld. Counsel for respondent no. I has also conceded the
statement made by Ld. Counsel for S.Applicant and made
a request to adjourn the matter for next 3- weeks to
ensure outcome of settlement proposal given by
S.Applicant".
13. That it is evident that the Bank is actively considering the
OTS Proposal at an advance stage and therefore, there is every
likelihood of burial of the entire dispute.
14. That it is humbly submitted that the bank is actively
considering the proposal for OTS and if that fructifies, the entire
liability of the company would come to an end. In any event, it
is noteworthy that the Pawa Group has almost equal
shareholding and therefore, the same may also be an equitable
factor for consideration by this Hon'ble Court.
15. That it is further humbly submitted that insofar as the
personal assets of the applicant and his family are concerned,
they are left with virtually nothing as everything has gone
towards the payment of debts and satisfying the lenders. So
much so, they do not even have their own house to live in and
have been living in rented accommodation for the last more than
5 years. The only remaining assets with the family are the
personal jewelry of the three ladies i.e., the wife of the Applicant
11/21
PMB 29.ba.1068-23.doc
and his two daughters-in-law which would come out to be
approximately Rs. 1.10 Crores. The family is ever ready to place
this entire jewelry as security with the Learned Trial Court
during the pendency of the Trial and/or subject to any direction
that may be issued by this Hon'ble Court.
16. That the Applicant further humbly beseeches this Hon'ble
Court to grant him indulgence and release him on bail so that he
may make all out efforts to fructify the OTS and generate all
other resources to settle the entire matter.
17. That the Applicant further undertakes to furnish adequate
surety for the purpose of bail and may be able to persuade his
relatives etc. to furnish a surety having valuation of upto Rs. 5
Crores for the purpose of releasing him on bail within such time
frame/period that this Hon'ble Court may deem fit."
18. In paragraph 17 of the affidavit, though it is stated that
the applicant is willing to furnish a surety having valuation of
upto Rs.5 crores for the purpose of releasing him on bail, on
behalf of the applicant, learned counsel on instructions of the
applicant through his son who is personally present in the Court
submitted that a sum of Rs.5 crores will be deposited with the
Special Court by way of Fixed Deposit in the name of the
concerned Registrar/ Superintendent of the Special Court within
a period of two months from the date of the applicant's
enlargement on bail. The statement is accepted as an
undertaking to this Court. The affidavit to that effect be filed by
the applicant in this Court before his release. Registry to accept.
The said deposit will abide by the orders passed by the Special
Court."
6. I have heard Mr. Mundargi, learned Senior Advocate
for the applicant and Mr. Venegavkar, learned counsel for
respondent No.1.
7. Mr. Venegavkar, learned counsel for respondent No.1
submitted that so far as the role of the present applicant is
concerned, the same is slightly different from that of the co-
accused. My attention is invited to the affidavit-in-reply filed
12/21
PMB 29.ba.1068-23.doc
on behalf of the respondent No.1. Apart from this Mr.
Venegavkar submitted thus :-
A. SFIO investigation revealed that various
individuals including the Applicant were persons who
played crucial roles and were responsible for violations
of fudging of financial statements to avail additional
loans as also enhanced credit limit from banks without
sufficient stock, and thereby. committed the offences
as defined under Section 447 of the Companies Act,
2013.
B. That though the Applicant was never a Director
or Chairman of A-1 Jagat Agro Commodities Private
Limited, but he was controlling the affairs of the
company through his wife, A-3 Sudha Satish Pawa. He
used to meet various people and presented himself as
the Chief Executive Officer (CEO) of the Company and
the same was also displayed on the Website of the
company.
C. That despite not having any signing power on
behalf of the company, he was actually running the
13/21
PMB 29.ba.1068-23.doc
company on behalf of his wife/director, Sudha Satish
Pawa. He, along with others blatantly used the
structure of A-1 Jagat Agro Commodities Private
Limited for taking credit facilities from the banks by
submitting fudged financial statements with regard to
the stock position.
D. The Applicant remained evasive in his answers
during investigation and it is pertinent to mention here
that Applicant/A-4 along with other officials were
confronted with the fact regarding valuation of the
stock when most of the godowns were not traceable
and no satisfactory reply was provided. Despite being
aware of the position of stocks and godowns,
directions of Hon'ble NCLT and subsequent verification
by the SFIO officers, the same was not informed to
the bank officials.
E. That scrutiny of the bank statements of Jagat
Agro Commodities Private Limited, Jagat Overseas
maintained with SBOP, PNB and HDFC Bank, and
personal accounts of Satish Kumar Pawa, and Satish
14/21
PMB 29.ba.1068-23.doc
Kumar Pawa HUF, especially the bank accounts
maintained with SBOP, PNB, Bank of India of CEO
Satish Kumar Pawa, Jagat Agro Commodities Private
Limited, Jagat Overseas & Others, revealed that
transactions amounting to several crores of rupees,
especially during the Financial Years 2013-14 to 2015-
16, had been received into the personal accounts of
Satish Kumar Pawa by channelizing through Jagat
Overseas which was, in turn, received from the
Company.
F. He alongwith Sant Lal Aggarwal were controlling
day to day affairs of the company and were actively
participating into the banking transactions with the
Bank including attending the meetings with the
consortium of the banks.
G. That statement of Vikas Bansal, Vinod Kumar,
Raj Kumar and Yugul Kishor Garg was recorded during
the course of investigation which indicates that bogus
billing was being raised through Jagat Agro to inflate
the turnover and valuation of the stocks of the
15/21
PMB 29.ba.1068-23.doc
company which was used to raise the funds from the
consortium of the Banks which ultimately resulted into
default of 386.99 Crores of loan amount to the Banks.
H. In light of the foregoing facts, it is clear that
Satish Kumar Pawa/Applicant was charged for offence
punishable U/s 447 of the Companies Act, 2013 and
before granting the bail the court had to cross the
hurdles of S. 212 (6) of the Companies Act, 2013.
8. Mr. Mundargi, learned Senior Advocate for the
applicant submitted that the properties which have been
secured in Bail Application No.785 of 2023 concerns the
present applicant as well. To show the applicant's bonafides,
an affidavit dated 05.11.2023 has been filed by the wife of
the present applicant stating thus :-
"1. That I am a law-abiding senior citizen having my address
as mentioned herein above. I am providing this affidavit for the
purpose of furnishing security in order to secure bail of my
husband Mr. Satish Pawa, who came to be arrested on 22 nd
February 2022 in relation to offence under Section 447 of the
Companies Act 2013 and has been languishing in judicial
custody lodged at the Mumbai Central Prison at Arthur Road,
Mumbai.
2. Mr. Satish Pawa was a shareholder in Jagat Agro
Commodities Pvt. Ltd. ("JACPL") wherein I was a director. Me
and my family ("Pawa group") held around 48.81% of the
shares of the Company and were involved in marketing and
promotion activities of JACPL. The operational, financial and
16/21
PMB 29.ba.1068-23.doc
administrative affairs of JACPL were primarily under the control
of Mr. Santlal Aggarwal along with his family ("Aggarwal
group"). In and around the year 2014, as a result of
repercussions of the drought and famine on the rice industry
and rising variable interest rates of the mortgages, the financial
health of JACPL fell in a delicate position due to which, Mr.
Santlal Aggarwal, namely Accused No.2 herein, being at the
helm of all the financial decisions, opted inter alia, for
enhancement of financial assistance despite there being strong
resistance from the Pawa group.
3. Consequently, the Pawa group was marginalized in the
financial and operational affairs of JACPL. Thus, due to such
gross mismanagement of the affairs of JACPL, the Pawa group
was constrained to act as whistleblowers and therefore, had to
file a petition before the Hon'ble National Company Law Board
(NCLB") under Section 397, 398, 402, and 403 of the
Companies Act 1956.
4. That it is also a well-known fact that during the relevant
time period, due to the incessant losses to the rice industry as
also recognized and accepted by the government agencies,
JACPL suffered huge losses and the credit facilities availed by
the company from State Bank of India ("SBI")-the primary
lender and Punjab National Bank ("PNB")-the secondary lender,
had to be restricted and the disbursal arrangements thereto,
were revoked. In the present case, the accusations by the
Serious Fraud Investigation Office ("SFIO") are that Rs.349
crores of the bank money have been siphoned off - The
accusations are vehemently denied by the Applicant.
5. My husband and I have suffered personal losses, including
the tragic loss of our only child, Ms. Swati Pawa, to a brain
stroke. Our financial resources have been depleted due to
property attachments by enforcement agencies and banks. The
mismanagement of JACPL by the Aggarwal group has led to
significant professional and personal losses, leaving us without a
source of income.
6. Despite the afore-mentioned challenged, I am willing to
furnish the following personal property as security for Mr. Satish
Pawa's bail:
- Property Details:
- Plot No. D-842, measuring 564 sq. yds.
- Located at New Friends Colony, New Delhi-110065
The Agreement of Sale of the abovementioned property was
executed in New Delhi on 11 th day of April 1997 between Shri
17/21
PMB 29.ba.1068-23.doc
Arun Kumar resident of 61/20, Ramjas Road, Karol Bagh, New
Delhi and Mrs. Sudha Pawa (me) and my husband Mr. Satish
Pawa, for the sale of the mentioned plot. The Agreement of Sale
along with all the relevant documents pertaining to the property
are hereby annexed and marked as Exhibit 'A'.
7. I affirm that my husband and I are co-owners of the
aforementioned property, each holding an equal share in the
said same. This property represents our only remaining asset. I
understand that by furnishing this property as security for bail, I
may be required to surrender the property if Mr. Satish Pawa
fails to appear in court as required or violates any conditions of
bail."
9. The affidavit is taken on record and marked as Exhibit
"X" for identification.
10. Learned Senior Advocate submits that the present
applicant as well as Mrs. Sudha Satish Pawa will abide by
the statements made in the affidavit.
11. It is at the instance of the applicant that the
proceedings commenced before the NCLT in respect of
financial irregularities alleged by the applicant against the
Director - Sant Lal Aggarwal who has been enlarged on
bail. It is the case of the respondent No.1 that the applicant
along with Sant Lal Aggarwal were controlling day to day
affairs of the company and were actively participating into
the banking transactions with the Bank including attending
the meetings with the consortium of the banks. It is thus
18/21
PMB 29.ba.1068-23.doc
obvious that the order in the case of co-accused - Sant Lal
Aggarwal enlarging him on bail will cover the case of the
present applicant as well.
12. The applicant presently is 77 years of age. He is
suffering from old age ailments. The applicant was arrested
on 23.02.2022. He is in custody for more than one year and
eight months. The maximum punishment for the offence
alleged is ten years of rigorous imprisonment. No doubt a
minimum period of three years is prescribed. The trial is
likely to take a long time to conclude. Considering the age
of the applicant, the period of his detention as an under-
trial and since the order dated 03.10.2023 in Bail
Application No.785 of 2023 covers the case of the present
applicant also, in the facts and circumstances of the present
case I am satisfied that the hurdle of twin conditions laid
down by Section 212(6) of the Companies Act can be
overcome. The applicant can be enlarged on bail. Hence,
the following order :-
ORDER
(a) The application is allowed.
19/21PMB 29.ba.1068-23.doc
(b) The applicant-Satish Kumar Pawa in connection with C.R. No. SFIO/INV/JACPL/473/2016 registered with Serious Fraud Investigation Office, Mumbai and in Special Company Case No.418 of 2022, shall be released on bail on his furnishing P.R. Bond of Rs.1,00,000/- with one or more local sureties in the like amount.
(c) The applicants is permitted to furnish cash bail surety in the sum of Rs.1,00,000/- for a period of six weeks in lieu of surety.
(d) The applicant shall not directly or indirectly make any inducement, threat or promise to any person acquainted with the facts of the case so as to dissuade him from disclosing the facts to Court or any Police Officer. The applicant shall not tamper with evidence.
(e) On being released on bail, the applicant shall furnish his contact number and residential address to the Investigating Officer and shall keep him updated, in case there is any change.
(f) The applicant shall attend the trial regularly.
(g) The applicant shall surrender his passport, if any, with the Special Court if not already surrendered.
(h) The applicant shall not leave the country without the permission of the Special Court.
20/21PMB 29.ba.1068-23.doc
(i) The statements made in the affidavit shall be abided by the applicant.
13. The aforesaid observations are prima facie in nature expressed in view of the mandate of Section 212(6) of the said Act and the same shall not influence the Special Court while trying the special case.
14. The application is disposed of.
(M. S. KARNIK, J.) 21/21 Signed by: Pradnya Bhogale Designation: PA To Honourable Judge Date: 07/11/2023 12:53:15