Allahabad High Court
Sujay Desai And Another vs Union Of India Through Secretary The ... on 5 May, 2020
Equivalent citations: AIRONLINE 2020 ALL 857
Author: Ramesh Sinha
Bench: Ramesh Sinha
HIGH COURT OF JUDICATURE AT ALLAHABAD AFR In Chamber Judgment/order reserved on 01.05.2020 Judgment/order delivered on 05.05.2020 Criminal Misc. Bail Application No. 12047 of 2020 Sujay Desai & another vs. Union of India and another. Hon'ble Ramesh Sinha, J.
1. The present application under section 439 Cr.P.C. has been filed by the applicants for interim bail. The prayer made in the present application is reproduced here under:-
"This Hon'ble Court may graciously be pleased to consider this matter as imminently urgent and allow this application. It is to be noted here that the WHO has declared Coronavirus as a Public Health Emergency and has categorically stated that individuals suffering from diabetes of any kind, are at increased risk of severe illness from Coronavirus and they should be particularly stringent in following social distancing measures, including significantly limiting face to face interaction. Therefore, it is imperative that this Hon'ble Court may hear the matter and pass some interim order/grant interim bail to the applicants in Arrest Order dated 19.3.2020 issued by respondent no. 2 in furtherance of Order No. 03/117/2018-CL-II (NR) dated 21.02.2018 and Order No. 7/117/2108/CL-II dated 22.08.2019 under sections 447 and 448 of the Companies Act, 2013 or else the applicants shall suffer irreparable loss and injury which could not be compensated, as this matter rquired urgent hearing by this Hon'ble Court"
2. The present matter has been nominated to this Bench by Hon'ble The Chief Justice vide order dated 30.4.2020 and the same was heard through video conferencing and judgment/order was reserved by this Court on 1.5.2020.
3. Heard Sri Anurag Khanna, learned Senior Advocate assisted by Ms. Gunjan Jadwani, learned counsel for the applicants and Sri Gyan Prakash, learned Assistant Solicitor General of India for the respondents.
4. Pleadings between the parties have been exchanged through e-mail which are on record.
5. The brief facts of the case are that the applicants have been arrested in pursuance of the arrest order dated 19.3.2020 by the Arresting Officer, who is Assistant Director of Ministry of Corporate Affairs for the offence under sections 447 and 448 of the Companies Act, 2013 from Delhi and Mumbai respectively. Copies of grounds of arrest were also served on the applicants on 19.3.2020. In pursuance of Order No. 03/117/2018-CL-II (NR) dated 21.02.2018 and Order No. 7/117/2108/CL-II dated 22.08.2019 under sections 447 and 448 of the Companies Act, 2013 issued by the Ministry of Corporate Affairs, Government of India (hereinafter referred to as the MCA) which in exercise of power under sections 212 (1) (c) of the Companies Act, 2013 had ordered for investigation into affairs of Rotomac Global Pvt. Ltd. (hereinafter referred to as the 'RGPL') and 10 others and Frost International Ltd. (hereinafter referred to as 'F.I.L.') by the Serious Fraud Investigation Office-respondent no. 2 (hereinafter referred to as 'the SFIO') in the public interest. Pursuant to the order of MCA, Director SFIO vide Order No. SFIO/Inv./AOI/2018-19 dated 20.06.2018 had appointed a team of officers for carrying out investigation into the affairs of the Company. The applicant no. 1 is the Director and CEO of M/s F.I.L. and applicant no. 2 is the Managing Director of F.I.L.
6. The applicants before approaching this Court for interim bail have approached the Apex Court due to present pandemic and spread of Covid-19 (Corona Virus) due to which working of all the Courts were suspended in the State and filed Writ Petition (Crl.) No. 126 of 2020 for seeking following relief:-
"Pass a writ, order or direction in the nature of mandamus or any other appropriate writ for seeking of immediate release of the petitioners in light of the threat posed to the life and personal liberty of the petitioners in light of the Covid-19."
7. The Apex Court on 1.4.2020 was pleased to dispose of the said writ petition and directed the applicants to approach High Court by filing bail applications thus, the applicants have filed the present bail application before this Court seeking interim bail.
8. Learned counsel for the applicants submits that applicant no. 1 is suffering from Type-II diabetes and is also asthmatic patient and suffered from frequent asthmatic attack and he is required to take insulin injection as well as other medicines for asthma to maintain his health. So far as applicant no. 2 is concerned, he is Senior citizen aged about 63 years and is also Type-II diabetic patient suffering from ill health for a long time. Further he is overweight and has a diminished lung capacity and he is also required to take insulin injection as well as other medicine in order to maintain his health. It has been vehemently argued by learned counsel for the applicants that due to Covid-19, the life of the applicants is under great threat and particularly when they are also suffering from the disease of diabetes and asthma and there are increased risk of severe suffering from Corona Virus and they should be particularly stringent in following social distancing measures including significantly limiting face to face interaction. He submitted that the applicants are presently confined in District Jail, Kanpur Nagar which is over crowded and due to large number of persons in the said jail, the inmates are highly suspected to come into contact of Covid-19 (Novel Corona Virus). He submitted that the Apex Court taking suo motu cognizance of the threat to prisoners of various prisons in India, into the light of Corona Virus, on 16.3.2020 passed an order in Suo Motu Writ Petition (Civil) No. 1 of 2020 and thereafter passed an order in the said petition on 23.3.2020 for releasing the inmates of jail directing the respective States/Union Territories to constitute a high power committee and consider the release of prisoners, who have been convicted or under trial for the offence for which prescribed punishment are about 7 years or less, with or without fine and the prisoners has been convicted for lesser number of years than the maximum. Learned counsel for the applicants has placed reliance on the order of the Delhi High Court in the case of Arvind Yadav vs. N.C.T. Delhi being numbered as Bail Application No. 778 of 2020 where the Delhi High Court vide order dated 22.4.2020 was pleased to grant interim bail to the accused, who was involved under the N.D.P.S. Act, 1985 considering the lock down due to Covid-19. He also placed reliance on another judgment of the Delhi High Court in the case of Babulal vs. N.C.T. Delhi in Crl. Appeal No. 291 of 2020 by which the Delhi High Court vide order dated 20.4.2020 was pleased to grant interim suspension of sentence to the appellant, who was sentenced for heinous crimes under the POCSO Act, considering the "unprecedented circumstances of a public health emergency that prevail today and the consequent need to decongest prisons for overall medical safety of all the prisoners...".
9. Learned counsel for the applicants further placed reliance on an order passed by Lucknow Bench of this Court in Crl. Misc. Bail Application No. 2013 of 2020 Subhash Chandra Agarwal vs. State of U.P. passed on 30.4.2020 in which interim bail has been granted to the accused in the said case for the offence under sections 419, 420, 467, 468, 471 I.P.C. He also submitted that the investigation of the present case is pending since June, 2018 and the applicants have been co-operating in the investigation being conducted by the SIFO. He submitted that applicant no. 1, who had gone to New Delhi for the purpose of interrogation in the present case on 19.3.2020, was detained and arrested by the Arresting Officer whereas applicant no. 2 was arrested from Mumbai in the present case. He further pointed out that since the date when the applicants were arrested and were lodged in Kanpur District Jail, the Investigating Officer has not visited in jail for the purpose of investigation and the allegation against the applicants is that they committed fraud in the affairs of 11 Companies and have further not furnished documents to the Investigating Officer, is not correct as the applicants have supplied voluminous documents to the respondent no. 2. There would not be any fruitful purpose to detain them in jail as till date no complaint has been filed by respondent no. 2 against them for offences under sections 447, 448 the Companies Act, 2013. They have no flight risk. They are ready to abide by the conditions which may be imposed by this Court.
10. Per contra, Sri Gyan Prakash, learned Assistant Solicitor General of India appearing for the respondents has submitted that the applicants were arrested on 19.3.2020 and they being the Directors/Controllers, used the corporate identities of the respective Companies of Rotomac Group, i.e., Rotomac Global Pvt. Ltd., Rotomac Exports Pvt. Ltd., Crown Alba Writing Instruments Pvt. Ltd, Kothari Foods & Fragrances Pvt. Limited, Mohan Steels Ltd. and Frost International Ltd. to deceive the Public Financial Institutions/Banks in obtaining credit facilities in the form of Letter of Credits and otherwise against which they defaulted to the tune of Rs. 4,000/- crores approximately in the case of RGPL and Rs. 3500/- crores approximately in the case of FIL which amounts continue as outstanding liabilities in the respective Companies. The applicant no. 1 is the Director & CEO, the signatory of the financial statements of FIL for the financial year 2013-14 to 2017-18. Applicant no. 1 along with his father applicant no. 2, who is the Managing Director were ultimate decision makers of the business of F.I.L. which have been also accepted by all the others Directors and employees of the F.I.L. whose statements were recorded under oath. They under the garb of Merchantile Trade have fraudulently induced the Banks & Public Financial Institutions to obtain credit facilities. He had knowingly falsified the books of account and the financial statements of F.I.L. deliberately concealing material facts thereby inducing BFIs to fraudulently extending credit facilities to F.I.L. which ultimately remained outstanding as account of F.I.L. became N.P.A. The falsified financial statements signed by the applicant no. 1 for the financial year 2013-14 to 2017-18 that was filed with ROC and that submitted to BFIs depicted false MT trade receivables to the tune of approx. Rs. 3500 crore in F.I.L. as per financial statements for financial year 2017-18. He submitted that the offence committed by the applicants being the Director and the Managing Director of F.I.L., has come into light during the investigation, is of grave nature. The plea which has been taken by the applicants for granting them interim bail in view of spread of Covid-19 (Corona Virus) is only an attempt to claim a relief indirectly which they cannot seek directly in such a offence of high magnitude amounting to thousands of crores. As this stage, their release would definitely hamper the investigation and further there are strong chances of tempering with the investigation of the present case. He further argued that so far as the judgment the Apex Court passed in Suo Motu Writ Petition (Civil) No. 1 of 2020 is concerned that relates to the offence which are punishable maximum upto 7 years and the Apex Court has categorically made it clear in its order that while considering the case of the said accused persons, the nature and gravity of the offence should be also taken into account by the High Powered Committee constituted in the light of the order of the Apex Court dated 23.3.2020. In the present case the offences under Sections 447 and 448 of the Companies Act, 2103 for which the applicants have been charged is punishable maximum upto 10 years and is of grave nature, hence the applicants cannot claim any relief in pursuance of the order of the Apex Court passed in Suo Motu writ petition. Therefore, their case is distinguishable from category/class of those prisoners. He next pointed that the applicants have made an application before the Additional Session Judge/Special Judge, Court no. 9 Kanpur Nagar which is the designated Court under section 436 of the Companies Act, 2013 that they may be permitted to have home cooked food, clothes, bedding and medicine etc. which was not opposed by the respondent no. 2 S.F.I.O. and in pursuance thereof they are being given the said facilities. He further submitted that the applicants are also being given their regular medicines for their ailment in jail. So far as the case which have been relied upon by the learned counsel for the applicants with respect to release on interim bail by the Delhi High Court with respect to accused involved in serious offences are concerned, it was a short period for operating Bank account and taking care of mentally retarded child of the said accused. He submitted that looking into the gravity and nature of offence committed by the applicants where they have deceived the Public Financial Institutions/Banks worth thousands of crores, this Court should not exercise its discretion in grant of interim bail to the applicants and the same be rejected. Learned Assistant Solicitor General in support of his argument has relied upon the judgment of the Apex Court in the case of Serious Fraud Investigation Office vs. Nittin Johari and another (Criminal Appeal No. 1381 of 2019, P Chidrambaram vs. Directorate of Enforcement (2019) 9 SCC 24, Y.S. Jagan Moham Reddy vs. Central Bureau of Investigation, reported in 2013 (7) SCC 439, and in Rohit Tandon vs. Directorate of Enforcement, (2018) 11 SCC 46 and State of Gujarat vs. Mohanlal Jitamalji Porwal, (1987) 2 SCC 364 in which the Court has observed that economic offences constitute a class apart and need to be visited with a different approach in the matter of bail. The economic offence having deep rooted conspiracies and involving huge loss of Public funds, needs to be viewed seriously and considered as grave offences affecting the economy of the country as a whole and thereby posing serious threat to the financial health of the Companies. The court thus observed that while granting bail, the court has to keep in mind the nature of accusations, nature of evidence in support thereof, the severity of punishment which conviction will ential, the larger interest of the public/State and other similar considerations.
11. Considered the rival submissions made by learned counsel for the parties and perused the record.
12. It transpires from the record that the applicants before approaching this Court has filed Writ Petition (Crl.) No. 126 of 2020 before the Apex Court and on 1st April, 2020, the Apex Court passed the following order:-
"The above writ petitions are filed for grant of bail in favour of the petitioners in veiw of the threat posed to their lives in the light of COVID-19. Notice was issued on 27.03.2020.
Today, we are informed that the High Court of Allahabad is taking up matters which are of urgent nature. As the Writ Petitions pertain to grant of bail, we are of the opinion that the petitioners should withdraw these writ petitions to approach the High Court by filing bail applications. The High Court of Allahabad is requested to take up the bail applications at the earliest. We make it clear that we have ot heard the matters on merit.
The writ petitions are, accordingly, disposed of as withdrawn."
13. From a perusal of the aforesaid order passed by the Apex Court, it is apparent that the applicants were given liberty to approach this Court by filing bail application and the applicants in pursuance of the said order, had filed the present application under section 439 Cr.P.C. for interim bail taking into account serious threat to their lives because of the severe illness, from Corona Virus. Thus it is clear that no regular bail application has been filed by the applicants nor the same is pending before this Court or before the Special Judge, (Companies Act, 2013) at Kanpur Nagar. The applicants without moving regular bail application before this Court in the present case, have come up with a prayer only for grant of interim bail due to Covid-19 (Corona Virus) which speaks of lot of their conduct and the contention of counsel for the respondent appears to be justified to a great extent that the applicants want to seek relief indirectly which they cannot seek directly being a difficult task, realizing the nature and gravity of the offence as nothing had stopped them to file a regular bail applications before this Court on merits which this Court is also hearing showing urgency in the matters.
14. Be that as it may. The applicants have chosen to file the present bail application under sections 439 Cr.P.C. for interim bail, the Court in the interest of justice proceeds to decide the same with the prayer made therein.
15. The main thrust which has been canvassed by learned counsel for the applicants is that due to Covid-19 (Corona Virus) infection, the applicants being diabetic patients have great risk to their lives if they are kept in jail where there are much chances of they being infected by Corona Virus. The applicant no. 1 is the son of applicant no. 2 and further claims that he is also a patient of Asthma. Due to over crowding in District Jail where they are confined they cannot follow the guideline of social distancing measures, including significantly limiting face to face interaction and due to lack of medical care regarding their lives in the prevalent environment in jail, they may be released on interim bail by this Court. In this regard, the applicant's counsel have also drawn the attention of Court towards the order dated 23.3.2020 passed by the Apex Court Suo Motu in the aforesaid writ petition and also circular dated 18.3.2020 of this Court whereby the working of court below has been suspended. So far as the order dated 23.3.2020, it is evident that the Apex Court has directed each State/Union Territories to constitute a High Powered Committee to determine which class of prisoners can be released on parole or on interim bail for said period as may be thought appropriate. The Court has directed that the State/Union Territories could consider the release of the prisoners, who have been convicted or under trial for the offence which prescribed punishment upto 7 years or less, with or without fine and the prisoners, who have been convicted for lesser number of years than the maximum. The Apex Court further left it open for the High Powered Committee to determine the category of prisoners, who should be release as aforesaid, depending upon gravity and the nature of offence and other relevant factor thereto. In pursuance of the same, High Powered Committee had been constituted in the State of U.P. as has been informed by the Secretary U.P. Legal Services Authorities Lucknow vide order dated 27th March, 2020 and as per the resolution of the High Powered Committee in its meeting dated 27.3.2020 had issued certain directions regarding convicted and under trial prisoners and has resolved as follows:-
"The Committee has resolved that the following category of convicted prisoners (excepts who are Foreign Nationals) to be released on parole on furnishing personal bond with the undertaking written on the personal bond itself that he/she shall surrender before the prison authority after expiry of the parole period.:-
a) Convicts already on parole would get extended special parole of 08 additional weeks.
b) Convicts who have already availed 01 parole peacefully and surrendered on time will be granted afresh one-time special parole for 08 weeks.
c) Convicts who are not facing a sentence of more than 7 years shall be released on special parole for 08 weeks.
The Committee further resolved that following category of under trial prisoners (except prisoners who are Foreign Nationals) may be released on Interim Bail.
a) Under trial prisoners facing criminal cases in which maximum sentence is 07 years and presently confined in jails may be released on interim bail for 08 weeks by the Sessions Court, Additional Sessions Court or the Chief Judicial Magistrate including other Judicial Magistrates, as the case may be, on furnishing personal bond with the under taking written on the personal bond itself that he/she shall surrender before the Court after expiry of the interim bail period. Other conditions may be imposed by the Court if it thinks fit, considering the circumstances of the case.
b) The grant of interim bail may be done by visiting the jails, on alternate days, by the Sessions Judge/Additional Sessions Judge/the Chief Judicial Magistrate/other Judicial Magistrates, as the case may be, on the bail applications at the jails itself and it shall be done forthwith. For drafting bail applications, to be moved by under trial prisoners assistance and services of prison officers, jail staff, jail Para Legal Volunteers (PLVs) and Panel Lawyers empanelled with the District Legal Services Authority (DLSA) may be utilized under intimation to the Secretary, DLSA of the concerned district. For this purpose passes shall be issued to the Judges/Magistrate & Panel Lawyers during lock down period by the District Administration.
c) The Undertrial Review Committee contemplated by the Hon'ble Supreme Court in Re Inhuman Conditions in 1382 prisons, (2016) 3 SCC 700, shall meet every week and take such decisions in consultation with the concerned district authority as per the said judgment.
d) Jail Superintendent shall be in continuous touch with concerned Secretary, District Legal Services Authority regarding disposal of interim bail applications moved by the under trial prisoners so that proper arrangements may be made."
16. From a perusal of the resolution of the said Committee, it is apparent that the Committee has resolved to release the under trial prisoners on interim bail, who are facing criminal cases in which the maximum sentence is of 7 years and presently confined in jails, for a period of eight weeks by the competent courts. Thus, the contention of Assistant Solicitor General Sri Gyan Prakash appearing on behalf of the respondents, who vehemently argued that the applicants are not entitled for interim bail as per the order passed by the Apex Court Suo Motu in the aforesaid writ petition by which a High Powered Committee has been constituted as their case is distinguishable from under trial prisoners as the offence in which the applicants have been confined in jail is punishable with a maximum sentence upto 10 years, appears to have substance. Moreover, so far as the risk of applicants being infected due to Corona Virus because of their severe illness in the lack of following strict norms of social distancing measures including face to face interaction is concerned, it has been pointed by learned Assistant Solicitor General that the applicants had moved an application before the Special Judge (Companies Act) Kanpur Nagar for providing them home cooked food, clothes, bedding and medicines etc. was not opposed by the S.F.I.O. on account of which the same are being provided to them and the said fact has not been denied by learned counsel for the applicants but he has submitted that the said facilities is not adequate for the applicants to run the risk of their lives as the present interim bail application has been filed only on the ground of risk to life of the applicants because of their illness and coming in contact with Covid-19 (Corona Virus) infected persons. The main thrust of the argument of learned counsel for the applicants was only on the said issue though he tried to argue on the merits of the case in short stating that the Central Government has ordered for investigation by Serious Fraud Investigation Officer through its Director-respondent no. 2 by its order dated 21.2.2018 and 22.8.2019 respectively as is apparent from the grounds of arrest which has been enclosed along with the present application but the same has yet not been concluded by the Investigating Officer nor report has been submitted to the Central Government by it, hence no fruitful purpose would be served if the applicants are being detained in jail as no investigation is taking place and no Inspector of respondent no. 2 has visited the jail for the purpose of investigation since the date, i.e., 19.3.2020 they have been detained in jail. He stated that the applicants have been co-operating in the investigation and the applicant no. 1 was arrested by the respondent no. 2 when he went for the purpose of interrogation on 19.3.2020 at Delhi and no complaint has been filed till date under the Companies Act, 2013 in pursuance of the said investigation. With respect to the argument of learned counsel for the applicants, the Court only wants to observe that from a perusal of the ground of arrest, it is apparent that applicant no. 1 Sujay Desai was the Director/CEO of F.I.L. and along with said Company, the investigation has been ordered and is underway into the affairs of Rotomac Global Pvt. Ltd. and 10 other Companies and Frost International Limited by S.F.I.O. in public interest under the order dated 21.2.2018 and 22.8.2019 respectively of Ministry of Corporate Affairs, Government of India and applicant no. 2 Uday J. Desai was functioning as Director of Frost International Limited from 31.5.1995 onward and as Managing Director of the said Company from 29.12.2008 onward and under their direction they used Merchantile Trade for rotation of funds continuously manipulating and falsified books of account and financial statements of the Company to fraudulently inducing the Banks and Public Financial Institutions for obtaining credit facilities. As a result of fraudulent activities, the Company has defaulted against outstanding liabilities of Rs. 3578/- crores approximately to Banks and Public Financial Institutions thereby causing wrongful loss to them and their acts and omission are punishable under section 447 and 448 of the Companies Act, 2013. Learned Assistant Solicitor General appearing on behalf of the respondents through his objection filed has drawn the attention of the Court that the applicants have been arrested for the commission of offence of fraud with Public Sector Banks and Financial Institutions involving total amount of Rs. 7500/- crores approximately (Rs. 4000/- crores approximately in RGPL and Rs. 3500/- crores in F.I.L.) and the Ministry of Corporate Affairs vide order dated 21.2.2018 ordered investigation into the affairs of 11 Companies of Rotomac Group and Frost International Ltd. and during investigation, it has been revealed that the approval was taken from Ministry of Corporate Affairs to investigate the affairs of another Company, i.e., F.I.L. and Ministry of Corporate Affairs vide order dated 22.8.2019 granted the said approval.
17. Thus, taking into account the nature and gravity of the offence which shakes the conscience of the society and public at large, the investigation being still pending and there are strong apprehensions that there would be chances of tampering of evidence by the applicants, the prayer for grant of interim bail is hereby refused.
18. Accordingly, the present application for grant of interim bail to the applicants, namely, Sujay Desai and Uday J. Desai in Arrest Order dated 19.3.2020 issued by respondent no. 2 in furtherance of Order No. 03/117/2018-CL-II (NR) dated 21.02.2018 and Order No. 7/117/2108/CL-II dated 22.08.2019 under sections 447 and 448 of the Companies Act, 2013, is hereby rejected.
19. However, it is directed that the I.G. (Prison) State of U.P. Lucknow is directed to ensure that the applicants are kept safely in District Jail, Kanpur Nagar where they are stated to be confined as on date taking all necessary precautions as has been issued by the State of U.P. in the context of Corona Virus (COVID-19) particularly, if any, also with respect to prisoners detained in jail throughout the State.
20. It is further directed that the respondent no. 2 shall expedite the investigation of the present case and conclude the same at the earliest.
21. It is made clear that any observation made by this Court would not prejudice the right of the applicant for considration of his regular bail application under section 439 Cr.P.C., if any, filed before this Court or the Court below, as the case may be, as the same has been made only for the disposal of the present application.
22. Copy of this order shall be produced by the counsel for the applicants before I.G. (Prison) State of U.P. Lucknow for necessary information and follow up action. The learned Assistant Solicitor General shall also forward a copy of this order to the I.G. (Prison) State of U.P. Lucknow for its immediate follow up and compliance, forthwith.
Dated: 05.05.2020 Shiraz.