Delhi High Court

Delhi High Court: In a petition filed by the Serious Fraud Investigation Office (SFIO) (petitioner) seeking to set aside the order passed by Special Judge (Companies Act), Dwarka, New Delhi wherein regular bail has been granted to the accused Aarti Singhal (respondent) with respect to the offence under Section 447 Companies Act, 2013, investigated by SFIO on the basis of the proviso to Section 212(6) of the Companies Act, 2013, Dinesh Kumar Sharma, J., held that the order granting bail is a well-reasoned order and has been based on proper material on record considering several incidental aspects around the case, thus, there seems no infirmity with the order which requires the interference of the Court.

The petitioner has challenged the order on the grounds that the Special Judge has wrongly interpreted the beneficial proviso under Section 212(6) Companies Act, 2013, failed to consider the detailed role played by the respondent/accused in the present fraud, erred in accepting the contention of the respondent/accused that she was merely a dutiful/obedient wife acting on the instructions of her husband, the respondent/accused is at flight risk.

SFIO has submitted that the investigation has revealed the detailed role played by the respondent/accused in the transactions of fraud in siphoning of materials from BPSL Plant, Sambalpur, Orissa, diversion of funds from BPSL in the form of bogus capital advances and routing the same as equity or unsecured loans in related entities of BPSL, bogus advances to suppliers, issue and negotiation of Inland Letters of Credit by Bhushan Power & Steel Limited, diversion of BPSL funds for the purchase of shares by promoters & family members for long-term capital gains, bogus purchase of capital goods, purchase of property at Mumbai by Assurity Real Estate LLP.

The Court noted that Section 212(6) of the Companies Act is only an enabling provision that vests discretion with the Courts to grant bail to certain categories of persons. The said discretion is not to be used as a rule of thumb but rather depends on special circumstances and facts necessitating such release on bail while also considering the nature, gravity, and seriousness of the offense.

The Court further noted that the respondent in the present case is a woman aged 62 yrs, a senior citizen and a housewife who was merely a figurehead in the company and has acted at the behest of her husband and the other senior functionaries of the company. No independent offense has been ascertained against her except that she was the authorized signatory in all bank accounts related to BPSL and its associated companies and that she signed the cheques in question.

The Court observed that the law distinguishing between cancellation of bail, rejection of bail, and quashing of the bail order directly affects the personal liberty of a person which is a fundamental right guaranteed under Article 21, however, the Courts must adopt different parameters and mechanisms while adjudicating the three. Thus, the Court must analyze if the order granting bail is perverse, without jurisdiction or based on irrelevant material on record.

The Court remarked that the order granting bail is a well-reasoned order and has been based on proper material on record considering several incidental aspects around the case. There is no infirmity with the order which so requires the interference of this Court. Thus, the special benefit conferred on a woman and after considering the role of the respondent and upon its satisfaction has duly exercised its discretion in favor of the present respondent thereby granting her bail.

[Serious Fraud Investigation Office v Aarti Singhal, 2023 SCC OnLine Del 1956, decided on 06-04-2023]

Judgment By: Justice Dinesh Kumar Sharma

Advocates who appeared in this case :

Mr. Kirtiman Singh, CGSC Ms. Vidhi Jain, Advocate for the Petitioner;

Mr. N Hariharan, Sr. Adv. with Ms. Ranjana Roy Gawai, Mr. Akshdeep Singh Khurana, Ms. Ujjmal Jain, Ms. Shambhavi Kashyap, Mr. Vijay Poonia & Ms. Janvi Sharma, Advocates for the Respondent.

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