Delhi High Court: A bail application was filed by Arun Kumar Aggarwal (applicant), a qualified chartered accountant associated with BPSL from 2000 to 2019 and was later appointed as a Chief Financial Officer in the year 2007, under Section 439 of Criminal Procedure Code (‘CrPC’) read with Section 212(6) of Companies Act, 2013 seeking grant of regular bail in a complaint registered under Section 120B read with Sections 417 and 420 Penal Code, 1860 (‘IPC’), Section 36(c) read with Section 447 of the Companies Act, 2013, Sections 129 and 448 read with Section 447, and Sections 211 and 628 of the Companies Act, 1956. Amit Sharma, J., granted bail to the applicant subject to a few conditions as the requirements of Sections 212(6)(i) and (ii) of the Companies Act, are satisfied.
The Ministry of Corporate Affairs, Government of India in the exercise of its powers conferred under Section 212(1)(c) of the Companies Act, assigned the investigation into the affairs of Bhushan Power and Steel Ltd. (‘BPSL’), its ten group companies and Bhushan Steel Limited (‘BSL’) with its two group companies to Serious Fraud Investigation Office. As per the allegations leveled by the SFIO, during the investigation, it was revealed that in furtherance of a fraudulent modus operandi, finished goods lying in the plant of BPSL were removed from the plant allegedly without issuing sale invoices and were sold in the open market. The funds generated from the said sale were never given to BPSL and were systematically never reflected in the books of account of BPSL. The alleged illegal movement of the goods worth Rs. 1,023 crores from the plant without raising invoices inter alia caused wrongful loss to BPSL and wrongful enrichment of persons who were controlling the affairs of BPSL.
As per the status report dated 31-03-2017, BPSL had an outstanding liability to the tune of Rs. 37,000 crores approximately, towards banks and financial institutions which were classified as Non-Performing Assets (‘NPAs’) in the books of said banks and financial institutions. The goods that were illegally removed from the plant were the security for the said loans availed by BPSL from banks/institutions. Furthermore, the books of accounts were falsified by not accounting for the sale of such goods valued at Rs. 1,023 crores, while the freight payments of seventy railway receipts were booked under the head ‘Capital Work in Progress’. The investigation revealed siphoning of monies by creating bogus capital advances to paper companies through a web of complex transactions by the controllers of BPSL.
The Court noted that it must examine the case of the applicant with respect to the twin conditions contained in Sections 212(6)(i) and (ii) of the Companies Act, which are in addition to conditions for bail under Section 439 of the CrPC. The foundation of the respondent’s case concerning the present applicant is that he was the Chief Financial Officer and a Key Managerial Person, who had signed the financial statements of the year 2013-14 to 2016-17.
The Court further noted that the material on record, by way of statements made by the entry operators, co-accused, employees of the companies, documents including the attendance registers of the board meetings as well as meetings of the audit committee indicates to the contrary. There is nothing placed on record to show that the present applicant attended the meetings, as alleged. The allegation was based on the fact that the provision enshrines that if the board of directors must follow the directions or instructions of the Chief Financial Officer then the presence of the latter in such meetings would be a necessity.
The Court observed that the present applicant was granted interim bail during the pendency of the present bail application, and he surrendered in time without misusing the liberty granted. Thus, based on the material brought on record, the requirements of Sections 212(6)(i) and (ii) of the Companies Act, are satisfied.
The Court allowed the application and admitted the applicant to bail upon furnishing a personal bond in the sum of Rs. 5,00,000/- along with two sureties of like amount to the satisfaction of the Trial Court subject to following conditions:
i. In case of any change of address, the applicant is directed to inform the Trial Court/Investigating Officer, with a prior notice of seven days.
ii. The applicant shall not leave India without the prior permission of the Trial Court.
iii. The applicant is directed to give all his mobile numbers to the Investigating Officer and keep them operational at all times.
iv. The applicant shall not, directly or indirectly, tamper with evidence or try to influence the witness in any manner.
v. In case it is established that the applicant tried to tamper with the evidence, the bail granted to the applicant shall stand cancelled forthwith.
[Arun Kumar Aggarwal v Serious Fraud Investigation Office, 2023 SCC OnLine Del 3366, decided on 01-06-2023]
Advocates who appeared in this case :
Mr. Arvind K. Nigam, Senior Advocate with Mr. Abhir Datt, Mr. Manu Padalia, Mr. Bhanu Sanoriya and Mr. Rohit Hooda, Advocates for bail Applicant;
Mr. Ripu Daman Bhardwaj, CGSC, with Mr. Kushagra Kumar, GP, Mr. Nitin Agnihotri, Prosecutor SFIO, Mr. Shriram & Mr. Salman, Advocates for SFIO.
