In BAIL APPLN. 1740/2022-DEL HC- Merely because offence is cognizable and non-bailable, it is not essential that accused must be taken into custody when charge-sheet is filed: Delhi HC
Justice Anup Jairam Bhambhani [21-12-2022]

Read Order: KOMAL CHADHA v. SERIOUS FRAUD INVESTIGATION OFFICE 

Mansimran Kaur

New Delhi, December 26, 2022: The Delhi High Court has clarified that though the twin conditions in Section 212(6)(i) and (ii) of the Companies Act must otherwise be satisfied before a person is released on bail, those conditions would not apply inter-alia to a woman and it would be anathema to the legislative intent to not grant the benefit of the relaxation to a woman accused.

Justice Anup Jairam Bhambhani allowed the  present petition instituted  under section 439 of the Code of Criminal Procedure, 1973  by  the petitioner, who was  accused in a case pending before the Special Judge (Companies Act) and seeking regular bail.

The accused-petitioner was summoned in the matter through the  summoning order   made by the  Special Judge (Companies Act) stating that she was the director of M/s Parul Polymers Pvt Ltd.  (first accused ), being the wife of Suman Chadha, who was the other director of the company. 

The gravamen of the offences alleged under section 447 of the Companies Act, 2013 was that the company, which was engaged in the trade of plastic granules, indulged in cash sales, in fictitious sale of food grain and in creation of accommodation/adjustment accounting entries, apart from misuse of cheque discounting facilities.

This order which was based upon the criminal complaint filed by the SFIO under section 212(15), showed that the role ascribed to the petitioner was that of being an ‘officer who is in default’ within the meaning of section 2(60), since the petitioner was a director of the company and was liable for the affairs of the company under section 212(14).

After considering the submissions, the Court interestingly noted that the  Special Judge referred to the stringent twin conditions contained in section 212 of the Companies Act, going-on to say that merely because the petitioner was  a woman,  the same did not justify ‘grant of bail’ to her. 

However, this was not a case of grant of bail since the petitioner had not been arrested and was not in custody at all. This was a case of either remanding the petitioner to judicial custody, or of allowing her to go through the trial while not in custody. Evidently, the  Special Judge misdirected himself in applying section 212(6) of the Companies Act, which is not a section that deals with the question of remanding the petitioner to judicial custody, the Court noted. 

Despite having the power under section 212(8) of the Companies Act, to arrest the petitioner in the course of investigation, the investigating officer did not arrest the petitioner, by which it could reasonably be inferred that the officer did not have reason to believe that the petitioner was guilty of any offence punishable under the concerned sections of the Companies Act. Even when the report under section 212(12) was filed, there was nothing on record to show that the investigating officer sought for the petitioner to be remanded to judicial custody.

As per the Bench, the petitioner’s conduct couldnot have a worse effect now than it possibly could have had during the course of investigation, since all the purportedly incriminating evidence and material had already been collected and placed before the  Special Judge as part of the criminal complaint.

“Most importantly, the provision to section 212(6) of the Companies Act cannot be treated as nugatory or dead letter. By way of the proviso, the Legislature has specifically carved-out an exception to the otherwise strict provision for bail, to say that though the twin conditions in section 212(6)(i) and (ii) of the Companies Act must otherwise be satisfied before a person is released on bail, those conditions would not apply inter-alia to a woman. In view of the proviso, it would be anathema to the legislative intent to not grant the benefit of the relaxation to a woman accused”, the Bench said.

Further reference was placed to the judgments in Moti Ram & Ors. vs. State of Madhya Pradesh and  Laloo Prasad vs. State of Jharkhand.

It was also opined by the Bench that the power of the SFIO to arrest an accused during investigation in exercise of the powers conferred under section 212(8) is the power to enforce ‘police custody’ in aid of investigation and this power may be exercised by an investigating officer of the SFIO if he has reason to believe on the basis of material available with him that a person is guilty of commission of offences stipulated in section 212(6).

On the other hand, the power vested in the court to remand is the power to enforce ‘judicial custody’ of an accused; which, of necessity, must arise at the pre-trial stage only from some apprehension on the part of the investigating officer, say of witness intimidation, evidence tampering, flight-risk or such other matter. Such apprehension can rarely, if ever, emanate in the court itself, since the court is meant to be the neutral arbiter of the case.

Referring to the judgment in Siddharth vs. State of Uttar Pradesh & Anr, the Bench said, “Merely because the offence is cognizable and non-bailable, it is not essential that an accused must be taken into custody when the charge-sheet is filed”. 

Holding the petitioner entitled to benefit of the provision to section 212(6) of Companies Act, the court granted regular bail to the petitioner subject to some conditions.