HC: Allegations of grave economic offences alone cannot be dispositive of a bail application [Read Judgment]

18 Jun 2022

By : Ayesha

The Division Bench of the Delhi High Court in the case of Praveen Kumar Agarwal & Ors. vs Central Bureau of Investigation consisting of Justice Prateek Jalan reiterated that allegations of grave economic offences alone cannot be dispositive of a bail application.

Facts

Six applications were filed u/s 439 CrPC for grant of bail in connection with FIR u/s 120B/409/411/420/467/468/ 471/474 IPC and Sections 4/5 read with Section 6 of the Prize Chit and Money Circulation Schemes (Banning) Act, 1978 (“PCMCS Act”). The mentioned FIR was registered against two companies, namely PGF Limited (“PGF”) and PACL Limited (“PACL”), and their officers. The FIR was registered pursuant to the directions of the Supreme Court in PGF Limited & Ors vs. Union of India & Anr, which revealed that the aforesaid companies were carrying out a collective investment scheme (“CIS”) in the garb of sale and development of agricultural land. The alleged modus operandi of the accused was to seek investment in land without the companies having ownership of the land. Sample checking of the land allotted by PGF to its customers revealed that the land was held, not in the name of the company, but in the name of other individuals.

Procedural History

The Special Court considered the bail applications of the present applicants and three other accused. While granting bail to one of the applicants therein, who was the Chartered Accountant and auditor of PGF, the Special Court rejected the applications of the other accused, including the present applicants. The Special Court found that the delay in filing of the supplementary charge sheet cannot be a ground for grant of bail in a case of complicated financial fraud like the present one. The likely delay in completion of the trial, given the number of witnesses, and the factum of the accused having cooperated in the investigation have also been held to be insufficient for the grant of bail.

Contentions Made

Petitioner: The case against the applicants does not concern the main charge of running a CIS or fraudulently inducing investors to invest in the projects of PACL/PGF but that they were providing accommodating entities to PACL/PGF and thus facilitating diversion of funds obtained from investors by the said two companies. The allegation of diversion of funds and transactions of the nature described in the supplementary charge sheet were revealed even at the stage of the original charge sheet. Several of the applicants joined the investigation whenever required by the IO and the nature of the transactions against PGF and PACL were discovered based on information and documents provided by them. The other applicants were not served with such notices at all. Although permission was taken from the Special Court to undertake further investigation in the year 2016, no steps were taken. Those who were summoned to the CBI office via notices u/s 41A CrPC were arrested soon thereafter despite their cooperation with the IO. No material was placed on record to justify the arrest of those concerned individuals even though they were served notices or to justify the sudden decision to arrest the applicants at this length of time.

Respondent: The present cases relate to a Ponzi scheme in which the allegation is that the principal perpetrators cheated more than 5.4 crore small investors of their hard-earned wealth. Several of the directors of PGF/PACL continue to remain in custody in the present FIR. The arrest of the present applicants at this stage was required to prevent their influence over their employees and to discover the route by which the amounts received by them were recouped.

Observations of the Court

The Bench, relying on the judgments in Y.S. Jagan Mohan Reddy and Nimmagadda Prasad reiterated that the sole consideration of allegations regarding grave economic offences, with a very large number of victims cannot be dispositive of the applications for bail.

Judgment

The applicants were granted bail, subject to the following conditions:

The applicants will furnish a personal bond in the sum of ₹30,00,000/- each, with two sureties each in the like amount, to the satisfaction of the Trial Court. At least one of the sureties in each case will be from the spouse or a blood relative of the concerned applicant.
Each of the applicants will furnish their residential address to the IO, which will be verified by the IO. The applicants will remain resident at the said addresses and will give prior information to the Special Court and the IO in the event of any change of address.
The applicants will not leave the country without the permission of the Special Court. Their passports, if any, will be surrendered to the Court.
Each of the applicants will give their mobile numbers to the IO and ensure that the said mobile numbers are kept in working condition and are always reachable.
Each of the applicants will attend the Special Court on every date of hearing, unless exempted by the Special Court under exceptional circumstances.
Each of the applicants will report to the Officer-in-Charge of the police station having jurisdiction over their place of residence on the first and third Monday of every calendar month at 04:00 PM, and will be released within one hour, after completion of necessary formalities.
The applicants will not tamper with the evidence or attempt to influence any of the witnesses in the case or act in any other manner prejudicial to the trial.