Recently, the Punjab & Haryana High Court dismissed the second successive bail petition of an accused involved in the high-profile Adarsh Group of Companies financial fraud case, concerning alleged siphoning of nearly Rs.85 crores from Adarsh Credit Cooperative Society Limited (ACCSL). The Court underscored that “economic offences involving diversion of public funds constitute a distinct and serious class of offences, warranting a stricter approach in matters of bail,” highlighting the statutory rigour of Section 212(6) of the Companies Act, 2013.
Brief Fact:
The petition stems from a Central Government-ordered SFIO investigation dated 20.06.2018 into the affairs of the Adarsh Group of Companies and its 125 LLPs, following allegations that funds belonging to nearly two lakh depositorsof ACCSL were siphoned through corporate entities controlled by Mukesh Modi and associates. The petitioner, holding an 18% partnership in Adarsh Build Estate Limited (ABEL), Dehradun, and an authorised signatory for the project, was accused of diverting Rs.45.20 crores under the pretext of project expenses and withdrawing Rs.19.93 crores as advances, with only Rs.9.72 crores satisfactorily explained. Arrested on 22.07.2022, his initial bail plea was dismissed by the High Court on 09.11.2023, and the Supreme Court dismissed a Special Leave Petition on 06.05.2024, prompting the current second bail application.
Contentions of the Petitioner:
Counsel for the petitioner argued that prolonged incarceration since 22.07.2022 violated Article 21, given that charges were yet to be framed. The petitioner maintained full cooperation with SFIO during investigation, claimed parity with co-accused who were granted bail, and stressed his minor role as an 18% shareholder rather than a director or employee responsible for fund diversion. He cited health concerns and repayment through banking channels as grounds for bail, asserting that the rigours of Section 212(6) should yield in cases of prolonged custody, especially when the trial’s conclusion remains uncertain.
Contentions of the Respondent:
The respondents opposed the petition on multiple fronts, noting it was a second successive bail application after prior rejections by both High Court and Supreme Court, with no material change in circumstances. They emphasized that the petitioner had evaded arrest and concealed facts during the investigation, and stressed that Section 212(6) creates a statutory embargo on bail, particularly in serious economic offences affecting public funds. It was contended that the petitioner actively participated in the alleged fraud, and prolonged custody alone does not override statutory provisions aimed at safeguarding depositor interests.
Observations of the Court:
The Court meticulously examined the statutory framework under Section 212(6) of the Companies Act, 2013, highlighting that the non-obstante clause overrides general CrPC principles, leaving little room for discretionary bail in large scale financial fraud cases. Observing that the petitioner failed to provide substantive evidence of repayment of Rs.85 crores, the Court noted, “No automatic right to bail accrues merely because an accused appears before the Court pursuant to summons.”
The bench further emphasized that economic offences involving public funds must be treated as a distinct category warranting a stricter bail approach, referencing precedent in Pankaj Jain v. Union of India. While acknowledging prolonged custody, the Court underscored that successive bail petitions cannot be entertained absent a substantial change in circumstances, and stressed the need for expedited trial proceedings to prevent undue delay.
The decision of the Court:
The Court dismissed the petitioner’s bail application, holding that no exceptional circumstances justified departure from previous rejections. The bench clarified that all pending applications stood rendered infructuous and directed the trial court to expedite proceedings, including adopting procedural measures to avoid delay. The judgment reinforces that statutory restrictions under Section 212(6) prevail over Article 21 considerations in cases of serious economic offences, clearly delineating the limits on successive bail petitions and affirming a stringent judicial stance for the protection of public funds.
Case Title: Rajeev Kumar Rana vs. Serious Fraud Investigation Office
Case No.: CRM-M-23555-2025
Coram: Justice Manish Batra
Advocate for Petitioner: Adv. Vinod Ghai, Arnav Ghai, Nitin Gupta
Advocate for Respondent: Adv. Puneeta Sethi, Y.S. Thakur
Read Judgment @Latestlaws.com
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