Kavi Arora vs State
2020 Latest Caselaw 2228 Del

$~2
*       IN THE HIGH COURT OF DELHI AT NEW DELHI

                                      Reserved on:       10.07.2020
                                      Pronounced on:     23.07.2020

+       BAIL APPLN. 1413/2020
        KAVI ARORA                                       ..... Petitioner
                           Through    Mr.Puneet Bali, Sr. Adv. with
                                      Mr.Vibhav Jain, Mr.Aditya Soni &
                                      Mr.Mayank Datta, Advs.

                          versus

        STATE                                           ..... Respondent
                          Through     Mr.Amit Chadha, APP for State.
                                      Mr.Mohit Mathur, Sr. Adv. with
                                      Mr.Sandeep Das, Mr.Vipin Tyagi,
                                      Ms.Aishwarya Singh & Ms.Surbhi
                                      Sharma, Advs. For R-2.

        CORAM:
        HON'BLE MR. JUSTICE SURESH KUMAR KAIT

                             JUDGMENT

1. The Petitioner is humbly petitioning before this Court under Section

439 read with Section 482 of the Code of Criminal Procedure, 1973 seeking

the relief of regular bail, having been arrested on 10.10.2019 during the

course of investigation in F.I.R. bearing no. 50/2019, dated 27.03.2019,

registered by the Economic Offence Wing, Delhi Police, (hereinafter

referred to as the 'Respondent'), under Sections 409/420 read with Section

120-B of the Indian Penal Code, 1860. The said investigation culminating in

chargesheet dated 06.01.2020, wherein the Petitioner was arraigned as

Accused No. 4 under Sections 409, 420 and 120-B of the Indian Penal Code,

1860.

2. Mr.Puneet Bali, learned senior counsel appeared on behalf of the

petitioner and submitted that petitioner was not named as an accused in the

said F.I.R. and the ensuing chargesheet, which was filed as far back as on

06.01.2020, thereby marking conclusion of investigation by the Respondent

against the Petitioner, fails to bring forth any material to implicate the

Petitioner in the criminal proceedings emanating out of the said F.I.R., much

less be able to justify the detention of the Petitioner in custody for more than

8 months, that too even after conclusion of investigation in the said

proceedings.

3. Further submitted that a co-accused Anil Saxena has already been

granted regular bail by the Court vide order dated 17.06.2020. From a bare

perusal of the chargesheet, it becomes crystal clear that Anil Saxena and the

petitioner have been attributed similar roles by the investigating agency.

Anil Saxena was the group Chief Financial Officer and a member of the

same Risk Management Committee (hereinafter referred to as "RMC")/Loan

Investment and Borrowing Committee (hereinafter referred to as "LIABC")

as the petitioner, which approved the loans, till his resignation on

14.11.2017. In addition to this, as per the Investigation Report dated

27.09.2018 prepared by AZB & Partners (Advocates and Solicitors)

(hereinafter referred to as "AZB Report"), Anil Saxena was issuing direct

instructions for disbursement of loans. In fact, the case of the petitioner is on

a far better footing, since Anil Saxena was part of the parent company

Religare Enterprises Limited (hereinafter referred to as "REL") management

team, while the petitioner was part of the subsidiary Religare Finvest

Limited (hereinafter referred to as "RFL") team. Further, whereas there are

no allegations whatsoever, against petitioner that he received even a single

penny out of the loan amount siphoned off by the promoters, on the other

hand there are allegations against Anil Saxena that he was also granted a

loan of Rs.1,40,00,000/- (one crore and forty lacs) by one of entities owned

and controlled by the promoters.

4. Mr.Bali submitted that the mandate given to the petitioner on his

joining RFL was to set up a retail Small and Medium Enterprise (hereinafter

referred to as "SME") lending business which does not have dependence on

performance of Capital Markets. The Petitioner was handling Consumer

Finance which later got rechristened to SME Lending Business, being

successfully created so by the Petitioner. The performance evaluation of

Petitioner was always limited to SME business throughout his employment

at RFL. Further, even after becoming the MD and CEO of the company, the

Petitioner was looking after only the SME side of business without any

control on the functioning ICD/CLB and Loan Against Shares making the

Petitioner merely a figurative MD of RFL. SME lending business/ loans in

the present case means secured or unsecured long term loans given to small

and medium scale entities. On the other hand in the present case Inter-

Corporate Deposits (hereinafter referred to as "ICD") / Corporate Loan

Book (hereinafter referred to as "CLB") were short term unsecured loans

given to bigger entities and companies. While RFL management team was

managing SME lending business, REL team used to manage ICD/CLB and

LAS business.

5. Further submitted that when the Petitioner joined RFL there was a

clear understanding that RFL will remain a Retail SME Lending Company

and other businesses will be demerged and taken out of this entity. Capital

Market Lending was run as a separate business for which another NBFC

license was obtained from RBI under the name of Religare Finance Ltd. An

announcement was also made to this effect to the entire senior management

of Religare Group in February 2010 by Shachindra Nath, then Group Chief

Operating Officer (COO) REL and further reiterated in the group

announcement made in April 2010 by Shachindra Nath, who was by then

elevated to the position of Group Chief Executive Officer (CEO) REL under

his guidance and supervision the SME business loan book grew from Rs.

264 Cr. in 2009 to Rs.l5,976 Cr in 2016. The total Revenue on the other

hand grew from Rs.11 Cr. in 2009 to Rs.2,062 Cr. in 2016. However, not a

single loan transaction under the 'SME business' has come under any kind of

scanner or investigation by the RBI and neither has been questioned in the

investigation in the present case. In fact, while the Petitioner's mandate was

to handle the new SME lending business, it was the REL team responsible

for managing the already existing Inter-Corporate Deposit (Later named as

CLB) and loan against shares business, which were never under the control

and supervision of the Petitioner, and in respect of which the Respondent

has instituted the said criminal proceedings in the aforementioned F.I.R.

6. Learned senior counsel submitted that the Petitioner was

chargesheeted on wholly misconceived facts, falsely implicating him of

causing wrongful losses to RFL by siphoning off its funds as ICD/CLB

loans, in conspiracy with the other chargesheeted accused, to the benefit of

RHC Holding Pvt. Ltd. (A company consisting of a 100 % shareholding of

the Malvinder Mohan Singh and Shivinder Mohan Singh, the promoters of

REL). The said chargesheet proceeds on a completely false premise to

arraign the Petitioner, holding him liable for disbursal of loans and alleged

siphoning of money, without being able to produce even an iota of evidence

to show the Petitioner's involvement in the alleged offences.

7. Mr.Bali submitted that the Hon'ble Supreme Court in Sanjay

Chandra Vs. CBI, (2012) 1 SCC 40, which involved economic offences of

huge magnitude, while giving due regard to the settled principles of bail

jurisprudence has exhaustively laid down law on bail. The Apex Court held

that utmost importance has to be given to the valuable right of personal

liberty and innocence of the Accused until proven guilty. The said principles

were also kept in mind by the Apex Court in Dipak Shubhashchandra

Mehta v. CBI: (2012) 4 SCC 134, wherein it was held that detaining under-

trials indefinitely is violative of Article 21 of the Constitution of India.

These principles have also been endorsed by this Court, most recently in

''Firoz Khan vs State (NCT of Delhi), Bail Application 945/2020 decided

on 29.05.2020" whereby held that detaining under trials inordinately

without any purpose leaves them with inevitable impression that they are

being punished even before trial and therefore being treated unfairly by the

system. If after a protracted trial, the under trials is found not guilty, the state

cannot give back to the accused the valuable years of life lost in prison.

8. Further submitted that the case against petitioner is that he was part of

various Committees which approved loan to the defaulting entities. What

logically follows from the above allegation is that if petitioner is roped in

then all committee members have to be attributed similar roles and arrayed

as accused. Instead, in the present case, out of all the RMC and RPT

Members only the petitioner and two others have been named as accused

and the rest are not. Details of other RMC and RPT Members is given

below:

A. RMC Committee Members

S.No. Name Post Loans Whether Approved Made Accused

1. Maninder Group CEO and Boss of 13 No Singh Kavi Arora

2. Mr.Avinash Independent Director of 6 No Chander REL Mahajan (Also Member of RPT Committee of REL)

3. Anil Saxena Group CFO and 6 Accused no.5 (Already Director of REL Granted bail)

4. Sunil Kumar Group Treasury Head 6 No Garg and Director, RFL

5. Pankaj President and Chief 6 No Sharma Risk Officer, RFL

6. Sunil MD and Chairman of 6 Accused Godhwani REL (Also Member of No.3 RPT Committee of REL)

B. RPT Committee Members

S.No. Name Post Loans Whether Approved Made Accused

1. Avinash Independent Director, REL 11 No Chander (Also approved 6 loans in Mahajan RMC meetings)

2. Rashi DhirIndependent Director of 6 No REL

3. Monish K. International Finance 9 No Dutt Corporation (IFC) Nominee Director, REL

4. Sunil MD and Chairman of REL 6 Accused Godhwani (Also approved 6 loans in No.5 RMC meetings)

5. Harpal Director, REL 5 No Singh

9. One such RMC Approval meeting dated 31.01.2017 clearly shows

that approvals were granted unanimously by entire committee with note that

"entity known to promoter group". Not the case that Petitioner acted against

the Committee or Voted to pass loan despite the committee not agreeing to it

or insisted on approval of loan, despite a bad credit note. Further, all the

RMC approvals were put to the Board of Directors of RFL in the subsequent

Minutes of Meetings and the same were duly noted and accepted by the

board without any opposition which is evident from the minutes of the board

meeting dated 30.08.2017, relevant portion of the same is reproduced as

under:-

"The Board was apprised that is terms of Secretarial Standards 1, minutes of meetings of any Board Committee shall be noted at the Board Meeting held immediately following the date of entry of such Committee Minutes in the Minutes Book. Accordingly, the minutes of the following Board Committees were circulated to the Board with the agenda and thereafter noted by the Board in the meeting:

i. Audit Committee Meeting held on June 26, 2017 and June 28, 2017.

ii. Risk Management Committee (RMC) Meeting held on June 14, 2017 and June 28, 2017.

iii. Nomination and Remuneration Committee (NRC) Meeting held on June 28, 2017.

Further, a summary of the above minutes was circulated to the Board with the agenda for its easy reference. The same was duly noted by the Board."

10. It is further submitted that the case of complainant as per the Internal

Inquiry is that loans were issued to the entities known to the Promoters since

atleast 2005-06, as per available record. Yet, none of the persons responsible

for issuing those loans have been arrayed as accused. If the petitioner has

been arrayed as an accused, then all earlier approving members should also

be arrayed as accused in the matter.

11. A perusal of email dated 21.09.2016 would show that same was

written by Mr.Pankaj Sharma (then Chief Risk Officer, RFL) to REL

Management (Malvinder Mohan Singh, Shivinder Mohan Singh, Sunil

Godhwani, Anil Saxena and Sunil Garg) with only a copy to the petitioner.

Relevant Portion of email is reproduced as under:-

"Kindly note that this calendar will require new loans to be given in Jan'17 and Jun'17 to avoid reporting NPA. This may not find purchase with the approval committee of RFL and REL."

Thus, round tripping, if any, was suggested by Pankaj Sharma, who is not

arrayed as an accused. In addition, he passed 3 loans as RMC member.

Infact, as per RFL website, at present he is the President & Head of

Corporate Planning and Strategy. Further, while sending the email he knew

that rest of RMC (of which petitioner was a member) would not agree with

his suggestion. In addition, as per the charge sheet, the defaulting entities

were operating from the offices of RHC and transactions were carried out on

instructions of Hemant Dhingra (Director of Finance of RHC). Statement of

Hemant Dhingra relied upon in the charge sheet attributes no role to the

petitioner, more so does not even mention his name. Statement of Directors

of defaulting entities relied upon in the charge sheet attributes no role to the

petitioner. Further, these Directors have stated that they were either known

to the promoters or acquaintances of their late father. Not even remotely

connected to the petitioner.

12. As held in P.Chidambaram vs. CBI: 2019 SCC OnLine SC 1197, if

the applicant fulfils the triple test of bail then holding him in custody is

detrimental to course of justice and violative of Article 21 of the

Constitution.

13. In the case of S.K. Alagh vs. State of Uttar Pradesh & Ors.: (2008) 5

SCC 662, it is held by the Hon'ble Supreme Court that unless the Penal

Code provides vicarious liability on the part of the party who has not been

charged directly for the offence even if he is the Managing Director, cannot

be held vicariously liable for offence by the Company.

14. Mr.Bali submitted that in view of the role assigned to the petitioner

and settled law and on parity with co-accused Anil Saxena, the petitioner

deserves bail.

15. On the other hand, Mr.Amit Chadha, learned APP for State and

Mr.Mohit Mathur, learned senior advocate appeared on behalf of the

complainant Religare Finvest Limited (RFL) submitted that the present

offence relates to siphoning of Rs. 2000 crores of public money through a

labyrinth of layered transactions pursuant to a deep-rooted conspiracy in

which the Petitioner - Kavi Arora played an active role. The siphoning of

pubic money has been discovered by SEBI and the RBI since the Religare

Enterprises Limited (REL) - parent company of the Complainant Company

is a public listed entity with 42,650 shareholders and the present matter

affects them directly. Further, the complainant company is a registered

NBFC with the RBI and has taken loans from banks. The siphoning affects

the complainant company's ability to repay the banks, to which it owes

money(s) worth Rs.5,000 crores. The modus operandi adopted for the

siphoning was evergreening of unsecured loans which were rotated via

circuitous transactions through shell entities which only existed on paper but

had no business. The loan proposals prepared by RFL itself (for such loans

to be extended) evidence that the entities to which loans worth hundreds of

crores were extended as funding for 'working capital' had no business (and

therefore did not need working capital). The proposal to fund working

capital of such entities was only a camouflage for the siphoning. It is

important to note that no request for borrowing the funds was ever received

by RFL from the borrower companies but funds amounting to thousands of

crores were extended based on one-page MOUs. The case of Artifice

Properties Pvt. Ltd. evidences the true intention behind extending these

loans. Artifice Properties Pvt. Ltd. had no business income, but still the

funds were extended by RFL to it ostensibly as working capital facility.

Despite, approval for the same was given by the Petitioner on 01.09.2016.

16. Further submitted that petitioner's role in the conspiracy and

petitioner's position in the complainant company found during investigation

that the Petitioner was the CEO and Managing Director of the Complainant

Company for 6 years, i.e., between 14.11.2011 to 12.11.2017. By virtue of

his position as the CEO and Managing Director he was the overall incharge

of the business of the Complainant Company. During his tenure as the CEO

and Managing Director a large part of the siphoning took place. He was the

ultimate approving authority on the various committees which sanctioned

the loans and was directly responsible for such sanctions. Out of 19 loans in

default which have been mentioned in the chargesheet, the Petitioner had

approved 16 loans amounting to approximately Rs. 1900 crores. The other 3

loans out of 19 were initially granted under the Loan Against Property

portfolio. Therefore, the Petitioner was approving all loans under the

Corporate Loan Book. The Petitioner being the CEO and Managing Director

was a key managerial personnel of the Complainant Company and

responsible for disbursement of loans to the shell entities. Investigation has

found that the Petitioner / Kavi Arora was a crucial link in the chain of

approvals relating to the circuitous transactions. Whenever financing was

required by the Promoters, (a) Hemant Dhingra (an employee of RHC

Holding-an entity owned and controlled by the Promoters); (b) Sunil

Godhwani; or (c) Anil Saxena (Group CFO of the Religare Group) would

orally instruct the Petitioner / Kavi Arora to extend loans to entities related

to the Promoters. While instructions would be issued by persons in other

companies, the Petitioner / Kavi Arora executed the conspiracy at RFL's

level by ensuring disbursements of unsecured loans worth hundreds of

crores and creation of paperwork. Loans were extended and disbursements

made, after which documentation was prepared by the petitioner's team at

his instance. Since disbursements were made from RFL, official(s) of RFL

had to be part of the conspiracy and execute the same at RFL level. The

Petitioner was one such top official and investigation against the rest is

pending.

17. Further submitted that the following facts show that the Petitioner

played an active role in the conspiracy and the siphoning funds:

Date                   Particulars

29.04.2014             RBI raised concerns about these CLB Loans and pointed

out the ever greening or round tripping of funds in a letter addressed specifically to the Petitioner. Despite the said letter the Petitioner being CEO and Managing Director and part of various committees continued to give loans under the Corporate Loan Book to shell entities which rotated these funds.

08.03.2016 RBI again raised concerns in a letter addressed to the Petitioner regarding the CLB Loans and pointed that the CLB Loans policy was deficient.

12.07.2016 The RBI was not convinced with the explanation provided on 8.7.2016. Therefore, the Petitioner (being the CEO and MD of RFL) along with Sunil Godhwani (being CEO and MD of REL) undertook not to increase the CLB Loan exposure or roll over the CLB loans, but continued giving loans under the CLB.

01.09.2016 Despite the aforesaid undertakings to the RBI, the Petitioner approved loans worth Rs. 492 crores to the following entities:

Zolton Properties Pvt. Ltd.- Rs.165 cr Artifice Properties Pvt. Ltd.- Rs. 165 Cr Modland Wears Pvt. Ltd.- Rs. 162 Cr

It is pertinent to mention that these loans were opposed by the independent director - Mr. Mohnish Dutt vide his email dated 31.8.2016 but were still approved by the Petitioner.

21.09.2016 The Petitioner was a party to an internal email which acknowledges that the CLB Loans must be evergreened to avoid being categorized as NPAs. The email was sent in the context of credit rating agency - ICRA seeking explanation regarding the CLB Loans from the Petitioner.

27.01.2017 Since the CLB Loans continued unabated, the RBI once again in a letter addressed to the Petitioner raised issues with the CLB Loans and specifically stated that the loans were routed from one entity to another. RBI red flagged the following entities which are also part of the chargesheet to which loans had been granted:

A&A Capital Services Pvt. Ltd.

Gurudev Financial Services Pvt. Ltd.

Fern Healthcare Pvt. Ltd.

Tripoli Investment and Trading Company Annies Apparels Pvt. Ltd.

Torus Buildcon Pvt. Ltd.

Rosestar Marketing Pvt. Ltd.

Best Health Management Pvt. Ltd.

Volga Management and Consultancy Pvt. Ltd.

Ad Advertising Pvt. Ltd.

31.01.2017 Despite the aforesaid RBI letter to the Petitioner he immediately thereafter pursuant to the conspiracy approved loans to the following entities (which had been mentioned in the RBI Letter) amounting to Rs. 300 cr:

A&A Capital Services Pvt. Ltd.

Abhiruchi Distributors Pvt. Ltd.

Annies Apparel Pvt. Ltd.

30.06.2017 Despite the aforesaid undertakings to the RBI and RBI concerns, the Petitioner disbursed loans worth Rs. 850 crores to the following entities:

Rosestar Marketing Pvt. Ltd.

Tripoli Investment and Trading Company Volga Management and Consultancy Pvt. Ltd.

Ad Advertising Fern Healthcare Pvt. Ltd.

Torus Buildcon Pvt. Ltd.

Reference may be made to Petition Pg. 42 @ Pgs. 73 to 79 It is pertinent to note that while the loans were disbursed on 30 June, 2017 the loan proposals were prepared only on 5 July, 2017 (and thus ante dated). The same is evident from Ms.Rajni Barnwal's statement of (Compilation Pg. 131 and Pg. 75 and emails of July 5, 2017 and July 11, 2017 (Compilation Pg. 133).

Therefore, the minutes of the RMC meeting of 28 June, 2017 are fabricated since they record that the loan proposals have been received and reviewed (Compilation Pg. 85).

The Petitioner ratified the forged minutes of the RMC meeting of 28 June, 2017 in the RMC meeting held on 16 August, 2017 (Compilation Pg. 272).

It is important to note that 30 June, 2017 was the last day of the quarter (1 April, 2017 to 30 June, 2017). Therefore, a sizeable disbursement was made, without documentation to avoid reporting the same to RBI and to evergreen loans which were becoming due on the same day to avoid categorization as NPAs.

The loans were granted to entities which were specifically stated to be suspicious in RBI's letter dated 31.01.2017.

31.08.2017 The petitioner signed the director's report where despite the internal email of 21 September, 2016 (relevant or the financial year 2016-17), the Petitioner (being the CEO and Managing Director) specifically stated to the general public that the CLB Loans were not NPAs.

18. It is submitted, in conclusion, the petitioner's role (as the Managing

Director and CEO) in the conspiracy is evident from the following:

(a) The petitioner kept extending loans to shell companies despite RBI

raising a concern regarding the same specifically with the

Petitioner. The SEBI has also noticed the increase in CLB Loans

despite contrary undertakings to the RBI;

(b) He fabricated minutes of RMC Committee meeting of 28 June,

2017 to disburse loans amounting to Rs. 800 crores and then

ratified these forged minutes on 16 August, 2017. This shows that

documentation with respect to CLB loans was a mere charade to

legitimize the transfer of funds.

(c) He knowingly falsified books of accounts, i.e., the Director's Report

dated 31 August, 2017 to state that the CLB Loans were not NPAs,

despite knowing to the contrary (as per email of 21 September,

2017 in the context of ICRA seeking answers from the Petitioner).

(d) He was instrumental in granting of loan to Modland Wears Pvt.

Ltd. who had admittedly indulged in round-tripping. Modland

Wears Pvt. Ltd. in the insolvency proceedings initiated against it by

the complainant has admitted that such loan was given for round-

tripping and the same has also been recorded in the confirmatory

order of SEBI dated 11.09.2019.

19. It is further submitted that the complaint is also against "other

unknown persons (who are associates of the 'promoters' and aided and

abetted such acts of the promoters)". Additionally, the complaint was filed

at that time when the complainant was not aware of specific role of each co-

conspirator and these details emerged only during the investigation. In any

event it is settled law that the FIR is not an encyclopaedia of all the facts. As

argued on behalf of the petitioner that the Petitioner, as the "leader" of the

team took responsibility for the SCCPL transaction and was willing to resign

for the same. Firstly, the SCCPL transaction was a separate transaction

which is not part of the chargesheet herein. Secondly, the loans given under

this transaction were secured, unlike the loans given under CLB. Therefore,

the Petitioner is trying to mislead the court. The Petitioner never took

responsibility for the CLB Loans which were ultimately siphoned off and

thus cannot claim any moral high ground on the basis of an unrelated

transaction.

20. On the ground of parity, it is argued that bail order dated 17.06.2020

granting bail to Anil Saxena categorically states that the observation of the

court is limited to examining the question whether the petitioner therein, i.e.,

Anil Saxena, can be released on bail. Therefore, the said order cannot be

relied upon by the Petitioner herein and would not applicable to all the

accused persons involved. Moreover, Anil Saxena was not holding any

executive position in the Complainant Company after 13.11.2011 and was

not in control of its day to day management. However, that is not the case

for the Petitioner herein. The Petitioner was CEO and Managing Director of

the Complainant Company for 6 years, the entity by which the loans under

CLB were given. By virtue of that position, he was involved in the day-to-

day functioning of the Complainant Company, as was also admitted by him

while taking responsibility for the SCCPL transaction. Further, the RBI also

addressed all its communications with respect to the Complainant Company

to the Petitioner and the Petitioner was further involved in

misrepresentations to the RBI in order to hide the siphoning. Moreover,

Anil Saxena only approved 6 loans, 3 of which were secured. Without

prejudice to the Complainant's contentions against this, the Petitioner herein

approved loans to 16 out of the 19 entities in question. Therefore, the

Petitioner's role was greater than that of Anil Saxena and the two cannot be

placed equally. Thus, the present petition deserves to be dismissed.

21. I have heard learned counsel for the parties and perused the material

available on record.

22. It is pertinent to mention here that while a fraction of the money trail

of Rs. 2000 crores has been recovered, the other fraction still remains

untraced as yet and investigation regarding the same is ongoing, by the

Economic Offences Wing as well as independently by SEBI. The SEBI

itself is still investigating fraud of about Rs. 600 crores and has recorded the

same in its order dated 14.03.2019. Moreover, the loans granted by the

Petitioner to the following entities amounting to over Rs. 600 crores are still

under investigation:

A. A&A Capital Services Pvt. Ltd.

B. Shridham Distributors Pvt. Ltd (erstwhile Abhiruchi Distrbutors

Pvt. Ltd)

C. Annies Apparel Pvt. Ltd.

D. Gurudev Financial Services Pvt. Ltd; and

E. Tara Alloys Ltd.

23. The petitioner being influential is capable of tampering with evidence

and influencing witnesses who were his subordinates. As apparent from the

various documents and the bail applications themselves, there is no denial of

the Complainant Company's funds by the accused persons having been

siphoned away. In addition, there is a higher apprehension of the accused

persons including petitioner herein absconding as they are aware that they

are likely to be convicted. Further, the conduct of the Accused with respect

to internal investigation being carried out by AZB & Partners is also

relevant as the Accused refused to participate in the investigation.

24. In addition, there are various complaints and FIR which have been

filed by the Complainant Company and are pending investigation. The

Accused has also been made a suspect in another case emanating from FIR

No. 189/2019 dated September 23, 2019 which is pending at the stage of

cognizance. It is pertinent to note that this is not an isolated instance and

there are various other frauds committed by the accused persons. Agencies

like SEBI.. ED and SFIO are also investigating REL.

25. It is settled law that economic offences are considered to be grave

offences especially when public money is involved and that the Courts have

to be careful in granting bail in such cases. These observations have been

made in Y.S. Jagmohan Reddy v. CBI (Criminal Appeal No. 730 of 2013).

26. In the case of Sunil Dahiya v. State [(2016) 4 DLT (Cri) 593] this

Court held as follows:

"54. The nature and wavily of accusations against the accused, in my view, is serious. The grant of regular bail in a case involving cheating, criminal breach of trust by an agent, of such a large magnitude of money, affecting a very large number of people would also have an adverse impact not only in the progress of the case, but also on the trust of the criminal justice system that people repose. It would certainly not be safe for the society. In case the applicant accused is granted regular bail, it is also likely that he may tamper with the evidence/witnesses, or even threaten them considering that the stake for the accused is high. It is also very much likely that looking to the high stakes, the nature and extent of his involvement, and his resources, lie may flee from justice."

27. In the case of CBI vs. Ramendu Chattopadya (Criminal Appeal No.

1711 of 2019), the Hon'ble Supreme Court held that economic offences

having deep rooted conspiracy involving investors' money have to be taken

seriously. The Hon'ble Supreme Court while dismissing the order of bail,

despite filing of chargesheet stated in Paragraph no. 8 as follows:

"This Court is conscious of the need to view such economic offences having a deep rooted conspiracy and involving a huge loss of investors' money seriously. Though further investigation is going on, as of now, the investigation discloses that the Respondent played a key role....thereby cheating a large number of innocent depositors and misappropriating their hard-earned money."

28. This Court is conscious about the fact that the Petitioner has been

charged with Section 409 IPC which is a grave offence punishable with life

imprisonment. The judgments of Sanjay Chandra vs. CBI is distinguishable

from the present case as the charges in the said case carried a maximum

punishment of 7 years, which is not the case herein. The same was also

noted in Nittin Johari vs. SFIO (BA 1971/2019), wherein this Court held:

"4. Ld. Sr. Counsel has submitted that investigation in the present case stands completed and even charge sheet has been filed by the investigating agency...Despite being CEO and a whole time Director, the petitioner was only an employee of BSL and has never been a shareholder or signatory of the Accounts of BSL. No financial benefit has accrued to the applicant from the allegedly fraudulent activities of BSL. Petitioner has only acted in his professional capacity as CFO of BSL. The work of the finance department was duly delegated, and each person was responsible for his scope of work. The petitioner was neither aware of nor involved in the alleged falsification of books or the alleged preparation and use of any forged and fraudulent documentation in any manner. It is further submitted that on number of occasions, the documents which came to him in the course of his work were already approved by the Board of Directors as well as by the Audit Committee and there was no reason for the petitioner to suspect any wrongdoing in such decision.

.....

16. Ld. Sr. Counsel has argued that investigation in the present case is complete. There are 284 accused persons and documents on which reliance has been placed are voluminous and trial may take considerable time and, therefore, the petitioner in view of the judgment of Hon'ble Supreme Court in Sanjay Chandra's case (supra) be released on bail. However, the said case is distinguishable from the case in hand as the charges in

the said case carried a maximum punishment for a term which may extend to seven years whereas in the present case, the petitioner is alleged to involved in offence u/s. 36(c), 128, 129, 447, 448 of the Companies Act, 2013; u/s. 209, 211 r/w 628 of the Companies Act, 1956 and under Section 467, 468, 471 r/w Section 120B of the Indian Penal Code and one of the offence u/s. 467 IPC is punishable with imprisonment up to life."

29. The Hon'ble Supreme Court of India has held that of chargesheet does

not lessen the allegations of the prosecution in any manner. To the contrary,

it establishes material on record against accused persons. (Virupakshappa

Gouda vs. State of Karnataka [AIR 2017 SC 1685]). Similar

pronouncements have been made in CBI vs. Ramendu Chattopadya and

Nittin Johari vs. SFIO (BA 1971/2019).

30. The judgments being relied upon by the Petitioner, i.e., the judgment

of Sanjay Chandra v. CBI is distinguishable as the same do not involve

misappropriation of public money, unlike in the present case. The same has

been distinguished by this Court in the case of Gurmeet Singh & Ors. v.

CBI [2017 (162) DRJ 488], wherein this Court held:

"12. The main argument addressed by learned senior counsels for the petitioners is that entire allegations of the CBI show that being an offence of serious nature, bail should not be granted, whereas in Sanjay Chandra (supra) Supreme Court noted that the statement of the

witnesses ran into seven hundred pages and the other documentary evidence was also too voluminous, so the trial may take considerable time and the appellant therein would have to remain in jail longer than the period of detention had they been convicted, thus it was not in the interest of justice that they should be in jail for indefinite period. In Sanjay Chandra (supra) the Supreme Court was not dealing with a case of large number of investors rather the allegations were in respect of criminal conspiracy between the accused in the year 2009 to get UAS license for providing telecom services to a company otherwise ineligible to get UAS license."

31. Moreover, Sanjay Chandra vs. CBI & Ors. has been distinguished

by this Court in the case of Sunil Grover v State: [(2012) 3 DLT (Cri) 861]

wherein it was held that no public money was involved in Sanjay Chandra's

case. This Court in Sunil Grover's case held as follow:

"12. So far as the judgments of the Apex Court in Sanjay Chandra's case and Suresh Kalmadi's case (supra) are concerned, no doubt, these reinforce and revisit the basic principles of law with regard to the grant of bail...In the cases, which have been cited by the learned counsel for the petitioner, no member of the general public was affected directly, rather it was the public ex-chequer which was put to loss by not holding auction of government resources or by over invoicing lenders. This is totally different from the facts of the present case where the petitioner floats advertisements and invites the offers from the members of the public to invest money in their schemes by promising them lucrative returns at regular intervals."

32. It is pertinent to mention here that in order dated 17.06.2020 granting

bail to Anil Saxena, categorically observed by coordinate bench that he was

not part of day-to-day functioning of RFL is of no relevance here as per the

role played by the petitioner in the present case.

33. Moreover, it is relevant to mention here that order dated 17.06.2020

granting bail to co-accused Anil Saxena was challenged before the Hon'ble

Supreme Court vide SLP(Crl.) diary no.13106/2020 and same has been

disposed of vide order dated 17.07.2020. Whereas, present pettion was heard

on 10.07.2020 and pending for judgment, however, meanwhile, through

Court Master, this Court has been apprised about the said order wherein the

Hon'ble Supreme Court has observed that although, the petitioner (therein)

may be justified in relying upon documents brought on record to indicate

that the finding of the fact noted by this Court (High Court) in the impugned

judgment is correct or contrary to record, even so, stating overall view of the

matter, there lordships decline to interfere with the order granting bail to

Anil Saxena. Further observed, the observations in the impugned order of

bail are confined to R-2 (therein) and cannot be used as precedent/parity for

other accused. The case of other accused be considered on its merit.

34. In view of above facts and law discussed and the fact that further

investigation is at the crucial stage regarding fraud committed by accused

for worth of Rs.2,000/- crores plus of public money, there is apprehension

that the petitioner may tamper with the evidence and influence the

prosecution witnesses, therefore, this Court is not inclined to grant bail.

35. The petition is, accordingly, dismissed with no order as to costs.

36. The Trial Court shall not get influenced by the observations made by

this Court while passing the order in the present petition.

37. The order be uploaded on the website forthwith. Copy of the order be

also forwarded to the learned counsel through email.

(SURESH KUMAR KAIT) JUDGE JULY 23, 2020 ab