Punjab-Haryana High Court
Surjeet Kumar Bansal vs Central Bureau Of Investigation And ... on 4 April, 2024
Author: Manjari Nehru Kaul
Bench: Manjari Nehru Kaul
Neutral Citation No:=2024:PHHC:045226
2024:PHHC:045226
THE HIGH COURT OF PUNJAB & HARYANA
AT CHANDIGARH
CRM-M-57266-2023 (O&M)
Reserved on : 19.03.2024
Pronounced on: 04.04.2024
Surjeet Kumar Bansal .....Petitioner
Versus
Central Bureau of Investigation and another .....Respondents
CORAM: HON'BLE MRS. JUSTICE MANJARI NEHRU KAUL
Argued by : Mr. Vikram Chaudhri, Senior Advocate with
Mr. Keshavam Chaudhri, Mr. Digvijay Singh and
Mr. Rishab Tewari, Advocates for the petitioner.
Mr. Gagandeep S. Wasu, Spl. Public Prosecutor
for respondent No.1-CBI.
Mr. Shobhit Phutela, Sr. Panel Counsel, UOI with
Ms. Bhawna Gandhi & Mr. Vivek Singh, Advocates
for respondent No.2-ED.
****
MANJARI NEHRU KAUL, J.
1. The petitioner has filed the instant petition under Section
439 of the Cr.P.C. for calling the records of FIR RCBDI/2021/E/0010
dated 29.12.2021 registered under Sections 406, 420, 467, 468, 471 and
120 B of the IPC and Section 13(2) read with 13(1)(d) of the Prevention
of Corruption Act, 1988 by CBI BSFB, New Delhi as well as ECIR
CDZO-1/01/2022 dated 06.01.2022 under Sections 3 and 4 of the
Prevention of Money Laundering Act, 2002 (hereinafter referred to as
'PMLA') and upon perusal thereof for grant of regular bail to the
petitioner in PMLA case arising out of ECIR CDZO-1/01/2022 dated
06.01.2022 under Sections 3 and 4 of the PMLA.
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2. Learned senior counsel has filed written arguments which
are taken on record subject to all just exceptions.
Further, submissions made by learned senior counsel
for the petitioner are as follows:-
2 (a). That the arrest of the petitioner was carried out in flagrant
violation of the mandatory provisions outlined in Section 19 of the
PMLA. Given the absence of any incriminating material in the
possession of the Investigating Officer indicating the petitioner's guilt
under Section 4 of the PMLA, there was no legal basis for his arrest.
Upon scrutiny of the Grounds of Arrest (Annexure P-10), it is evident
that the Arresting Officer lacked any substantial material to conclude
the guilt of the petitioner of an offence under Section 4 of the PMLA.
Instead, the "reasons to believe" as recorded in the Grounds of Arrest
are founded merely on the subjective views and beliefs of the
Investigating Officer, rather than any cogent evidence pointing towards
the guilt of the petitioner.
2 (b). That the requirement of the "necessity to arrest" is
indispensable for apprehending a person under the PMLA. However,
neither the Grounds of Arrest nor the remand application (Annexure P-
11) submitted before the learned Illaqa Magistrate demonstrate any
such necessity. Mere non-cooperation or failure to comply with the
summons issued by the Arresting Officer does not warrant arrest under
any circumstances. In case of non-cooperation, Section 63 of the PMLA
would be applicable, and not Section 19(1) of the PMLA.
2 (c). That despite glaring irregularities while arresting the
petitioner, learned Magistrate functioned merely as a post office for the
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prosecution by mechanically issuing the remand order. Courts of law
are entrusted with safeguarding individual rights and must ensure strict
compliance with the legislative provisions delineated in Section 19 of
the PMLA to prevent the abuse of powers of arrest.
2 (d). That the petitioner has not been named as an accused in the
FIR registered by respondent No.1-Central Bureau of Investigation
(hereinafter referred to as 'CBI'), to date. Therefore, without being
implicated in the predicate offence, proceedings under the PMLA could
not be initiated against him in the absence of evidence suggesting his
guilt. Furthermore, the Grounds of Arrest (Annexure P-10) contain
glaring errors, including a false statement asserting that the FIR of the
predicate offences has been registered against M/s Parabolic Drugs
Limited (hereinafter referred to as 'accused company'), Vineet Gupta
and "the petitioner" which stands contradicted by the absence of the
petitioner's name in the list of accused/suspects in the FIR (Annexure
P-1).
2 (e). That the primary accusations against the petitioner
encompass:
2 (e) (i). That the petitioner and his firm, serving as a statutory
auditor of the accused company, issued various certificates that
facilitated the extension of loans/credit facilities to the accused
company by a consortium of banks;
2 (e) (ii). That the petitioner intentionally failed to disclose in the
audit report the fact that bank funds were being illicitly transferred and
diverted through the utilisation of shell companies.
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2 (e) (iii). That the petitioner provided assistance by issuing false
Chartered Accountant (CA) certificates to accused company, which
were used to obtain loans from a consortium of banks.
2 (e) (iv). That the petitioner wilfully omitted to report the diversion
layering and siphoning off, of proceeds of crime through Parabolic
Group Companies and various shell entities in his audit reports.
2 (f). That the aforestated accusations are devoid of any merit
and are based on a deliberate misunderstanding of the role and
responsibilities of the CA/statutory auditor. When acting as a statutory
auditor of a company, the CA is tasked with auditing the accounts of the
company based on information and material provided by the
management and other officials of the company; audit report is
subsequently prepared by the CA/statutory auditor who is obligated to
express a true and fair view of the status of the company based on the
provided information and documents. In the present case, the petitioner
thus, just fulfilled his duty. Furthermore, being just a statutory auditor,
the petitioner, was not involved in the day to day operations of the
accused company nor did he have any control over them. Therefore, the
notion that he, as a statutory auditor, assisted in the generation of
proceeds of crime simply by providing audit reports, was unfounded as
whatever the petitioner did was on the basis of the material supplied to
him by the accused company.
2 (g). That the grant of credit facilities by the banks is regulated
by RBI circulars, notifications, and there own lending policies
established under various schemes. Therefore, it cannot be said that the
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loans were solely extended based on the certificates issued by the
statutory auditor i.e. the petitioner, in the instant case.
2 (h). That there was no obligation to report any diversion,
layering, or siphoning off of proceeds of crime into the shell entities in
the audit report. The petitioner disclosed all financial transactions in the
audit report and even as per the Grounds of Arrest there are no
allegations that any information provided in the audit report submitted
by the petitioner was inaccurate or misleading. Additionally, there are
no accusations against the petitioner regarding benefitting from alleged
illicit funds. Thus, it is evident that the petitioner did not receive any
proceeds of crime beyond his professional fees from the accused
company.
2 (i). That the petitioner's family trust "S.K. Bansal Trust" held
shares in "Parabolic Infrastructure Pvt. Ltd.", a sister concern of the
accused company. However, prior to the enactment of Section 141(3)(d)
of the Companies Act, 2013, which came into effect on 26.03.2014,
there were no restrictions on obtaining share holdings in an entity
related to a company where one was serving as a statutory auditor.
2 (j). That in the petition i.e. CWP-3210-2022 filed by the
primary accused in the FIR pertaining to the predicate offence
(Annexure P-1), a Division Bench of this Court, vide the order dated
26.02.2024, has stayed further proceedings in the impugned FIR.
Consequently, the stay on proceedings under the FIR of the predicate
offence, which serves as the basis for initiation of proceedings by
respondent No.1-CBI would essentially put on hold the proceedings
initiated under the PMLA by respondent No.2-Enforcement Directorate
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(hereinafter referred to as 'ED'). During the period of stay of
proceedings in the FIR pertaining to the predicate offence, respondent
No.2-ED cannot proceed further and must await the outcome of such
proceedings before initiating any further action under the PMLA. If the
predicate offence is ultimately quashed by this Court, then the question
of any offence under the PMLA; in other words if the foundation is
removed, the super structure would necessarily collapse. However, if
the prayer for quashing is declined, then respondent No.2-ED would be
free to proceed further. Therefore, even the proceedings under the
PMLA should remain stayed awaiting the final outcome of the
aforementioned writ petition. Consequently, during such a period,
prolonged incarceration of the petitioner would be futile and he
deserves to be granted the concession of bail. In support, learned senior
counsel has placed reliance upon Vijay Madanlal Choudhary and
others Vs. Union of India : 2022 SCC Online SC 929; B.
Shanmugam Vs. Karthik Dasari, Deputy Director of Enforcement :
2022 SCC Online Mad 4417; Mantri Developers Pvt. Ltd. and others
Vs. Directorate of Enforcement and another (Writ Petition
No.20713/2022 decided on 14.12.2022) and WP(Crl) No.9/2024 titled
as 'Anil Kumar Aggarwal Vs. Enforcement Directorate through its
Assistant Director, Jammu' decided on 15.03.2024 (J&K HC).
2 (k). That despite the fact that vide order dated 07.12.2023 the
arrest of the principal accused has been declared void and they have
been released from judicial custody by this Court in CWP-24787-2023
and CWP-25048-2023, albeit due to lapses on the part of respondent
No.2-ED, the petitioner, who played no role in the alleged offence, has
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been in custody for more than five months having been arrested on
27.10.2023. Surprisingly, respondent No.2-ED took nearly three months
to effectively challenge the bail granted to the principal accused before
Hon'ble the Supreme Court, indicating potential clandestine activities
where the petitioner is being made to unjustly suffer.
Petitioner's arguments on medical grounds:
2 (l). That in addition to the merits of the case, the petitioner is
also suffering from a myriad of ailments in his advanced age of 74
years. In support, learned senior counsel has drawn the attention of this
Court to the medical record of the petitioner.
2 (m). That the proviso of Section 45 of the PMLA carves out an
exception to the rigours of twin conditions under Section 45 of the
PMLA-(1) the determination of whether the petitioner would fall "sick
and infirm", need not necessarily entail an inquiry into whether the
ailments petitioner is suffering from are life threatening or not. Learned
counsel submits that no doubt provisions provide medical facilities,
however, such facilities cannot be reasonably compared with facilities
available at a private hospital. The general medical set up of the jail
would not be adequate to treat the petitioner who is suffering from a
range of serious illnesses and requires regular follow up. In support,
learned counsel has placed reliance upon Devki Nandan Garg Vs.
Directorate of Enforcement : 2022 SCC OnLine Del 3086.
2 (n). That additionally, aside from the aforementioned
submissions, the petitioner's wife is battling breast cancer and has
undergone three cycles of chemotherapy. She is scheduled for
mastectomy and requires support and care during this challenging time
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for her healthy recovery. Moreover, considering that there is no risk of
the petitioner absconding the process of law, and he is willing to
comply with any stringent conditions imposed, he be extended the
concession of bail.
3. Submissions made by learned counsel for respondent
No.1-CBI are as follows:-
3 (a). The respondent No.1-CBI has opposed the prayer of the
learned senior counsel for the petitioner by highlighting the grave and
serious allegations against him of facilitating a financial fraud
amounting to Rs.1626.7 crores, however, the respondent-CBI has
acknowledged that the name of the petitioner does not figure in the
column of the names of the accused/suspected persons as also that the
proceedings related to the predicate offence have been stayed vide
order dated 26.02.2024 passed in CWP-3210-2022.
4. Learned counsel for respondent No.2-ED has filed written
submissions which are taken on record subject to all just exceptions.
Further, submissions made by learned counsel for
respondent No.2-ED:-
4 (a). That the petitioner was duly arrested by the Arresting
Officer in accordance with law, with no violation of Section 19 of the
PMLA in the instant case; the guilt of the petitioner is evident from the
material collected by the Arresting Officer, indicating his active
involvement in concealing fund diversions and other deliberate
shortcomings in the audit reports. The grounds for suspecting the guilt
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of the petitioner were duly recorded in the Grounds of Arrest, which in
turn were promptly provided to the petitioner. At the time of the
arresting a person, there is no obligation to furnish the accused person
with evidence in the possession of the Arresting Officer; the Arresting
Officer is only required to justify the arrest based on available evidence,
a requirement that has been fully complied with, in this case.
4 (b). That upon a thorough examination of the Grounds of
Arrest, it is evident that the petitioner is guilty of offences under
Section 4 of the PMLA. Despite receiving summons for joining
investigation, the petitioner failed to appear and due to his non-
cooperation, his arrest was necessitated. These facts are clearly outlined
in the Grounds of Arrest and the remand application, justifying the
detention of the petitioner by the respondent-ED, and hence, the
remand order cannot be faulted with.
4 (b). It is well established principle of law that a person accused
of an offence under the PMLA need not be named as an accused in the
FIR and the predicate offence, therefore, the petitioner cannot benefit
from the fact that he was not named as an accused in the FIR registered
by the respondent-CBI.
4 (c). That the investigation conducted so far has revealed the
active involvement of the petitioner in aiding other accused persons in
generating proceeds of crime through various means, including
layering, accusations, concealment and utilisation of ill-gotten funds.
Additionally, the petitioner actively assisted the accused company in
converting loan funds from liabilities to assets through circuitous
transactions involving Parabolic Group of Companies. It was on
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account of the complicity of the petitioner that the banks were
defrauded to the tune of Rs.1626.7 crores.
4 (d). That it is inconceivable for a statutory auditor, affiliated
with the accused company since the year 1996, to remain ignorant of
the true financial health and status of the company. Despite being aware
of illicit transactions and fund diversions, the petitioner allegedly
omitted to disclose the fact that bank funds were being layered and
siphoned off through shell companies in audit reports. Additionally, the
petitioner issued fraudulent CA certificates without physically verifying
records, leading to the inflation of the accused company's books and
consequent huge bank fraud amounting to Rs.1626.7 crores. This is
clearly indicative of the active involvement of the petitioner in
obtaining the proceeds of crime through deceptive means, further
routed through various companies including shell companies to obtain
additional loans from banks.
4 (e). That the prosecution complaint delineates the commission
of the alleged offence by the petitioner under Section 4 of the PMLA,
implying that due to the gravity of the crime committed, the petitioner
is not entitled to any relief.
4 (f). That the petitioner has also failed to satisfy the mandatory
criteria laid down in Section 45 of the PMLA as he could not prima
facie prove his innocence in the alleged offences or that he was unlikely
not to commit any offence while on bail. Moreover, in view of the
investigation still underway in the present case, and the high probability
and risk of tampering with evidence, precludes him from being eligible
for the grant of bail, especially at this juncture.
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4 (g). That the medical condition of the petitioner does not
qualify for relief under proviso to Section 45 of the PMLA as his
ailments, as confirmed by a Medical Board from PGIMER, Chandigarh
do not pose life threatening risk. The jail authorities are providing him
with adequate medical care, and his condition can be managed with oral
medication.
4 (h). That the grant of bail to the Directors and Promoters of the
accused company was based on technicalities, not on merits, thus, the
petitioner cannot claim parity with them nor can their bail be a
consideration for deciding the instant petition.
4 (i). That the stay of investigation into the predicate offence
does not affect proceedings under the PMLA, as both are distinct and
independent. Offences under Section 4 of the PMLA are stand alone
offences and are unaffected by the stay on investigation in the predicate
offence. The order of stay cannot extend to PMLA proceedings, as
respondent No.2-ED was not party to the proceedings and the
investigation into the predicate offences did not refer to any
proceedings under the PMLA. In support, learned counsel has placed
reliance upon Dr. Manik Bhattacharya Vs. Ramesh Malik and others
: 2022 SCC Online SC 1465 (SC); Sikandar Singh Vs. Directorate of
Enforcement and another (CRM-M-51250-2023 decided on
26.02.2024); Suresh Gupta Vs. Government of India, Criminal
Petition No.5196 of 2019 decided on 23.02.2022 and Smt. Soodamani
Dorai Vs. Joint Director of Enforcement Directorate, Writ Petition
No.8383 and 8384 of 2013 decided on 04.10.2018.
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4 (j). That while considering the plea of an accused for grant of
bail under Section 439 of the Cr.P.C. the Courts are precluded from
delving into appreciation and detailed examination of the evidence and
other material collected by the investigating agency; a prayer for bail
under Section 439 of the Cr.P.C. hinges on a prima facie case, and not
an exhaustive analysis of the evidence collected by the investigating
agency.
4 (k). That the petitioner's contention does not meet the
parameters laid down by Hon'ble the Supreme Court and various High
Courts to avail the benefit of proviso to Section 45 of the PMLA.
4 (l). That in the medical report dated 06.03.2024 by the Medical
Board constituted by PGIMER, Chandigarh, it has been categorically
observed that the petitioner is not suffering from any life threatening
diseases and his ailments can be managed with medication and regular
follow ups. Moreover, as evident from the medical record of the
petitioner, the petitioner is being taken for medical check up as and
when required. Reliance has been placed on Kewal Krishan Kumar Vs.
Enforcement Directorate : 2023 SCC OnLine Del 1547.
4 (m). That the wife of the petitioner admittedly is undergoing
treatment for cancer, however, the petitioner cannot be granted bail on
the said ground as she is being taken care of by the doctors and her
family members.
Findings of this Court
5. I have heard learned counsel for the parties and perused the
relevant material on record.
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6. The petitioner initially sought the concession of bail on
medical grounds stating that he was a 74 year old man suffering from
various life threatening diseases, necessitating constant medical
attention and monitoring that he purportedly lacked access to, within
the confines of the jail. Learned senior counsel for the petitioner argued
that given the severity of the following "life threatening diseases", the
case of the petitioner qualified for bail under the proviso to Section 45
of the PMLA:-
Sr. Diseases
No.
1. Cervical Compressive Myelopath
2. NAFLD (Non-Alcoholic Fatty Liver Disease)
3. Subclinical Hypothyroidism
4. Hashimoto's Thyroiditis.
5. Senile Gynecomastia
6. Accelerated Hypertension
7. Grade II Prostatomegaly
7. Taking note of the aforesaid submissions made by learned
senior counsel for the petitioner, this Court vide order dated 12.02.2024
requested the PGIMER, Chandigarh to constitute a Medical Board to
evaluate the health condition of the petitioner and send a report
accordingly. In compliance of the order of this Court, the Medical
Board constituted by the PGIMER, Chandigarh sent the following
report. Relevant portion of the report is reproduced hereinbelow:-
"Impression: As per the assessment and the complaints
given by the patient, the medical board is of the opinion
that the patient is suffering from multiple diseases as
Diabetes mellitus with neuropathy, Hypertension, Benign
prostate hyperplasia, hypothyroidism, cervical spondylitis
with spondylotic myelopathy. The mentioned diseases are
not life threatening and needs regular treatment, already
optimized by the panel of doctors and requires follow-up.
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In wake of two episodes of loss of consciousness in the
past one year and complaints of chest pain. Cardiology
opinion was sought and Computed Tomography
Coronary Angiography was advised. Computed
Tomography Coronary Angiography could not be done
due to high calcium score. There is suspicion of
Coronary Artery Disease which can be life threatening.
This requires further evaluation with Invasive Contrast
Angiography for
which the patient did not give his consent."
8. Thus, as per the aforesaid report though the petitioner was
stated to be suffering from multiple ailments, however, none of them
were deemed life threatening by the Medical Board. It had further been
mentioned by the Board that there was suspicion of coronary artery
disease which necessitated further evaluation with invasive contrast
angiography, however, the petitioner had not given his consent for it.
On 22.02.2024 when, this case was taken up for hearing by this Court,
the daughter and nephew of the petitioner appeared in person and stated
that the petitioner had declined to give consent for invasive contrast
angiography due to the absence of his family members; the petitioner
would, however, be willing to undergo the said test if one of his family
members was permitted to remain present with him during the
angiography. Accordingly, respondent No.2-ED was directed vide order
dated 22.02.2024 to get an appointment in the Cardio Department of
PGIMER, Chandigarh and get invasive contrast angiography of the
petitioner done in the presence of one of his family members. In
compliance of the above order, angiography was carried upon the
petitioner. The doctors' opinion affirmed that the petitioner's coronary
arteries showed insignificant blockage and his echo cardiography
displayed normal heart function. Underlying insignificant heart
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condition, diagnosed through angiography, was deemed manageable
with medication and did not require any surgical intervention. The
relevant portion of the report of the Medical Board is reproduced
hereinbelow:-
"........He is known case of diabetes mellitus and
hypertension. Invasive coronary angiography performed
on 4th March 2024 showed insignificant blockage of
coronary arteries (Detailed report and angiography CD
give to the patient), which needs the medical treatment
and does not require any operation like angioplasty or
bypass surgery. His echocardiography showed normal
heart functions. He has been discharged on 5th March
2024 in satisfactory condition. The underlying,
insignificant heart disease as diagnosed by angiography
is not life threatening at present and to be managed with
medicines which has been prescribed to him."
9. Given the above findings in the report submitted by the
PGIMER, Chandigarh, it is evident that the petitioner's health condition
does not post any life threatening risk and can be managed with
medication and regular check ups. Moreover, the petitioner is receiving
adequate medical care at GMCH, Sector 32, Chandigarh, a premier
Government Medical Institute, as and when required. In the
circumstances, the case of the petitioner would not fall under the
proviso to Section 45 of the PMLA.
10. The first ground raised by the learned senior counsel for
the petitioner is that his arrest violates Section 19 of the PMLA.
However, upon meticulous examination, this Court does not find any
merit in the said assertion. An analysis of the Grounds of Arrest
(Annexure P-10) elucidates that the Arresting Officer explicitly
delineated that, based on the investigation, the directors and promoters
of the accused company, with the active aid and assistance of the
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petitioner, perpetrated a bank fraud through forged documents. It is
documented that the petitioner aided the directors and promoters of the
accused company, in altering the loan funds from liabilities to assets via
circuitous transactions involving Parabolic Group of Companies.
Additionally, the petitioner deliberately omitted to disclose the
funneling of bank funds through shell companies in his audit report.
Furthermore, the investigation allegedly uncovered that the petitioner
and his accountancy company namely, 'S.K. Bansal and Company',
knowingly facilitated the generation and acquisition of proceeds of
crime by co-accused Pranav Gupta and Vineet Gupta. The petitioner
issued false CA certificates to the accused company, facilitating loans
from consortium of banks and wilfully omitted to report the diversion,
layering, and siphoning off of proceeds of crime through Parabolic
Group of Companies and various shell entities in his audit report. Thus,
it is evident that the Arresting Officer comprehensively outlined the
involvement of the petitioner in the crime in question, elucidating the
modus operandi, to apprise him of the accusations against him.
11. Further, it has been explicitly stated that, based on the
material in possession, the Arresting Officer had valid reasons to
believe that the petitioner is guilty of money laundering under Sections
3 and 4 of the PMLA, as the petitioner was directly involved in criminal
activities and process related to money laundering, including
generation, acquisition, possession, and proceeds of crime. Substantial
documentary evidence was collected during investigation and searches
conducted under Section 17 of the PMLA. Therefore, the Grounds of
Arrest (Annexure P-10) provided a comprehensive overview of the case
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and the accusations against the petitioner, and the belief regarding the
petitioner's guilt was founded on the material collected during the
course of investigation. The law does not mandate the Arresting Officer
to enumerate such material in possession in the Grounds of Arrest or
furnish a copy thereof to the arrestee. The necessity for the petitioner's
arrest is further evident from the Grounds of Arrest, wherein it was
categorically stated that his custody was required to trace the money
trail and locate the entire proceeds of crime concealed through various
channels, within the petitioner's exclusive knowledge. Moreover, there
was a foreseeable risk of proceeds of crime and evidence being
tampered with or transferred. Additionally, it is a matter of record that
the petitioner neither appeared nor participated in the investigation
despite issuance of summons on 20.07.2022, thereby justifying his
arrest to effectively conclude the investigation. Furthermore, it is not
even the case of the petitioner that the Grounds of Arrest were not
supplied to him much less within reasonable time. Hence, under these
circumstances, neither the arrest of the petitioner can be deemed a
violation of Section 19 of the PMLA nor can the remand order be
regarded as illegal or mechanical in nature.
12. It is documented and conceded by the learned counsel for
respondent No.1-CBI that the petitioner is not implicated in the FIR
related to the scheduled offence, however, it would not preclude
respondent No.2-ED from initiating proceedings under the PMLA. It is
well settled law that a person accused of an offence under Section 3 of
the PMLA need not necessarily be accused of the scheduled offence.
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13. It would be relevant to reproduce the relevant portion of
the prosecution complaint dated 26.12.2023 wherein role of the
petitioner has been detailed:-
"13.4 Role of Surjeet Kumar Bansal (Accused No.4) in
generation, layering, placement, integration and
utilization of Proceeds of Crime:
i. During the course of investigation, it has been
revealed that accused Surjeet Kumar Bansal was actively
involved in assisting the Promoter Directors of PDL in the
commission of offence of money laundering by way of
a) That, he audited the books of accounts of PDL and
its Group Companies in the capacity of Independent
Auditor without disclosing the fact that S.K Bansal Family
Trust was holding shares of one of the Group Company of
PDL namely M/s. Parabolic Infrastructure Private
Limited, as per Annual Return AGM dated 28.09.2006.
b) That he had issued CA Certificates without
physically verifying the records and books of account and
stock of the M/s. PDL.
c) That he was aware that Promoter Directors of the
Company were indulging in malpractices of siphoning off
the loan amounts but the same were not pointed out in the
audit reports because he was told not to mention the same
in the audit reports by Promoter Directors of M/s. PDL.
d) As a statutory auditor of PDL, it was binding upon
S.K. Bansal to point out the major discrepancies/ apparent
dubious transactions in his report, however, he turned
blind eye to the same and continued to issue certificates on
the basis of which the lender Banks continued to issue
fresh loans or enhance existing limits granted to PDL.
Some of the major questionable transactions which were
not commented upon/ pointed out by S.K. Bansal in the
Audit Reports are as below: -
● PDL had showed debt of Rs. 63 Crores towards
CMSL. However, the debt was written off in the year
2013-14 without offering any reasonable rationale.
It is also pertinent to note here that PDL had filed a
civil suit against CMSL for the recovery of Rs. 2.65
Crores only and agreed to settle for payment of Rs.
2.40 Crores and there was no note from Statutory
auditor as to when Rs. 63 Crores were receivables
from CMSL and as to why suit for only Rs. 2.65
Crore was filed.
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● It was within the knowledge of Statutory Auditor
that PNG was non-functional and did not had the
capacity to offer corporate guarantee to PDL.
However, the auditor in his audit report for FY
2019-20 reported that PNG had stood as Corporate
Guarantor for PDL to the extent of Rs. 943.75
Crores.
● Devaluation of Stock of Work In Progress (WIP) of
PDL-
While the Stock of WIP was reported at Rs. 302.21
Crores on 31.03.2015, it dramatically decreased to
Rs. 32.22 Crores as on 31.03.16. The absence of
quantitative details in the balance sheet and the
unavailability of stock statements after 31.01.2015
above, which is reproduced below:-
S. Particulars Amt (Rs in
No. Crores)
1. Opening Stock as on 31.03.15 315.38
i. Stock of WIP 302.21
ii. Raw Material 11.79
iii. Store and Spares 0.438
iv. Inventory in Finished Goods 0.932
2. Amt. of Purchases of Raw material during 53.17
2015-16
3. Amt. of Sales during the year (83.10)
4. Closing Stock Supposed to be left as on 285.45
31.03.2016
5. Closing Stock shown by the company as on 40.10
31.03.16
vii. Stock of WIP 32.22
viii. Raw Material 7.26
ix. Inventory in Finished Goods 0.61
● That, it is also noteworthy to mention that during
2015-16, the sales of the Company were very less, as
such, it cannot be claimed by the Company that
stock had been sold, rather it was majorly devalued
in 2015-16 by more than 85%.
● That, the above conduct of the Directors of the
Company in connivance with Statutory Auditor
(Accused S.K Bansal) also strengthens the
possibility that actual purchase was not made only
loan amount was siphoned through bogus
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expenditures. Over a period of time, over-valuation
of Stock was reflected in the books of the Company
and in the Financial Year 2015-16, it was sharply
reduced by 85%.
● That, the Statutory Auditor by not disclosing the
correct facts and aspects in the books of accounts
enabled the Company to enhance its credit facilities
with the sole intention to divert the same thereby
causing wrongful loss to consortium banks and
others.
ii. That, the company PDL has applied for Corporate
Debt Restructuring under the CDR system which was
approved vide XCR NO. 1192/2012-13 letter dated
23.03.2013 and Master Restructuring Agreement has been
executed dated 28.8.2013. One of the terms of the
Restructuring package as sanctioned to the company
under CDR, required the promotors to infuse funds in the
company in the form of instruments (equity and
convertible debt). In order to enable the company to
comply the aforesaid terms of the restructuring package
and issue /allot the shares to promotors, the authorized
capital of the company is required to be increased.
In this regard, the board of Directors in the meeting
held on 10.08.2013 has approved the enhancement of
Authorized Share Capital of the company from 62 Crores
to 72 Crores divided into 7,20,000/- equity shares of Rs. 10
each.
On perusal of the Balance Sheet of F.Y. 2012-13,
2013-14 & 2014-15 of PDL, it has been found that there is
no increase in the Share capital of the Company which is
as follows:-
● Share capital in the F.Y. 2012-13 was Rs. 61.89
Crores
● Share capital in the F.Y 2013-14 was Rs. 61.89
Crore.
● Share capital in the F.Y 2014-15 was Rs. 61.89
Crore.
The Statutory Auditor of the company has never
informed in the forthcoming Financial Years that the
company has not induced capital through share
application money.
iii. On the behest of State Bank of India, Stock Audit of
PDL was conducted by Independent Auditor M/s. Parveen
Singia & Associates, Chartered Accountants wherein the
said Auditor has pointed out certain observations/
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discrepancies and on the basis of which, the State Bank of
India has reduced the Drawing power of Cash Credit Loan
by Rs. 50 Crores. The accused (S.K Bansal) Statutory
Auditor of PDL had never pointed out/ reported any such
discrepancy in the Audit Reports of PDL for any Financial
Year.
iv. During the course of his statement dated
28.10.2023, recorded under the provisions of PMLA, 2002,
S.K. Bansal, had stated that he was getting remuneration
of Rs. 3-4 lakhs per annum and that beside this he had
received audit fee from the group companies of PDL for
conducting the audits of the said companies. In this
regard, it is pertinent to mention here that being Statutory
Auditor of the company, S.K. Bansal should have received
audit fee from the company, however, he had also received
annual remuneration as well, which contradicts the claim
of being independent from the company, which is a
prerequisite for being the Statutory Auditor of a company.
In essence, it has resulted in him betraying the very
essence of independence mandated for auditing financial
accounts. This blatant conflict of interest raises serious
questions about the credibility of the audit process. It is
quite apparent that S.K. Bansal, even though was Statutory
Auditor of the company, was entangled in a web of
financial benefits emanating from the very entity supposed
to be under impartial examination. In view of the same, it
is quite apparent that S. K. Bansal had acted at the whims
and fancies of the Promoter Directors of M/s PDL,
assisting them in ultimately defrauding Banks to the tune
of Hundreds of Crores.
v. Accused Surjeet Kumar Bansal, thus, involved in
money laundering as defined under Section 3 r/w 4 of the
PMLA, 2002. Thus, he actively involved himself in the
offence of money laundering and based on the
investigation conducted he was arrested on 28.10.2023
under the provisions of Section 19 of the PMLA, 2002 for
his role in money laundering in the present case. He,
therefore, was an active participant in assisting Promoter
Directors of PDL in generation of proceeds of crime and
actually involved in the laundering of the said proceeds of
crime as defined under Section 3 of PMLA, 2002.
vi. Surjeet Kumar Bansal has knowingly assisted and
was actually involved, in collusion with other accused
persons, in generation of Proceeds of Crime [as a result of
criminal activity related to the Scheduled Offence as
defined in section 2(1)(u) of PMLA) in the form of
movable/ immovable properties [as defined in Section
2(1)(v) of PMLA). Thus, it is evident that Surjeet Kumar
Bansal had indulged in generation, layering, acquisition,
concealment and utilization of proceeds of crime by his
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active involvement in the criminal activities related to the
scheduled offences defined u/s 2(1)(x) & 2(1)(y) of PMLA
and; thus, committed the offence of money laundering as
defined u/s 3 of PMLA which is punishable u/s 4 of
PMLA."
14. Upon careful examination of the above allegations against
the petitioner, it is evident at first glance that he was prima facie
actively involved in the crime in question. As the statutory director of
the accused company, the petitioner and his firm failed to red flag the
huge diversion and siphoning off, of funds. Instead he purportedly
aided the accused company in obtaining loans by issuing certificates
that did not accurately depict its financial status. Allegedly, these
certificates and audit reports misrepresented the true financial position
and were intentionally issued by the petitioner to facilitate loan
procurement by the accused company. It is the specific case of
respondent No.2-ED that without these certificates, the banks would
not have extended loans of such magnitude to the accused company.
The petitioner has admittedly been associated with the accused
company since the year 1996 and has been responsible for auditing its
accounts since then. Consequently, it is hard to believe and digest that
throughout this period, he was merely acting upon false information
provided by the officials of the accused company, and remained
oblivious to any wrongdoing. Furthermore, the FIR registered under the
scheduled offence also makes note of the following:-
S.No. Diversion and Siphoning off Remarks
1. XXX XXX
2. Diversion observed from tax Payments made to
audit report 31.03.2016 related parties
3. XXX XXX
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4. XXX XXX
5. XXX XXX
Indisputably, the said tax audit report has been prepared by
the petitioner as per the FIR in question. Upon a perusal of the tax audit
report prepared by the petitioner, which admittedly reveals funds
diversion, this Court finds it perplexing that a seasoned professional
with over 40 years of experience, failed to detect discrepancies in the
accounts of the accused company and raise concerns at any time.
Whether the petitioner was aware of the fund diversions, layering, or
discrepancies in the accounts remains a matter of trial, requiring
presentation of evidence in the said regard. The petitioner would get
ample opportunity during trial to demonstrate his innocence by proving
that he was unaware of all the alleged irregularities. The petitioner has
not satisfied the conditions outlined in Section 45 of the PMLA for
being eligible for the concession of bail. The bail granted to co-accused
Pranav Gupta and Vineet Gupta on technical grounds rather than on
merits, holds no relevance to the present petition filed by the petitioner
under Section 439 of the Cr.P.C.
15. Learned senior counsel for the petitioner has also asserted
that since the proceedings in the FIR pertaining to the scheduled
offence have been stayed by a Division Bench of this Court, the
proceedings under PMLA would also have to be kept in abeyance to
await the final outcome of the decision of the Division Bench of this
Court. However, this plea is bereft of any merit and deserves to be
rejected. While the scheduled offence is pivotal to the accusations of
money laundering as has been held by Hon'ble the Supreme Court in
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Vijay Madanlal Choudhary's case (supra), the proceedings under
PMLA are distinct and independent. Therefore, a stay on criminal
proceedings in the FIR initiated by respondent No.1-CBI would not
extend to the proceedings for offences under PMLA, and they would
have to await the outcome of the writ petition independently.
16. Furthermore, in the case of Sikandar Singh's case (supra)
a Division Bench of this Court while relying upon Dr. Manik
Bhattacharya's case (supra) concluded that Enforcement Directorate is
not bound by the protective orders passed in FIRs of scheduled
offences. Hence, in the light of the ratio of law laid down by Hon'ble
Supreme the Court and a Division bench of this Court, the case laws
relied upon by the learned senior counsel for the petitioner on this issue
would not advance his cause, and this Court respectfully would
disagree with those judgments.
17. A prayer has also been made by learned senior counsel for
the petitioner for taking a compassionate view by extending the
concession of regular bail to the petitioner since his wife is suffering
from carcinoma of breast and is scheduled for mastectomy on
28.03.2024 in Bombay, therefore, the presence of the petitioner would
be required for her care. Learned senior counsel for the petitioner has,
however, fairly admitted that there are other family members who are
taking care of his wife, negating the necessity for his release at this
stage. This Court, therefore, does not deem it fit to extend the
concession of bail to the petitioner.
18. Before parting, it needs to be emphasized that offences
under PMLA constitute a category of their own and must be viewed
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with utmost seriousness as such offences not only pose a serious danger
to the economic health of the nation but also impede the progress of the
country. Such offences are committed with intense planning and
calculation, and camouflaged surreptitiously, necessitating the
investigating agency to go through the material collected with a fine
comb so as to uncover the such scams which, if left unaddressed, would
without doubt be fatal to economic health of the country. Thus, the
rigors of Section 45 of the PMLA which lay down an exceptionally
high yardstick for grant of bail under PMLA, must not be given a go-by.
19. Given the gravity of the allegations against the petitioner
involving a huge financial fraud amounting to Rs.1626.7 crores, no
ground has been made out to release him on bail at this stage.
Accordingly, the instant petition is hereby dismissed.
20. Pending applications, if any, stand disposed of.
21. It is clarified that anything observed hereinabove shall not
be construed to be an expression of opinion on the merits of the case.
04.04.2024 (MANJARI NEHRU KAUL)
Vinay JUDGE
Whether speaking/reasoned : Yes/No
Whether reportable : Yes/No
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