Appeal
Sixteen Interconnected appeals
2. This batch of sixteen Appeals being interconnected with each other and arising out of the proceedings being CIS No. COMA/5/2019 pending before the Special Judge, Gurugram, are being decided by this common judgment.
Facts
3. In these cases, there is a brazen attempt made on the part of the respondents-accused to stall the criminal proceedings initiated against them, in respect of the serious economic offences allegedly committed by them, by not respecting the summons/warrants issued by the Special Court from time to time and thereby causing obstruction in the administration of justice. A few basic common facts necessary for deciding the present appeals may be stated as under: –
(i) The Appellant i.e. Serious Fraud Investigation Office (SFIO) is a statutory body constituted and established under Section 211 of the Companies Act of 2013. The Ministry of Corporate Affairs (MCA) vide the order dated 20.06.2018 in exercise of its powers conferred under Section 212(1)(c) of the Companies Act, 2013 and Section 43(2) and (3)(c)(i) of Limited Liability PartnershipAct, 2008 directed the SFIO to inquire and investigate into the affairs of 125 Companies of Adarsh Group (hereinafter referred to as “CIUs”). On 25.02.2019, the MCA further ordered to investigate into the affairs of 20 other companies and two persons.
(ii) On 09.05.2019, the SFIO, on completion of the investigation submitted an Investigation report to the MCA recommending prosecution against the respondents for the various offences under the Companies Act (1956 and 2013) and of the IPC. Accordingly, on 18.05.2019, a Criminal Complaint being COMA/5/2019, came to be filed by the SFIO in the Special Court at Gurugram impleading 181 Accused including the respondents in the instant Appeals, under Section 439(2) read with Section 436(1)(a), (d) and (2) read with Section 212 of the Companies Act, 2013, read with Section 621(1) of the Companies Act, 1956, read with Section 50 of the Limited Liability Partnership Act, 2008, read with Section 193 of the Code of Criminal Procedure, seeking taking of cognizance and prosecution of the Accused named therein for the offences committed by them jointly and severally, under the various provisions of the Companies Act and the Indian Penal Code as mentioned therein.
(iii) It has been alleged in the complaint that one Adarsh Credit Cooperative Society Limited (ACCSL) was a Multi-State Credit Cooperative Society, founded by one Mukesh Modi, and was managed and controlled by him and his family and his associates.
(iv) The said society accepted the deposits from its members, who were mostly low to middle income individuals. The ACCSL had 800+ branches, 20 lakhs members, 3.7 lakhs advisors and Rs.9253 crores of outstanding deposits as on 31.05.2018. It is further alleged that the controllers of the Society i.e. Mukesh Modi, Rahul Modi and others got incorporated around 125 companies (Adarsh Group of Companies), and started controlling the said Companies by either becoming themselves as the directors or making their members and associates as the directors of the said Companies. On the completion of the investigation it was found that the funds to the tune of Rs.1700 crores were given by the ACCSL as illegal loans to its own controlled 70 Adarsh Group of Companies (CUIs) and certain other companies belonging to the other groups of persons, contrary to settled the position that a company could not be a member of a multistate credit cooperative society and therefore loans could not have been given to such companies by the ACCSL. It is further alleged that total amount of Rs.4120 crores were the outstanding balance as on 31.03.2018 against such illegal loans given by the ACCSL.
(v) It is also further alleged by the SFIO that the illegal loans obtained from ACCSL by the Companies belonging to Adarsh Group and Ridhi Sidhi Group were on the basis of forged financial/loan documents submitted/signed by the directors of the Companies belonging to the Adarsh Group. The said directors had siphoned off the said funds/loans obtained from the ACCSL in connivance of the other accused. The directors had signed off balance sheets of the companies showing the said funds obtained ACCSL as “loans taken from a financial institution”.
(vi) The Special Court vide the detailed Order dated 03.06.2019 took the cognizance of all the offences alleged against the accused including the respondents, under the Companies Act and under the IPC, and summoned all the accused including the respondents herein by issuing bailable warrants in the sum of Rs.10,000/- with one surety in the like amount with the direction to appear on 30.07.2019.
(vii) There being some clerical/typographical errors found in the order dated 03.06.2019, the Special Court corrected the cognizance order vide the order dated 11.07.2019. Since the respondents-accused allegedly did not allow the said bailable warrants issued by the Special Court to be executed on them, by hiding themselves and not making themselves available at the given residential addresses, in collusion with the process servers, the Special Court had to issue non-bailable warrants against the respondents from time to time by passing detailed orders. In some of the cases, the Special Court also initiated proclamation of offenders proceedings against the accused.
4. The details of the status of each of the respondents and the orders passed by the Special Court issuing bailable/non-bailable warrants/initiating proclamation proceedings against them are tabulated hereunder for the sake of convenience:
“ ……………… “
Legal provisions and positions
Legal provisions: Companies Act and Cr.P.C
10. At this juncture, it would be beneficial to reproduce some of the provisions of the Companies Act as also the Code of Criminal Procedure.
11. Section 212 of the Companies Act, 2013 pertains to the “Investigation into the affairs of Company by Serious Fraud Investigation Office”. The relevant part thereof is reproduced below:
“212. Investigation into affairs of Company by Serious Fraud Investigation Office”
12. Section 447 of the Companies Act, 2013 pertains to the “Punishment for fraud” which reads as under: –
“ …………….. “
13. Section 82 of Cr.P.C., 1973 pertains to the “Proclamation for person absconding”, relevant part thereof reads as under: –
“82. Proclamation for person absconding. — (1) If any Court has reason to believe (whether after taking evidence or not) that any person against whom a warrant has been issued by it has absconded or is concealing himself so that such warrant cannot be executed, such Court may publish a written proclamation requiring him to appear at a specified place and at a specified time not less than thirty days from the date of publishing such proclamation. (2) to (5)…………………………………”
14. Section 204 of Cr.P.C., 1973 pertains to the “Issue of process”, relevant part thereof reads as under: –
“204. Issue of process”
15. Section 438 of Cr.P.C., 1973 pertains to the “Direction for grant of bail to person apprehending arrest”, relevant part thereof reads as under: –
“ …………… “
Legal position
16. Now, as explicitly clear from the bare reading of Section 204 of the Code, when the Court taking cognizance of an offence, is of the opinion that there is sufficient ground for proceeding with the complaint, and the case appears to be a warrant case, the Court has a discretion either to issue a warrant, or, summons for causing the accused to be brought or to appear at a certain time before the Court (if the Court does not have the jurisdiction, to appear before the Court having jurisdiction). It is well settled proposition of law that in complaint cases, when a warrant or summons issued by the Court for bringing the accused before it, is not executed, and if the Court is satisfied that the person will not voluntarily appear in the Court; or the police authorities are unable to find the person to serve him with a summons; or when it is considered that the person could harm someone if not placed into custody immediately, the concerned Court could issue nonbailable warrant to bring him to the Court.
17. A very pertinent discussion and observations made by a three Judge Bench of this Court in the case of Inder Mohan Goswami and Another vs. State of Uttaranchal and Others in this regard may be reproduced hereinbelow: –
“paras. 49, 52, 53”
18. Now, so far as anticipatory bail is concerned, this Court has consistently emphasized that anticipatory bail should not be granted as a matter of routine, particularly in serious economic offences, involving large scale fraud, public money or complex financial crimes. In P. Chidambaram vs. Directorate of Enforcement, it was observed as under: –
“paras. 69, 71, 72, 77, 78”
19. In Y.S. Jagan Mohan Reddy vs. Central Bureau of Investigation it was observed as under: –
“34. Economic offences constitute a class apart and need to be visited with a different approach in the matter of bail. The economic offences having deep-rooted conspiracies and involving huge loss of public funds need to be viewed seriously and considered as grave offences affecting the economy of the country as a whole and thereby posing serious threat to the financial health of the country. 35. While granting bail, the court has to keep in mind the nature of accusations, the nature of evidence in support thereof, the severity of the punishment which conviction will entail, the character of the accused, circumstances which are peculiar to the accused, reasonable possibility of securing the presence of the accused at the trial, reasonable apprehension of the witnesses being tampered with, the larger interests of the public/State and other similar considerations.”
20. In Nimmagadda Prasad vs. Central Bureau of Investigation it was observed as under: –
“23. Unfortunately, in the last few years, the country has been seeing an alarming rise in white-collar crimes, which has affected the fibre of the country’s economic structure. Incontrovertibly, economic offences have serious repercussions on the development of the country as a whole. In State of Gujarat v. Mohanlal Jitamalji Porwal [(1987) 2 SCC 364: 1987 SCC (Cri) 364] this Court, while considering a request of the prosecution for adducing additional evidence, inter alia, observed as under: (SCC p. 371, para 5)
“5. … The entire community is aggrieved if the economic offenders who ruin the economy of the State are not brought to book. A murder may be committed in the heat of moment upon passions being aroused. An economic offence is committed with cool calculation and deliberate design with an eye on personal profit regardless of the consequence to the community. A disregard for the interest of the community can be manifested only at the cost of forfeiting the trust and faith of the community in the system to administer justice in an even-handed manner without fear of criticism from the quarters which view whitecollar crimes with a permissive eye unmindful of the damage done to the national economy and national interest.””
21. Recently in Srikant Upadhyay and Others vs. State of Bihar and Another, a very pertinent observations have been made with regard to the powers of the Court to grant anticipatory bail under Section 438 of CrPC. It has been observed that –
“paras. 9, 10, 25”
22. In Prem Shankar Prasad vs. State of Bihar and Another, this Court, disapproving the Order passed by the High Court granting anticipatory bail to the accused though the proceedings under Section 82/83 CrPC were initiated, observed as under: –
“paras. 10, 11”
Analysis & Conclusion
23. In view of the above settled legal position, it is no more res integra that economic offences constitute a class apart, as they have deep rooted conspiracies involving huge loss of public funds, and therefore such offences need to be viewed seriously. They are considered as grave and serious offences affecting the economy of the country as a whole and thereby posing serious threats to the financial health of the country. The law aids only the abiding and certainly not its resistants. When after the investigation, a chargesheet is submitted in the court, or in a complaint case, summons or warrant is issued to the accused, he is bound to submit himself to the authority of law. If he is creating hindrances in the execution of warrants or is concealing himself and does not submit to the authority of law, he must not be granted the privilege of anticipatory bail, particularly when the Court taking cognizance has found him prima facie involved in serious economic offences or heinous offences. In such cases when the court has reason to believe that the person against whom the warrant has been issued has absconded or is concealing himself so that warrant could not be executed, the concerned court would be perfectly justified in initiating the proclamation proceedings against him under Section 82 Cr.P.C. The High Courts should also consider the factum of issuance of non-bailable warrants and initiation of proclamation proceedings seriously and not casually, while considering the anticipatory bail application of such accused.
24. In the instant case, as stated earlier, the Ministry of Corporate Affairs had directed the Appellant – SFIO to investigate into the affairs of 125 companies and on the completion of the investigation, the SFIO had lodged the private complaint before the Special Court against the accused including the respondents, alleging various serious offences under the Companies Act including Section 447 thereof and the offences under the IPC. It is pertinent to note that as per sub-section (6) of Section 212 the offence covered under Section 447 of the Companies Act has been made cognizable and the person accused of the said offence is not entitled to be released on bail or on his bond, unless twin conditions mentioned therein are satisfied. The twin conditions are: – (i) that a Public Prosecutor should be given an opportunity to oppose the application for such release; and (ii) where the Public Prosecutor opposes the application, the Court is satisfied that there are reasonable grounds for believing that he is not guilty of such offence and that he is not likely to commit any offence while on bail. These twin conditions are mandatory in nature. A three Judge Bench in case of Vijay Madanlal Choudhary and Others vs. Union of India and Others, while examining the validity of similar conditions contained in Section 45 of the PMLA Act, had held that the restrictive conditions of bail are mandatory in nature. They are applicable even in the anticipatory bail proceedings.
25. In a recent case in Union of India through Assistant Director vs. Kanhaiya Prasad, it has been observed by this Court that cryptic orders granting bail without adverting to the facts or the consideration of such restrictive conditions with regard to the bail are perverse and liable to be set aside.
26. Coming back to the facts of the present case, though the Special Court had taken cognizance of the alleged offences under the Companies Act including under Section 447 and other offences under the IPC, and even though the non-bailable warrants were issued from time to time against the Respondents, and even though the proclamation proceedings were initiated against them, the High Court has passed the impugned orders. The said Orders have been passed in utter disregard of the mandatory conditions contained in Section 212(6) of the Companies Act, and also ignoring the conduct of the respondents accused. Such orders being in the teeth of the legal position settled by this Court, as also in the teeth of the Section 212(6) of Companies Act, would fall into the category of perverse orders and therefore untenable at law.
27. In none of the impugned orders, the High Court has bothered to look into the proceedings conducted, and the detailed orders passed by the Special Court for securing the presence of the Respondents – Accused. It cannot be gainsaid that the judicial time of every court, even of Magistrate’s Court is as precious and valuable as that of the High Courts and the Supreme Court. The accused are duty bound to cooperate the trial courts in proceeding further with the cases and bound to remain present in the Court as and when required by the Court. Not allowing the Courts to proceed further with the cases by avoiding execution of summons or warrants, disobeying the orders of the Court, and trying to delay the proceedings by hook or crook, would certainly amount to interfering with and causing obstruction in the administration of justice. As held in Srikant Upadhay’s case (supra), when warrant of arrest is issued or proclamation proceedings are initiated, the accused would not be entitled to invoke, except in exceptional cases, the extraordinary power of the court to grant anticipatory bail. Granting anticipatory bail is certainly not the rule. The respondentsaccused, who have continuously avoided to follow the due process of law, by avoiding attendance in the Court, by concealing themselves and thereby attempting to derail the proceedings, would not be entitled to the anticipatory bail. If the Rule of Law is to prevail in the society, every person would have to abide by the law, respect the law and follow the due process of law.
28. A faint attempt was made by the learned counsels for the Respondents to rely upon the decision in case of Tarsem Lal vs. Directorate of Enforcement Jalandhar Zonal Office, to submit that if the respondents were not arrested by the SFIO during the course of investigation till the filing of the complaint, the Special Court while taking cognizance of the alleged offences should have issued a summons only to the respondents-accused and not a warrant. The said submission is bereft of merits. As discussed earlier, as per Section 204, Cr.P.C. in a complaint case, which appears to be a warrant case, the Court taking cognizance of the offence, has the discretion to issue warrant or summons as it thinks fit, for causing the accused to be brought or to appear before it. As held by three Judge Bench of this Court in case of Inder Mohan Goswami and Another (supra), the Court is empowered to issue even a nonbailable warrant to bring a person to the Court, when it is reasonable for the Court to believe that the person will not voluntarily appear in the Court or the police authorities are unable to find the person to serve him with a summons. There cannot be a strait jacket formula, as sought to be submitted by the learned advocates for the Respondents that the Court must first issue a summons even in case of a warrant case, irrespective of the gravity or seriousness of the offence. As well settled by now, whether the attendance of the accused can be best secured by issuing a bailable warrant or non-bailable warrant, would be a matter, which entirely rests at the discretion of the concerned Court [State of U.P. vs. Poosu (1976) 3 SCC 1 (Para-49)] Although the discretion should be exercised judiciously, diverse considerations such as the nature and seriousness of the offence, the circumstances peculiar to the accused, possibility of his concealing or absconding, larger interest of public and state etc. also must be seriously considered by the court.
29. In the instant case, the Special Court considering the seriousness of the alleged offences had initially issued bailable warrants, however, the Respondents kept on avoiding the execution of such warrants and did not appear before the Special Court though fully aware about the pendency of the complaint proceedings against them. The Special Court therefore had to pass detailed orders from time to time for the issuance of non-bailable warrants, and thereafter had also initiated the Proclamation proceedings under Section 82 of the Code, for requiring respondents to appear before it. The High Court however without paying any heed to the proceedings conducted by the Special Court against the respondents, and ignoring the well settled legal position, granted anticipatory bail to the Respondents vide the impugned orders. As discussed earlier, the said Orders being perverse and untenable at law, cannot be allowed to be sustained, and deserve to be set aside.
Acts and Sections involved
1. Companies Act, 2013
* Section 212: Investigation into affairs of Company by Serious Fraud Investigation Office
* Section 447: Punishment for fraud
2. Code of Criminal Procedure, 1973 (Cr.P.C.)
* Section 82: Proclamation for person absconding
* Section 204: Issue of process
* Section 438: Direction for grant of bail to person apprehending arrest
Judgments that are relied upon or cited
1. Inder Mohan Goswami and Another vs. State of Uttaranchal and Others (2007) 12 SCC 1
2. State of U.P. v. Poosu (1976) 3 SCC 1
3. P. Chidambaram vs. Directorate of Enforcement (2019) 9 SCC 24
4. Y.S. Jagan Mohan Reddy vs. Central Bureau of Investigation (2013) 7 SCC 439
5. Nimmagadda Prasad vs. Central Bureau of Investigation (2013) 7 SCC 466
6. Directorate of Enforcement v. Ashok Kumar Jain (1998) 2 SCC 105
7. Vijay Madanlal Choudhary and Others vs. Union of India and Others (2023) 12 SCC 1
8. Union of India through Assistant Director vs. Kanhaiya Prasad (2025) SCC Online SC 306
9. Srikant Upadhyay and Others vs. State of Bihar and Another (2024) SCC OnLine SC 282
10. Prem Shankar Prasad vs. State of Bihar and Another (2022) 14 SCC 516
11. Tarsem Lal vs. Directorate of Enforcement Jalandhar Zonal Office (2024) 7 SCC 61
12. HDFC Bank Ltd. v. J.J.Mannan & Anr (no citation provided)
13. State of Gujarat v. Mohanlal Jitamalji Porwal (1987) 2 SCC 364
14. State of M.P. v. Ram Kishna Balothia (1995) 3 SCC 221
Party
Serious Fraud Investigation Office (SFIO) – Appellant vs. Aditya Sarda – Respondent – Crl.Apl No: 1872 / 2025 – 2025 INSC 477 – APRIL 09th, 2025 – Hon’ble Justice Bela M. Trivedi and Hon’ble Justice Prasanna B. Varale.
