Case Law Details
Nittin Johari Vs SFIO (Delhi High Court)
Conclusion: Since offences pertaining to the non-disclosure of the documents which were required under Indian Accounting Standards (IndAS) alleged against assessee- chartered accountant were serious in nature which involved fraud to the tune of several crores and the offence being an economic one which affected the economy of the nation, assessee was not entitled for bail under Section 439 Cr.P.C and Section 212(6) of the Companies Act, 2013.
Held: Assessee was a Chartered Accountant (CA) cum Chief Financial Officer (CFO) and the whole time director of the company i.e. Bhushan Steel. Under the garb of first time adoption of IndAs (Indian Accounting Standards), the amount of Rs. 3,727.45 Cr. and Rs. 2,420.69 Cr. for the F.Y. 2014-15 and 2015-16 respectively was shown under the head “Bill of exchange-payable,” which reflected the actual position of the fraudulently availed LCs. However, it was never reflected in the balance sheet for F.Y. 2014-15 and 2015-16. During the course of investigation, it was also revealed that the books of accounts of BSL were manipulated, in the figures of „Stock-in-Transit‟ (SIT) and „Trade Receivable‟ and on account of the fraudulently encashed LCs during the period 2013-14 to 2016-17 which was covered up through false increase in valuation of assets by around Rs. 15000/- crore. The revaluation was fraudulently done and based on a false valuation report. The balance sheet of BSL was already manipulated to contain the inflated figures of Rs. 6523 crore of ‘SIT'(Stock-in-Transit), Rs. 1271 crore of trade Receivable and Rs. 2420 crore of bill of Exchange-payable amounting to Rs. 10,214 crore. It was alleged that the figure of Rs. 10,214 crore was written off to cover up the fraud which was continuously perpetrated from 2013-14 to 2016-17 by various individuals including assessee. Investigation had revealed that the assets of BSL were fraudulently revalued to a higher value from Rs. 36,563.17 crore to 51,435.72 crore as on 1st April, 2015 at the time of first adoption. The fair value of assets was fraudulently increased by Rs. 15,568 crore, for the purpose of making various adjustments related to inflated ‘SIT’, Trade Receivables and Bill of Exchange-Payable. Perusal of the above facts, thus, revealed that assessee was actively involved in the fraudulent activities and was instrumental in submission of false and fabricated documents to discount letter of credits, preparation of false books of accounts including balance sheet. On these charges, the Chartered Accountant (CA) was arrested. This court was of the opinion that offences alleged against assessee were serious in nature which involved fraud to the tune of several crores and the offence being an economic one which affected the economy of the nation, assessee was not entitled for bail under Section 439 Cr.P.C. This court was further of the opinion that in view of the allegations appearing on record against assessee there were no reasonable grounds to believe that he was not guilty of the offences alleged against him and he was not likely to commit any offence under the Act while on bail and, therefore, no grounds for bail were made out under Section 212(6) of the Companies Act, 2013.
FULL TEXT OF THE HIGH COURT ORDER /JUDGEMENT
1. This bail application is filed by the petitioner Nittin Johari u/s. 439 CrPC r.w. Section 212(6) of the Companies Act, 2013 in complaint case No. 502/2019 arising out of case No. 5/5/2016/CL-II dated 03.05.2016 and file no. SFIO/INV/BPS/2016/480-494 at Serious Fraud Investigation Office.
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