Ashish Mittal Vs Serious Fraud Investigation Office (Delhi High Court)
The crux of the offence alleged against the accused persons is therefore, that by round-tripping funds, ESL and some of the other 69 accused (including companies and individuals), have committed fraud as contemplated under section 447 of the 2013 Act, apart from other offences under the 1956 Act and the IPC.
After a detailed investigation in the matter, the SFIO has filed a prosecution complaint under section 439(2)/436/212 of the 2013 Act, which is the equivalent of a chargesheet, arraigning 70 persons as accused. Of the accused, 15 are corporate entities and 55 are various persons alleged to have been associated with ESL and other subsidiary companies in various ways.
High Court held that The twin-conditions contained in section 212(6) of Companies Act 2013 Act do not imply that as soon as section 212(6) is triggered, bail must reflexively, immediately or automatically be rejected. Section 212(6) however raises the threshold of satisfaction required of the court while considering the grant or denial of bail. In addition to the usual and ordinary conditions under section 439 Cr.P.C., the court is also required to be satisfied that there are reasonable grounds for believing that the accused is not guilty, and that the accused is not likely to commit any offence while on bail.
At the threshold therefore, it must be seen if there are any allegations against the accused under the relevant section section 447 of the 2013 Act, since otherwise section 212(6) will not come into play at all.
Section 212(6) contemplates that before a court decides to grant bail to an accused, the public prosecutor must be given an opportunity to oppose the bail application.
Giving to the public prosecutor the opportunity to oppose bail however, does not mean rejection of bail on opposition simpliciter. The public prosecutor cannot simply say that bail must not be granted, without giving any reasons for the opposition.
The requirement of opportunity to oppose indicates and contemplates:
Firstly, based on an assessment of the need for custody, the public prosecutor may choose to not oppose the grant of bail, in which case the additional twin-conditions under section 212(6) will not apply31 and the court will consider bail on the usual in ordinary conditions under section 439 Cr.P.C.32. To illustrate this point, the public prosecutor may choose not to oppose grant of interim bail, say on the ground of demise of a close family member, medical emergency in the family, social obligations such as marriage of children, etc.; and
Secondly, if the public prosecutor opposes grant of bail, the opposition must be reasoned opposition, for which the prosecutor must first make-out a case for denial of bail by establishing foundational facts as against the accused and giving valid reasons.
A reasoned opposition by the public prosecutor – not by the investigating agency – is a sine-qua-non for the court being satisfied in relation to the additional twin conditions stipulated under section 212(6) of the 2013 Act. Needless to add that the public prosecutor is expected to be fair and reasonable, being first and foremost an officer of the court, who is not expected to act as a mouthpiece of the investigating agency. The necessity for a reasoned opposition is also inherent in the constitutional guarantee in Article 21 of the Constitution, when it prescribes that every act depriving the liberty of an individual must be in accordance with procedure established by law, which procedure must not be arbitrary, unfair or unreasonable. The sanctity of personal liberty cannot be waylaid on mere unreasoned ipse-dixit of the public prosecutor.
Failure of the public prosecutor to establish foundational facts would necessarily lead the court to be satisfied that there are reasonable grounds for believing that the accused is not guilty. Only when the prosecution is able to cross that threshold – of establishing foundational facts – would the onus shift to the accused to explain his position and to satisfy the court as to reasonable grounds for absence of guilt. The requirement for the public prosecutor to establish foundational facts in the first instance, also flows from the fundamental principle of the law of evidence that the onus lies on the propounder of a fact and the cardinal presumption that all individuals are innocent until proven guilty.
Section 212(6) of the 2013 Act is actuated when the individual is accused of committing an offence as mentioned in the said section, section 447 of the 2013 Act. However, what is stated in a complaint or the FIR are only allegations, which may or may not be founded on evidence or material. To borrow the words of the Supreme Court in Noor Aga (supra), superficially a case may have an ugly look and thereby, prima facie, shaking the conscience of any court but it is well settled that suspicion, however high it may be, can under no circumstances, be held to be a substitute for legal evidence. 45 Unlike cases of preventive detention, this is not a jurisdiction of suspicion. Indeed, the more severe the punishment, the greater must be the care taken to see that all safeguards in a statute are scrupulously followed.
