The Delhi High Court expounded that individuals accused of non-bailable offences have the right to seek bail if the Court determined that the Prosecution had failed to establish a prima facie case.
Hon’ble Mr. Justice Amit Sharma further stated that the Accused could be detained in custody during the trial and such detention was not considered a violation of Article 21 because it was authorised by law.
Brief Facts:
Religare Enterprises Limited (hereinafter referred to as “REL”) and its subsidiary Religare Finvest Limited (hereinafter referred to as “RFL”) were accused of financial fraud by Mr. Manpreet Singh Suri, Authorised Representative of RFL. The allegations included unsecured loans of Rs. 2,397 Crores given by RFL to shell companies related to the promoters, which wilfully defaulted on repayment.
The RBI had expressed concerns about the Corporate Loan Book (hereinafter referred to as “CLB”) portfolio of RFL, but the promoters allegedly never addressed the concerns. The investigation revealed that the CLB loans were granted based on verbal instructions, and RFL did not receive official requests from borrowers. The loans were allegedly misappropriated and never returned. The CLB was primarily created to utilise funds by the promoters, and inter-corporate loans were disbursed to companies controlled by the promoters, routing funds to companies owned by the promoters. The investigation also revealed that RFL had made major investments in its subsidiary companies, and any loss caused to RFL due to the alleged diversion of funds resulted in a direct loss to the shareholders of REL.
Thereafter, after the filing of the chargesheet, an application was filed before the Court seeking regular bail under section 439 of the Code of Criminal Procedure, 1973 (hereinafter referred to as “CrPC”).
Contentions of the Applicant:
It was argued that the main charge sheet and supplementary charge sheets had been filed, and the investigation against the Applicant was completed.
The Trial in the case was expected to be lengthy, with 78 witnesses and 34 accused persons involved, and it had not yet commenced. Hence, it was contended that the prolonged pre-trial detention of the Applicant violated his rights under Article 21 of the Constitution of India.
The applicant stated that despite the ongoing investigation, he had travelled abroad to London and Singapore on multiple occasions. However, he had returned to India to cooperate with the investigation, indicating no likelihood of evading trial. There were no allegations of evidence tampering or witness influencing against the applicant.
Regarding the alleged role of the Applicant in loan disbursements, it was stated that he never served on the Board of RFL. The loss claim suffered by REL's shareholders was deemed unsubstantiated since the promoters owned 50% of the company and the CLB constituted less than 9% of RFL's portfolio.
It was also contended that the offence under Section 420 of the Indian Penal Code, 1860 (hereinafter referred to as “IPC”) was not established in the case. The CLB existed since 2008, but the loan defaults began only in 2016, implying that the necessary element of dishonest intention since inception required for Section 420 was missing. Additionally, no allegations were made regarding misrepresentation or suppression during the loan sanctioning. Regarding Section 409 of the IPC, it was argued that Section 420 and 409 were mutually exclusive and could not coexist in relation to the same transaction.
Contentions of the Respondents:
Concerns about corporate governance that were raised by the RBI was raised and it was asserted that the health of the CLB portfolio was repeatedly questioned. Audit records also raised concerns about the CLB portfolio, indicating the extension of loans to repay previous loans. The report mentioned the initiation of loan disbursals based on oral instructions from certain individuals and the relationship between borrower entities and REL's promoters.
They also highlighted the evergreening of loans to prevent them from being categorised as non-performing assets. RFL did not execute loan agreements but relied on system-generated documents. They drew attention to proceedings before the NCLT, where it was revealed that the loans disbursed to the entities involved in the case were deemed sham. One of the entities, Modland Wears Pvt. Ltd., stated that the money advanced by RFL was for their own purpose, not as financial aid and that RFL provided specific instructions on how to deploy the funds.
Observations of the Court:
It was held that the gravity of the offence, being a socio-economic one with a possible life imprisonment sentence under Section 409 of the IPC, can be a factor against granting bail, but it would not be the only factor to deny bail. It was observed that other co-accused individuals had been granted bail in the case.
The Bench expounded that personal liberty cannot be deprived except through a procedure established by law. Personal liberty is guaranteed by the Constitution, specifically under Article 21. However, Article 21 also recognizes that personal liberty can be curtailed through a lawful procedure. According to the criminal laws of the country, individuals accused of non-bailable offences can be detained in custody during the trial unless they are granted bail in accordance with the law.
It was ruled that such detention is not considered a violation of Article 21 since it is authorised by law. Nevertheless, it was opined that even individuals accused of non-bailable offences have the right to seek bail if the court determines that the prosecution has failed to establish a prima facie case against them.
Considering the completion of the investigation, the voluminous documentary evidence, and the absence of prejudice to the prosecution, the Delhi High Court allowed the bail.
The decision of the Court:
Based on the aforementioned findings, the Delhi High Court allowed the application and granted bail to the Applicant.
Case Title: Malvinder Mohan Singh v State NCT of Delhi
Case No.: Bail Application 2810 of 2021
Coram: Hon’ble Mr. Justice Amit Sharma
Advocates for Applicant: Advs. Mr. Sanjeev Bhandari, ASC, Mr. Kunal Mittal and Mr. Saurabh Tanwar, Advocates
Advocates for Respondent: Advs. Mr. Mohit Mathur, Mr. Sunil Dalal, Senior Advocates, Mr. Sandeep Das, Mr. Lakshya Dheer, Ms. Manisha Saroha, Mr. Nikhil Beniwal Mr. Harshit Mahalwal and Mr. Mahabir Singh, Advocates
Read Judgement @LatestLaws.com:
Picture Source :
