HC grants Bail to CA associated to alleged fraud with respect to public money of Rs. 5,435 Crores

The Delhi High Court on Friday granted bail to Chartered Accountant (CA) Arun Kumar Aggarwal accused by the Serious Fraud Investigation Office (SIFO) in the matter of Bhushan Power and Steel Ltd.

As per the allegations leveled by the SFIO, during investigation, it was revealed that in furtherance of a fraudulent modus operandi, finished goods lying in the plant of BPSL were removed from the plant allegedly without issuing sale invoices and were sold in the open market. The funds generated from the said sale were never given to BPSL and were systematically never reflected in the books of account of BPSL. The alleged illegal movement of the goods worth Rs. 1,023 crores from the plant without raising invoices inter alia caused wrongful loss to BPSL and wrongful enrichment of persons who were controlling the affairs of BPSL.

In the Status Report that as on 31.03.2017, BPSL had outstanding liability to the tune of Rs. 37,000 crores approximately, towards banks and financial institutions which were classified as Non-Performing Assets (NPAs) in the books of said banks and financial institutions. The goods that were illegally removed from the plant, were the security for the said loans availed by BPSL from banks/institutions. Furthermore, the books of accounts were falsified by not accounting for sale of such goods valued at Rs.1,023 crores, while the freight payments of seventy railway receipts were booked under the head Capital Work in Progress(CWIP).

Upon examination of the bank accounts of BPSL and its associated companies, it has been alleged that a huge amount of funds was diverted to various paper companies and through a myriad of companies, it was infused back to associated companies of the former Chief Managing Director (CDM) of BPSL, Sanjay Singal. The investigation revealed siphoning of monies by creating bogus capital advances to paper companies through a web of complex transactions by the controllers of BPSL. In pursuance thereof, the same funds were introduced in the accounts of Adarsh Infotech Pvt. Ltd. (A- 7) that made payment to BPSL on behalf of Shree Ankleshwar Pvt. Ltd. (A- 33) for purchase of immovable property from BPSL situated at Flat No. 109 to 112 at International Trade Tower, Nehru Place, New Delhi. The funds so siphoned were also given to Silver Star Commercial Company Pvt. Ltd. (A- 34) through BSN Enterprise Pvt. Ltd. (A-3), it has been alleged that both the end receiver companies are managed by Sanjay Singal, the former CMD of BPSL.

The report alleges that the promoters and controllers of BPSL induced the banks to sanction loans on the basis of false financial statements and bogus infusion of equity that had been bought by diversion of BPSL money and materials to circumvent the BPSL bank accounts from being classified as NPAs. The SFIO, in its report, alleges fraudulent availing of credit facilities from banks also through the instrument of Inland Letter of Credits (LCs) issued on the basis of false documents from banks and then fraudulently discounting the said LCs, converting them into wrongful gains.

After placing sufficient material on record against the accused, for prosecution under Sections 447/36(c) read with Sections 447/129/448 of the Companies Act, Sections 211 and 628 of the Companies Act, 1956 and Sections 120B/417/420 of the IPC. The SFIO arrested the applicant on 21.03.2022 and produced him before the learned Special Court, Dwarka that granted 2 days judicial remand. Thereafter, the SFIO filed an application seeking 14 days Judicial Custody that was granted by the learned Special Court vide Order dated 24.03.2022. The applicant is in judicial custody since then.

The SFIO, in the complaint case, on the basis of the findings of the investigation report, has leveled the following charges of fraud, citing instances that associate the applicant herein to the alleged fraud with respect to public money to the tune of Rs. 5,435 Crores. The respondent has alleged a total number of twelve charges against the accused in the said complaint case. Charge 1 includes ten instances. Out of the twelve charges, seven charges have been alleged against the applicant, and out of the ten instances under the first charge, three instances have been alleged against him.

Relevant Text HC Order

51. Learned Senior Counsel has submitted that the present applicant joined the investigation on each and every occasion as and when called by the investigating officer and it is further noted that nothing has been brought on record by the respondent to show that the applicant is capable of tampering with the evidence or is a flight risk. It is further noted that the present applicant was granted interim bail during the pendency of the present bail application and he surrendered in time without misusing the liberty granted. In the present case, in view of the discussion made herein before, this Court is of the opinion that from the material brought on record, the requirements of Sections 212(6)(i) and (ii) of the Companies Act, are satisfied.

52. In view of the facts and circumstances of the present case, the application is allowed and the applicant is admitted to bail upon furnishing a personal bond in the sum of Rs. 5,00,000/- alongwith two sureties of like amount to the satisfaction of the learned Trial Court/Link Court, further subject to the following conditions:

i. In case of any change of address, the applicant is directed to inform the same to the learned Trial Court/Investigating Officer, with a prior notice of seven days.

ii. The applicant shall not leave India without the prior permission of the learned Trial Court.

iii. The applicant is directed to give all his mobile numbers to the Investigating Officer and keep them operational at all times.

iv. The applicant shall not, directly or indirectly, tamper with evidence or try to influence the witness in any manner.

v. In case it is established that the applicant tried to tamper with the evidence, the bail granted to the applicant shall stand cancelled forthwith.

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