Delhi High Court dismisses FIR against CA due to a lack of supporting Evidence for Criminal Conspiracy and Bribery

The Delhi High Court recently rejected a First Information Report (FIR) filed against a Chartered Accountant (CA) who worked as a financial consultant for Prakash Industries Ltd. (PIL), citing a lack of corroborating evidence to support charges of criminal conspiracy and bribery.

The factual matrix shows that Prakash Industries Ltd., a coal, iron, steel, and energy company, applied for a USD 50 million Foreign Currency Convertible Bond (FCCB) loan under the Reserve Bank of India’s External Commercial Borrowing (ECB) criteria.

The Central Bureau of Investigation (CBI) later filed a FIR under Sections 9 and 13(2) of the Prevention of Corruption Act, 1988, and Section 120B (criminal conspiracy) of the Indian Penal Code, 1860.

The CBI claimed that PIL, through its Financial Consultant Vipul Agarwal and Chairman Ved Prakash Agarwal, conspired with middleman Pawan Bansal to obtain a $20 million loan from Syndicate Bank by paying a bribe of Rs.3.25 crore through illegal channels to its then-Chairman and Managing Director, Sudhir Kumar Jain.

Senior Advocates Vikas Pahwa, Gurpreet Singh, Amir Khan, Shivam Tandon, Namisha Samshi, Shivam Tandon, Kunal Aggarwal, and Ali Kazi, representing Prakash Industries, contended that the allegations were based solely on call data records (CDRs) and intercepted conversations that lacked independent corroboration.

He argued that regular business emails could not be used as evidence of criminal conspiracy, especially when there was no direct evidence linking Agarwal to any illegal payments.

Furthermore, the defence pointed out discrepancies in witness statements, particularly those of Uday Shankar Majumdar. The General Manager at Syndicate Bank. It was claimed that the general manager acknowledged executing the loan under duress but did not expressly accuse Agarwal of any misconduct.

Special Public Prosecutor Ripudaman Bhardwaj, Kushagra Kumar, Abhinav Bhardwaj, and Vishal Baliyan, representing the CBI, reiterated that Agarwal was instrumental in carrying out the conspiracy, regularly coordinating with Bansal to expedite the loan approval, including obtaining assistance from PIL employees to facilitate the loan.

The single bench of Justice Chandra Dhari Singh stated that “Mere telephonic conversations between parties involved in a business proposal cannot be construed as evidence of a criminal act unless accompanied by substantial proof indicating mens rea.”

The court also stated that no financial trail, bank records, or direct proof demonstrated Agarwal’s role in bribing Jain. The Bench reiterated that a criminal conviction required a higher level of proof and that the prosecution failed to demonstrate Agarwal’s direct involvement in the alleged bribery scheme, concluding that the FIR could not be supported and thereby quashing the proceedings against him.