The Delhi High Court, in Komal Chadha v SFIO 2022 SCC OnLine Del 4543, has recently held in a decision involving custody of a woman accused of offences under the Companies Act that the rigor of twin conditions laid down in section 212(6) of the Companies Act, 2013 would not apply to women in light of the proviso to such section.
- The applicant was the director and authorized signatory of a company (Parul Polymers Pvt Ltd) which had defaulted on repayment to banks and as such investigation under the Companies Act was carried out by the Serious Fraud Investigation Office (SFIO).
- SFIO submitted its complaint (equivalent to chargesheet / police report) in February 2021 naming the applicant as an accused. During the course of investigation which was conducted over more than six (6) years, the SFIO did not arrest the applicant.
- The cognizance of the complaint was taken by the trial court in March 2022 and the applicant appeared before such court in compliance with the summons in May 2022, when she was taken into judicial custody by the court.
- In the connected matter, relating to IPC offences, but arising from the same set of allegations the applicant was granted regular bail by the CBI court in September 2022.
Held, while granting regular bail:
- The Court held that the stringent twin conditions for bail under section 212(6) of the Companies Act would not apply to a woman and the legislative intent was clear that in case of an accused being a woman, the benefit of the proviso would have to be extended to her.
- The lower court had committed an error while sending the applicant to judicial custody in May 2022. The Court examined the lower court's order remanding her to judicial custody in which the lower court had observed that merely because the applicant was a woman would not entitle her to bail. The Court observed the error made by the lower court that it confused the decision of whether or not to send the applicant to judicial custody, with the decision of whether or not to grant her bail.
- The Court also found that other factors (e.g., tampering of evidence, influencing witnesses, flight risk etc.) were also satisfied regarding the grant of bail to the applicant.
The conditions laid down in section 212(6) of the Companies Act are actually stringent and make the grant of bail relatively onerous upon the court. However, the intent of the Proviso is also clear that in case of women, or sick of infirm persons etc., such conditions are not to be applied. It is also true that the regular conditions for grant of bail u/s 439 of the Code of Criminal Procedure, 1973 would nonetheless, be applicable. Regardless of the clarity, lower courts specifically more-often-than-not err in simply ignoring the Proviso and quoting twin conditions as a reason for rejecting the bail only on that basis. The earlier decision in the case of Priyanka Modi v SFIO (for women), and the decision of the Delhi High Court in the case of Devki Nandan Garg v ED (for sick or infirm persons) are relevant on this issue.
Another issue that the Court has pointed out is what has today become a core issue specially in the case of economic offences - that accused persons are taken into custody on their first appearance in the court, even when they have not been arrested by the investigating agency. A detailed analysis of this issue and what's happening in the judicial circles to avoid this misapplication of law, could be found here: Remedies available to an accused when chargesheet is filed without arrest
Originally Published 28 December 2022
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