Serious Fraud Investigation Office v. Aditya Sarda

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Companies Act, 2013 – Section 212(6), Section 447 – Criminal Procedure Code, 1973 – Sections 82, 204, 438 – Anticipatory Bail in Economic Offences.

Serious Fraud Investigation Office (SFIO) investigated Adarsh Group for illegal loans worth Rs. 1700 crores, alleging fraud and siphoning of funds. Special Court issued bailable and non-bailable warrants and initiated proclamation proceedings against accused for non-compliance. High Court granted anticipatory bail, ignoring mandatory bail conditions under Section 212(6) and accused’s absconding conduct.

Held

Economic offences, impacting public funds, warrant stringent bail approach. Section 212(6) mandates twin conditions for bail in Section 447 offences, applicable to anticipatory bail. Accused evading warrants and proclamation proceedings not entitled to anticipatory bail, except in exceptional cases. High Court orders set aside as perverse for disregarding legal provisions and Special Court proceedings. Accused directed to surrender; appeals against certain respondents dismissed due to procedural distinctions. [Paras 23-30]

Case Citation: 2025 (4) KLR (SC) 55 : 2025 INSC 477
Court: Supreme Court of India
Judges: Bela M. Trivedi, J.; Prasanna B. Varale, J.
Date of Judgment: April 9, 2025
Case Numbers: Criminal Appeal No. of 2025 (Arising out of SLP (Crl.) Nos. 13956/2023 with connected cases)

Counsel:

  • For Appellant: Mr. Padmesh Mishra, Adv.; Mr. Hari Kishan, Adv.; Mr. Sudarshan Lamba, AOR; Mr. Amrish Kumar, AOR
  • For Respondents: Mr. Siddharth Dave, Sr. Adv.; Mr. Abhishek Singh, AOR; Mr. Amit Bhalla, Adv.; Mr. Aniruddh Joshi, Adv.; Mr. Umang Shankar, AOR; Mr. Aditya Samaddar, AOR; Mr. Sumit Kumar, AOR; Mr. Gautam Awasthi, AOR; Mr. Arjun Sharma, Adv.; Mr. Upendra Pratap Singh, AOR; Mr. Rohan Ganpathy, AOR; Mr. Jawaid Hussain Khan, Adv.; Mr. V. Elanchezhiyan, AOR; Mr. Rajat Mittal, AOR; Ms. Sadapurna Mukherjee, Adv.; Mr. Davesh Bhatia, AOR

Facts

The Serious Fraud Investigation Office (SFIO), a statutory body under the Companies Act, 2013, investigated 125 companies of the Adarsh Group and 20 others, as directed by the Ministry of Corporate Affairs (MCA) in 2018. The investigation revealed that Adarsh Credit Cooperative Society Limited (ACCSL), controlled by Mukesh Modi and associates, illegally accepted deposits from low to middle-income members and provided loans worth Rs. 1700 crores to 70 Adarsh Group companies and others, violating regulations. These loans, totaling Rs. 4120 crores outstanding as of March 31, 2018, were facilitated through forged documents and siphoned off by the accused.

On May 18, 2019, SFIO filed a criminal complaint (COMA/5/2019) against 181 accused, including the respondents, in the Special Court at Gurugram, alleging offenses under the Companies Act, 1956 and 2013, the Limited Liability Partnership Act, 2008, and the Indian Penal Code (IPC). The Special Court took cognizance on June 3, 2019, issuing bailable warrants, later escalating to non-bailable warrants and proclamation proceedings under Section 82 of the Cr.P.C. due to the accused’s non-compliance. The respondents sought anticipatory bail, which was denied by the Special Court but granted by the High Court of Punjab & Haryana in March-April 2023. SFIO appealed these High Court orders to the Supreme Court.

Issues

  1. Whether the High Court erred in granting anticipatory bail to the respondents, ignoring the mandatory conditions under Section 212(6) of the Companies Act, 2013, and the respondents’ conduct in avoiding court processes.
  2. Whether the issuance of non-bailable warrants and proclamation proceedings by the Special Court justified denying anticipatory bail in cases involving serious economic offenses.
  3. Whether the appeals against respondents Mahesh Dutt Sharma, Akshat Singh, and Naveen Kumar should be entertained, given the distinct procedural history in their cases.

Holding

The Supreme Court allowed the appeals against most respondents, setting aside the High Court’s orders dated March 29, 2023, and April 20, 2023, granting anticipatory bail, deeming them perverse and contrary to Section 212(6) of the Companies Act, 2013, and established legal principles. The respondents were directed to surrender before the Special Court within one week, with their bail applications to be decided per law. The appeals against Mahesh Dutt Sharma, Akshat Singh, and Naveen Kumar were dismissed due to procedural distinctions.

Reasoning

  1. Nature of Economic Offenses: The Court emphasized that economic offenses, such as those under Section 447 of the Companies Act, 2013, involve deep-rooted conspiracies and significant public fund losses, necessitating a stringent approach to bail. These offenses threaten the country’s financial health, distinguishing them from other crimes.
  2. Mandatory Bail Conditions: Section 212(6) of the Companies Act, 2013, mandates that offenses under Section 447 are cognizable, and bail is not to be granted unless the Public Prosecutor is heard and the court is satisfied of the accused’s innocence and unlikelihood of reoffending. The High Court failed to consider these twin conditions, rendering its orders perverse.
  3. Respondents’ Conduct: The respondents deliberately avoided court summons, bailable and non-bailable warrants, and proclamation proceedings under Section 82 Cr.P.C., indicating an intent to obstruct justice. Their awareness of the proceedings, evidenced by anticipatory bail applications, negated claims of ignorance.
  4. Judicial Discretion and Precedents: Citing cases like P. Chidambaram v. Directorate of Enforcement and Y.S. Jagan Mohan Reddy v. CBI, the Court reiterated that anticipatory bail is an extraordinary remedy, not a routine entitlement, especially in economic offenses. The High Court’s casual disregard of the Special Court’s detailed orders and proclamation proceedings was unjustified.
  5. Discretionary Issuance of Warrants: Under Section 204 Cr.P.C., courts have discretion to issue warrants or summons in warrant cases, considering the offense’s gravity and the accused’s conduct. The Special Court’s escalation to non-bailable warrants was justified given the respondents’ non-compliance and the serious nature of the offenses.
  6. Dismissed Appeals: For Mahesh Dutt Sharma, no non-bailable warrants or proclamation proceedings were initiated, weakening SFIO’s case. For Akshat Singh and Naveen Kumar, the Special Court had granted anticipatory bail, and the High Court upheld it, distinguishing their cases from others.

Disposition

  • Appeals Allowed: SLP (Crl.) Nos. 13956/2023, 14033/2023, 15318/2023, 15322/2023, 13960/2023, 15333/2023, 14128/2023, 13965/2023, 13975/2023, 13983/2023, 13976/2023, 13971/2023, 15311/2023, 13978/2023. High Court orders set aside; respondents to surrender within one week.
  • Appeals Dismissed: SLP (Crl.) Nos. 13973-13974/2023 (Akshat Singh, Naveen Kumar), 15326/2023 (Mahesh Dutt Sharma).
  • No opinion expressed on the case’s merits, leaving bail applications to the Special Court’s discretion.

Key Legal Principles

  • Economic offenses require a stringent bail approach due to their impact on public funds and national economy.
  • Section 212(6) of the Companies Act, 2013, imposes mandatory bail conditions for Section 447 offenses, applicable to anticipatory bail.
  • Courts may issue non-bailable warrants when accused evade summons or bailable warrants, especially in serious cases.
  • Anticipatory bail is an extraordinary remedy, not a right, and is inappropriate when accused abscond or obstruct justice.
  • High Courts must seriously consider non-bailable warrants and proclamation proceedings when evaluating anticipatory bail applications.
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