The Delhi High Court has directed that Bhushan Steel's erstwhile promoter Neeraj Singal, arrested by the SFIO for allegedly siphoning off Rs 20 billion, be released on interim bail as the agency has not been able to justify the need for his continued incarceration.
A bench of justices S Muralidhar and Vinod Goel said since Singal's challenge to the constitutional validity of the provisions for grant of bail and powers of arrest of SFIO were prima facie not frivolous, he should be able to seek interim relief.
"Therefore, the present petition cannot be viewed as a mere plea for issuance of a writ of habeas corpus and an attempt to bypass the regular route of obtaining regular bail," the court said and added that he be released on interim bail subject to furnishing a personal bond of Rs five lakh and two sureties of Rs two lakh each.
The Serious Fraud Investigation Office (SFIO) orally urged the court to stay operation of its order for a week, but the bench declined it.
The matter took a dramatic turn when later in the day, advocate Pramod Kumar Dubey, appearing for Neeraj Singal, mentioned before the high court that the trial court was not accepting the bail order as the address in the sureties was of Neeraj Singal's mother who had filed the habeas corpus petition on his behalf.
Mr Dubey also told the bench that the Additional Sessions Judge heading the special court under the Companies Act said the sureties cannot be accepted till the addressees are verified, despite submission of valid proofs like Aadhaar.
Meanwhile, Additional Solicitor General Maninder Acharya told the high court that its order has been challenged by SFIO in the Supreme Court which will continue to hear the matter tomorrow.
Taking note of the submissions, the bench said that since the apex court has not stayed its order passed in the morning granting interim relief to Neeraj Singal, the special court "should not waste time".
"Any kind of delay in implementing the order of this court will not be countenanced," the high court said and directed its Registrar General to "immediately communicate" to the special court to implement the bail order "without any delay".
Subsequently, Special Judge (Companies Act) Vivek Kumar Gulia accepted the bail bonds and issued the release warrant after receiving telephonic communication from the high court for immediate implementation of its order.
In its judgement granting relief to Neeraj Singal, arrested on August 8, the court imposed several conditions, including that he will not travel abroad without prior permission of the trial court and that he will not meet any of the witnesses. Neeraj Singal has been directed not to tamper with course of investigation or evidence in the case and cooperate with the probe.
The bench, however, made it clear he shall not be compelled by the SFIO to sign his statement recorded by the agency.
The court also said the interim relief will continue till an investigation report is filed, at which stage if required he can seek regular bail.
In its 35-page judgement, the bench cited several issues for grant of interim relief like grounds of arrest being only explained and not served in writing on Neeraj Singal and the SFIO being selective about whom it arrests in the matter when there were others who were also being investigated.
The court also said that the SFIO has not shown that the petitioner violated any of the bail conditions in a separate CBI case against him nor that he interfered in the probe into Bhushan Steel Ltd (BSL) and Bhushan Steel and Power Ltd (BSPL) or tampered evidence or influenced witnesses.
"Given the repeated assertions that the officer of SFIO is satisfied that the petitioner (Neeraj Singal) has been guilty of an offence, what more investigation needs to be undertaken qua the petitioner is unclear.
"In other words, justification for the continued incarceration of petitioner even beyond 20 days, at this stage, for the purpose of investigation, has not been made out," the bench said.
Neeraj Singal, in his plea moved through advocates Ranjana Roy Gawai, Arshdeep Singh and Hemant Shah, had claimed that since power of arrest was not there with SFIO when it began its investigation in May 2016 into affairs of BSL and BSPL, it could not have arrested him.
Agreeing with the contention, the bench said arrest of the petitioner could have been only by a police officer and that too on registration of an FIR.
The court did not agree with the SFIO's contention that change in its powers was merely procedural, by saying "it cannot be a matter of mere procedure".
"It has a substantive element which raises an arguable question whether such provisions can be retrospectively applied to events that took place prior to those provisions becoming operational," it said.
The bench said that since the SFIO intends to examine him, his apprehension is "well founded" that his statement might be used against him as per section 217(7) of the Companies Act and therefore, his continued judicial custody would put him in a "vulnerable" position.
"This is another reason in his favour for the grant of interim bail," it said.
The bench also observed that while Neeraj Singal was arrested pursuant to the investigation by SFIO into BSL and BSPL and their group companies, "till date there has been no move to prosecute any of the companies".
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