Karunakaran Ramchand vs Economic Offence Wing

,,,,,,

Manoj Kumar Ohri, J",,,,,,

The present application has been filed under Section 438 Cr.P.C. on behalf of the petitioner seeking anticipatory bail in FIR No. 253/2018 registered,,,,,,

under Sections 409/467/468/471/120B IPC at P.S. Economic Offences Wing, Delhi.",,,,,,

It was informed that on the basis of the present FIR, an ECIR bearing No. ECIR/MBZO-1/2/2019 has also been registered by the Directorate of",,,,,,

Enforcement, Mumbai under Sections 44 and 45 of the PMLA Act in which the petitioner along with other accused persons has been named and also",,,,,,

alleged to have indulged in money laundering. The designated Court at Mumbai has also taken cognizance of the complaint. During investigation by the,,,,,,

Enforcement Directorate, the petitioner came to be arrested on 19.06.2019 and since 28.06.2019, the petitioner is under judicial custody in the",,,,,,

aforesaid ECIR.,,,,,,

In the present FIR, the petitioner has not been arrested till date.",,,,,,

Briefly, the facts of the case are that the present FIR came to be registered on 06.12.2018 at the instance of one Ashish Begwani, who being the",,,,,,

Director and authorized representative of ‘Enso Infrastructures Pvt. Ltd.’ (hereinafter referred to as EIPL), made a complaint that in August,",,,,,,

2010, he met Ravi Parthasarthy, Hari Sankaran, K. Ramchand, Mukund Gajanan Sapre and Sanjiv Krishan Rai in Mumbai. In the said meeting, he",,,,,,

was told that the company ‘IL&FS Transportation Networks Ltd.’ (hereinafter referred to as ITNL) being part of the IL&FS Group, was",,,,,,

involved in developing, operating and facilitating surface transportation infrastructure projects. He was told that IL&FS group was a Government",,,,,,

backed entity. He was, in particular, apprised of the Gurgaon Metro Project which was promoted by ITNL through ‘Enso Rail Systems Ltd.’,",,,,,,

later came to be known as ‘IL&FS Rail Ltd.’ (hereinafter referred to as ILRL).,,,,,,

On such representation, the complainant agreed to invest. He was advised by Ravi Parthasarthy, Hari Sankaran and Sanjiv Krishan Rai @ Sanjiv",,,,,,

Rai to invest in ILRL by purchasing shares of EIPL, which was a shareholder in ILRL. Resultantly, the complainant purchased shares of EIPL worth",,,,,,

Rs.90,35,43,780/-. By 10.03.2014, the complainant made further investment and was having shares worth Rs.99,72,93,680/-.",,,,,,

In September, 2014, the complainant met Ravi Parthasarthy, Hari Sankaran, Ramesh C. Bawa, K. Ramchand and Mukund Gajanan Sapre. Again,",,,,,,

from October, 2014 to March, 2015, the complainant met the representatives of ITNL namely, Krishna Ghag and Mukund Gajanan Sapre. In these",,,,,,

meetings, the shares of ITNL were offered to him and in this regard, an agreement was also executed on 23.03.2015. Thus, by March 2015, the",,,,,,

complainant had invested a total of Rs. 170 crores in ILRL by:,,,,,,

i) purchasing shares of EIPL,,,,,,

ii) purchasing fresh shares during fresh allotment done by ILRL and;,,,,,,

iii) purchasing shares sold by ITNL.,,,,,,

But in spite of that, he was not made a Director in ILRL and kept in dark about the affairs of the company.",,,,,,

It was further stated that in May, 2018, the complainant came across certain demand notices and assessment orders issued on 31.12.2016 and",,,,,,

23.03.2017 by the Income Tax Department to ILRL with respect to assessment years 2014-15 and 2015-16 wherein, it was observed that ILRL had",,,,,,

not only issued bogus contract orders to one M/s Silverpoint Infratech Limited but also made payments even though no work was executed by that,,,,,,

company. Similar bogus contracts were awarded to other companies as well and payments were also made.,,,,,,

The aforesaid facts were neither mentioned in the balance sheet nor in the Directors Report for the year ending 31.03.2017. He thus claimed that,,,,,,

ILRL, in collusion with other accused, awarded bogus work orders without first issuing any tenders. The payments released were nothing but",,,,,,

accommodation entries resulting in benefits to the accused persons. A total of 22 accused have been implicated in the FIR.,,,,,,

Mr. Arvind Nigam, learned Senior Counsel for the petitioner while appearing for the petitioner, has made the following submissions: -",,,,,,

A) That the petitioner is a qualified Civil Engineer with Post Graduate Diploma in Planning, Urban and Transportation. The petitioner joined",,,,,,

‘Infrastructure Leasing & Financial Services Limited’ (IL&FS) as an Assistant Vice-President and later, was sent on deputation to ITNL,",,,,,,

where he continued as Managing Director till October, 2018, when he was asked to resign.",,,,,,

B) The complainant’s allegation of being allured to invest and purchase shares of EIPL by the petitioner in specific and by the accused persons in,,,,,,

general, is nothing but a falsehood and an afterthought. The same is evident from the following facts:",,,,,,

i) The petitioner neither met the complainant in August, 2010 nor enticed him in any manner. The complainant has not mentioned the name of the",,,,,,

petitioner for the subsequent meetings.,,,,,,

ii) The complainant had acquired shares of EIPL from the secondary market from June/September, 2010 onwards. The petitioner in fact, had shown",,,,,,

displeasure and condemned the entry of the complainant's company in ILRL vide emails dated 21.11.2011 and 22.11.2011, which were sent by him to",,,,,,

Sanjiv Krishan Rai, who was the Managing Director of ILRL. Reference was also made to the show cause notice dated 15.11.2018 issued by the",,,,,,

Income Tax authorities to contend that the complainant himself is of dubious character.,,,,,,

iii) The complainant had agreed that R.L. Kabra would continue as a Director in ILRL on behalf of EIPL.,,,,,,

C) The allegations of awarding bogus contracts by ILRL to the 10 companies from 2010 onwards involving an amount of approx. Rs. 94 crores, are",,,,,,

unsubstantiated because:,,,,,,

i) The contracts were approved by a ‘Committee of Directors’, which comprised of R.L. Kabra, Mukund Gajanan Sapre and Sanjiv Krishan",,,,,,

Rai. Further, the award of contracts did not have the approval of the Board.",,,,,,

ii) During petitioner’s tenure as the Director of ILRL, only two contracts were awarded by the ‘Committee of Directors’ to M/s",,,,,,

Suryamukhi Projects Pvt. Ltd. and M/s AMR Constructions Pvt. Ltd. So far as the bills of M/s AMR Construction Pvt. Ltd. are concerned, the same",,,,,,

were approved by Sanjiv Krishan Rai and were not approved by the Board of Directors. The payments were not endorsed by the petitioner but by,,,,,,

Sanjiv Krishan Rai and Paritam Kumar.,,,,,,

iii) The payments to the abovesaid two companies were released over a period of time including after petitioner’s resignation. Even otherwise, the",,,,,,

same, at best, may amount to only lack of supervision by the petitioner.",,,,,,

D) The petitioner had no role to play in the award of contracts either to Sanjiv Krishan Rai or to his company M/s. SRKK Advisors Pvt. Ltd. as both,,,,,,

the ‘letters of appointment’ dated 24.03.2015 were signed by Mukund G. Sapre and not by the present petitioner.,,,,,,

E) There are no allegations that the petitioner was the beneficiary, in any manner. In this regard, reference was made to the Status Report as well as",,,,,,

the proceedings instituted by the complainant company before the NCLT, Chandigarh, where the petitioner has not even been impleaded. Even though",,,,,,

the said proceedings were instituted after the present complaint was filed on 06.08.2018 but no averment was made that the petitioner had induced the,,,,,,

complainant to purchase shares of EIPL.,,,,,,

F) The Investigating Officer has already interrogated the petitioner twice on 20.02.2020 and 21.02.2020 in Arthur Road Jail at Mumbai and thereafter,",,,,,,

no step has been taken to interrogate the petitioner any further.,,,,,,

G) The FIR is registered after a delay of almost 4 years as the transactions relate to the years 2010-2014.,,,,,,

H) Lastly, it was stated that the petitioner is 65 years of age and the co-accused persons namely, R.L. Kabra and Mukund G. Sapre have already",,,,,,

been released on bail against whom charge sheet also has been filed.,,,,,,

Ms. Meenakshi Chauhan, learned APP for the State, duly assisted by learned counsel for the complainant, has vehemently opposed the bail",,,,,,

application. It was submitted that the petitioner had joined IL&FS in the year 1994. He remained associated with ILRL since 2009 and resigned as a,,,,,,

Director only on 27.01.2011. The petitioner remained associated with ITNL since 2008 as a Managing Director and resigned only in October, 2018.",,,,,,

ITNL was the promoter company of ILRL and its majority shareholder. ITNL & ILRL had a written agreement to the effect that that any sub-,,,,,,

contracting would be done with the consent of ITNL. Both Mukund G. Sapre and Sanjiv Krishan Rai used to report to the present petitioner, who was",,,,,,

the Managing Director of ITNL.,,,,,,

It was further submitted that the petitioner along with others had enticed the complainant to invest in ILRL. Despite the complainant purchasing,,,,,,

shares of ILRL by taking over the EIPL, he was deliberately not allowed to become a Director. The petitioner conspired with other co-accused",,,,,,

persons to defraud not only the complainant but the other shareholders of ILRL as well.,,,,,,

The bogus contracts were awarded during the petitioner’s tenure. Even if only two contracts were awarded during his tenure as a Director of,,,,,,

the ILRL, but all the 10 contracts, worth approx. Rs. 94 crores, were awarded while he was the Managing Director of the ITNL. During investigation,",,,,,,

the statements of officers of ILRL namely, Hukum Singh Chaudhary and Bindeshwar Prasad, who were in-charge of the site, were recorded under",,,,,,

Section 161 Cr.P.C., in which they stated that they had never heard of those 10 companies, to whom work was awarded and no work was executed",,,,,,

by any of the companies. On inspecting the work orders, which related to clearance of land, no details of the affected shopkeepers or the description",,,,,,

of the encroachment were found. The work contracts were awarded without signing any contract or taking any performance guarantee. Further, the",,,,,,

work was awarded without inviting any tender.,,,,,,

It was also submitted that the contracts to Sanjiv Krishan Rai and his company M/s SRKK Advisors Pvt. Ltd. were also awarded while the,,,,,,

petitioner was the Manging Director of ITNL. Though Sanjiv Rai retired from ILRL on 31.03.2015, an amount of Rs.3 crores was initially transferred",,,,,,

as advance from the account of ITNL on 25.03.2015 and the remaining Rs.3 crores were transferred within the course of 1 year till 31.03.2016.,,,,,,

It was next submitted that the petitioner has not cooperated in the investigation and has not disclosed the names of other conspirators and ultimate,,,,,,

beneficiary of the 10 bogus contracts awarded qua which investigations are still pending. He also did not provide any justification to award of,,,,,,

contracts to Sanjiv Rai and his company. The petitioner needs to be confronted with other accused persons, which is possible only during custodial",,,,,,

interrogation as other accused have given contradicted versions. The petitioner could not be interrogated further on account of restriction caused by,,,,,,

COVID-19 and the petitioner is in a position to influence the witnesses.,,,,,,

Lastly, it was submitted that the petitioner cannot claim any parity with either R.L. Kabra or Mukund G. Sapre, as they were admitted to regular",,,,,,

bail after they had spent considerable time in the judicial custody. The co-accused namely, Sanjiv Rai and Ravi Parthasarthy are still absconding. The",,,,,,

petitioner's bail application bearing no. 361/2020 seeking regular bail in the ECIR bearing No. ECIR/MBZO-1/2/2019 has been dismissed by the,,,,,,

Bombay High Court vide order dated 29.10.2020.,,,,,,

In rebuttal, Mr. Nigam, learned Senior Counsel for the petitioner, has submitted that the dismissal of petitioner’s bail in the ED case was on",,,,,,

entirely different parameters. It was additionally submitted that the sanction granted for investigations conducted by the SFIO has already been,,,,,,

quashed by the Bombay High Court on account of non-application of mind. In both of the above cases, the SLP is preferred before the Supreme",,,,,,

Court.,,,,,,

Before proceeding further, I deem it apposite to refer to the relevant parameters, as culled from various judicial pronouncements, to be kept in",,,,,,

mind, at the time of consideration of an anticipatory bail application.",,,,,,

The Supreme Court in Siddharam Satlingappa Mhetre v. State Of Maharashtra And Ors. reported as (2011) 1 SCC 69,4 laid down the following",,,,,,

parameters that need to be taken into consideration while dealing with the anticipatory bail:,,,,,,

(a) The nature and gravity of the accusation and the exact role of the accused must be properly comprehended before arrest is made;,,,,,,

(b) The antecedents of the applicant including the fact as to whether the accused has previously undergone imprisonment on conviction by a,,,,,,

court in respect of any cognizable offence;,,,,,,

(c) The possibility of the applicant to flee from justice;,,,,,,

(d) The possibility of the accused's likelihood to repeat similar or other offences;,,,,,,

(e) Where the accusations have been made only with the object of injuring or humiliating the applicant by arresting him or her;,,,,,,

(f) Impact of grant of anticipatory bail particularly in cases of large magnitude affecting a very large number of people;,,,,,,

(g) The courts must evaluate the entire available material against the accused very carefully. The court must also clearly comprehend the,,,,,,

S.

No.","Name of the

Company","Gross Total

amount as

per WO (a)","Period of amount paid

from to",,"Gross

TDS/Buildi

ng

Cess/WCT

deducted

(b)","Gross

Total

Amount Paid

(a)-(b)

1.,"M/s

Silverpoint

Infratech

Ltd.","218,800,000",15.7.2013,7.4.2014,"15,753,600","203,046,400

2.,"Suryamukhi

Projects Pvt.

Ltd.","18,988,554",21.7.2010,18.5.2011,"180,173","18,808,381

3.,"AMR

Constructions

Ltd.","85,650,701",6.9.2010,9.5.2011,"2,046,199","83,604,502

4.,"NKG

Infrastructure

Ltd.","130,566,480",3.9.2011,20.12.2011,"3,916,994","126,649,486

5.,"NKC

Projects Pvt.

Ltd.","109,450,652",30.4.2013,30.5.2013,"7,280,446","102,170,206

6.,"Ethical

Constructions

Pvt. Ltd.","23,000,000",30.5.2013,30.5.2013,"1,656,000","21,344,000

7.,"Prathyusha

Resources &

Infra Pvt.

Ltd.","58,000,000",30.5.2013,30.5.2013,"1,656,000","5,3824,000

8.,"ARSS Infra

Projects Ltd.","117,200,000",4.12.2013,18.7.2014,"8,622,400","108,577,600

9.,"Divyanshi

Infra Projects

Ltd.","130,200,000",13.3.2014,16.6.2014,"9,763,200","120,436,800

10,"Sagar Infra

Rail

International

Ltd.","10,92,00,000",28.2.2011,4.4.2011,,"10,92,00,000

,Total,"100,1056387",,,"53,395,012","94,7661,375

While emphasizing the need of custodial interrogation, the Supreme Court, in State Rep. By The CBI v. Anil Sharma reported as (1997) 7 SCC",,,,,,

187, held as under:",,,,,,

“6. We find force in the submission of the CBI that custodial interrogation is qualitatively more elicitation-oriented than questioning a,,,,,,

suspect who is well ensconced with a favourable order Under Section 438 of the Code. In a case like this effective interrogation of a,,,,,,

suspected person is of tremendous advantage in disinterring many useful informations and also materials which would have been,,,,,,

concealed. Success in such interrogation would elude if the suspected person knows that he is well protected and insulated by a pre-arrest,,,,,,

bail order during the time he is interrogated. Very often interrogation in such a condition would reduce to a mere ritual. The argument that,,,,,,

the custodial interrogation is fraught with the danger of the person being subjected to third- degree methods need not be countenanced,",,,,,,

for, such an argument can be advanced by all Accused in all criminal cases. The Court has to presume that responsible police officers",,,,,,

would conduct themselves in a responsible manner and that those entrusted with the task of disinterring offences would not conduct,,,,,,

themselves as offenders.â€​,,,,,,

Recently, the aforesaid view was reiterated by the Supreme Court in P. Chidambaram v. Directorate of Enforcement reported as (2019) 9 SCC",,,,,,

24, where, while relying on its decision in Anil Sharma (Supra), while rejecting the anticipatory bail application, it was held as under:",,,,,,

“78. Power under Section 438 Code of Criminal Procedure being an extraordinary remedy, has to be exercised sparingly; more so, in",,,,,,

cases of economic offences. Economic offences stand as a different class as they affect the economic fabric of the society….,,,,,,

***,,,,,,

Grant of anticipatory bail at the stage of investigation may frustrate the investigating agency in interrogating the Accused and in,,,,,,

collecting the useful information and also the materials which might have been concealed. Success in such interrogation would elude if the,,,,,,

Accused knows that he is protected by the order of the court….â€​,,,,,,

The alleged acts were committed when the petitioner was assuming office as a Director of ILRL and also as the Managing Director of ITNL.,,,,,,

The ‘Committee of Directors’, which awarded the contracts, was constituted under the Chairmanship of the petitioner. The two contracts to",,,,,,

M/s Suryamukhi Projects Pvt Ltd. and M/s AMR Constructions Pvt Ltd. were awarded during the petitioner’s tenure in ILRL. In fact, the",,,,,,

petitioner was the Managing Director of ITNL when all the 10 alleged bogus contracts were awarded. The petitioner’s knowledge and,,,,,,

involvement in the alleged awarding of contracts cannot be ruled out. The investigation qua the petitioner as well as the real beneficiaries of the,,,,,,

siphoned off amount is still pending. Apparently, the money that is alleged to be siphoned off is public money and the offence is grave in nature.",,,,,,

Indeed, the Investigating Officer has interrogated the petitioner twice, however looking at the gravity of the offence and the aspect of pending",,,,,,

investigation relating to finding out the real beneficiaries of the siphoned off money, this Court finds itself in disagreement with the submission that no",,,,,,

more interrogation in custody is required. Equally, the petitioner’s submission that it could be only a case of lack of supervision on his part, is not",,,,,,

convincing as both Sanjiv Rai and Mukund G. Sapre were reporting directly to the present petitioner. Further, this Court cannot overlook the",,,,,,

submission made on behalf of the State that the petitioner had occupied the highest office and as such, the risk of his tampering with the evidence and",,,,,,

influencing the witnesses also cannot be completely ruled out. The other co-accused namely R.L. Kabra and Mukund Sapre have been released on,,,,,,

regular bail and as such, the petitioner cannot claim parity with them. The Court, in these facts and circumstances, cannot turn down the prayer of the",,,,,,

Investigating Officer seeking custodial interrogation. Accordingly, the petitioner’s bail application is dismissed.",,,,,,

Needless to state that the observations made hereinabove are only prima facie and shall have no bearing on the merits of the case.,,,,,,