Delhi HC allows Bail to Accused of Corporate Fraud Case since Trial not possible due to Lockdown [Read Order]

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The High Court of Delhi granted the bail to the Director accused of fraud on grounds that he was not the signatory to the alleged False Statement in the balance sheet of the Company quoting a reason that the trial proceedings cannot be completed within the reasonable time because of lockdown due to COVID-19 outbreak in India.

The petitioner, Aditya Kumar Bhandari, was a whole-time Director of RHL and he was not a signatory to the Financial Statements of RHL. Further, the petitioner has been found not guilty of the alleged offense under Sections 129, 134, and 448 of Companies Act, 2013 in respect of alleged ‘False Statement in the Balance Sheets of RHL as per findings.

As per Section 134(1) Companies Act, 2013 the Balance Sheet of the company is required to be approved by the Board of Directors, meaning thereby that the Serious Fraud Investigation Office (SFIO) admits that despite being a Director in the Board of RHL, the petitioner was not functioning as a decision making member of the Board of Directors and therefore he has admittedly not been held liable for alleged falsification of the balance sheets of the RHL.

The petitioner contended that each and every director is not liable in criminal proceedings for the act of another director/offense committed and there is no complaint alleging cheating or misappropriation of their funds made against the petitioner by any Bank or financial institution, till date.

The single bench of Justice Suresh Kumar allowed the bail application of the Director accused of fraud on grounds that he was not the signatory to the alleged False Statement in the balance sheet of the Company.

“There are no allegations that petitioner is a flight risk or may temper with the evidence or influence the witnesses,” the court noted.

“Since the present application is for bail, therefore, this Court refrains from making any observation on the merit of the prosecution case, which is the subject matter of the Trial. However, in view of the above facts and considering the period in judicial custody, this Court is of the view that petitioner deserves for bail,” the court said.

“It is not in dispute that investigation is complete, a criminal complaint has been filed and charges are yet to be framed. Presently, our country is under “Lock-down” due to COVID-19, therefore, the regular functioning of the courts may take more time. Thus, in the present situation, the trial of the present case is not possible in the near future. Further, there are no allegations that the petitioner is a flight risk or may temper with the evidence or influence the witnesses.”

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