Restriction by S. 212(6) of Companies Act not applicable When accused Co-operate with investigation: Calcutta HC upholds Bail under PMLA [Read Order]

The Calcutta High Court (HC) held that the restrictions by section 212(6) of the Companies Act, 1956 is not applicable when the accused cooperates with the investigation and upholds the bail under the Prevention of Money Laundering Act(PMLA). The court held that the objection raised by SFIO about non-consideration of restrictions of Section 212(6) of the Companies Act while granting bail to opposite parties/accused is unmerited and the bail orders do not suffer from any illegality.

The serious Fraud Investigation Office(SFIO) initiated an investigation about the affairs of the Prayag Group of Companies. In the course of the investigation, the involvement of the opposite parties/accused in the alleged offences transpired. They were interrogated and upon conclusion of investigation complaint was filed.

They appeared before the trial court and were released on bail. The bail orders are presently assailed in these proceedings on the ground that the court had not taken into consideration the restrictions under Section 212 (6) of the Companies Act. The aforesaid provision is part material to the restrictions of bail in Section 37 of the NDPS Act and Section 45(1) of the PMLA Act.

Mr. Majumder, Advocate for the petitioner/SFIO submitted that Judge did not give opportunity to the Public Prosecutor to oppose the bail applications. He also submitted the Court had not applied his mind and recorded its satisfaction that the accused were not guilty of the alleged offences or were not likely to commit similar offences. Accordingly, the bail orders suffer from patent illegality and are liable to be set aside.

Section 212(6) of the Companies Act imposes restrictions on the matter of bail. The provision mandates the court to give an opportunity of hearing to the Public Prosecutor and in the event the Public Prosecutor opposes the bail, the court has to record its satisfaction that the accused is not guilty of the offence or is not likely to commit similar offence in future before releasing the accused on bail. It is true in the present case the court did not record such satisfaction while granting bail to the opposite parties/accused.

The aforesaid observations propound that the restrictions to bail in the special statute like the present one may not apply in those cases where the accused had co-operated during the investigation and had not been consciously arrested.

A division bench of Justice Gaurang Kanth and Justice Joymalya Bagchi held that the objection raised by SFIO about non-consideration of restrictions of Section 212(6) of the Companies Act while granting bail to opposite parties/accused is unmerited and the bail orders do not suffer from any illegality.

To Read the full text of the Order CLICK HERE

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