New Delhi: The Delhi High Court has set aside the summons issued by the ASJ against the Executive Director of the Punjab National Bank, Dr Rajesh Kumar Yaduvanshi for alleged fraud committed by Bhushan Steel Limited.
A single-judge bench of Justice Vibhu Bakhru noted in his judgment that “the impugned summons issued to the petitioner and the impugned order, to the limited extent that it directs the issuance of summons to the petitioner, are set aside.”
The petition has been filed by the Executive Director of PNB, Dr Rajesh challenging the order of the ASJ directing issuance of summon to him in the case of the Serious Fraud Investigation Office (SFIO) v. Bhushan Steel Limited and Ors. The summon has been issued on the ground that there was sufficient material placed on record against the petitioner for him to face prosecution in respect of offenses under Sections 128, 129, 448 read with Section 447 of the Companies Act, 2013.
The main issue in this matter is that
“whether the petitioner can be prosecuted for the alleged fraud committed by BSL and/or promoters solely for the reason that the petitioner was a director of BSL and, whether there is any material on record to indicate that the petitioner was complicit in the commission of the alleged offense.”
The bench noted thatsuffice it to state that the gravamen of SFIO’s allegation is that the Promoters had borrowed funds in companies from various lenders including PNB and SBI and had through an elaborate scheme siphoned off the said funds through other companies for their gains. It has been alleged that to achieve the said end, they were assisted by various other persons and employees.Whereas, Mr. Rajesh was a Nominee Director of PNB on the Board of BSL.
However, Mr. Pinaki Mishra appearing for Mr. Rajesh submitted that
“merely mentioning the petitioner’s name as being one of the persons who are allegedly liable to be prosecuted under Sections 128, 129 and 448 of the Companies Act, without ascribing any specific role or pointing out any culpable conduct would not constitute sufficient material to persuade any Court to issue summons.”
Relying upon various judgments of the Supreme Court Mr. Mishra contended that summons can be issued only after due application of mind and after concluding that there is sufficient ground for proceeding against an accused.
Whereas, ASG Mr. Sharma appearing for SFIO submitted that an investigation into the affairs of BSL had establishedthat the Promoters and their family members assisted by employees and close associates had used a complex web of one hundred and fifty-seven companies to siphon off funds from BSL for various purposes.
The bench observed that the key question to be addressed is whether there is any allegation in the Investigation Report or any material on record which would indicate that the petitioner has connived or has been complicit with the promoters and/or other entities in perpetuating the fraud by approving financial statements, which he knew to be not fairly and truly reflecting the affairs of BSL.
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Whereas the bench noted that “neither the complaint made by the SFIO nor the Investigation Report submitted by the SFIO contains any specific allegations against the petitioner of being complicit or having acted in bad faith.”
Read the judgment here;
VIB21092020CRLR13082019-003835-India Legal Bureau