Dispute Prima Facie Of Civil Nature: Gujarat High Court Grants Anticipatory Bail In ₹1,000 Crore Alleged Cheating Case

Background

The factual matrix involved the Complainant, one of the Directors of M/s. Manpasand Beverages Ltd ('MBL'/Complainant company) and M/S Finquest Financial Solutions Pvt Ltd (Accused company).

Facing huge tax amount of illegal tax credit, MBL required financial assistant and subsequently, approached Accused No.1, the Director of Finquest. The Accused company agreed to sanction term loan of INR 100 crores subject to creating security on all assets of the company for which the Complainant company agreed to create security in favour of Finquest.

It was alleged in the FIR that the Accused No. 1 and others misused the terms and conditions of the agreement and disbursed only INR 9 crores with the intent to take over the Complainant company. Further, the Accused company nominated 3 persons as directors of the Board of MBL and took control of the management of MBL thereby mortgaging properties and causing losses to the tune of INR 1000 crore.

The Complainant offered to repay INR 9 crore, but the Accused then demanded INR 20 crore. Consequently, an FIR was lodged against all 7 accused persons. The Sessions Court rejected the anticipatory bail application of the Applicants.

The primary contentions of the Applicants were that INR 9 crores were disbursed only after due diligence and keeping in view the urgency displayed by MBL. There was no malafide intention in not disbursing the remaining amount of loan as agreed between the parties. Further, it was pointed out that the Complainant had moved an application at NCLT Ahmedabad for pressurising the Applicants along with a suit for declaration and permanent injunction before the Civil Court Vadodara for various reliefs. Relying on the final summary report by the Economic Office Unit-VI, Mumbai, it was averred that the son of the Complainant had filed a complaint against the Accused under sections 406, 420 and other similar provisions and these allegations were ill-founded. Lastly, the Accused exercised no control over MBL's daily affairs or its assets.

Per contra, the Respondent-State opposed the application on the ground that the allegations against the Applicants were grave and the Accused had systematically disbursed only INR 9 crores and taken control over the company worth INR 100 crore. The other Accused also had past antecedents and no exceptional case was made out for anticipatory bail.

Findings

The High Court's foremost observation was that INR 9 crores were disbursed after detailed investigation and as a good gesture. The Court opined,

"the company M/s. FFSPL, did not have sanction the loan on account of false audited figure observed by the CA in his report and further recommended for detailed investigation of books of account for last 3 financial years through an independent agency, as the CA noticed fraudulent transaction of the company."

There was also no truth to the allegation that losses were caused the Complainant company as per the 'B' summary report of the Economic Wings at Mumbai, the Court noted. Averring that the Applicants had cooperated in the investigation and the dispute was purely civil in nature, the Court said that the Applicants were entitled to anticipatory bail.

It was clarified that the Investigating Agency was at liberty to apply to the Magistrate for police remand of the Applicant and upon competition of such remand, the Accused would be set free immediately in pursuance of the bail order.

Case Title: BHARATBHAI JAYANTILAL PATEL (DELETED) Versus STATE OF GUJARAT

Case No.: R/CR.MA/4140/2020