Supreme Court Seeks SFIO's Response On SRS Group Chairman Anil Jindal's Plea For Interim Bail In Financial Fraud Case

The Supreme Court recently issued notice to the Serious Fraud Investigation Office on SRS Group Chairman Anil Jindal's plea for interim bail in a financial fraud case.

A bench of Justices Sanjiv Khanna and Sanjay Kumar passed the order, upon hearing Senior Advocate Dr S Muralidhar (for Jindal), who argued that Jindal has spent over 3 years in custody in the present case and the trial will likely take time as there are 81 accused involved.

The matter is next listed for consideration in the week commencing October 21, 2024.

Notably, during the hearing, Justice Khanna expressed slight reservation considering the amount involved in the case. "How much is the amount involved? 770 crores...we understand bail is the rule, and not jail, but there have to be some exceptions...they can't swindle money of 770 crores and say 3 years now, I get bail, it will take 20 years for the trial to be concluded...", the judge said.

In response, Muralidhar submitted that Jindal has been inside jail for 6 years in total and a little over 3 years in the present case. He also informed that Jindal has been given bail in the other cases. The senior counsel further pressed that the maximum sentence that can be imposed under Section 447 of the Companies Act is 10 years.

To recap, SFIO filed a complaint against SRS Group of Companies, alleging (i) false statement in balance sheets/books (ii) fraudulent representation before banks for obtaining credit facilities (iii) siphoning and diversion of funds received as loan from banks/ financial institutions, etc.

Insofar as Jindal was concerned, it was stated that he was the controller and Chairman of the SRS Group, responsible for the overall planning, administration, brand building, and preparation of financial statements. It was further alleged that he was instrumental in getting loan facilities to the SRS Group companies by furnishing false documents.

While in custody in another case, Jindal was produced before the trial Court by the jail authorities concerned, in pursuance of production warrants. On the same day, upon an application moved by SFIO, he was remanded to judicial custody. It is claimed that he was never formally arrested in the present case.

In 2023, the trial Court granted bail to Jindal. However, the same was cancelled by the Punjab and Haryana High Court this year, being of the view that the Trial Court failed to adhere to the stringent conditions encapsulated in Section 212(6) of the Companies Act.

Insofar as Jindal's grievance regarding non-supply of the grounds for arrest, the High Court held that "mere non-compliance of the formality" under Companies Act Rules could not be construed as breach of the mandate carried in Section 212(8) of Companies Act, as Jindal was not formally arrested.

For context, Section 212(8) of the Companies Act states that if the Director, Additional Director or Assistant Director of SFIO has, on the basis of material in his possession, reason to believe that any person has been guilty of any offence punishable under the sections referred to in sub-section (6), he may arrest such person and shall, as soon as may be, inform the arrestee the grounds for arrest.

The High Court further opined that while extending the relief of regular bail to Jindal, the trial Court did not bear in mind the seriousness and magnitude of the offence committed, though it was one of the predominant factors to be taken into consideration.

Assailing the High Court order, Jindal approached the Supreme Court. A bench of Justices Khanna, Sanjay Karol and Kumar issued notice on his petition in July, 2024.

The petition is filed through Advocate-on-Record Vivek Jain.

Case Title: Anil Jindal v. Serious Fraud Investigation Office, Special Leave to Appeal (Crl.) No. 8433/2024