Ravi Kumar Sondhi

IN THE COURT OF RAVI KUMAR SONDHI,
(UID No. HR-0026)

SESSIONS JUDGE
CUM-
SPECIAL JUDGE
(Under Companies Act, 2013)
GURUGRAM.
Serial No.1
Case Type : BA No.76 of 01.04.2019
CIS No. : BA/1120/2019.
CNR No. : HRGR-01-004446-2019.
Date of Decision : 20.04.2019.
Rahul Modi son of Virender Modi, resident of Modi House, Sirohi,

Rajasthan, presently at Gurugram.
.........Applicant.
Versus
Serious Fraud Investigation Office.

..........Complainant-Respondent.
Serial No.2
Case Type : BA No.77 of 01.04.2019
CIS No. : BA/1121/2019.
CNR No. : HRGR-01-004448-2019.
Date of Decision : 20.04.2019.
Mukesh Modi son of Shri Prakash Raj Modi, resident of 10, Adarsh
Nagar, Sirohi, Rajasthan, presently at Gurugram.
.........Applicant.
Versus
Serious Fraud Investigation Office.

..........Complainant-Respondent.
For offences as punishable under Section 447 of the

Companies Act, 2013.
File No.: SFIO/INV/AOI/2018-19-AGC&L/842-966
Applications for regular bail under section 439 Cr.P.C.
Argued by:
For applicant Rahul Modi : Sh. Vikram Chaudhri, Senior
Advocate, Sh. Vishal Gupta &
Ms. Supriya Juneja, Advocates.
For applicant Mukesh Modi : Sh. Vikram Chaudhri, Senior
(Ravi Kumar Sondhi)

(UID No. HR-0026)
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(CNR No.HRGR01-004446-2019) (CIS No. BA/1120/2019) -2-
Rahul Modi vs. Serious Fraud Investigation Office
Advocate, Sh. Vishal Gupta &

Sh. Aditya Singla, Advocates.
For complainant SFIO : S/Sh. Satish Aggarwal, Alok
Kumar Jain, Lokender Raghav,
Advocates.
Sh. Saud Ahmad, Joint Director,
SFIO.
Sh. Parshant Baliyan, Deputy
Director & Investigating Officer,
SFIO.
Sh. Hari Krishan, Assistant
Director, SFIO.
ORDER:
1. This order will dispose of above referred two bail
applications moved by applicants, Rahul Modi and Mukesh Modi
separately being arisen out of the same case and on the same facts and
circumstances.
2. Facts in brief, leading to filing of these bail applications are
that the case in hand arises out of order of investigation passed by the
Central Government through Ministry of Corporate Affairs (hereinafter
referred as “MCA”), whereby, MCA, in the public interest, into the
affairs of Adarsh Group of Companies and LLPs (125 Nos.) (“CUIs”), by
Serious Fraud Investigation Office (hereinafter referred as “SFIO”) , as
per its order dated 20.06.2018 passed in exercise of its powers conferred
under section 212(1)(c) of the Companies Act 2013 and section 43 (2) &
(3) (c) (i) of LLP Act 2008, on the allegations of siphoning of the funds of
the Adarsh Cooperative Society under the garb of some loan transactions
by the accused persons by creating sham companies justifying prosecution
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of the accused under section 447 of the Companies Act. In this regard, it is
alleged that the companies, involved in this economic fraud or scam are
collectively mentioned as Adarsh Group of Companies and LLPs, further
referred as Companies under investigations or CUIs, for short.
Accordingly after inquiry and investigations, both the applicants along
with their co-accused, were arrested on 10.12.2018, on the basis of
material in possession collected during investigation and after recording
reason to believe that they have been guilty of offence punishable under
section 447 of the Companies Act, 2013.
3. It is also alleged by complainant-SFIO that the investigations
into the affairs of CUIs, till date has revealed that newly incorporated
CUIs were utilized to siphon off the public funds, by the applicant in
conspiracy with others. The funds in the CUIs were received from Adarsh
Credit Cooperative Society Limited, Ahmedabad (hereinafter referred as
“ACCSL”), based on unsubstantiated, questionable projected balance
sheets and financial statements. These funds ultimately belong to 22 Lakh
depositors (with outstanding balance due towards them being upwards of
Rs.10,000 Crore). Further, the said process did not involve any due
diligence or arm’s length processes. Even both, the CUIs as well as
ACCSL are controlled by the applicants and their family/members as
associates. The applicant Rahul Modi has been one of the real brains
behind the fraud committed by CUI’s. The statements taken on oath and
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other material collected during the investigation show that the applicant
was controlling the CUIs and was major decision maker in siphoning of
the public funds.
4. Accordingly now by way of these applications, the applicants
have sought regular bail inter-alia alleging that it may be a fact that the
applicant, Mukesh Modi is the founder of the ASCCSL whereas the
applicant Rahul Modi is the signatory in various CUIs and Managing
Director of ACCSL but there is no evidence whatsoever with the
investigating Agency to show that there was any act of omission,
concealment of any fact or abuse of position by any of them. The
applicant Mukesh Modi was not even involved in the day to day
functioning of the said society for over more than seven years but he was
one of the Director of the CCUs named Adarsh Buildestate Ltd. As such,
alleging that the applicants have been arrested only on suspicion without
there being any prima-facie evidence against them they have sought
regular bail alleging that they have already joined the investigations many
times and they have co-operated with the investigating agency and never
misused the conditions of the earlier bail and thus no purpose shall be
served by keeping them into custody.
5. Besides above, the applicant Mukesh Modi also alleged that
he is aged about 60 years and a chronic patient of diabeties and as such his
medical conditions are also not very favourable and thus he be granted
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bail on this ground also. Similarly, applicant-accused Rahul Modi also
submitted that some subsequent proceedings are also pending as per the
orders of the NCLAT dated 04.10.2018 and 31.10.2018 respectively. The
entire matter is based on documentary evidence and thus sought regular
bail.
6. On notice the bail application was contested by the
complainant SFIO reiterating all the allegations as already referred above.
In this regard, it was also explained by the complainant that investigation
into the affairs of CUIs, has revealed that newly incorporated CUIs were
utilized to siphon off the public funds, by the applicant in conspiracy with
others. The funds in the CUIs were received from Adarsh Credit
Cooperative Society Limited, Ahmedabad (Hereinafter referred as
“ACCSL”), based on unsubstantiated, questionable projected balance
sheets and financial statements. These funds ultimately belong to 22 Lakh
depositors (with outstanding balance due towards them being upwards of
₹10,000 Crore). And both the CUIs as well as ACCSL are controlled by
the applicants and their family members or associates. It is further
submitted that the applicants have been the real brains behind the fraud
committed by CUI’s. The statements taken on oath and other material
collected during the investigations show that the applicant Rahul Modi
was controlling the CUIs and was major decision maker in siphoning of
the public funds.
(Ravi Kumar Sondhi)

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7. As such, it was alleged that there are no reasonable grounds
for believing that the applicants are not guilty of offence punishable u/s
447 of the Companies Act, 2013 and thus the applicants squarely falls
under the provisions of Section 212(6)(ii) of the Companies Act, 2013 and
thus they are not entitled for bail. That Section 212 (6) of the Companies
Act, 2013, starts with non-obstante clause and the provisions stipulated
under Section 212 (6) (ii) of the Companies Act, 2013, are mandatory in
nature and as such in the facts and circumstances pertaining to the present
case, the applicants are not entitled to be released on bail.
8. Arguments addressed by Sh. Vikram Chaudhri, Senior
Advocate, learned counsel for the applicants and Sh. Satish Aggarwal,
learned counsel for the complainant, SFIO have been heard and appraised
of besides going through the records.
9. After considering the contentions of both the parties and the
records it comes out that admittedly as per the provisions of Section 212
(6), the bail plea has to be considered as per the requirements of that
provision that too after giving a prima facie observations that the
applicants are not prima facie guilty of the offence alleged. For ready
reference the provision is reproduced as under:
“(6) Notwithstanding anything contained in the Code of

Criminal Procedure, 1973, 1[offence covered under section
447] of this Act shall be cognizable and no person accused of
any offence under those sections shall be released on bail or
on his own bond unless—
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(i) the Public Prosecutor has been given an opportunity to

oppose the application for such release; and
(ii) where the Public Prosecutor opposes the application,

the court is satisfied that there are reasonable grounds for
believing that he is not guilty of such offence and that he is
not likely to commit any offence while on bail:
Provided that a person, who, is under the age of sixteen years
or is a woman or is sick or infirm, may be released on bail, if
the Special Court so directs:
Provided further that the Special Court shall not take

cognizance of any offence referred to this sub-section except
upon a complaint in writing made by—
(i)the Director, Serious Fraud Investigation Office; or
(ii) any officer of the Central Government authorised, by a
general or special order in writing in this behalf by that
Government.”
10. During the course of arguments, it is admitted fact that as on
date, the interpretation of above provisions has not been done by the
Higher courts including Hon’ble Apex Court but a similar provision under
the provisiosn of Section 21(5) of the Maharashtra Control of Organised
Crime Act, 1999. (MCOCA in short) has been considered by the Hon;ble
Apex Court in Ranjitsing Brahmajeetsing Sharma Versus State of
Maharashtra and another, (2005)5, Supreme Court Cases 294 , and
the he Hon’ble Apex Court while interpreting a similar clause in above
section held that;
“37. Such findings are required to be recorded only for the

purpose of arriving at an objective finding on the basis of
materials on record only for grant of bail and for no other
purpose.
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38. We are furthermore of the opinion that the restrictions

on the power of the court to grant bail should not be pushed
too far. If the court, having regard to the materials brought on
record, is satisfied that in all probability he may not be
ultimately convicted, an order granting bail may be passed.
The satisfaction of the court as regards his likelihood of not
committing an offence while on bail must be construed to
mean an offence under the Act and not any offence
whatsoever be it a minor or major offence. If such an
expansive meaning is given, even likelihood of commission
of an offence under Section 279 of the Indian Penal Code
may debar the court from releasing the accused on bail. A
statute, it is trite, should not be interpreted in such a manner
as would lead to absurdity. What would further be necessary
on the part of the court is to see the culpability of the accused
and his involvement in the commission of an organized crime
either directly or indirectly. The court at the time of
considering the application for grant of bail shall consider the
question from the angle as to whether he was possessed of the
requisite mens rea. Every little omission or commission,
negligence or dereliction may not lead to a possibility of his
having culpability in the matter which is not the sine qua non
for attracting the provisions of MCOCA. A person in a given
situation may not do that which he ought to have done. The
court may in a situation of this nature keep in mind the broad
principles of law that some acts of omission and commission
on the part of a public servant may attract disciplinary
proceedings but may not attract a penal provision.
45. It is, furthermore, trite that for the purpose of
considering an application for grant of bail, although detailed
reasons are not necessary to be assigned, the order granting
bail must demonstrate application of mind at least in serious
cases as to why the applicant has been granted or denied the
privilege of bail.
46. The duty of the court at this stage is not to weigh the
evidence meticulously but to arrive at a finding on the basis
of broad probabilities. However, while dealing with a special
statute like MCOCA having regard to the provisions
contained in sub-section (4) of Section 21 of the Act, the
court may have to probe into the matter deeper so as to enable
it to arrive at a finding that the materials collected against the
accused during the investigation may not justify a judgment
of conviction. The findings recorded by the court while
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granting or refusing bail undoubtedly would be tentative in

nature, which may not have any bearing on the merit of the
case and the trial court would thus be free to decide the case
on the basis of evidence adduced at the trial, without any
manner being prejudiced thereby.”
11. Again a similar provisions as existing under the provisions of
Section 45 of the Prevention of Money-Laundering Act, has been
considered in Rohit Tandon Versus The Enforcement Directorate,
2018(5) RCR (Criminal) 35 (SC), and the Hon’ble Apex Court held
that;
“The sweep of Section 45 of the Act of 2002 which is limited

to 212(6) of the Companies Act has been considered in the
case of Gautam Kundu v. Directorate of Enforcement
(Prevention of Money-Laundering Act, Government of
India, 2016(1) R.C.R. (Criminal) 398, 2015(6) Recent
Apex Jugments (R.A.J.) 622 : (2015) 16 SCC 1 this
Court has had and occasion to examine it in paragraphs 28-
30. It will be useful to advert to paragraphs 28 to 30 of this
decision which read thus:
“28. Before dealing with the application for bail on
merit, it is to be considered whether the provisions of
Section 45 of the PMLA are binding on the High Court
while considering the application for bail under Section
439 of the Code of Criminal Procedure, 1973. There is
no doubt that PMLA deals with the offence of money
laundering and the Parliament has enacted this law as
per commitment of the country to the United Nations
General Assembly. PMLA is a special statute enacted
by the Parliament for dealing with money-laundering.
Section 5 of the Code of Criminal Procedure, 1973
clearly lays down that the provisions of the Code of
Criminal Procedure will not affect any special statute or
any local law. In other words, the provisions of any
special statute will prevail over the general provisions
of the Code of Criminal Procedure in case of any
conflict.
29. Section 45 of the PMLA starts with a non
obstante clause which indicates that the provisions laid
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down in Section 45 of the PMLA will have overriding

effect on the general provisions of the Code of Criminal
Procedure in case of conflict between them. Section 45
of the PMLA imposes following two conditions for
grant of bail to any person accused of an offence
punishable for a term of imprisonment of more than
three years under Part-A of the Schedule of the PMLA:
(i) That the prosecutor must be given an opportunity
to oppose the application for bail; and
(ii) That the Court must be satisfied that there are
reasonable grounds for believing that the accused
person is not guilty of such offence and that he is not
likely to commit any offence while on bail.
30. The conditions specified under Section 45 of the
PMLA are mandatory and needs to be complied with
which is further strengthened by the provisions of
Section 65 and also Section 71 of the PMLA. Section
65 requires that the provisions of Cr.P.C. shall apply in
so-far-as they are not inconsistent with the provisions
of this Act and Section 71 provides that the provisions
of the PMLA shall have overriding effect
notwithstanding anything inconsistent therewith
contained in any other law for the time being in force.
PMLA has an overriding effect and the provisions of
Cr.P.C. would apply only if they are not inconsistent
with the provisions of this Act. Therefore, the
conditions enumerated in Section 45 of PMLA will
have to be complied with even in respect of an
application for bail made under Section 439 of Cr.P.C.,
1973. That coupled with the provisions of Section 34
provides that unless the contrary is proved, the
Authority or the Court shall presume that proceeds of
crime are involved in money laundering and the burden
to prove that the proceeds of crime are not involved,
lies on the appellant.”
It was further held that;
“18. The consistent view taken by this Court is that
economic offences having deep-rooted conspiracies
and involving huge loss of public funds need to be
viewed seriously and considered as grave offences
affecting the economy of the country as a whole and
thereby posing serious threat to the financial health of
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the country. Further, when attempt is made to project

the proceeds of crime as untainted money and also that
the allegations may not ultimately be established, but
having been made, the burden of proof that the monies
were not the proceeds of crime and were not, therefore,
tainted shifts on the accused persons under Section 24
of the Act of 2002.
19. It is not necessary to multiply the authorities on
the sweep of Section 45 of the Act of 2002 which, as
aforementioned, is no more res integra. The decision in
the case of Ranjitsing Brahmajeetsing Sharma v.
State of Maharashtra and Anr., (2005) 5 SCC 294
and State of Maharashtra v. Vishwanath Maranna
Shetty, 2012(4) R.C.R. (Criminal) 931 : 2012(6)
Recent Apex Judgments (R.A.J.) 92 : (2012) 10
SCC 561 dealt with an analogous provision in the
Maharashtra Control of Organised Crime Act, 1999. It
has been expounded that the Court at the stage of
considering the application for grant of bail, shall
consider the question from the angle as to whether the
accused was possessed of the requisite mens rea. The
Court is not required to record a positive finding that
the accused had not committed an offence under the
Act. The Court ought to maintain a delicate balance
between a judgment of acquittal and conviction and an
order granting bail much before commencement of
trial. The duty of the Court at this stage is not to weigh
the evidence meticulously but to arrive at a finding on
the basis of broad probabilities. Further, the Court is
required to record a finding as to the possibility of the
accused committing a crime which is an offence under
the Act after grant of bail. In Ranjitsing
Brahmajeetsing Sharma (supra), in paragraphs 44 to 46
of the said decision, this Court observed thus:
“44. The wording of Section 21(4) in our opinion,
does not lead to the conclusion that the Court must
arrive at a positive finding that the applicant for bail
has not committed an offence under the Act. If such a
construction is placed, the court intending to grant bail
must arrive at a finding that the applicant has not
committed such an offence. In such an event, it will be
impossible for the prosecution to obtain a judgment of
conviction of the applicant. Such cannot be the
intention of the Legislature. Section 21(4) of MCOCA,
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therefore, must be construed reasonably. It must be so

construed that the Court is able to maintain a delicate
balance between a judgment of acquittal and
conviction and an order granting bail much before
commencement of trial. Similarly the Court will be
required to record a finding as to the possibility of his
committing a crime after grant of bail. However, such
an offence in future must be an offence under the Act
and not any other offence. Since it is difficult to predict
the future conduct of an accused, the court must
necessarily consider this aspect of the matter having
regard to the antecedents of the accused, his
propensities and the nature and manner in which he is
alleged to have committed the offence.
45. It is, furthermore, trite that for the purpose of
considering an application for grant of bail, although
detailed reasons are not necessary to be assigned, the
order granting bail must demonstrate application of
mind at least in serious cases as to why the applicant
has been granted or denied the privilege of bail.
46. The duty of the court at this stage is not to weigh
the evidence meticulously but to arrive at a finding on
the basis of broad probabilities. However, while
dealing with a special statute like MCOCA having
regard to the provisions contained in sub-section (4) of
Section 21 of the Act, the court may have to probe into
the matter deeper so as to enable it to arrive at a
finding that the materials collected against the accused
during the investigation may not justify a judgment of
conviction. The findings recorded by the court while
granting or refusing bail undoubtedly would be
tentative in nature, which may not have any bearing on
the merit of the case and the trial court would thus be
free to decide the case on the basis of evidence
adduced at the trial, without any manner being
prejudiced thereby.”
It was further held that;
20. Reverting to the decision in the case of
Manoranjana Sinh v. Central Bureau of
Investigation, 2017(1) R.C.R. (Criminal) 1025 :
2017(1) Recent Aped Judgments (R.A.J.) 553 :
(2017) 5 SCC 218 we hold that the same is on the
facts of that case. Even in the said decision, the Court
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has noted that the grant or denial of bail is regulated to

a large extent by the facts and circumstances of each
case. In the case of Sanjay Chandra v. Central
Bureau of Investigation, 2011(4) R.C.R.
(Criminal) 898 : 2011(6) Recent Apex Judgments
(R.A.J.) 191 : (2012) 1 SCC 40 the Court was not
called upon to consider the efficacy of Section 45 of
the Act of 2002 which is a special enactment.
21. Keeping in mind the dictum in the aforesaid
decisions, we find no difficulty in upholding the
opinion recorded by the Sessions Court as well as the
High Court in this regard. In our opinion, both the
Courts have carefully analysed the allegations and the
materials on record indicating the complicity of the
appellant in the commission of crime punishable under
Section 3/4 of the Act of 2002. The Courts have
maintained the delicate balance between the judgment
of acquittal and conviction and order granting bail
before commencement of trial. The material on record
does not commend us to take a contrary view.”
12. Then with regard to serious economic/white collar offences,
the Hon’ble Supreme Court has repeatedly observed as was in the above
referred case that such offences are far more serious to the society when
compared to individual criminal offences and they tend to seriously
prejudice/destroy the economy of the country, thereby causing immense
irreversible damage to the larger public interest. Even in Y.S. Jagan
Mohan Reddy Versus Central Bureau of Investigation, 2013(3)
RCR (Criminal) 108 (SC) Hon’ble Apex Court while considering the
issue of bail in such like economic offences held that;
“15. Economic offences constitute a class apart and need to

be visited with a different approach in the matter of bail. The
economic offence having deep rooted conspiracies and
involving huge loss of public funds needs to be viewed
seriously and considered as grave offences affecting the
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economy of the country as a whole and thereby posing

serious threat to the financial health of the country.
16. While granting bail, the court to keep in mind the
nature of accusations, the nature of evidence in support
thereof, the severity of the punishment which conviction will
entail, the character of the accused, circumstances which are
peculiar to the accused, reasonable possibility of securing the
presence of the accused at the trial, reasonable apprehension
of the witnesses being tampered with, the larger interests of
the public/State and other similar considerations.”
13. In Nimmagadda Prasad Versus Central Bureau of
Investigation, 2013(3) RCR (Criminal) 175 (SC), Hon’ble Apex
Court held that:
“26. Unfortunately, in the last few years, the country has

been seeing an alarming rise in white-collar crimes, which
has affected the fiber of the country’s economic structure.
Incontrovertibly, economic offences have serious
repercussions on the development of the country as a whole.
In State of Gujarat v. Mohanlal Jitamalji Porwal and
Anr., (1987)2 SCC 364 this Court, while considering a
request of the prosecution for adducing additional evidence,
inter alia, observed as under :-
“5….The entire Community is aggrieved if the
economic offenders who ruin the economy of the State
are not brought to book. A murder may be committed in
the heat of moment upon passions being aroused. An
economic offence is committed with cool calculation
and deliberate design with an eye on personal profit
regardless of the consequence to the Community. A
disregard for the interest of the Community can be
manifested only at the cost of forfeiting the trust and
faith of the Community in the system to administer
justice in an even handed manner without fear of
criticism from the quarters which view while collar
crimes with a permissive eye unmindful of the damage
done to the national economy and national interest….”
28. Economic offences constitute a class apart and need to
be visited with a different approach in the matter of bail. The
economic offence having deep rooted conspiracies and
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involving huge loss of public funds needs to be viewed

seriously and considered as grave offences affecting the
economy of the country as a whole and thereby posing
serious threat to the financial health of the country.”
14. The issue was also considered by the Hon’ble Punjab &
Haryana High Court in Vinay Kumar Kumpawat v. Union of India
and another (CRM-M No.5425 of 2019) decided on 20.02.19, where
one of the other accused involved in this very case, Vinay Kumpawat,
sought anticipatory bail but the Hon’ble High Court, upon considering the
submission made and facts of the matter, dismissed the application and
observed as under: -
xxxxxxxxxx
It is thus clear that the matter under investigation
pertains to siphoning /mis-utilization of huge amounts
collected from over 22 lakh depositors. The petitioner
is alleged to have a role in the said siphoning/ mis-
utilization.
Thus, it is not a fit case where the petitioner can be
granted anticipatory bail. Dismissed.”
15. During the course of arguments learned counsel for the
applicants argued firstly on the legality of the provisions of the Companies
Act as well as the procedure provided in the Act to investigate the matter
in hand as well as on the merits of the controversy alleging that there is
not even iota of evidence to justify even the arrest of the accused and now
to keep them in custody for all times to come and thus justifies bail for the
applicants. But without repeating all these contentions, the same will be
considered one by one as rebutted by the other party.
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16. Accordingly, keeping in mind the dictum in the aforesaid
decisions and the litmus test and after considering the contentions of both
the parties and records, it comes out that first of all so far as the plea of the
learned counsel for the applicants regarding the provisions of Companies
Act as well as the limitation of grant of bail as provided under Section
212(6)(ii) being manifestly arbitrary and unconstitutional on the
touchstone of Article 14 and 21 of the Constitution of India, is concerned,
this court has no jurisdiction to go into the legality of the provisions.
Above all during the course of arguments, it is undisputed case of the
parties that one Ramesh Chander Bawa, who is also involved in a similar
matter under the Companies Act filed a writ petition before the Hon’ble
Apex Court under the provisions of Article 32 of the Constitution, which
was listed as Writ Petition (Criminal) No.107 of 2019 but the Hon’ble
Apex Court vide judgment dated 10.04.2019 declined to entertain that
petition as prayed for under Article 32 of the Constitution and dismissed
the same accordingly. As such the plea that the arrest of the applicants is
in violation of the procedure established by law specially under the Cr.P.C.
and thus on this ground alone the applicants are entitled for bail is a
misconceived plea. On the contrary this court has to consider the issue of
bail in view of the limitations provided under Section 212(6)(ii) vis-a-vis
material on record, to come out of the limitations of section 212(6) of the
Companies Act.
17. Needless to say, so far as the procedure of investigations
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prosecution including arrest etc., is concerned, Section 212 of the
Companies Act provides a complete procedure step by step and stage by
stage and it is provided under this Section that on the orders of the
competent authority Serious Fraud Investigation Office (SFIO) will
initiate the investigations in the manner and follow the procedure provided
in the Chapter XIV of the Companies Act then such period as may be
specified in the order and under sub-section 5 the company and its
officials and employees, who are or have been in employment of the
company shall be responsible to provide all information, explanation,
documents and assistance to the Investigating Officer as he may require or
conduct all the investigations and ultimately sub-section 6 provides two
limitations saying that notwithstanding anything contained in the Cr.P.C.
the offence under Section 447 of the Companies Act shall be cognizable
and no person accused of any offence under those sections shall be
released on bail unless and until an opportunity to oppose the application
is granted to the Public Prosecutor and on such contest unless the court is
satisfied that there are reasonable grounds for believing that he is not
guilty of such offence and that he is not likely to commit any offence
while on bail subject to certain further exceptions which are admittedly
not applicable to the applicants. In addition to this, sub-section 7 says that
the limitation on granting bail specified in sub-section 6 are in addition to
the limitation under the Cr.P.C. Thus the only factual issue involves now
to decide these bail applications is whether as per the contentions raised
(Ravi Kumar Sondhi)

(UID No. HR-0026)
SJ, GGM, 20.04.2019.
Satish Kumar
on behalf of the applicants as to the facts and circumstances leading to the
arrest of the accused, whether there exist sufficient material on record
which prima facie justifies to say that there are reasonable grounds for
believing that the applicants are not guilty of such offence and they will
not indulge in any such offence in case they will be granted bail.
18. Accordingly, to start with as far as the facts and
circumstances leading to the arrest of the applicants on the basis of
material on record and its legality is concerned, admittedly the Hon’ble
Delhi High Court ordered the release of applicants on interim bail
observing some illegalities in the arrest procedure but the Hon’ble Apex
Court in Criminal Appeal Nos.538-539 of 209 (Arising out of SLP (Crl.)
Nos. 94-95 of 2019), Transfer Petition (Crl.) No.35 of 2019 (Serious
Fraud Investigations Office & another Vs. Vivek Harivyasi & others),
Vide judgment dated 27.3.2019, while allowing the appeals filed by the
complainant, SFIO set aside the order of the Hon’ble Delhi High court
dated 20.12.2018 passed in Writ Petition (Crl.) Nos. 3842 and 3843 of
2018, directed both the accused, Mukesh Kumar Modi and Rahul Virendra
Modi to surrender and remain present before this court. Thus there is no
need to go into the question of arrest of the applicants in view of the
findings of Hon’ble Apex Court.
19. No doubt, as argued by learned counsel for the applicants as
per the procedure provided under Section 212 of the Companies Act the
SFIO is duty bound to submit the final investigation report to the Central
(Ravi Kumar Sondhi)

(UID No. HR-0026)
SJ, GGM, 20.04.2019.
Satish Kumar
Government and in terms of Section 212(14) the Central Government has
the sole prerogative of taking further decision to direct the SFIO to initiate
prosecution and thus there may be a situation where the Central
Government may disagree but such a position cannot be pre-supposes to
make a ground to say at this stage that the prosecution of the accused is
based on unreasonable grounds or that they are not guilty of the offence
for which they have been arrested and even otherwise on this ground the
bail application cannot be allowed.
20. Admittedly, as per the definition of body corporate as
provided under Section 2(11) a body corporate does not include a co-
operative society or any other body corporate not being a company as
defined under the Companies Act or as notified by the Central
Government. But as per the provisions of sub-section 5 of the companies
Act, the complainant is empowered to investigate the affairs of the
company and its officers and employees who may be connected with a
society also. Then section 217(2) also empowers the SFIO to seek
information from any other body incorporate other than the company
under investigations and accordingly in this case it is a fact that the
investigations relates only to the affairs of the companies under
investigations including 22 CUIs created by one of the applicants being its
founder Director and there is no investigation in the affairs of the ACCSL
Society except that the investigation starts with the transferring of the
(Ravi Kumar Sondhi)

(UID No. HR-0026)
SJ, GGM, 20.04.2019.
Satish Kumar
funds of the Society to the companies and the SFIO sought requisite
information from the ACCSL required for the investigations into the
affairs of the CUIs, without investigating into the affairs of the ACCSL.
As such, the plea of lack of jurisdiction of SFIO to investigate this matter
also proves to be legally misconceived. And let us proceed as to the
contentions on merits on the question of bail.
21. As observed above, during the course of arguments the main
stress of the counsel for the applicants was that there is even no prima-
facie allegation with some material substance to show the involvement of
the applicants in the manner alleged. Needless to say during the pendency
of the bail application, in order to justify their defence, an application was
filed on behalf of the applicants praying to take on record some additional
material/documents and to direct the complainant-SFIO to consider those
documents and independently examine the allegations and that prayer was
allowed vide order dated 20.04.2019 and the complainant-SFIO called
upon to consider those documents and to submit a status report, which was
filed on today.
22. Accordingly, a reply was filed and copy of the same was
supplied to the counsel for the applicant accused. It was also alleged that
applicants have selectively provided certain documents but those are not
clear as to the details of Noida land deals. A status report was also
submitted in a sealed envelope showing proceedings relating to the above
aspect being part of the investigations file for the perusal of undersigned.
(Ravi Kumar Sondhi)

(UID No. HR-0026)
SJ, GGM, 20.04.2019.
Satish Kumar
And thus in nutshell it was clarified that even after considering all those
documents etc. and evidence relied upon by the applicants in defence to
the allegations levelled by the complainant-SFIO, there is nothing to say
that they have no direct involvement in the entire scam leading to a fraud
of serious economic magnitude as all the transactions as investigated by
the Investigating Agency are not only dubious in nature but there is no
lawful explanation from the applicants, who were given sufficient
opportunities to explain the veracity of those transaction and their Modus
Operandi in using the funds of the ACCSL Society by siphoning off the
same. The main explanation put forward to justify the transfer of the funds
from the accounts of the companies to the accounts of some partnership
firms alleging it to be legitimate investments, was that on account of some
amendment in the Companies Act, the companies were restricted from
accepting loans as the same would be categorized as deposits and as such
to wriggle out of those legal complications in view of the fact that
sufficient advance for purchase of some land deals was already paid and
thus to avoid loss, the purchase of land was undertaken in the name of
certain firms and not by the companies. However, this explanation has not
been found favour and accepted by the complainant-SFIO, which on the
basis of the investigations carried out till date, pointed out a lot of acts of
omissions and commissions on the part of the applicants which prima-
facie establish that both the applicants along with other accused persons as
per a deep rooted conspiracy, indulged into a modus-operandi with a main
(Ravi Kumar Sondhi)

(UID No. HR-0026)
SJ, GGM, 20.04.2019.
Satish Kumar
motive to siphon off the funds of the ACCSL Society by creating sham
companies and sham transactions in a camouflaged manner to cheat the
innocent members, who made deposits with the ACCSL with a hope to get
some good incentives on their investments.
23. No doubt, it is a fact that the limitations provided under
Section 212 are to be justified only on the basis of the prima-facie
evidence and is reiterated by the Hon’ble Apex Court in Ranjit Singh’s
case (supra), on the contrary, the court must arrive at a prima facie
findings based on prima-facie evidence as per the material on record to
show that the applicants who sought the bail have not committed the
alleged offence. Accordingly, in order to see this aspect, the under signed
has gone through all the investigations carried out by the complainant till
date including the investigations upto 20th December, 2018 and thereafter
after the re-arrest of the applicants and the further investigations done by
the SFIO till date. Then investigations also includes the statements of the
accused as well as the other witnesses recorded on oath as per the
provisions of section 217(4) of the Companies Act and voluminous
documents as detailed in the nottings through table and annexures and
from all this material on record and detailed investigations carried out, it
comes out that the complainant has examined the records of Adarsh Group
of Companies and LLPs (125 Nos.) (“CUIs”) and after examining the
records of those companies including financial statements it was found
that all those companies are involved in the business of real estate and
(Ravi Kumar Sondhi)

(UID No. HR-0026)
SJ, GGM, 20.04.2019.
Satish Kumar
only source of funds for these companies under investigations were the
loans availed from the Society ACCSL.
24. Then it is also a fact that the Society was also founded by the
applicant Mukesh Modi way back in the year 1999 as a Co-operative
Society to cater the needs of local masses in Rajasthan and ultimately it
gained the status of multi-State Co-operative Society having a
membership of about 20 lacs with a deposit of about more than 9,000
Crores and it was controlled by the applicant Mukesh Modi and his family
members or close associates. The ACCSL Society used to take deposits
from the public at large to pay back with interest and to lend the money
collected as loan to its members but the investigations reveals that most of
the loans were given to the entities/companies controlled by the applicant
Mukesh Kumar Modi. Even most of the companies under investigations,
(CUIs) were under the control of applicant, Mukesh Modi and all those
companies obtained loan from the Society without any proper
documentation and all those loans were utilized to purchase lands
primarily besides other assets and the Society has never initiated any
process to recover the loans and ultimately to wriggle out of that, all those
companies approached NCLAT and an order of moratorium has been
passed. But that will not help the applicants so far as the present case is
concerned.
25. So far as the plea of the counsel for the applicants that
(Ravi Kumar Sondhi)

(UID No. HR-0026)
SJ, GGM, 20.04.2019.
Satish Kumar
applicants have already joined the investigations and co-operated
throughout and they have deep roots in the society and there is no
likelihood of their absconding from the law is concerned, if it is so it by
itself is not sufficient to say that there are sufficient prima-facie
circumstances to say that the applicants are not guilty of the offence for
which they have been arrested. Then it is a matter of fact as disclosed by
SFIO that as on today about 35 so called influential and deep rooted
persons have absconded from India after being involved in such like
serious economic frauds. No doubt, it is a also fact that earlier as per the
orders of the Hon’ble Delhi High Court they were released on bail and
they remained on bail but later on when the order of the Hon’ble Delhi
High Court was set aside by the Hon’ble Apex Court vide judgment dated
27.03.2019 and the applicants surrendered before this court and they were
remanded to the custody of the complainant-SFIO, it was also alleged that
after being released on interim bail, both the petitioners were summoned
by the complainant-SFIO and its investigating officer on various
occasions but they remained non-cooperative in providing the information
and documents vital for the investigations and all efforts made to procure
the information or documents from them also proved in vain. Then it was
alleged that during the period from interim bail to the petitioners till date a
large number of social media messages via WhatsApp and Facebook have
been spread by the petitioners to influence poor depositors and to come
then false promises about the safety of their deposits and they have also
(Ravi Kumar Sondhi)

(UID No. HR-0026)
SJ, GGM, 20.04.2019.
Satish Kumar
uploaded number of videos on YouTube regarding the same and thus they
tried to influence the investors by various modes and also tried to tamper
the evidence to scuttle the ongoing investigations.
26. Even otherwise, when the under signed gone through the
entire investigations carried out till date, it comes out that basically all the
transactions which are alleged to be dubious transactions are based on the
documentary evidence and if we believe the explanation of the applicants
their simple stand is that all those transactions are based on legitimate
investments. Whereas the way and the modus-operandi used to do those
transactions as fully detailed in the investigation proceedings, shows that
there are repeated acts of omissions and commissions on the part of the
applicants in conspiracy and collusion with all other persons including
their family members as mentioned above. Even the main Society ACCSL
is under the control of the applicants and their family members. Even all
the 22 companies under investigations, CUIs are found to be in absolute
control of applicant Mukesh Modi and his family members or his close
associates or the employees of ACCSL who have been shown Directors.
There are details of Directors and their relationship with Mukesh Modi.
Then the investigations reveals that the majority of the CUIs including the
22 CUIs controlled by applicant Mukesh Modi and through his associates
are having nominal or insignificant network created just to make baseless
projected balance sheets just to get loans from the ACCSL and the ACCSL
(Ravi Kumar Sondhi)

(UID No. HR-0026)
SJ, GGM, 20.04.2019.
Satish Kumar
on its part without going into the financial audit or investigations of those
balance sheets including physical verification or viability reports
sanctioned loans to those CUIs and this itself shows that there was a
collusion and direct involvement of the applicants with a prima-facie mens
rea to siphon off the funds of the Society by creating CUIs with sham
assets and liabilities.
27. Then it is also in the investigations that out of a total loan of
about 3500 crores, only a payment of 250 crores have been returned out of
those loans leading to accumulation of the loan amount and no action
whatsoever was initiated on the part of the ACCSL to recover the loan
rather limits of sanctions keeps on increasing which further shows that the
concept of moratorium used by Adarsh Group is just to take an illegal
mode of temporary suspension from repayment of loan and interest.
28. Then there is a scam of siphoning off share application
money (SAM in short) and the investigations reveals that in all the 22
CUIs registered in Gurugram an amount equal to ₹ 66.00 crores have
been shown as share application money and this entire amount was
invested by 22 CUIs in ACCSL somewhere in the month of April 2016.
Out of the total amount of ₹ 226.00 crores as deposited by all the CUIs
and the illegality is writ large because the entire amount of SAM was
deposited with ACCSL in cash and then it was refunded by the ACCSL to
the same 22 CUIs as per their share and other entities though through
(Ravi Kumar Sondhi)

(UID No. HR-0026)
SJ, GGM, 20.04.2019.
Satish Kumar
RTGS mode but on the very same day the said amount was again
transferred back as loan repayment of ACCSl by those CUIs. Thus it is
apparent that a circular transaction mode has been adopted to siphon off
the funds giving it a lawful colour. If it was lawful money why it was not
deposited in their respective bank accounts by the CUIs and when the
applicants were directed to explain this modus-operandi, they tried to put
forward an unjustified explanation that the management was afraid that
the bank will ask questions regarding the sources of those funds which by
no stretch of imagination can be a lawful justification to go for cash
transactions.
29. Then a sum of ₹ 226.00 crores was utilized by the ACCSL for
purchase of suit lengths for its members from 22 different entities but on
investigation it was found that no sale purchase took place and all those
purchases were based on bogus, fake and fabricated documents. Then after
demonetization the the accused adopted the process of adjustment of the
book entries in their CUIs with the help of 22 shell entities to cover up the
money siphoned off from the 22 CUIs. Thus the investigations prima-facie
shows that there was a mens rea based on a modus-operandi with the
intention to cause wrongful loss to the Society and the public at large and
wrongful gain to the CUIs and its Directors, who are primarily the
applicants and their family members and there is direct role of both the
applicants in these transactions.
(Ravi Kumar Sondhi)

(UID No. HR-0026)
SJ, GGM, 20.04.2019.
Satish Kumar
30. Last but not the least, the explanation put forward to purchase
Noida land deals in the name of firms instead of companies on the basis of
an amendment in the Companies Act is also dubious as all the tripartite
agreements shows that all the 2/3 partnership firms created by the parties
was also owned by the family members of the applicants including one
Vaibhav Lodha, who is stated to be son-in-law of applicant Mukesh Modi
and who have signed the tripartite agreement on behalf of most of the
firms. Then there are hundreds of dubious transactions between different
companies. Thus the fact remains that at this stage there is sufficient
prima-facie material on record which satisfies this court at this stage to say
that there are no reasonable grounds to believe that both the applicants are
not guilty of such offence or that there are not likely to commit any
offence of the same nature while on bail and thus the case of the applicant
squarely falls under the provisions of Section 212(6)(ii) of the Companies
Act justifying denial of bail to the applicants. Rather the entire scam is
based on a web of a dubious transactions made with an only intention to
siphon off the funds of the Society by creating sham companies and other
legal entities and to usurp the funds of the Society to the detriment of the
public at large. Thus it being a case of scam involving a serious Economic
offence of cheating and fraud, having deep rooted conspiracies and
involving huge loss of public funds needed to be viewed very seriously
and to be considered as gravest from of offence affecting economy of
Country as a whole and thereby posing serious threat to financial health of
(Ravi Kumar Sondhi)

(UID No. HR-0026)
SJ, GGM, 20.04.2019.
Satish Kumar
country and being a offence of class apart, the same are required to be
viewed with a more serious manner
31. As a upshot of above discussion, without commenting
anything further on the merits of the controversy, both the bail
applications of both the applicants are dismissed.
32. Needless to say, any observations made in this order
including some facts taken from the main file of SFIO and mentioned in
this order directly or indirectly, is limited only to form an opinion to
consider the bail plea of the applicants that too for a limited purpose of
requirements of section 212(6)(ii) and thus the same cannot be
misconstrued as an expression of opinion on the merits of controversy or
any impact on the ongoing investigations and SFIO shall complete the
investigations and submit its report to the concerned authority without
being influenced by the same. Record of bail applications be tagged with
the remand papers. Sd/-
Pronounced in open court. (Ravi Kumar Sondhi),

Dated: 20.04.2019. (UID No.HR0026)
Satish Kumar Sessions Judge,

Gurugram.
Certified that all the pages of this order have been
checked and signed by the under signed.
Sd/-
(Ravi Kumar Sondhi),
(UID No.HR0026)
Sessions Judge,
ASHOK
Digitally signed by ASHOK
KUMAR ARORA
DN: cn=ASHOK KUMAR
ARORA,ou=JUDICIAL,CID -
Gurugram.
KUMAR 6449643,o=OFFICE OF
DISTRICT AND SESSIONS
JUDGE
ARORA GURUGRAM,st=Haryana,c
=IN
Date: 2019.04.22 18:36:11
IST
(Ravi Kumar Sondhi)

(UID No. HR-0026)
SJ, GGM, 20.04.2019.
Satish Kumar

Ravi Kumar Sondhi

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IN THE COURT OF RAVI KUMAR SONDHI,

(UID No. HR-0026)

Rahul Modi son of Virender Modi, resident of Modi House, Sirohi,

Serious Fraud Investigation Office.

Serious Fraud Investigation Office.

For offences as punishable under Section 447 of the

File No.: SFIO/INV/AOI/2018-19-AGC&L/842-966

Applications for regular bail under section 439 Cr.P.C.

(Ravi Kumar Sondhi)

Advocate, Sh. Vishal Gupta &

1. This order will dispose of above referred two bail

applications moved by applicants, Rahul Modi and Mukesh Modi

2. Facts in brief, leading to filing of these bail applications are

Central Government through Ministry of Corporate Affairs (hereinafter

referred as “MCA”), whereby, MCA, in the public interest, into the

affairs of Adarsh Group of Companies and LLPs (125 Nos.) (“CUIs”), by

Serious Fraud Investigation Office (hereinafter referred as “SFIO”) , as

by the accused persons by creating sham companies justifying prosecution

(Ravi Kumar Sondhi)

collectively mentioned as Adarsh Group of Companies and LLPs, further

referred as Companies under investigations or CUIs, for short.

Accordingly after inquiry and investigations, both the applicants along

with their co-accused, were arrested on 10.12.2018, on the basis of

material in possession collected during investigation and after recording

section 447 of the Companies Act, 2013.

3. It is also alleged by complainant-SFIO that the investigations

Credit Cooperative Society Limited, Ahmedabad (hereinafter referred as

“ACCSL”), based on unsubstantiated, questionable projected balance

sheets and financial statements. These funds ultimately belong to 22 Lakh

depositors (with outstanding balance due towards them being upwards of

diligence or arm’s length processes. Even both, the CUIs as well as

ACCSL are controlled by the applicants and their family/members as

(Ravi Kumar Sondhi)

the public funds.

4. Accordingly now by way of these applications, the applicants

applicant, Mukesh Modi is the founder of the ASCCSL whereas the

applicant Rahul Modi is the signatory in various CUIs and Managing

Director of ACCSL but there is no evidence whatsoever with the

investigating Agency to show that there was any act of omission,

concealment of any fact or abuse of position by any of them. The

served by keeping them into custody.

5. Besides above, the applicant Mukesh Modi also alleged that

(Ravi Kumar Sondhi)

bail on this ground also. Similarly, applicant-accused Rahul Modi also

orders of the NCLAT dated 04.10.2018 and 31.10.2018 respectively. The

entire matter is based on documentary evidence and thus sought regular

6. On notice the bail application was contested by the

complainant SFIO reiterating all the allegations as already referred above.

In this regard, it was also explained by the complainant that investigation

Cooperative Society Limited, Ahmedabad (Hereinafter referred as

“ACCSL”), based on unsubstantiated, questionable projected balance

sheets and financial statements. These funds ultimately belong to 22 Lakh

depositors (with outstanding balance due towards them being upwards of

the applicants and their family members or associates. It is further

committed by CUI’s. The statements taken on oath and other material

the public funds.

(Ravi Kumar Sondhi)

7. As such, it was alleged that there are no reasonable grounds

case, the applicants are not entitled to be released on bail.

8. Arguments addressed by Sh. Vikram Chaudhri, Senior

of besides going through the records.

9. After considering the contentions of both the parties and the

reference the provision is reproduced as under: