New Delhi: The Delhi High Court on Friday questioned the procedure followed by the Serious Fraud Investigation Office (SFIO) in its probe against Bhushan Steel and the arrest of the company’s erstwhile promoter Neeraj Singal, as the agency registered a case only after his arrest for allegedly siphoning off funds worth over Rs 2,000 crore.
“What is this procedure that no case is registered, but you (SFIO) move a remand application? There is not a file number or a case file or case diary. What kind of procedure is this? How can you arrest without a registered case? You have been investigating for two years, but with no registered case. It is extraordinary,” a bench of justices S Muralidhar and Vinod Goel said.
The observations by the court came during the hearing of a habeas corpus plea moved on behalf of Singal, through advocate Pramod Kumar Dubey, seeking his release on interim bail on the grounds that his arrest on 8 August and continued judicial custody were illegal.
During the hearing, which will continue on 27 August, the Bench asked Additional Solicitor General (ASG) Maninder Acharya whether under section 212 of the Companies Act, the director or employee of a company or someone connected to it can be arrested without first investigating the private entity. The court said the SFIO was not even sure if the Centre would proceed against the company, but still went ahead and arrested someone and put him in jail.
“Without the company being held guilty, can you arrest a person connected to the company under the Companies Act? If yes, how? If no, then justify the arrest,” it said. Parliament had made it extremely difficult for the SFIO, which comes under the Ministry of Corporate Affairs, to arrest someone, it added.
Defending the SFIO’s actions, the ASG argued that the agency’s probe was at an initial stage and further investigation might indicate that the directors had “looted or victimised” the company and its shareholders. A person is arrested during the investigation to prevent him from tampering with evidence and influencing witnesses, according to the ASG.
Singal was arrested on 8 August in relation to an SFIO investigation into the affairs of Bhushan Steel Ltd and Bhushan Steel and Power Ltd, pursuant to a May 2016 order of the Centre under the Companies Act. He was the first person ever to be arrested by the SFIO, which was given this power only in August last year. The petition, against Singal’s arrest and continued custody, also challenged certain provisions of the Companies Act on the grant of bail to persons arrested under the Act, claiming that they were violative of fundamental rights since they imposed “unreasonable restrictions”. The plea also claimed that his arrest was illegal since no grounds for arrest were communicated to him orally or in writing by the probe agency at the time of arrest. It also said that the power of arrest cannot be exercised retrospectively for the offences allegedly committed prior to coming into force of the provisions of the Act.