The Delhi High Court has refused to grant bail to the person accused of diversion of loan funds, round tripping and money laundering.
The bench of Justice Anoop Kumar Mendiratta has observed that apart from the statements of the witnesses recorded under Section 50 of PMLA, the data manifesting relationship of stock, turn over and borrowings by SBFL reflects that SBFL started taking loans from different banks with the help of inflated turn over and fictitious closing stocks.
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Background
The consortium of banks led by State Bank of India engaged the services of BDO India LLP for conducting forensic audit of SBFL and the Forensic Auditor submitted the Audit Review.
The Forensic Auditor reported many discrepancies and investigation revealed that accused including Siddharth Kumar (petitioner) and Tarun Kumar were actively involved in the illegal transactions mentioned in the Forensic Report. SBFL was further found to have resorted to diversion of loan funds, round tripping and money laundering.
It was also revealed that SBFL was a family managed business mainly for the profit of Kewal Krishan Kumar and other family members and the key decision making was kept in the hands of Kewal Krishan Kumar, Siddharth Kumar (petitioner), Tarun Kumar, Divyarth Kumar and Sunanda Kumar by virtue of Directorship, Shareholding or being Authorized Signatories.
The inflated inventory/stocks in the Books of Accounts was accompanied with increased borrowings and the loans were taken keeping stocks as a base of borrowings. Subsequently, in the Board of Directors’ Meeting, Directors of SBFL in league with Siddharth Kumar (petitioner), Tarun Kumar, Raman Bhuraria fraudulently declared the stock worth Rs.3035.52 crores as obsolete/damaged by pest.
Investigation also revealed that Shri Kewal Krishan Kumar, Tarun Kumar, Siddharth Kumar (petitioner), Raman Bhuraria (CA) and others were involved in paper sale transaction without conducting any actual business transactions which resulted in false inflation of financials. The complex web of transactions is stated to have been created and borrowed funds were channelized through bank accounts of several Shakti Bhog entities and shell entities operated inter alia by Devki Nandan Garg and Ashok Kumar Goel.
Petitioner’s Arguments
The petitioner contended that the allegations regarding alleged fraud and money laundering are vehemently denied and it is urged that they can be ascertained only during trial. The role of the applicant/petitioner is further stated to be much less than of co-accused Tarun Kumar whose bail was declined by the Apex Court.
The petitioner argued that petitioner has spent over 26 months in custody, which is about little less than 1/3rd of the maximum punishment for offence under Section 4 of PMLA. Seriousness of offence cannot be used as a basis to deny bail, since the trial is protracted. The veracity of statements of witnesses recorded under Section 50 of PMLA is a matter of trial and cannot be accepted as gospel truth.
ED’s Arguments
The ED argued that role of the petitioner is graver than co-accused Tarun Kumar, whose bail application stands rejected by the Apex Court. Petitioner is stated to be son of Kewal Krishan Kumar, who was the main Promoter and Managing Director of SBFL, while Tarun Kumar was the Vice President of SBFL and nephew of Kewal Krishan Kumar. The averments raised by the petitioner with reference to the status of petitioner in predicate offence, parity with co-accused Raman Bhuraria (CA) who was granted bail by this Court and delay in completion of trial are stated to have also been raised by co-accused Tarun Kumar, whose bail application was rejected.
Conclusion
The court held that the stock worth Rs.3035.52 crores was declared as obsolete/damaged by pest without suitably accounting for the same, prima facie, reflects mala fide intention. There appears to be sufficient material on record, which reflects that the petitioner was knowingly involved in the process and also appears to be the beneficiary of the proceeds of the crime.
The court stated that there is no reasonable grounds for believing that petitioner is not guilty of offence as provided under Section 45 of PMLA. Considering the evidence on record, serious nature of economic offence whereby the public funds to the tune of Rs.3035.52 crores have been siphoned off.
The court held that the application preferred on behalf of co-accused Tarun Kumar stands rejected by theApex Court, this Court is of the considered opinion that the petitioner is not entitled to bail.
Case Details
Case Title: Siddharth Kumar Versus ED
Case No.: BAIL APPLN. 1839/2023, CRL.M.A. 29686/2023
Date: 19/11/2024
Counsel For Petitioner: Tanveer Ahmed Mir
Counsel For Respondent: Zoheb Hossain
