Abdul Jabbar, Abdul Kareem and Febina Abdul Kareem v. State of Kerala and others

BA 1712/23 1 ## **`IN THE HIGH COURT OF KERALA AT ERNAKULAM`** ## **`PRESENT`** ``` THE HONOURABLE MR.JUSTICE MOHAMMED NIAS C.P. ``` ``` MONDAY, THE 9[TH] DAY OF OCTOBER 2023 / 17TH ASWINA, 1945 ``` ``` BAIL APPL. NO. 1712 OF 2023 ``` ``` CRIME NO.271/2023 OF PERINTHALMANNA POLICE STATION, MALAPPURAM ``` ## **`PETITIONER/ACCUSED 1,2 & 3:`** ``` 1ABDUL JABBAR, AGED 38 YEARS,S/O MOHAMMED,PUTHUKKI HOUSE, KUNDURKUNNU,PALAKKAD,KERALA., PIN - 678583 2ABDUL KAREEM, AGED 45 YEARS,S/O MOHAMMED SHEERIEF ,PAZHERY HOUSE, MANNARKKAD, PALAKKAD, KERALA, PIN - 678582 3FEBINA ABDUL KAREEM, AGED 40 YEARS,W/O ABDUL KAREEM, PAZHERY HOUSE, MANNARKKAD, PALAKKAD. KERALA, PIN - 678582 ``` ``` BY ADVS. S.SREEKUMAR (SR.)(S-571) M.P.SHAMEEM AHAMED AKHIL PHILIP MANITHOTTIYIL ``` ## **`RESPONDENTS/STATE & DE FACTO COMPLAINANT :`** ``` 1STATE OF KERALA, REPRESENTED BY PUBLIC PROSECUTOR,HIGH COURT OF KERALA, PIN - 682031 2THE STATION HOUSE OFFICER, PERINTALMANNA POLICE STATION, MALAPPURAM DISTRICT, PIN - 679322 3LATHIKA KEEZHEPPAT W/O SATHEESH VASUDEVAN NAIR, VASOBIYA PALACE, PAZHERI HERITAGE GARDEN, THOTTAKKARA ROAD, PERINTHALMANNA SANTHI NAGAR, MALAPPURAM ``` BA 1712/23 2 ``` BY SR.PP SRI.P.G.MANU(MAMMALASSERY) ``` ``` BY ADVS. AKHIL SURESH G.HARIKUMAR (GOPINATHAN NAIR) ``` ``` THIS BAIL APPLICATION HAVING COME UP FOR ADMISSION ON ``` ``` 4.10.2023, THE COURT ON 09.10.2023 PASSED THE FOLLOWING: ``` BA 1712/23 3 ## **MOHAMMED NIAS C.P., J** **............................................................** ## **Bail Application No.1712 of 2023** ........................................................... Dated this the 9[th] day of October, 2023 ## **ORDER** Apprehending arrest in crime No.271/2023 of Perinthalmanna police station, Malappuram district, for the offences under Section 420 read with 34 IPC, this application for bail is filed by accused Nos.1 to 3. 2. The allegation made by the de facto complainant in Annexure-II complaint is that she is a shareholder of a company by the name 'Aagaz Properties Pvt. Ltd.' and the first petitioner, the Managing Director of the said company, had availed a loan facility of INR 8,00,00,000/- from the South Indian Bank and the Company had offered its landed assets as collateral security for the said loan. This, according to the de facto complainant, is in violation of Sections 185 and 186 of the Companies Act, 2013, inasmuch as no special resolution was passed by the Company for the above purpose and the landed assets were offered as a collateral security only on the basis of a board resolution, which is illegal, and this has prejudiced the rights of the de facto complainant, a shareholder. The Directors of the company taking BA 1712/23 4 advantage of their dominant position and with the intention of cheating the petitioner had committed the act. 3. The learned Senior Counsel for the petitioners Sri.S. Sreekumar, instructed by Sri. M.P Shameem Ahamed submits that the requirement of passing a special resolution under Section 185 of the Companies Act in connection with providing a loan to the Directors or giving security in connection with the loan availed by the Directors is not applicable to private companies as private companies are specifically exempted from the applicability of Section 185 vide Notification dated 5.6.2015. That apart, the restriction under Section 186(ii) has no application with respect to the loan given to employees or security given by a Company for the loan availed by the employee and since the first petitioner who is the Managing Director and employee, neither Section 185 nor 186 has any application. He also argues that, at any rate, the de facto complainant had approached the Registrar of Companies on 30.12.2022 making an identical complaint, pursuant to which the company and the petitioners were directed to offer their reply and the same was done and further action awaited. It is his further argument that in the instant case, custodial interrogation is not at all required and the complaints before various Forums are made only to harass the petitioners. It is also pointed out that the third petitioner who is the wife of the second petitioner had resigned from directorship as early as 16.9.2011 which is evident from Annexure-A4 and the second petitioner had resigned from the directorship with effect from 11.5.2015 as evident from BA 1712/23 5 Annexure-A3 Form filed with the Ministry of Corporate Affairs. Thus, they had no role in the board resolution by which sanction was given for offering the company's assets as security for the loan availed by the first petitioner, the Managing Director. 4. The de facto complainant, represented by Adv. Akhil Suresh opposed the bail application contending that the actions of the petitioners were in gross violation of Section 185 of the Companies Act, 2013, and that by offering a company's property as a security for the loan availed, the loss is caused to the company and its shareholders and, therefore, Section 420 read with 34 of IPC is clearly attracted. He argues that a charge has been created over the property by the Company without the knowledge of the shareholders and that going by Section 185 of the Companies Act, a special resolution is required before sanctioning a loan to the Directors at the instance of 50% of shareholders, the complaint was preferred. He argues that going by the gravity of the offence, the bail application deserves to be rejected. 5. The learned Public Prosecutor was also heard. 6. After hearing the rival submissions, a few facts are to be noticed. A complaint has already been preferred before the Registrar of Companies on 20.12.2022 making identical allegations. On receipt of the complaint, the response of the petitioners was sought which was provided on 23.02.2023 itself. Both sides submitted that no further action has been taken by the Registrar possibly because of the pendency of the litigation. As rightly BA 1712/23 6 pointed out by the learned Senior Counsel, there are provisions in the Companies Act dealing with the procedure of instituting a complaint in cases where fraud is alleged. It is also to be noted that the issue raised in the complaint is essentially a legal one, the correctness of which is to be decided on the basis of documents. There is hardly any room for a custodial interrogation in the instant case. Since the legality of the action of the petitioners is already pending consideration before the Registrar, as stated above, and also before this Court in a writ petition, I do not intend to enter into any findings on the rival contentions, as it is not warranted in this bail application. Since I find that a custodial interrogation is not required and also for the reasons stated above, I am inclined to allow this application on the following conditions:- - i. The petitioners shall appear before the Investigating Officer within ten days from today and subject themselves to interrogation. - ii. After interrogation, in the event of the Investigating Officer deciding to arrest the petitioners, they shall be released on bail on executing separate bond for a sum of Rs.1,00,000/- (Rupees one lakh only) with two solvent shorties each for the like sum to the satisfaction of the officer concerned. - iii.The petitioners shall appear before the Investigating Officer for interrogation as and when directed. BA 1712/23 7 - iv.They shall also co-operate with the investigation and shall not directly or indirectly make any inducement, threat or promise to any person acquainted with the facts of the case to dissuade them from disclosing such facts to the court or the police officer. - v. The petitioners shall not leave India without the permission of the jurisdictional court. - vi.The petitioners shall not commit any similar offence while on bail. - vii.If any of the above conditions are violated by the petitioners, the jurisdictional court is empowered to cancel the bail in accordance with law. It is made clear that it is within the power of police to investigate the matter and, if necessary, to effect recoveries on the information, if any, given by the petitioners, even when the petitioners are on bail as per the judgment of the Apex Court in **Sushila Aggarwal and others v. State ( NCT of Delhi) and another [2021 (1) KHC 663]** . Sd/- **MOHAMMED NIAS C.P., JUDGE** okb/ 8 BA 1712/23 ## **`APPENDIX OF BAIL APPL. 1712/2023`** |`PETITIONER ANNEXURES`|| |---|---| |`Annexure A1`|`COPY OF THE FIR IN CRIME NO.271/2023 IS`| ||`PRODUCED AND MARKED AS ANNEXURE A1`| |`Annexure A2`|`COPY OF THE COMPLAINT DATED 07.12.2022 FILED`| ||`BY MR.SATHEESH VASUDEVAN`| |`Annexure A3`|`COPY OF DIR 12 FILED WITH MINISTRY OF`| ||`CORPORATE AFFAIRS FOR THE RESIGNATION OF THE`| ||`2ND PETITIONER FROM THE BOARD OF DIRECTORS`| |`Annexure A4`|`COPY OF THE FORM 32 FILED FOR THE`| ||`RESIGNATION OF THE 3RD PETITIONER FROM THE`| ||`DIRECTORSHIP`| |`Annexure A5`|`COPY OF BOARD RESOLUTION FOR APPOINTING 1ST`| ||`PETITIONER AS MANAGING DIRECTOR`| |`Annexure A6`|`COPY OF THE EMPLOYMENT AGREEMENT DATED`| ||`07.05.2015`| |`Annexure A7`|`COPY OF THE NOTIFICATION NO G.S.R (464) (E)`| ||`DATED 05.06.2015`| |`Annexure A8`|`COPY OF THE COMPLAINT FILED BY THE DE-FACTO`| ||`COMPLAINANT THROUGH HIS POWER OF ATTORNEY`| ||`HOLDER BEFORE SOUTH INDIAN BANK`| |`Annexure A9`|`COPY OF THE LETTER DATED 02.01.2023 ISSUED`| ||`BY SOUTH INDIAN BANK`| |`Annexure A10`|`COPY OF THE COUNTER FILED BY THE PETITIONERS`| ||`HEREIN IN WPC 2869/2023`| |`Annexure A11`|`COPY OF THE LETTER DATED 23.01.2023 FILED BY`| ||`THE 1ST PETITIONER BEFORE THE SOUTH INDIAN`| ||`BANK`| |`Annexure A12`|`COPY OF THE RESIGNATION LETTER DATED`| ||`11.05.2015 GIVEN BY MR. SATISH VASUDEVAN`| ||`SATHEESH NAIR`| BA 1712/23 9 - `Annexure A13 COPY OF THE FORM AOC 4 ALONG WITH THE INDEPENDENT AUDITORS REPORT AND BALANCE SHEET OF AAGAZ PROPERTIES PRIVATE LIMITED FOR THE YEAR ENDING 31.03.2018` - `Annexure A14 COPY OF THE LETTER DATED 14.03.2023 ISSUED BY SOUTH INDIAN BANK` - `Annexure A15 COPY OF THE COMPLAINT DATED 20.12.2022 FILED BY DE-FACTO COMPLAINANT BEFORE THE REGISTRAR OF COMPANIES` - `Annexure A16 COPY OF THE LETTER DATED 30.12.2022 ISSUED BY REGISTRAR OF COMPANIES; KERALA` - `Annexure A17 A COPY OF THE REPLY DATED 23.02.2023 FILED BY AAGAZ PROPERTIES PRIVATE LIMITED BEFORE THE REGISTRAR OF COMPANIES` - `Annexure A18 COPY OF THE EMAIL DATED 30.05.2023 ALONG WITH THE MOU` - `RESPONDENT ANNEXURES Annexure R3(a) TRUE COPIES OF FORM NO. 66 FOR THE FINANCIAL YEARS 2012-13 TO 2013-14 IS ANNEXED` - `Annexure R3(b) TRUE COPIES OF THE FORM NO. MGT- 5 7/MGT-7A FOR THE FINANCIAL YEARS 2014-15 TO 2020-21 IS ANNEXED` - `Annexure R3(c) TRUE COPY OF THE RELEVANT PAGES OF THE PASSPORT OF MR. SATISH VASUDEVAN SATHI NAIR IS ANNEXED` - `Annexure R3(d) TRUE COPY OF THE REVENUE RECORDS OF THE COMPANY BEFORE AND DURING THE PERIOD OF MR. SATISH VASUDEVAN SATHI NAIR BECOMING A SHAREHOLDER IS ANNEXED` ``` PETITIONER ANNEXURES Annexure A 19COPY OF THE AGM NOTICE FOR THE YEAR 2018-19 Annexure A 20COPY OF THE ATTENDANCE SHEET FOR THE AGM ``` 10 BA 1712/23 ``` HELD ON 28.09.2019 Annexure A 21COPY OF FORM 32 FILED FOR THE APPOINTMENT OF 3RD RESPONDENT ``` ``` RESPONDENT ANNEXURES Annexure R3(e)A TRUE COPY OF THE CREDIT FACILITY AGREEMENT DATED 21.02.2018 Annexure R3(f)A TRUE COPY OF THE BOARD RESOLUTION DATED 23.02.2018 ```