A division bench of the Delhi High Court consisting of Justice Siddharth Mridul and Justice Sangita Dhingra Sehgal granted interim bail to the founder of the Adarsh Cooperative society Mukesh Modi and CEO Rahul Modi saying that the arrest of the duo was “absolutely illegal and patently suffers from the vice of lack of legal sanction and jurisdiction”.
The duo was arrested by the Serious Fraud Investigation Office (SFIO) on December 10 for an alleged fraud of syphoning over Rs. 230 crores from 22 companies registered in Gurgaon and other entities.
However, the Court granted bail subjecting them to a condition of furnishing a personal bond of Rs.500000 each with two local securities each of the like amount. The bench also directed them to surrender their passports to investigating officer and asked them not to leave Delhi and further to cooperate with the investigation as and when required.
The orders of the Court came during the hearing of a Habeus Corpus Petition filed by the duo contending that their arrest was unlawful and illegal.
The Court, during the course of proceedings, opined that Rahul Modi and Mukesh Modi being part of a respectable business family and also especially considering their hold in the society, said that there was no cogent material produced before it to prove that the duo would misuse the liberty granted to them by this court.
Senior advocate Kapil Sibal, appearing for them contended that the SFIO was given a timeframe of complete it's investigation within three months time that too expired on September 19.
The bench being agreed with the contention that the SFIO has failed to comply with the order passed by the competent authority dated June 20 and held, “A statutory body must be strictly held to the standards by which it professes its conduct to be judged”
It was also mentioned,
“…with the norms set out by the SFIO itself, warranting investigation to be completed within the timeframe, stipulated by the Central Government, that we are of the considered view that the order of arrest suffers from the vice of lack of jurisdiction, unlawful and illegal…”.
The Ahmedabad based Adarsh cooperative society was established in 1999 which later found to violate Section 25 of the Multi-State Co-operative Societies (MSCS) Act, 2000. Mukesh Modi and his family members were allegedly running Ponzi schemes under the disguise of cooperative society with over 20 lakh depositors and they were accused of utilizing the deposits of the society for personal gains, which further amounts to the violation of cooperative principles.
Earlier, the Central Registrar has asked the Gujarat Police to look into the dealings of Adarsh Credit Cooperative Society