SFIO Procedure in Former Bhushan Steel MD Neeraj Singal’s Arrest Questioned by Delhi High Court



SFIO Procedure in Former Bhushan Steel MD Neeraj Singal’s Arrest Questioned by Delhi High Court

On Friday, the Delhi High Court bench of Justice S Muralidhar and Justice Vinod Goel, during the hearing of a plea related to the probe of Serious Fraud Investigation Office (SFIO) against Bhushan Steel and the arrest of the company’s erstwhile promoter Neeraj Singal, questioned the procedure followed by the agency as itregistered a case only after his arrest for allegedly extorting funds worth over Rs. 2,000 crore.

On 8 August,pursuant to a May 2016 order of the Centre under the Companies Act, Singal was arrested in relation to an SFIO investigation into the affairs of Bhushan Steel Ltd and Bhushan Steel and Power Ltd and happened to be the first person ever to be arrested by the SFIO, after it got the power in August last yearThe Court was hearing 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.

The petition 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”. It was also claimed in the plea 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, adding that for the offences allegedly committed prior to coming into force of the provisions of the Act, the power of arrest cannot be exercised retrospectively

During the hearing, the bench said, 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.

Saying that 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, the Court 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. “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 asked further adding that the Parliament had made it extremely difficult for the SFIO, which comes under the Ministry of Corporate Affairs, to arrest someone

Speaking for SFIO, it was argued by the ASG that the probe being at an initial stage, the agency apprehended that further investigation might indicate that the directors had “looted or victimised” the company and its shareholdersand person is arrested during the investigation to prevent him from tampering with evidence and influencing witnesses

The hearing is to continue on 27 August, 2018.

Delhi High Court
Serious Fraud Investigation Office (SFIO)

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