Supreme Court Condemns Evasion Tactics in Multi-Crore Fraud Case: Brazen Attempt to Stall Proceedings: Non-Bailable Warrants & Proclamation Orders Upheld in Light of Economic Offence Gravity
Kiran Raj
The Supreme Court of India Division Bench of Justice Bela M. Trivedi and Justice Prasanna B. Varale held that the anticipatory bail orders passed by the High Court were perverse and untenable in law, having been issued in disregard of the statutory mandate under Section 212(6) of the Companies Act and without considering the conduct of the accused. The Court allowed a batch of appeals challenging the grant of anticipatory bail in fourteen cases arising from a multi-layered financial fraud involving the Adarsh Group of Companies and dismissed three appeals where such relief had been granted by the Special Court. The Bench held that where non-bailable warrants remained unexecuted due to deliberate non-cooperation, the Special Court was justified in initiating proclamation proceedings under Section 82 of the Code of Criminal Procedure.
The appellant in this matter is the Serious Fraud Investigation Office (SFIO), a statutory body constituted under Section 211 of the Companies Act, 2013. Pursuant to an order dated 20.06.2018 issued by the Ministry of Corporate Affairs (MCA) under Section 212(1)(c) of the Companies Act and Sections 43(2) and 43(3)(c)(i) of the Limited Liability Partnership Act, 2008, the SFIO was directed to investigate the affairs of 125 companies associated with the Adarsh Group. A supplementary order dated 25.02.2019 extended the investigation to include 20 more companies and two individuals.
Upon completion of the investigation, on 09.05.2019, the SFIO submitted its report to the MCA recommending prosecution. On 18.05.2019, a criminal complaint (COMA/5/2019) was filed before the Special Court at Gurugram against 181 accused persons, including the respondents in these appeals. The complaint was filed under Section 439(2) read with Sections 436(1)(a), 436(1)(d), and Section 212 of the Companies Act, 2013; Section 621(1) of the Companies Act, 1956; Section 50 of the Limited Liability Partnership Act, 2008; and Section 193 of the Code of Criminal Procedure. The complaint sought cognizance and prosecution for alleged offences under the Companies Acts and the Indian Penal Code.
According to the complaint, Adarsh Credit Cooperative Society Limited (ACCSL), a Multi-State Credit Cooperative Society founded by Mukesh Modi, accepted deposits from its members, who were predominantly low- to middle-income individuals. As of 31.05.2018, ACCSL had over 800 branches, more than 20 lakh members, and ₹9,253 crores in outstanding deposits.
It was alleged that Mukesh Modi, along with Rahul Modi and other associates, incorporated approximately 125 companies—collectively referred to as the Adarsh Group of Companies—and placed them under the control of family members or associates. The SFIO found that illegal loans amounting to ₹1,700 crores had been extended by ACCSL to 70 Adarsh Group companies and certain others. These loans violated the legal position that companies could not be members of a multi-state cooperative society. The total outstanding from such loans stood at ₹4,120 crores as on 31.03.2018.
It was further alleged that these loans were supported by forged financial and loan documents, and the funds were siphoned off by directors in collusion with others. The balance sheets of the involved companies recorded these amounts as loans from a financial institution.
On 03.06.2019, the Special Court took cognizance of the complaint and issued bailable warrants of ₹10,000 with one surety each, directing all accused to appear on 30.07.2019. Clerical corrections to the order were made on 11.07.2019.
The respondents-accused failed to respond to the bailable warrants and were found to have avoided execution by concealing themselves. Consequently, the Special Court issued non-bailable warrants (NBWs) against them on multiple occasions. In several cases, the Special Court initiated proclamation proceedings under Section 82 Cr.P.C. on the ground that the accused had deliberately absconded.
The status of each of the respondents was detailed in a tabulated format in the judgment. For example, in the case of Aditya Sarda (SLP (Crl.) No. 13956/2023), two bailable warrants and seven NBWs were issued between June 2019 and September 2021. A proclamation order was passed on 25.03.2022. His anticipatory bail application was denied by the Special Court on 08.07.2020 but later granted by the High Court on 20.04.2023.
Similar patterns emerged in other appeals—such as those involving Abhay K. Shah (SLP (Crl.) No. 14033/2023), Yash Vardhan (SLP (Crl.) No. 13965/2023), and Rahul Modi (SLP (Crl.) No. 13983/2023)—where multiple warrants were issued, proclamation orders were passed, and anticipatory bail was eventually granted by the High Court after initial rejection by the Special Court.
In contrast, in three matters—Akshat Singh and Naveen Kumar (SLP (Crl.) Nos. 13973–13974/2023), and Mahesh Dutt Sharma (SLP (Crl.) No. 15326/2023)—the Special Court itself had granted anticipatory bail. The SFIO's appeals challenging these grants were dismissed by the Supreme Court.
The offences involved were categorized as serious economic offences. Section 212(6) of the Companies Act, which prescribes twin conditions for bail in cases involving Section 447 (fraud), was cited as applicable. The prosecution emphasized that these conditions were ignored in the High Court’s grant of bail.
The SFIO contended that the accused, by failing to appear and resisting legal process, caused deliberate delays in adjudication. The High Court's orders granting anticipatory bail were passed in March–April 2023 despite the accused having previously absconded or concealed themselves.
The Supreme Court began by examining the conduct of the respondents post-cognizance. It noted:
“The facts that have emerged from the record clearly demonstrate the respondents in this set of appeals had avoided the execution of the non-bailable warrants even after their anticipatory bail applications were rejected in 2019–2020–2022 by the Special Court.”
Addressing the argument that the respondents were unaware of proceedings, the Court stated:
“The very fact of their filing anticipatory bail applications before the Special Court, falsifies the submissions made on behalf of the learned counsels for the said respondents that the respondents were not aware of the complaint proceedings filed by the SFIO in the Special Court.”
“There is no justification coming forth from the said respondents as to why after the rejection of their anticipatory bail applications by the Special Court, they did not appear before the Special Court and made themselves unavailable at the given addresses furnished by them during the course of the investigation by the SFIO.”
On the legality of proclamation proceedings, the Court stated:
“Since the said respondents had concealed themselves and avoided to remain present before the Special Court despite they having the knowledge about the pendency of the complaint proceedings, the Special Court was perfectly justified in initiating the proclamation proceedings against the said respondents.”
Regarding the twin conditions under Section 212(6) of the Companies Act, the Court observed:
“The said Orders have been passed in utter disregard of the mandatory conditions contained in Section 212(6) of the Companies Act, and also ignoring the conduct of the respondents-accused.”
“Such orders being in the teeth of the legal position settled by this Court, as also in the teeth of the Section 212(6) of Companies Act, would fall into the category of perverse orders and therefore untenable at law.”
The Court strongly disapproved of the High Court’s lack of consideration:
“In none of the impugned orders, the High Court has bothered to look into the proceedings conducted, and the detailed orders passed by the Special Court for securing the presence of the Respondents–Accused.”
“Not allowing the Courts to proceed further with the cases by avoiding execution of summons or warrants, disobeying the orders of the Court, and trying to delay the proceedings by hook or crook, would certainly amount to interfering with and causing obstruction in the administration of justice.”
Quoting from Srikant Upadhyay v. State of Bihar, the Court said:
“The respondents-accused, who have continuously avoided to follow the due process of law, by avoiding attendance in the Court, by concealing themselves and thereby attempting to derail the proceedings, would not be entitled to the anticipatory bail.”
On the rule of law, the Bench noted:
“If the Rule of Law is to prevail in the society, every person would have to abide by the law, respect the law and follow the due process of law.”
The Court also cited Inder Mohan Goswami v. State of Uttaranchal and State of U.P. v. Poosu, observing:
“Whether in the circumstances of the case, the attendance of the accused-respondent can be best secured by issuing a bailable warrant or non-bailable warrant, is a matter which rests entirely in the discretion of the Court.”
“Broadly speaking, the court would take into account various factors such as, the nature and seriousness of the offence, the character of the evidence, circumstances peculiar to the accused, possibility of his absconding, larger interest of the public and State.”
The Court stated:
“The Special Court considering the seriousness of the alleged offences had initially issued bailable warrants, however, the Respondents kept on avoiding the execution of such warrants and did not appear before the Special Court though fully aware about the pendency of the complaint proceedings against them.”
The Supreme Court held that the anticipatory bail orders passed by the High Court were not sustainable in law and deserved to be set aside. The Court recorded:
“In that view of the matter, the respective impugned orders dated 29.03.2023 and 20.04.2023 passed by the High Court granting anticipatory bail to the concerned accused who are the respondents in these Appeals, are set aside. The respondents-accused are directed to surrender themselves before the Special Court in one week from today. It is needless to mention that their bail applications as and when filed by them shall be decided by the Special Court in accordance with law. We clarify that we have not expressed any opinion on the merits of the case.”
The Court further held:
“The appeals in respect of the remaining respondents are allowed.”
“However, the Appeals arising out of SLP (Crl.) No.13973/2023 (Akshat Singh) & SLP (Crl.) No.13974/2023 (Naveen Kumar) and SLP (Crl.) No.15326/2023 (Mahesh Dutt Sharma) are dismissed accordingly.”
Advocates Representing the Parties
For the Petitioners: Mr. Padmesh Mishra, Advocate; Mr. Hari Kishan, Advocate; Mr. Sudarshan Lamba, AOR; Mr. Amrish Kumar, AOR
For the Respondents: M/s. Ars Associates, AOR; Mr. Abhishek Singh, AOR; Mr. Amit Bhalla, Advocate; Mr. Aniruddh Joshi, Advocate; Mr. Umang Shankar, AOR; Mr. Siddharth Dave, Senior Advocate; Mr. Aditya Samaddar, AOR; Mr. Sumit Kumar, AOR; Mr. Gautam Awasthi, AOR; Mr. Arjun Sharma, Advocate; Mr. Upendra Pratap Singh, AOR; Mr. Rohan Ganpathy, AOR; Mr. Jawaid Hussain Khan, Advocate; Mr. V. Elanchezhiyan, AOR; Mr. Rajat Mittal, AOR; Ms. Sadapurna Mukherjee, Advocate; Mr. Davesh Bhatia, AOR
Case Title: Serious Fraud Investigation Office v. Aditya Sarda & Ors.
Neutral Citation: 2025 INSC 477
Case Number: SLP (Crl.) No. 13956 of 2023
Bench: Justice Bela M. Trivedi and Justice Prasanna B. Varale
[Read/Download order]
