Achal Kumar Jindal vs State (NCT of Delhi) & Ors.

PURUSHAINDRA KUMAR KAURAV, J.

By way of the instant application, the applicant seeks grant of regular bail in connection with FIR No.142/2025 registered at PS Economic Offences Wing (South), Delhi for offences punishable under Sections 420/409/468/471/477A/120B of the Indian Penal Code, 1860 („IPC‟).

The facts of the case would indicate that on the complaint of Mr. Satish Kumar Aggarwal and Ms. Kanta Agarwal (“Complainants”) alleging criminal breach of trust, cheating, criminal conspiracy, misappropriation and diversion of funds of the Non-Banking Financial Corporation („NBFC‟) M/s Exclusive Capital Ltd. (“ECL”), inter alia, through related party transactions and fabricated documents, the subject FIR came to be registered against the Directors/Key Managerial Persons of M/s ECL including against the accused Satya Prakash Bagla, Johnson KA @ Kallarachal, and the present applicant.

It is alleged against all accused persons that they being under a fiduciary duty to utilize ECL‟s funds for the benefit of the company and the shareholders, in breach of their responsibilities as trustees, siphoned off and diverted funds of investors and creditors. The said diversion included funds raised from third parties/investors to the tune of Rs.315 Crores, as debt, for expanding operations of M/s ECL and increasing shareholder value.

Mr. Zoheb Hossain, learned senior counsel appearing for the applicant submits that the applicant is innocent and has been falsely implicated. The applicant is holding one equity share representing 0.00004% shares in ECL having no dominance or control over the company‟s affairs. Even otherwise, according to him, there is no bar in law to extend loans even to related parties if the company, in the ordinary course of its business, provides loans. Reference is made to Section 185(3)(b) of the Companies Act, 2013 (“CA, 2013”).

With respect to extending loans to related entities, it is contended that all loans have been repaid, except one for which arbitration is pending. Mr. Hossain submits that he did not personally benefit from the alleged wrong-doing. He further submits that the alleged misappropriation by extending loans took place prior to the complainants becoming shareholders on 05.09.2022 and prior to their purchase of the Compulsorily Convertible Preference Shares („CCPS‟) in March 2024, thus, no case is made out of criminal breach of trust.

It is also contended that the ECL being an NBFC is not a bank as per Section 5(b) of the Banking Regulation Act, 1949 (“BR Act”) as it does not accept any public deposits, therefore, Section 409 of the IPC cannot be attracted. It is also contended that the applicant has suffered about 3 months incarceration, the investigation is complete and the charge sheet has been filed. Only one day‟s police custody was allowed by the Magistrate. Since, thereafter, the applicant is in judicial custody and no further interrogation by the Investigating Agency is required.

Mr. Hossain has also explained the conduct of the applicant to overcome the findings rendered by this Court in earlier round of litigations, both before this Court in Achal Kumar Jindal v. State of NCT of Delhi,^{11.Common judgement dated 28.02.2026 in Crl. MC 321/2026 and Crl. MC 925/2026, “AKJ (HC)”} where the applicant had challenged the issuance of Non-Bailable Warrants, and sought a stay of the then on-going investigation as also interim protection from arrest; and before the Supreme Court in Achal Kumar Jindal v. The State of NCT of Delhi and Ors.^{22.SLP (Crl.) No. 4249-4252/2026, order dt. 17.03.2026, “AKJ (SC)”} It is his case that the Supreme Court while affirming the order of this Court clarified that the order would not adversely impact the merit of applicant‟s petition under Section 482 of the CrPC, which is pending for final adjudication and the observations made were only for the purpose of adjudicating the issue relating to the interim order. It is, thus, submitted that the applicant had never evaded the prosecution investigation and has always remained co-operative except to the extent of availing remedies available in law.

Submissions made on behalf of the applicant are vehemently opposed by Mr. Sanjay Jain, learned senior counsel appearing on behalf of EoW and by Mr. Siddhant Kumar, learned counsel appearing on behalf of the complainant. It is their case that for establishing the offence of Section 409 IPC the entrustment of property need not be of the complainant. They submit that serious allegations are against the applicant which warrant him not being released on bail. Further, the applicant has a history of being non-cooperative and is a flight risk. They also highlight the findings rendered by this Court in AKJ (HC), as also the Supreme Court in AKJ (SC).

I have considered the submissions made by the learned counsel for the parties and have also perused the record.

The crux of the allegation contained in the Chargesheet is that ECL, being managed and controlled by the accused persons including the applicant herein, raised funds, entrusted to them by investors/creditors, which were in the garb of legitimate business activities, siphoned off and diverted from ECL. At all times, the accused persons are claimed to have exercised dominion and control over the funds of ECL, which were dishonestly diverted from ECL to entities owned and controlled by them. The investigation by the EoW is claimed to have revealed that the accused persons actively participated in the board meetings and played a pivotal role in the commission of the offences. Importantly, the applicant was found to be the authorized signatories of the bank accounts and further authorised to execute documents on behalf of ECL.

The modus operandi adopted by the accused persons was explained through the following broad three-fold allegations in the chargesheet:

To provide a certain degree of definitiveness and specificity to the aforenoted allegations, illustratively the following transactions, as detailed in the chargesheet, and undertaken by ECL, may be taken note of. Before detailing the same, the role of the applicant, as described in the Chargesheet, in the companies which shall be introduced may be seen:

Pursuant to the search conducted at the registered office of ECL, the EoW is stated to have found a file pertaining to M/s Luxus Retail Pvt. Ltd. (“Luxus”), which contained photocopies of the transactions between ECL and Luxus. An analysis of the said file, as also the books of accounts of ECL, revealed that on 10.03.2022 a business loan of Rs. 5 Crores was given to Luxus. Qua this loan, a repayment entry of Rs. 5 Crores was made on 31.03.2022, in the ledger account maintained with ECL (though in actuality the transactions took place on 21.04.2022 and 29.06.2022).

On 19.04.2022 a transfer of Rs. 9.09 Crores was made into the account of Luxus by ECL. On 16.12.2022, a journal entry was made to square off the said amount. In support thereof, an invoice dated 16.12.2022 for an amount of Rs. 9.09 Crores was found along with a Delivery Challan, showing the purchase a used Bentley Musanne (“Bentley 1”) from Luxus. There is also, materially, no board approval for the purchase of Bentley 1 by ECL.

The investigation of EoW also revealed that on the very same day that the transfer of funds to Luxus to the tune of 9.09 Crores was made, an amount of Rs. 6 Crores was transferred to the co-accused, who utilized it for his personal gain and to repay Rs. 2 Crores of the original loan of 5 Crores. Further, a sum of Rs. 3 Crores was directly paid by Luxus to ECL on 21.04.2022 by this freshly received loan.

On the purchase of Bentley 1, where it came from, and to whom does it belong, the EoW‟s investigatin revealed that, Lexus purchased the car from a Dubai firm on 28.01.2022 at the price of Rs. 2.19 Crores, which was Nhava Sheva Port, Mumbai on 07.03.2022, for which a Customs Duty to the tune of Rs. 4.62 Crores were paid from the 9.09 Crores given to Lexus by ECL. On 15.03.2022, the Mumbai RTO office registered the Bentle 1 in the name of Luxus. The total cost (4.62 Crores + 2.19 Crores) comes out to be 6.81 Crores (as is also mentioned in the Registration Certificate dated 15.03.2022). This car was then transferred in the name of ECL, at an artificially inflated price, to square off a liability of Rs. 9.09 Crores.

Bentley 1 was registered at the office addresses of both Lexus and ECL i.e., Premises No. 5 & 6, Noori Baug, Near Kumaria Hotel, Andhrei Kurla Road, Andheri (East) Mumbai. However, the investigation revealed that neither companies have an operational office at the said place. The said address was also registered in the name of a related company i.e., Exclusive Motors Pvt. Ltd. (“EMPL”), which was found to be using the said vehicle. It may also be noted that the applicant is a director in EMPL.

During searches, a rent agreement, bearing the signatures of the applicant, was found having been executed between EMPL and ECL whereby the premises in Mumbai were sublet to ECL.It may also be noted that in addition to Bentley 1 purchased by ECL, a company with a paid-up equity capital of Rs. 2.5 Crores, another Bentley Car and one BMW X5 are also stated to have been purchased by ECL.

Thus, the transactions prima facie reveal that an amount of Rs. 9.09 Crores was advanced by M/s ECL to a related entity viz. Lexus without charging any interest and without proper documentation. The said amount was subsequently found to be adjusted through an inflated invoice reflecting the sale of a used vehicle. Evergreening of loans by the accused persons as also incorrect reporting by both Lexus and ECL, prima facie, seems to be made out.

The investigation revealed that ECL granted unsecured loans to its related company M/s Sulojay Realty Pvt. Ltd. (“Sulojay”) to the tune of Rs. 17 Crores (5 Crores + 12 Crores) despite Sulojay not having any business operations, no revenue and no unencumbered assets. The sole property of Sulojay was found to be mortgaged to ICICI Bank for a loan that took place subsequent to that of ECL. ICICI Bank considering the financial health of Sulojay was found to take sufficient collateral security, corporate guarantee of EMPL, exclusive charge on current assets of SRPL and personal guarantee of EMPL exclusive charge on current assets of SRPL and a personal guarantee of co-accused Satya Prakash Bagla.

To the contrary, ECL gave the loans without any security, corporate guarantee or personal guarantee. No recovery steps were initiated after the said company defaulted on repayments. Most importantly, the loan transaction of 12 Crores is stated to be in violation of ECL‟s own Board Resolution dated 27.09.2022 restraining transactions above 10 Crores with related parties in a financial year. In the board meeting dated 27.09.2022 in which the said resolution was passed, all co-accused, including the applicant, who signed as Chairman, were present.

Notably, the loan of Rs. 12 Crores was sanctioned to Sulojay on 04.06.2022, which is 2 days after the acquisition of almost 100% of Sulojay‟s shares by EMPL, in which as noted above, the applicant herein served as the Chief Financial Officer.

In addition to the above, the Chargesheet records various loans granted by ECL, some of which may be taken note of as under:

First, one M/s Lotus Enterprises was granted a loan of 27.07.2022 of Rs. 47 Crores (of which Rs. 24 Crores was disbursed) for the construction of flats in a real estate project titled “Lotus Enpar Residency” situated in Mumbai. As per the documents executed between ECL and the said company, it was stated that 24 flats in the proposed project of M/s Lotus Enterprises were collateral security for the said loan. However, the investigation of EoW, including the information received from the Mahrashtra Real Estate Regulatory Authority revealed the aforesaid to be completely false. Thus, effectively, an amount of Rs. 24 Crores were sanctioned to M/s Lotus Enterprises where no registered or enforceable collateral security document were executed or shown by the companies. Further, no evidence of interest payments came about.

Second, one M/s UV Asset Reconstruction Company Limited assigned 3 NPA accounts, and the respective Securities Receipts, to ECL. For the said assignment ECL paid approximately 100 Crores. However, the accused persons were unable to provide any original documents related to the Security Receipts, which are essential at the time of realization.

Third, one M/s Hawk Capital Pvt. Ltd., a consultancy services, acquired, inter alia, Security Receipts from a securitization trust through the means of a short-term loan funded by ECL. This loan was squared off through the transfer of the same Security Receipts. As on date, the investigation revealed, that the whereabouts of the original Security Receipts are unknown.

Additionally, there are also allegations of forgery and falsification of accounts, concerning the transactions undertaken by ECL. For instance the loan repayments from Luxus, the co-accused Mr. Bagla, and other borrowers including Raqibali, Sanmati Trading and UVARCL were actually credited to the company‟s bank account in April-June, 2022. However, they were recorded in the books as of 31.03.2022. This was done to artificially reduce the outstanding loan balances and present an improved financial position at year end by increasing the bank balance.

The role attributed in the Chargesheet to the co-accused, including the applicant herein, who is a Chartered Account, director, and shareholder in the companies noted above, is reproduced as under:

Specifically, against the applicant, it is contended that being a Chartered Accountant, he played an active role in collusion/criminal conspiracy with other accused persons in manipulating financial records, conducting board meetings for passing false resolutions and creating bogus/false rent agreements for non-existent offices to support/complete the fraudulent transactions. The applicant despite being, what Mr. Hossain contends, an “employee”, was not drawing a salary as the Executive Director, which is indicative of him getting compensated through other means.

Maximum punishment with respect to offences with which the applicant is charged, if proved, are as under:

At this stage the arguments of the applicant deserving consideration may be analysed.

Mr. Hossain contends that the complainants became shareholders and holders of CCPS after the date on which the offending transactions took place. Thus, according to him a foundational facet of criminal breach of trust is missing, it being entrustment, which must follow misappropriation. He also claims that the applicant merely had a single equity share in ECL, and all loans except one stand paid.

At the outset it may be noted that for the purposes of establishing criminal breach of trust, the entrustment need not, necessarily, be of the complainant themselves. The wheels of criminal law can be put in motion by any person. There is no locus standi that a complainant needs to prove in order to inform the investigative agencies about the commission of a cognizable offence. Qua the allegation of Section 420 being mutually exclusively to Section 405, as noted by the co-ordinate bench of this Court in AKJ (HC), the charges may be proved alternatively.

Reliance may also be placed on Bhim Sain Arora and Ors. v. State,^{33.2025 SCC OnLine Del 6721.} where an order framing charge against the directors of a company under Sections 406, 409, 420 was questioned, and the Court, while upholding the order observed as under:

The argument of all loans, except one, having been paid by the borrowers is also bereft of any merit. It is the original act of misappropriation, siphoning off, diversion and misutilization that forms the offending act. The subsequent repayment, which may have possibly happened with collusion, has no bearing on the same.

The argument of Mr. Hossain that the applicant had only a single share in ECL, is not the beneficiary and recipient of monies and the share value has not depreciated also does not merit consideration. The management of the company, it is trite law, is separate from its owners i.e., the shareholders. Whatever be the shares held by the applicant, it being the Executive Director of ECL is the material fact which has a bearing on the allegations. Insofar as the question of the applicant not being a beneficiary is concerned. It may firstly, be noted that the applicant is the Chief Financial Officer of EMPL which was found to be in control of Bentley 1; and secondly, the Chargesheet itself records at para. 19.77 that “the purpose and rationale behind the layering of funds, as well as the identification of the ultimate beneficiaries of these transactions, remain unexplained at this stage. These aspects require further verification and are to be ascertained during the further investigation alongwith detailed forensic examination of the financial records, as the arrested accused persons concealed these facts at the enquiry stage and during investigation.”

It may also be noted that similar arguments were raised before the Co-Ordinate Bench in AKJ (HC), para. 13 of which summarises the same and reads as under:

The Court rejected each of the arguments noted above holding as under:

Insofar as the question of depreciation of the value of shares/securities is concerned, at this stage a mini-trial cannot be conducted to determine what as on date is the value of the shares and from it to extrapolate whether a loss is made out or not.

The Supreme Court in State of Gujarat v. Mohanlal Jitamalji Porwal and Anr.,^{44.(1987) 2 SCC 364.} YS Jagan Mohan Reddy v. CBI,^{55.(2013) 7 SCC 439.} Anil Kumar Yadav v. State (NCT of Delhi),^{66.(2018) 12 SCC 129.} has taken the view that economic offences deserve a compounded scrutiny. Mr. Hossain contends that since ECL did not take public deposits/monies, thus, the said standard shall not apply to the applicant. While the present case deserves the rejection of bail on conventional standards, the Court also finds that the case warrants a serious approach. While it is indeed correct that financial crimes owing to them causing large scale financial havoc are treated on a different pedestal, they are also considered serious by virtue of the nature of crime itself. While conventional crimes may occur owing to a rise in passions, a financial crime takes place with cool calculation with the sole intent to hurt and injure the victims.

At this stage, the conduct of the applicant may be taken note of.

It has come on record that the applicant herein had filed a petition before this Court bearing Crl. MC 321/2026 seeking the quashment of the instant FIR. Vide order dated 15.01.2026, this Court recorded the undertaking of the applicant that he shall join the investigation as and when directed in writing by the IO. The said undertaking was violated by the applicant, and judicial notice of it was taken by the Court in AKJ (HC), wherein this Court observed:

Vide AKJ (HC), this Court also dismissed Crl. M.C. No. 925/2026 filed by the applicant seeking the recall of the Non-Bailable Warrants Issued against him. An SLP was filed against the said decision and the Supreme Court in AKJ (SC) materially observed:

In totality, the applicant is stated to be an absconder for a period of 5 months and finally surrendered only after proceedings for declaring him as a proclaimed offender began. In the 1-day police custody as well, cooperation was not extended to the police. Importantly, the Chargesheet records the following concerning conduct of the applicant:

The Chargesheet also notes that the NCLT in the case of Kanta Aggarwal and Anr. v. Exclusive Capital Limited and Ors.,^{77.Company Petition No. 48/2024.} appointed Hon’ble Mr. Justice (Retd.) RK Gauba as the observer of ECL after its directors were suspended. The NCLAT vide order dated 16.12.2024 passed in Company Appeal (AT) No. 161/24 directed that:

Further, the Supreme Court upheld the condition in SLP (C) No. 4540/2025 vide order dated 24.02.2025 wherein the Court observed:

However, in an attempt to render the Supreme Court order futile, the Chargsheet records that the accused persons have been undertaking various transactions on a daily basis below the limit of 10 lakhs in a manner such that it is not required to be brought to the notice of the observer. This conduct was also recorded by the Court in AKJ (HC), wherein the Court noted:

In Anil Kumar Yadav v. State (NCT of Delhi),^{88.(2018) 12 SCC 129.} the Supreme Court noted as under:

In Centrum Financial Services Ltd. v. State of NCT of Delhi and Anr.,^{99.(2022) 13 SCC 286.} the Supreme Court, in almost similarly placed facts, while cancelling the bail granted by the High Court made the following material observations:

It may also be noted that the State has filed an application seeking cancellation of bail granted to co-accused Mr. Bagla on the grounds that he has siphoned of money after being enlarged on bail. The possibility of the present applicant, a Chartered Account who remained successful in evading arrest for a period of 5 full months, not making himself available for trial and/or tampering with the complex financial trails, cannot be ignored.

Considering the entirety of the facts and circumstances of the present case, at this stage, the Court is not inclined to grant bail to the applicant.

Accordingly, the present application for bail stands dismissed.

It is clarified that the observations made in the present order are solely for the purposes of adjudicating the present bail application and shall not have a bearing on the merits of the matter, including the trial.