The Supreme Court said on Monday that it would examine whether the Delhi High Court was competent to grant bail to a person, against whom the Serious Fraud Investigation Office has initiated prosecution for allegedly siphoning off over Rs 200 crore.
The top court asked the managing director of Adarsh Credit Cooperative Society, Rahul Modi, who was arrested by the Serious Fraud Investigation Office (SFIO) and granted bail by the high court in the case, to reply as how a habeas corpus (unlawful detention or imprisonment) petition could be filed when he was on remand by an judicial order.
The SFIO, which comes under the Corporate Affairs Ministry, mainly probes white collar crimes.
A bench of justices A M Sapre and U U Lalit asked Modi to satisfy it whether the Delhi High Court was correct in granting him bail even when a bail application was not filed.
“You will also have to satisfy us whether the Delhi High Court was a competent court to entertain the petition filed by the accused in the case, when the prosecution was launched in Gurugram in Haryana,” the bench said.
Solicitor General Tushar Mehta, appearing for the SFIO, said that it was a serious financial fraud case and the high court had set aside the order of a Gurugram special court. The order was not under challenge and the high court does not have the territorial jurisdiction to do so, he claimed.
He said that the observation made by the Delhi High Court while granting the accused interim bail was against several judgments passed by the apex court.
Senior advocate Kapil Sibal, appearing for Modi, said that arrest was made in Delhi and the SFIO’s headquarter is in the national capital. Therefore, the Delhi High Court has the territorial jurisdiction to entertain the petition, he claimed.
He said that there were several judgments of the apex court which say that habeas corpus petitions can be filed even if a person is under remand by an judicial order.
The bench asked then does it mean that if the arrest is made by the SFIO anywhere in the country, then the Delhi High Court has a territorial jurisdiction to entertain a petition.
Sibal said that during the remand period he was kept in Delhi and after bail, Modi has been cooperating in the investigation.
Mehta countered the Sibal’s arguments, saying the remand order was passed by a special magistrate court in Gurugram and the companies had a registered headquarter in Gurugram.Therefore, the competent court was the Punjab and Haryana High Court, he said.
He alleged that the accused was influencing witnesses and the high court order needs to be stayed till the disposal of the plea.
The hearing remained inconclusive and would continue on January 23.
The SFIO has challenged the December 21, last year order of Delhi High Court by which it had granted interim bail to founder and managing director of Adarsh Credit Cooperative Society, Mukesh Modi and Rahul Modi, who were arrested by the agency.
It had observed that the arrest of the duo on December 10 last year was “absolutely illegal and patently suffers from vice of lack of legal sanction and jurisdiction”.
Mukesh Modi and his family members were allegedly running Ponzi schemes, duping over 20 lakh depositors. The Ahmedabad-based Adarsh Credit Cooperative Society had started its operations in 1999.
The deposits collected from members of the Adarsh Credit Cooperative Society were used for the benefit of a few family members belonging to the Mukesh Modi family.