A worker hammers an iron rod at a workshop in Ahmedabad (Photographer: Anindito Mukherjee/Bloomberg)

High Court Questions SFIO’s Bhushan Steel Probe Procedure And Promoter Arrest

The Delhi High Court questioned the procedure followed by the Serious Fraud Investigation Office in its probe against Bhushan Steel and the arrest of the company’s erstwhile promoter Neeraj Singal, as the agency registered a case only after his arrest for allegedly siphoning off funds worth over Rs 2,000 crore.

“You have been investigating for two years, but with no registered case. It is extraordinary,” a bench of justices S Muralidhar and Vinod Goel said questioning the absence of case registered and procedure followed by probing.

The observations came during the hearing of 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 was illegal.

During the hearing, which will continue on Aug. 27, the bench asked Additional Solicitor General 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. The court said the SFIO was not even sure if the Centre will proceed against the company, yet it went ahead and arrested someone and put him in jail.

Defending the SFIO’s actions, the Acharya argued that the agency’s probe was at an initial stage and further investigation might indicate that the directors had “looted or victimised” the company and its shareholders. He added that a person is arrested during the investigation to prevent him from tampering with evidence and influencing the witnesses. He was the first person ever to be arrested by SFIO which was given this power only in August last year.

The petition, against Singal’s arrest and continued custody, has also challenged certain provisions of the Companies Act on grant of bail to persons arrested under the Act, claiming that they were violative of fundamental rights as they imposed “unreasonable restrictions”.

The plea has claimed that his arrest was illegal as no grounds for arrest were communicated to him orally or in writing by the probe agency at the time of arrest.