NEW DELHI: The Delhi High Court said today that on the face of it, it does not find "frivolous" the plea by Bhushan Steel's erstwhile promoter Neeraj Singal, arrested for allegedly siphoning off funds worth over Rs 20 billion, against the powers of arrest of the Serious Fraud Investigation Office (SFIO).
"Prima facie we do not think the challenge is frivolous," a bench of justices S Muralidhar and Vinod Goel said while reserving its decision on Singal's interim application for release from judicial custody.
The court said it will pronounce its decision on Singal's interim application on August 29.
During the nearly three-hour-long arguments in the matter, the SFIO opposed any interim relief to Singal, saying that given the seriousness and magnitude of the offence he was accused of and his antecedents, he was not entitled to be released from custody.
Additional Solicitor General (ASG) Maninder Acharya termed the alleged offence as "economic terrorism", saying siphoning off Rs 2,000 crore would affect the common man in the same manner as a terrorist attack.
The ASG said in the past he had allegedly attempted to bribe a senior officer of State Bank of India.
A case has been lodged in this connection and proceedings were going on in a trial court.
Senior advocates Kapil Sibal and Siddharth Luthra, appearing for Singal, said he was granted bail in the SBI matter in 2014 by a CBI court.
The ASG also argued that he might "hamper" the investigation by influencing the witnesses by bribing them.
However, she could not give any instances of when he had hampered any investigation when the court sought such information.
The ASG said that Singal's father was also accused of bribery in the past, in response to which the bench asked, "So if father is involved (in bribery), so will the son? Is this some pious Hindu law or obligation?" The ASG also said the habeas corpus plea moved on behalf of Singal for his release from custody was not maintainable as he should have moved an application for bail.
The court asked how an accused can seek bail in such a case where in the 20 days since his arrest he has only been informed about the grounds of arrest, without the same being given to him in writing.
ASG Acharya, however, said that the grounds of arrest were mentioned in the arrest memo given to Singal but he refused to accept or sign it.
To this, the bench asked whether the memo was sent by post to him or his wife.
The court also asked why the petitioner's family members, also being investigated in the matter, were not arrested by SFIO and said that only putting him in jail would appear to be "an arbitrary exercise of power".
The bench, questioning the procedure followed by SFIO in the matter, asked why the agency did not consider as important the takeover of Bhushan Steel by the Tatas.
It also said that till date it has got no answer to its query raised on August 20 with regard to the legal position on transfer of criminal liability after a take over.
The bench said it was a serious issue internationally, as takeovers can be used to get away with fraud and added "if you (SFIO) ignore this aspect, it would be problematic".
Sibal and Luthra, during the arguments, said that in a case of fraud the entire evidence would be documentary and since SFIO claimed it has copies of the records of Bhushan Steel, there was no need to keep their client behind bars.
The senior lawyers also said the procedure being followed by SFIO was a complete bar on bail with which the court appeared to agree as it said "it is not a mere procedure, it directly impacts your right to life and liberty".
Singal, also represented by advocate Pramod Kumar Dubey, was arrested on August 8 in relation to an SFIO investigation into the affairs of Bhushan Steel Ltd and Bhushan Steel and Power Ltd, pursuant to a May 2016 order of the Centre under the Companies Act.
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.