Court’s Decision
The Delhi High Court granted anticipatory bail to the petitioners in a case involving alleged fraudulent transfer of ₹2.7 crore worth of equity shares belonging to the complainant. Justice Tejas Karia held that “when it is admitted that Form No. SH-4 was not executed, the question of forgery on the said document does not arise.” The Court concluded that custodial interrogation was unnecessary, observing that the dispute stemmed from a matrimonial conflict and that all relevant documents were already with the Investigating Officer.
Facts
The FIR in question was filed by the complainant alleging that her 18,000 shares in a family-owned company, Malhotra Electronics Pvt. Ltd., were fraudulently transferred to her husband without her consent. The complainant claimed she discovered the transfer through an auditor’s report in 2023 and accused the company’s directors (her in-laws and other family members) of forgery and cheating. The FIR invoked Sections 420, 468, and 471 of the Indian Penal Code. After dismissal of their first anticipatory bail applications by the Sessions Court for non-cooperation in producing documents (especially Form SH-4), the petitioners approached the High Court.
Issues
- Whether anticipatory bail should be granted in a case involving serious allegations of forgery and cheating.
- Whether the absence of Form No. SH-4 (share transfer form) negates the allegations of fraudulent transfer.
- Whether custodial interrogation is required when documentary evidence is already with the Investigating Officer.
Petitioners’ Arguments
The petitioners contended that:
- The company is a closely held family business, and shares were historically held and shuffled among family members, including the complainant, as part of a family arrangement.
- The complainant’s shares were gifted to her out of love and affection, and she did not pay for them.
- The timing of the FIR was suspect, as it came two years after the alleged transfer and only after failed matrimonial mediation, suggesting a vendetta.
- They had cooperated with the investigation and submitted all documents in their possession, insisting that Form SH-4 was never executed and thus does not exist.
- The re-transfer of shares to the complainant had already been done and recorded with the Registrar of Companies.
- The matter was civil and matrimonial in nature, and custodial interrogation would serve no purpose.
Respondent’s Arguments
The complainant’s counsel opposed anticipatory bail, arguing:
- The shares were part of the complainant’s streedhan, and their transfer without consent was illegal.
- The transaction was effected through forged documents, specifically Form SH-4, which the petitioners failed to produce.
- The share value being ₹2.7 crores indicated significant wrongful loss and gain.
- The petitioners’ explanations regarding Form SH-4 were inconsistent and misleading.
- The share transfer violated statutory requirements under Section 56 of the Companies Act and the Articles of Association, including the Right of First Refusal.
- Custodial interrogation was necessary to unearth the true facts.
The State supported the complainant and argued that non-production of Form SH-4 amounted to non-cooperation. The APP submitted that mere joining of investigation is insufficient and referred to precedents where custodial interrogation was considered essential.
Analysis of the Law
The Court relied on the well-established factors for deciding anticipatory bail applications, including the nature of accusations, possibility of the accused fleeing justice, and whether the accusation was intended to humiliate or injure the accused.
The Court noted the ongoing matrimonial discord between the complainant and her husband, the delay of over two years in filing the FIR, and the lack of explanation for this delay. It also considered that the shares had already been restored to the complainant.
The Court observed that the entire case was document-based, and the petitioners had already submitted available documents. The non-availability of Form SH-4 was consistently asserted and confirmed by the Registrar of Companies.
Precedent Analysis
- Gurbaksh Singh Sibbia v. State of Punjab (1980) 2 SCC 565: Emphasized the need to prevent misuse of criminal law and that anticipatory bail should not be restricted to rare cases.
- Siddharam Satlingappa Mhetre v. State of Maharashtra (2011) 1 SCC 694: Reinforced that anticipatory bail is not to be limited to exceptional cases and should be liberally applied.
- State v. Anil Sharma (1997) 7 SCC 187: Cited by the State, emphasizing the importance of custodial interrogation where influence or tampering with evidence is a risk. The Court distinguished this case by noting there was no such influence or misuse of interim protection.
- Pradip N. Sharma v. State of Gujarat, 2025 SCC OnLine SC 457: Applied to support that custodial interrogation should not be used unless the need is clearly demonstrated.
Court’s Reasoning
Justice Karia held that the petitioners had:
- Joined investigation;
- No criminal antecedents;
- Submitted statutory filings and audited reports;
- Asserted that the crucial document (Form SH-4) did not exist.
The Court stated:
“When it is admitted that Form No. SH-4 was not executed, the question of forgery on the said document does not arise.”
It further held that:
“Mere non-production of a document not in the possession/existence of the Applicants cannot be equated with their non-cooperation.”
It emphasized that:
“Investigation hinges on documentary evidence… and there is no further purpose that will be served by custodial interrogation.”
Conclusion
The Court allowed all anticipatory bail applications, granting bail on furnishing of ₹1,00,000 bond with two sureties. Conditions included:
- Continued cooperation with investigation;
- Prohibition on leaving the country without permission;
- No tampering with evidence or inducement to witnesses;
- Notification to the IO of any address changes.
The Court clarified that the order will not influence the merits of the trial.
Implications
- Presumption of Innocence Upheld: The Court reiterated that matrimonial discord cannot automatically justify criminal prosecution without concrete evidence.
- Custodial Interrogation Discouraged When Unnecessary: Especially in documentary-based offences with no risk of tampering or absconding.
- Clarity on Form SH-4: Non-existence of a mandatory form for share transfer can negate the allegation of forgery at the anticipatory bail stage.
- Matrimonial Disputes Misused for Criminal Pressure: Court acknowledged the increasing misuse of FIRs in the aftermath of failed mediation in matrimonial disputes.
FAQs
1. Can anticipatory bail be granted in cases of alleged corporate forgery involving family disputes?
Yes. The Delhi High Court clarified that anticipatory bail can be granted where the dispute arises from a family arrangement and all evidence is documentary in nature, especially when custodial interrogation serves no further purpose.
2. Is non-production of Form SH-4 sufficient to deny anticipatory bail?
No. The Court held that mere non-production of a non-existent document cannot be equated with non-cooperation, especially when the accused consistently maintain that the document does not exist.
3. What is the significance of Form SH-4 in share transfers?
Form SH-4 is a legally required instrument for share transfers under the Companies Act. Its absence may raise compliance issues but not necessarily criminal culpability unless fraud or forgery is established through evidence.
Also Read: Kerala High Court Grants Bail to Accused in ₹25 Lakh Gold Cheating Case Despite Prior Offences