JUDGMENT

P. Sathasivam, J. —

1) Leave granted. These appeals, at the instance of the Central Bureau of Investigation (in short “the CBI”), Hyderabad are directed against the order dated 25.06.2010 passed by the High Court of Andhra Pradesh at Hyderabad in Criminal Petition Nos. 4972 and 4913 of 2010, in and by which, the High Court enlarged the respondents herein, namely, S. Gopalakrishnan (A4) and V.S. Prabhakara Gupta (A10) on bail by imposing certain conditions.

2) Since the CBI has challenged the order of the High Court granting bail in respect of the two accused, namely, A4 and A10, we are constrained to refer only the facts which are necessary for the disposal of these appeals.

3) Brief Facts:

(a) On 07.01.2009, B. Ramalinga Raju (A1), the then Chairman of M/s Satyam Computer Services Limited (in short “M/s SCSL”) addressed a confessional letter to the Board of Directors revealing certain financial irregularities in M/s SCSL. As per this letter, the balance-sheet as on 30.09.2008 showed inflated (non-existent) cash and bank balances of Rs. 5,040/- crores, an accrued interest of Rs. 376/- crores which is non-existent and an understated liability of Rs.1,230/- crores on account of funds arranged by him and an overstated debtors position of Rs. 490/- crores (as against Rs. 2,651/- crores reflected in the books). He also revealed several other factual details which resulted an increase in artificial cash and bank balances.

(b) He also revealed several frauds and cooking books of accounts ever happened in India’s corporate history. Due to the fraud on the part of the persons in Management including the Financial Advisors, Auditors, etc., many investors suffered loss and on the complaint of one of such investors, a First Information Report (in short “FIR”) was registered on 09.01.2009 by the Andhra Pradesh State Crime Investigation Department against the then Chairman, Directors and Auditors of M/s SCSL and others under Section 120-B read with Sections 409, 420, 467, 468, 471 and 477A of the Indian Penal Code (in short `IPC’). Considering the magnitude of the offence, investigation was entrusted to the CBI and a regular case being RC.No.4(S)/2009 was registered by the CBI, Anti-Corruption Branch, Hyderabad, on 20.02.2009.

(c) Due to fudging of the company accounts and manipulation of records by showing incorrect and inflated figures in the balance-sheets by the Chairman, M.D. and other Directors of the Company which were certified by the Auditors, the value of the shares of the Company suddenly dropped causing huge financial loss to the shareholders. The drop in the value of the shares was due to dishonest and fraudulent acts committed by the aforesaid functionaries, who were managing the affairs of the Company and were associated with its functioning and day-to-day affairs.

4) With the above brief facts, let us consider the allegations leveled against the Respondents herein (A4 and A10) and the role played by them.

The role of S. Gopalakrishnan (A4), Partner and In-charge of M/s Price Waterhouse in CC 1/2010:

(a) He affixed his signature on the financial statements as partner of M/s Price Waterhouse, the Statutory Auditors for M/s SCSL from the financial year 2001 till 2007.

(b) He was a partner in the firm ‘M/s Price Waterhouse, Bangalore and not in ‘M/s Price Waterhouse’.

(c) In the agreement entered into between M/s SCSL and M/s Price Waterhouse, instead of affixing his signature, he signed as ‘M/s Price Waterhouse’ which is contrary to the established practice and procedure.

(d) By virtue of his status as a Statutory Auditor, it is incumbent on his part to verify the bank balances and FDRs claimed to be held by M/s SCSL besides other investments, liabilities and sales of the Company before certifying the statutory Audit Report which forms the basis of Annual Financial Statement of the Company

(e) The presentations made by him to the Audit Committee about the health of the Company were misleading.

(f) As a consideration f