Judicial Analysis Court Copy Headnote Facts Arguments Court observation

2019 Supreme(SC) 991

SUPREME COURT OF INDIA
R. BANUMATHI, A.S. BOPANNA, JJ.
P. CHIDAMBARAM – Appellant
VERSUS
DIRECTORATE OF ENFORCEMENT – Respondent
CRIMINAL APPEAL NO. 1340 2019 (Arising out of SLP(Crl.) No.7523 of 2019)
Decided On : 05-09-2019

Advocates Appeared:
For the Petitioner(s):Kapil Sibal, Abhishek Manu Singhvi, Kunal Vajani, Arshdeep Singh Khurana, Amit Bhandari, Adit Pujari, Hitesh Rai, Akshat Gupta, Ayush Agarwal, Karan Gogna, Aamir Khan, Aman Singh Brar, Akshay Sahni, Avishkar Singhavi, Shally Bhasin, Advocates
For the Respondent(s):Tushar Mehta, K.M. Natraj, Sonia Mathur, Zoheb Hossain, Rajat Nair, Kanu Aggarwal, A.K. Sharma, Rajeev Ranjan, Bhuvan Kapoor, Varun Chugh, Adv. B. Krishna Prasad, Advocates

IMPORTANT POINTS
Anticipatory bail cannot be granted once the accused is arrested.
Procedure for arrest under section 5 of Act, 2002 and rule 3 of Rules, 2005 provide sufficient safeguards.
Proceeding against offences under Section 8 of PC Act, 1988 under PMLA Act, 2002 not violative of Article 20(1).
The question as to whether offence under Section 8 of the PC Act, 1988 cannot be the predicate offence cannot be gone into at the stage of considering prayer for anticipatory bail.
Court can peruse case diary/materials collected during investigation by prosecution even before commencement of the trial in certain circumstances only for satisfaction of court’s conscience as to whether it is a fit case for grant of anticipatory bail.
Court cannot conduct mini trial at various stages of the investigation.
Pre-arrest bail being an exception should not be granted as a matter of rule.
Refusal to grant anticipatory bail would not amount to denial of rights conferred under Article 21.
Custodial interrogation, a recognised mode of interrogation, is not only permissible but more effective.
Anticipatory bail should not be granted in economic offences.
‘Schedule offences’ and ‘offence of money laundering’ under PMLA Act are independent of each other.

Headnote:
(a) Code of Criminal Procedure, 1973 - Section 438 - Anticipatory bail - Cannot be granted once the accused is arrested. (Para 3)
(b) Prevention of Money Laundering Act, 2002 - Sections 5 r/w Rule3, Prevention of Money-Laundering (The Manner of Forwarding a Copy of the Order of Provisional Attachment of Property along with the Material, and Copy of the Reasons along with the Material in respect of Survey, to the Adjudicating Authority and its period of Retention) Rules, 2005 - Procedure for arrest under section 5 and rule 3 providing sufficient safeguards. (Para 34)
(c) Prevention of Money Laundering Act, 2002 - Sections 45 - Making offence of money laundering cognizable and non-bailable - No person accused of such offence punishable for a term of imprisonment of more than three years under Part A of the Schedule to be released on bail unless the twin conditions thereon are satisfied - Instantly appellant charged with offence u/s 120B and 420, IPC and u/s 8 and 13, PC Act in 2007 - Such offences not included in Schedule A of the Act at relevant time - Section 8 provides for imprisonment extending upto seven years - Section 8 was included in Schedule Part A at relevant time - Proceedings under the Act, held, not violative of Article 20(1), Constitution of India. (Para 39, 41)
(d) Prevention of Money Laundering Act, 2002 - Sections 45 r/w section 8, Prevention of Corruption Act, 1988 and Section 438, Code of Criminal Procedure, 1973 - Contention that Section 8 of the Prevention of Corruption Act, 1988 cannot be the predicate offence qua the appellant - Cannot be gone into at the stage of considering prayer for anticipatory bail. (Para 41, 42)
(e) Prevention of Money Laundering Act, 2002 - Section 4 and 45 - Section 4 makes offences under the Act punishable with rigorous imprisonment for a term not less than three years extending to seven years and with fine - Offences attracting such punishment are cognizable and non-bailable - Second Schedule, Code of criminal Procedure, 1973 - Offence u/s 8, Prevention of Corruption Act, 1988 cognizable and non-bailable offence - satisfying requirement of section 45 of the Act - FIR against appellant under the Act held maintainable. (Para 43)
(f) Code of Criminal Procedure, 1973 - Section 172 - Case diary - Court can peruse case diary/materials collected during investigation by prosecution even before commencement of the trial in certain circumstances. (Para 53)
Code of Criminal Procedure, 1973 - Section 172 and 438 - While considering application for anticipatory bail court can peruse material gathered during investigation - Only for satisfaction of court’s conscience as to whether it is a fit case for grant of anticipatory bail - It cannot extract such material as it would prejudice the accused - However instantly such course adopted by High Court, held, does not affect correctness of refusing grant of anticipatory bail to appellant in view of all other aspects. (Para 55),
(g) Code of Criminal Procedure, 1973 - Section 438 - One of the grounds for High Court to refuse anticipatory bail was that appellant was in his answers to investigating agency as shown by the agency - Contention that appellant ought to be confronted with those materials rejected - Court cannot conduct mini trial while considering application for anticipatory bail - Answers given by accused - Whether “satisfactory” or “evasive” - Within the domain of the investigating agency - Court cannot substitute its views by conducting mini trial at various stages of the investigation - Nature of questions put to accused and manner of interrogation of accused must be left to the investigating agency. (Para 57, 58, 59, 64, 66)
(h) Code of Criminal Procedure, 1973 - Section 482 - It is open to the court to quash the proceedings where there is a clear case of abuse of power - Court can always issue appropriate direction at the instance of an aggrieved person if investigation is mala fide and not in accordance with the provisions of the Code - But such power is to be exercised sparingly. (Para 66)
(i) Code of Criminal Procedure, 1973 - Section 438 - Arrest a part of procedure of investigation - Pre-arrest bail an exception - Not to be granted as a matter of rule, but only in exceptional circumstances. (Para 67)
(j) Code of Criminal Procedure, 1973 - Section 438 and Article 21, Constitution of India - Right of anticipatory bail - Not a part of Article 21 - Refusal to grant anticipatory bail would not amount to denial of rights conferred under Article 21 - However, nature and the gravity of accusation and exact role of the accused must be properly comprehended. (Para 69, 70, 74)
(k) Prevention of Money Laundering Act, 2002 - Section 19 and section 438, Code of Criminal Procedure, 1973 - Section 19 has in-built safeguard against arbitrary exercise of power of arrest - Custodial interrogation a recognised mode of interrogation - Not only permissible but more effective. (Para 71)
(l) Code of Criminal Procedure, 1973 - Section 438 - Economic offences - Power to grant anticipatory bail must be exercised sparingly - More so in economic offences - Rather anticipatory bail should not be granted in economic offences. (Para 76)
(m) Prevention of Money Laundering Act, 2002 - Section 3 and Schedule - Schedule offences and ‘offence of money laundering’ - Independent of each other - Latter being economic offence committed with deliberate design, custodial interrogation of appellant is necessary. (Para 77, 78)
(n) Code of Criminal Procedure, 1973 - Section 438 - Grant of anticipatory bail at the stage of investigation - May frustrate interrogation of accused and collecting useful information - Held, instant is not a fit case to grant anticipatory bail. (Para 81, 82)
Facts of the case:
This appeal relates to the alleged irregularities in Foreign Investment Promotion Board (FIPB) clearance given to the INX Media for receiving foreign investment to the tune of Rs.305 crores against approved inflow of Rs.4.62 crores. The High Court rejected the appellant’s plea for anticipatory bail in the case registered by Central Bureau of Investigation (CBI) being RC No.220/2017-E-0011 under Section 120B IPC read with Section 420 IPC, Section 8 and Section 13(2) read with Section 13(1)(d) of the Prevention of Corruption Act, 1988. The High Court also refused to grant anticipatory bail in the case registered by the Enforcement Directorate in ECIR No.07/HIU/2017 punishable under Sections 3 and 4 of the Prevention of Money-Laundering Act, 2002.
Grievance of the appellant is that against the impugned order of the High Court, the appellant tried to get the matter listed in the Supreme Court on 21.08.2019; but the appellant could not get an urgent hearing in the Supreme Court seeking stay of the impugned order of the High Court. The appellant was arrested by the CBI on the night of 21.08.2019. SLP (Crl.) No.7525 of 2019 preferred by the appellant qua the CBI case was dismissed as infructuous vide order dated 26.08.2019 on the ground that the appellant has already been arrested and remanded to custody. Supreme Court granted liberty to the appellant to work out his remedy in accordance with law.
Finding of the Court:
It is not a fit case to grant anticipatory bail.
Result: Appeal dismissed.

Judgement Key Points

Certainly. Based on the provided legal document, here are the key points:

Anticipatory bail cannot be granted once the accused has been arrested, as per the relevant procedural provisions (!) (!) .
The procedure for arrest under the applicable Act and Rules provides sufficient safeguards to protect the rights of the accused (!) (!) .
Proceedings under the relevant Act related to offences of money laundering are not violative of constitutional rights, including Article 20(1) (!) (!) (!) .
The question of whether certain offences can serve as predicate offences at the anticipatory bail stage cannot be examined; such issues are typically reserved for trial proceedings (!) (!) (!) .
The court may peruse case diaries or investigation materials during the course of proceedings, but only under specific circumstances and primarily for the court’s conscience or to determine the appropriateness of bail (!) (!) (!) .
The court cannot conduct mini-trials or scrutinize the answers given by the accused during investigation to determine their cooperation or evasiveness, as this would interfere with the investigative process (!) (!) (!) (!) (!) .
The investigation process, including interrogation, is an exclusive function of the investigating agency, and the judiciary should not interfere unless there is clear abuse or mala fide conduct (!) (!) (!) .
The production and perusal of materials collected during investigation in sealed covers are permissible to satisfy the court’s conscience but should be done cautiously to avoid prejudice (!) (!) (!) (!) (!) .
The grant of anticipatory bail in economic offences and money laundering cases is generally disfavored, especially during investigation, to prevent hampering the process of interrogation and evidence collection (!) (!) (!) (!) .
The statutory framework, including safeguards and procedural requirements, is designed to balance individual liberty with the needs of effective investigation, and the exercise of bail powers must be cautious and exceptional in cases involving serious economic offences (!) (!) (!) (!) (!) (!) .
Overall, the decision to refuse anticipatory bail is based on the stage of investigation, the gravity of the offence, the strength of evidence, and the necessity of custodial interrogation to facilitate effective investigation, rather than on the merits of the case alone (!) (!) (!) .

Please let me know if you need further analysis or specific legal advice.

JUDGMENT

R. BANUMATHI, J.

Leave granted.

2. This appeal relates to the alleged irregularities in Foreign Investment Promotion Board (FIPB) clearance given to the INX Media for receiving foreign investment to the tune of Rs.305 crores against approved inflow of Rs.4.62 crores. The High Court of Delhi rejected the appellant’s plea for anticipatory bail in the case registered by Central Bureau of Investigation (CBI) being RC No.220/2017-E-0011 under Section 120B IPC read with Section 420 IPC, Section 8 and Section 13(2) read with Section 13(1)(d) of the Prevention of Corruption Act, 1988. By the impugned order dated 20.08.2019, the High Court also refused to grant anticipatory bail in the case registered by the Enforcement Directorate in ECIR No.07/HIU/2017 punishable under Sections 3 and 4 of the Prevention of Money-Laundering Act, 2002.

3. Grievance of the appellant is that against the impugned order of the High Court, the appellant tried to get the matter listed in the Supreme Court on 21.08.2019; but the appellant could not get an urgent hearing in the Supreme Court seeking stay of the impugned order of the High Court. The appellant was arrested by the CBI on the night of 21.08.2019. Since the appellant was arrested and remanded to custody in CBI case, in view of the judgment of the Constitution Bench in Shri Gurbaksh Singh Sibbia and others v. State of Punjab (1980) 2 SCC 565, the appellant cannot seek anticipatory bail after he is arrested. Accordingly, SLP(Crl.) No.7525 of 2019 preferred by the appellant qua the CBI case was dismissed as infructuous vide order dated 26.08.2019 on the ground that the appellant has already been arrested and remanded to custody. This Court granted liberty to the appellant to work out his remedy in accordance with law.

4. On 15.05.2017, CBI registered FIR in RC No.220/2017-E-0011 under Section 120B IPC read with Section 420 IPC, Section 8 and Section 13(2) read with Section 13(1)(d) of the Prevention of Corruption Act, 1988 against the accused viz. (i) INX Media through its Director Indrani Mukherjea; (ii) INX News through its Director Sh. Pratim Mukherjea @ Peter Mukherjea and others; (iii) Sh. Karti P. Chidambaram; (iv) Chess Management Services through its Director Sh. Karti P. Chidambaram and others; (v) Advantage Strategic Consulting through its Director Ms. Padma Vishwanathan @ Padma Bhaskararaman and others; (vi) unknown officers/officials of Ministry of Finance, Govt. of India; and (vii) other unknown persons for the alleged irregularities in giving FIPB’s clearance to INX Media to receive overseas funds of Rs.305 crores against approved Foreign Direct Investment (FDI) of Rs.4.62 crores.

5. Case of the prosecution in the predicate offence is that in 2007, INX Media Pvt. Ltd. approached Foreign Investment Promotion Board (FIPB) seeking approval for FDI upto 46.216 per cent of the issued equity capital. While sending the proposal by INX Media to be placed before the FIPB, INX Media had clearly mentioned in it the inflow of FDI to the extent of Rs.4,62,16,000/- taking the proposed issue at its face value. The FIPB in its meeting held on 18.05.2007 recommended the proposal of INX Media subject to the approval of the Finance Minister-the appellant. In the meeting, the Board did not approve the downstream investment by INX Media in INX News. In violation of the conditions of the approval, the recommendation of FIPB:- (i) INX Media deliberately made a downstream investment to the extent of 26% in the capital of INX News Ltd. without specific approval of FIPB which included indirect foreign investment by the same Foreign Investors; (ii) generated more than Rs.305 crores FDI in INX Media which is in clear violation of the approved foreign flow of Rs.4.62 crores by issuing shares to the foreign investors at a premium of more than Rs.800/- per share.

6. Upon receipt of a complaint on the basis of a

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2019 Supreme(SC) 991

SUPREME COURT OF INDIAR. BANUMATHI, A.S. BOPANNA, JJ.P. CHIDAMBARAM – AppellantVERSUSDIRECTORATE OF ENFORCEMENT – RespondentCRIMINAL APPEAL NO. 1340 2019 (Arising out of SLP(Crl.) No.7523 of 2019)Decided On : 05-09-2019

Cases Referred (32)

SUPREME COURT OF INDIA
R. BANUMATHI, A.S. BOPANNA, JJ.
P. CHIDAMBARAM – Appellant
VERSUS
DIRECTORATE OF ENFORCEMENT – Respondent
CRIMINAL APPEAL NO. 1340 2019 (Arising out of SLP(Crl.) No.7523 of 2019)
Decided On : 05-09-2019