TaxTMI 
TaxTMI 
2023 (5) TMI 1260
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....n Housing Finance Corporation Ltd. (hereinafter referred to as DHFL), Kapil Wadhawan, the then Chairman & MD of DHFL, Dheeraj Wadhawan, Director of DHFL, Shri Sudhakar Shetty, M/s Amaryllis Realtors LLP (ARLLP), M/s Gulmarg Realtors LLP (GRLLP), M/s Skylark Buildcon Pvt. Ltd., M/s Darshan Developers Pvt. Ltd., M/s Sigtia Constructions Pvt. Ltd., M/s Creatoz Builders Pvt. Ltd., M/s Township Developers Pvt. Ltd., M/s Shishir Reality Pvt. Ltd., M/s Sunblink Real Estate Pvt. Ltd. and other unknown persons including public servants, entered into a criminal conspiracy thereby cheating and inducing a consortium of 17 banks led by Union Bank of India (UBI) to sanction huge loans aggregating to Rs. 42,000 Crores approx. The respondents accused siphoned off, and misappropriated a significant portion of the said funds by falsifying the books of account of DHFL and deliberately and dishonestly defaulted on repayment of the legitimate dues, thereby causing a wrongful loss of Rs. 34,000 Crores approx. to the consortium lenders during the periods January, 2010 to December, 2019. 3. Basis the said allegations, the present FIR- RC 2242022A0001 u/s 120B, 409, 420, 477A of IPC, 13(2) r/w 13(1)(d) ....
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.... dated 03.12.2022, the Ld. Special Judge (PC Act) granted statutory bail under Section 167 (2) Cr.P.C to the Respondent nos. 1 and 2 holding that the chargesheet filed although within stipulated time is incomplete and hence Respondents were entitled to mandatory bail as per law. The relevant excerpt of the impugned order reads as under: "40) The proposition advanced on behalf of CBI that when chargesheet is already filed and court has taken cognizance upon the same, then no relief of statutory bail can be granted to accused as provisions of Section 167 (2) Cr.P.C. applies to pre cognizance stage and not to post cognizance stage. However, this rule applies only when the investigation is complete and then chargesheet is filed. Filing of incomplete chargesheet cannot deprive the accused to the statutory bail. No doubt, this application was moved by the accused persons after filing of the chargesheet but when the chargesheet filed is not disclosing complete investigation, then this application is still maintainable. Plea taken by CBI that investigation qua the present accused persons is fully completed is not acceptable due to reasons already given above. Taking of cognizance ....
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....accused though this court is satisfied with the work already done and labour already put on the job by CBI so far. Grant of this statutory bail without discussing any merits of case to accused person may be some setback to CBI but it is informed by Counsel for CBI that despite such default bail, accused persons will not come out of jail as they are still confined in other different cases in different states. Bye-passing of mandatory provisions of Section 167 (2) Cr.P.C. through incomplete chargesheet is not permissible under law but in some situations where offence is highly serious and heinous in nature, investigation spread over to different states and out of country and is of big magnitude as well as when economy of the county is at stake, then this maximum period of 60/90 days needed to be increased by the legislature through necessary amendments in the law as per my view besides giving some additional powers to court to extend the period to complete the investigation in such situations. In view of the above facts and circumstances, both the accused persons are entitled to statutory bail u/s 167 (2) Cr.P.C......." 9. Aggrieved thus, the petitioner CBI, has impugned the said ....
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.... were wilfully ignored. Detailed audit reports demonstrate the misuse and misappropriation of the borrowed funds. 14. Allegedly the main accused individuals formed 87 Shell Companies under the names of their employees, associates, and friends, through which they funnelled DHFL's funds. Most of these companies are now defunct and deregistered at the Registrar of Companies. The fraudulent disbursements were facilitated through a fictitious branch known as 'Bandra branch-001,' which was non-existent and created only virtually with the code name. The software Fox Pro used in the system of DHFL was manipulated to generate fictitious small retail home loan customers, to falsify accounts, to forge documents, and to produce dummy data. 15. Allegedly the embezzled funds were also extensively misused for personal expenses, including the purchase of jewellery and watches amounting to Rs. 174 crores, expensive paintings valued at Rs. 63 crores, credit card payments, foreign trips, chartered plane expenses, as well as repayment of personal and marketing borrowings. Moreover, a substantial investment of Rs. 9 crores was made to acquire shares in a helicopter. Enormous amounts w....
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....te of Maharashtra, 2001 Cri.L.J. 1832. b) Ld. SPP submits that it is settled law that the investigating agency even subsequent to the filing of chargesheet is empowered to conduct further investigation u/s 173(8) Cr.P.C. Both amendments to section 167 Cr.P.C. regarding statutory bail, as well as to section 173 (8) Cr.P.C. regarding further investigation were brought into the Cr.P.C. 1973 which did not exist in the earlier Cr.P.C. 1898. Ld. SPP has referred to the judgement dated 27.03.2023 in Crl.A Nos. 701-702 of 2020 titled Enforcement Directorate v Kapil Wadhawan and Ors. relied upon by Respondents to buttress this contention. c) Ld. SPP submits that the chargesheet is a final report within the meaning of Section 173 (2) Cr.P.C. if it is filed so as to enable the Court to apply its mind as to whether cognizance of the offence should be taken or not. Ld. SPP has referred to the judgement in Dinesh Dalmia v CBI, 2008 Cri. L.J.337. d) It has been submitted that a similar view has been adopted in Abdul Azeez P.V. v National Investigation Agency, 2014 AIR SCW 6537; Y.S. Jagan Mohan Reddy v CBI, 2013 AIR SCW 2800; Akash & Ors. v State of Maharashtra &Ors., C....
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....rom that it inferred that the report filed by the prosecution was 'incomplete'. It was held that it cannot be said if the investigating officer terms a police report as 'incomplete', it takes away the jurisdiction of the Magistrate to take cognizance of the offence, even if in the opinion of the Magistrate, the material is sufficient for him to be satisfied that it was a fit case for him to take cognizance of the offence. The Magistrate is not bound by the label given to the report or the charge-sheet by the investigating officer and it is for him to decide whether the report and the material on which it is based, is sufficient for him to take cognizance or not. f) Ld. SPP thus contends that once chargesheet has been filed within the stipulated time, right of accused to statutory bail would come to an end. It has been submitted that filing of chargesheet would be sufficient compliance of provisions of Section 167(2) Cr.P.C. Ld. SPP has relied upon the judgements in SFIO v Rahul Modi, AIR 2022 SC 902; Narendra K. Amin v CBI, 2015 Cri.L.J. 1334; Suresh Kumar Bikamchand Jain v State of Maharasthra, 2013 Cri.L.J. 1625, to support this contention. g) Ld....
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.... and for trial of the accused persons so charge-sheeted. Ld. SPP contends that cognizance is one thing whilst filing of a police report is another. The filing of police report may come much earlier whilst cognizance may be taken much later. There is a thin line between the two and the respondents are trying to disrupt and create confusion on this issue. Ld. SPP has drawn the attention of this Court to the earlier judgements rendered by this Court dated 15.03.2022 in Bail Appl No.120/2022 titled Suraj v State NCT of Delhi & judgement dated 04.08.2006 in Bail Appl No. 2542/2006 titled Deepender Kumar Srivastava v State (CBI). k) Ld. SPP urges that merely since investigation was pending against other accused regarding certain aspects, it would not justify grant of statutory bail to an accused against whom chargesheet has been filed and there is sufficient evidence against him to face trial. Reference has been made to the following judgements to support this contention. • Amarjeet Sharma v SFIO, 2022 SCC OnLine Del 3633; • Ujjawal Bajaj V State of Delhi (NCT) Crl. Rev. P. 201/2021 • Dinesh Jaiswal v State of Assam, Bail Appl N. 36/2023; ....
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....eport may not contain all the details of the offences, and just like an FIR/RC, even the report under section 173 Cr.P.C. is not an encyclopaedia. Reliance has been placed on the judgements in K Veerswami (supra) and Dalmia (supra) whereby it was held that it is not necessary that all the details of the offences must be stated in the chargesheet, and the details of the offence are required to be proved at a later stage i.e. during the course of trial of the case by adducing evidence. In any case, it is the right of the prosecution to decide whom it wants to prosecute. Moreover, investigating agency can also decline to array a person as a co-accused, and instead examine him as a witness. Reference has been made to A.R. Antulay v R.S. Nayak & Anr., AIR 1988 SC 1531. e) Therefore, solely because certain accused were not charge-sheeted or not made an accused, as urged by Respondents, would not give them the right to be released on statutory bail. f) The investigation is conducted only with regards to commission of offence and not with regards to involvement of an accused. Therefore, to aver that, investigation would only be complete if the same is complete against all....
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....mere pendency of further investigation which is continuation of primary investigation would not give statutory right to accused for grant of bail. All that is required to be considered is, whether there is sufficient evidence against accused to face trial in the case, if so, the chargesheet so filed shall be deemed to be complete. It was further observed in Vinay Tyagi (supra) that even subsequent to taking cognizance, Magistrate can direct further investigation, since conduct of proper and fair investigation is hallmark of any criminal investigation. j) It is submitted that in a case wherein Court takes cognizance and then directs further investigation, the same would not imply that the investigation was not complete. Ld. SPP submits that similar is the situation when after filing of the report, Investigating Officer deems it proper to file a supplementary report. k) Ld. SPP further contends that the plea of the Respondents that they were arrested without completion of investigation, which the Petitioner CBI could always have done subsequently, is without any legal basis, for the reason that whether to arrest an accused or not and when and where to arrest an accu....
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....entire Rs. 34,926.77 crores is yet to be found out and CBI has only seized a few hundred crores. It is submitted that as held in Dalmia (supra) pendency of investigation regarding end - use of funds would not be a reason to grant bail. In any case, investigation regarding money trail would be an offence under PMLA which is being investigated by the Directorate of Enforcement. Further since recovery could not be affected despite best efforts of Petitioner CBI, cannot be a ground to render the investigation as incomplete, especially since the offence against Respondents and their role in commission thereof has been fully established. (v) The role of CA, bank officials, NHB officials is yet to be investigated. Ld. SPP submits that the investigation regarding involvement of other persons would not be a reason to grant statutory bail to the respondents. The evidence contained in the chargesheet is sufficient for trial against accused and taking cognizance against them. (vi) The role of accused persons in conspiracy is not fully described in the chargesheet. It is submitted that involvement of the Respondents in the conspiracy is completely described and ....
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....Cr.P.C. It was further observed that filing of documents is directory and further investigation was not precluded. It was also held that investigating agency can place documents on the record even later. It was further held that report u/s 173 Cr.P.C. is an intimation to the Magistrate and the said report purports to be an opinion of the investigating officer. The said report is complete if is accompanied with all the documents and statements and nothing more is required to be mentioned in the said report. Ld. SPP contends that the said judgement in fact goes in favour of the Petitioner CBI. In the said case, the Hon'ble Supreme Court has also referred to Suresh Bikamchand Jain (supra) to reiterate that filing of chargesheet is sufficient compliance with the provisions of Section 167 Cr.P.C. and once chargesheet has been filed within the stipulated time the question of grant of statutory bail does not arise. e) Ld. SPP for CBI submits that further in Enforcement Directorate v Kapil Wadhawan (supra) the issue was with respect to whether the date of remand is to be included or excluded for considering a claim for default bail u/s 167(2) Cr.P.C. when computing the 60/90 days ....
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....he mandatory period and it was held that accused has an indefeasible right u/s 167 (2) Cr.P.C. k) In Chitra Ramakrishna v CBI (supra) the FIR was registered for commission of offences under IPC, PC Act and IT Act. During the pendency of the said investigation a request was received by the Ministry of Finance to investigate other aspects in terms of an order passed by SEBI. Chargesheet was filed by the CBI only in respect of the subsequent aspects as highlighted in the SEBI's order and not with regard to the allegations mentioned in the FIR. This Court termed the chargesheet as incomplete. Further the investigation was not completed with regard to all the offences as mentioned in the FIR and that the Court was not in a position to take cognizance of those offences. It is submitted that the said judgement was passed in peculiar facts of the case. In the said case it was further held that the chargesheet can be said to be complete when it enables the Court whether or not to take cognizance of the offence and if certain facets called for further investigation it would not render such report other than a final report. It was further observed that even if the police report i....
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....itors of DHFL and DHFL Promoter Groups companies/Sahana Group companies may be looked into during the course of investigation..." (Emphasis supplied) d) The Complaint relied upon 3 exhaustive Forensic Audit Reports conducted by KPMG and Grant Thornton India LLP prepared on the instructions of the Complainant banks and the Administrator of DHFL appointed by the RBI, which set out the details of the various persons and companies involved, their shareholding patterns, relevant entries of balance sheets and other financial statements were produced and exhaustively analysed. e) Thereafter, around 4 months from the date of the Complaint, the CBI registered the present FIR on 20.06.2022 against the Respondents, Sudhakar Shetty, Amaryllis Realtors LLP, Gulmarg Realtors LLP, Skylark Buildcon Pvt. Ltd., others and unknown public servant/s under Sections 120-B г/w 409, 420 & 477A, IPC and Section 13(2) г/w 13(1)(d) of PC Act. f) At the time of the registration of present FIR, the Respondents were in judicial custody in 3 different matters i.e., (i) ECIR bearing No. 3 of 2020 registered by Enforcement Directorate, Mumbai, (ii) FIR bearing No. RC ....
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....sheet. Thus, investigation into the outstanding amounts of the remaining 56 companies i.e., Rs. 16,480.9 crores is admittedly incomplete. 2. 65 companies with irregular loan disbursal The Complaint alleges disbursal of loans aggregating to Rs. 24,595 crores to 65 entities (all of which have been listed in the Complaint along with details on the nature of the investment/loan), with an outstanding of Rs. 11,909 crores. Out of the 65 companies listed out in the Complaint, none have been named as an accused in the chargesheet. Thus, investigation into Rs. 11,909.05 crores is admittedly incomplete. 3. Sudhakar Shetty & his entities, Amaryllis Realtors LLP (ARLIP) and Gulmarg Realtors LLP (GRLLP) Sudhakar Shetty and his entities have been shown to have received loans of approximately of Rs. 11,650 crores from DHFL and are alleged to be co-conspirators in the diversion of funds by DHFL. Sudhakar Shetty is the owner of the Sahana Group, which is alleged to have "commonalities with DHFL Promoters" and in which the Respondents are alleged to have "prima facie financial interest". Sudhakar Shetty/his entities have not been named as accused despite being named in the FI....
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....e chargesheet Averment common to all Remand Applications 1. As a matter of fact, the Remand Applications state as under - Allegations in the FIR against inter alia "Sudhakar Shetty (A-4), Amaryllis Realtors LLP (A-5), Gulmarg Realtors LLP (A-6) ... and other unknown persons including public servants..." that entered into a criminal conspiracy to cheat the consortium of 17 banks led by Union Bank of India, thereby causing a wrongful loss of Rs. 34,000 crores to the consortium. Paragraph no. 66 of the chargesheet inter alia states that investigation into the role of Sudhakar Shetty, Amaryllis Realtors LLP and Gulmarg Realtors LLP and the bank / NHB officials and public servants is pending. 2. Investigation into the routing of funds to foreign countries for creation of assets in the name of the Respondents, their family members and shell companies owned and controlled by them. 3. Admittedly, as per paragraph no. 66 of the chargesheet, the end-use of funds and the ultimate beneficiaries thereof have not been investigated. Further, the recoveries in the matter are to the tune of 0.02% of the amounts alleged to have been siphoned off. 3. Ascertaining the invest....
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.... Senior counsels submit that the above tables clearly demonstrate that the investigation in the matter with regard to the individuals, entities and the alleged fraud of Rs. 34,000 crores is still incomplete and at an initial stage. Ld. Senior counsel submits that as held by the Ld. Spl. Court in its impugned Order and uncontroverted by the CBI, the investigation in the instant matter will take a few years to complete and the Respondents will continue to languish in the jail, deprived of their personal liberties. Ld. Senior counsel urges that this will make it even more alarming for the respondents given that CBI has failed to file even a single supplementary chargesheet in the matter. k) Ld. Senior counsels argue that it is the duty of Courts to protect the liberty of accused from the practice of investigating agencies of filing preliminary chargesheets without completing investigation as a subterfuge to defeat the right of default bail and misusing remand 309 of Cr. P.C., 1973. Ld. Senior counsel has placed reliance on the following judgements to buttress this contention. • Aslam Babalal Desai v. State of Maharashtra, (1992) 4 SCC 272 • Rakesh Ku....
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....nsel submits that the same aspect squarely applies to present case, wherein the alleged conspiracy with respect to other accused persons/entities named in the FIR and other interconnected issues have not been conducted and remains pending. q) Ld. Senior counsel submits that the Courts must favour the Accused in the interpretation of Section 167(2), Cr.P.C., being a provision to protect personal liberty, a fundamental right guaranteed under Article 21 of the Constitution of India. Reliance has been placed on Aslam Babalal Desai v. State of Maharashtra (supra); Judgment dated 27.03.2023 in Crl. A. Nos. 701-702 of 2020 titled Enforcement Directorate v. Kapil Wadhawan and Ors. 21. Non applicability of the judgements cited by petitioner CBI a) Ms. Rebecca John and Sh. Amit Desai, Ld. Senior Counsels for the respondents contended that the judgements advanced by the petitioner CBI are not applicable to the instant case. Ld. Senior counsels for the respondents submit that the judgement in Dinesh Dalmia v. CBI, (supra) is inapplicable to the present case for the following reasons: • All the accused named in the FIR had been named accused in the chargesheet ....
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....t that the judgment of the Hon'ble Supreme Court in YS Jagan Mohan Reddy v. CBI, (2013) AIR SCW 2800, is inapplicable to the instant case for the following salient reasons: • Three supplementary chargesheets had been filed in separate RCs in a span of 9 months against the accused in the said case. • The Hon'ble Supreme Court did not record any observation on the completeness of the chargesheet because a specific liberty was granted to the accused to approach the Trial Court to consider the prayer for bail, independently. • The Hon'ble Supreme Court has not expressed any finding on whether or not the chargesheet filed in the said case was complete. • The said judgement has been distinguished in Chitra Ramkrishna. e) It has been submitted that the judgment of this Court in Riyazuddin v. State NCT of Delhi (supra) is not applicable to the facts of the present case for the following reasons: • In the said case, a chargesheet had already been filed, which was complete in all respects. Pursuant thereto, further investigation under Section 173 (8), Cr.P.C. was being carried out, during which certain fake Aadhar card....
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.... and the same cause of action) had been registered, no chargesheet had been filed. Thus, the Supreme Court in the said matter was not considering a case where the investigation was incomplete. j) It has been submitted that reliance of the petitioner CBI in Narendra Kumar Amin v. CBI, AIR 2015 SC 1002, is misplaced since the controversy before the Hon'ble Supreme Court in the said case pertained to whether or not the 90-day period under Section 167(2), Cr.P.C had come to an end and further whether the absence of some documents (which were subsequently filed by the investigating agency) would entitle the accused to default bail. The Hon'ble Supreme Court in the said case was not considering a case where the investigation was incomplete. k) Ld. Senior counsels submit that similarly, the judgment in Uday Mohanlal Acharya v. State of Maharashtra, (2001) 5 SCC 453, is not applicable to the instant case. The question that arose before the Hon'ble Supreme Court in the said case was the time at which the accused is said to have availed of his indefeasible right to default bail. The Hon'ble Supreme Court in the said case was not considering a case where the investigation wa....
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....idual. Thus, the strict adherence to the provisions of the Cr. P.C. in fact amounts to ensuring the fulfilment of the golden principles laid down in the Constitution of India. Section 57 of the Cr. P.C. provides that a person arrested cannot be detained for more than 24 hours and such person has to be produced within such time before the Court of law. The next important provision in this regard is Section 167 Cr. PC which provides that if a person is arrested and detained in the custody and investigation cannot be completed within 24 hours and there are grounds for believing that the accusation or information is well founded, the investigation agency shall produce such persons before the Court, the Court can authorize the detention of the accused in the custody as such learned Magistrate deems fit, for a term not exceeding 15 days in the whole. It is a settled proposition that in the first 15 days, the Court can remand such accused to judicial or police custody. Section 167 (2) (a) (i) of the Cr. P.C. provides that such a custody cannot exceed 90 days where the investigation relates to an offence punishable with death imprisonment for life or imprisonment for a term not less than t....
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....e the commencement of or adjourn any inquiry or trial, it may from time to time, for reasons to be recorded, postpone or adjourn the same on such terms as it thinks fit, for such time as it considers reasonable, and may by a warrant remand the accused if in custody. Thus, the conjoint reading of Section 57 Cr. PC, Section 167 Cr. PC and Section 309 Cr.P.C. makes it amply clear that immediately upon arrest of an accused, the police has to produce the accused before the Court within 24 hours and thereafter, during the investigation, the Court can remand the accused for 60 days / 90 days as the case may be depending upon the nature of the case. During the inquiry/trial the accused can be remanded to Judicial custody under section 309 Cr.P.C. 26. The holistic and literal reading of Section 167, also makes it clear that the magistrate/Court cannot remand a person beyond 60 days or 90 days, for whatever reasons, if the investigation is not completed. The completion of the investigation is indicated by filing of a report under Section 173 Cr. P.C. Thus, if all these provisions are read in tandem, the necessary corollary is that what is required is the completion of the investigation an....
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....the learned Session Judge can be set aside only if it suffers from serious infirmities, illegalities or perversity. 31. The Court is very clear in its mind that merely because in the charge sheet if the investigating agency has stated they want to conduct further investigation, the charge sheet cannot be termed as a preliminary charge sheet. The police has a right to conduct further investigation. However, at the same time, the investigating agency under the garb of further investigation cannot be allowed to file the police report without completion of investigation, only to defeat the right of statutory bail. The basic concept is that to fulfil the provision of Section 167, the charge sheet has to be filed upon completion of investigation. It may be possible that investigation against the persons who are charge sheeted are complete and further investigation qua other accused persons is continuing, then the persons against whom the investigation is complete cannot be extended the benefit of the statutory bail. But in the present case as has been shown by the learned defence counsels during the course of arguments that substantial investigation even qua the present accused person....
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.... complete. 34. In M. Ravindran v. Directorate of Revenue Intelligence, (2021) 2 SCC 485, a three-judge bench of the Apex Court inter alia observed as under: "17.9. Additionally, it is well-settled that in case of any ambiguity in the construction of a penal statute, the courts must favour the interpretation which leans towards protecting the rights of the accused, given the ubiquitous power disparity between the individual accused and the State machinery. This is applicable not only in the case of substantive penal statutes but also in the case of procedures providing for the curtailment of the liberty of the accused. 17.10. With respect to the CrPC particularly, the Statement of Objects and Reasons (supra) is an important aid of construction. Section 167(2) has to be interpreted keeping in mind the threefold objectives expressed by the legislature, namely, ensuring a fair trial, expeditious investigation and trial, and setting down a rationalised procedure that protects the interests of indigent sections of society. These objects are nothing but subsets of the overarching fundamental right guaranteed under Article 21. 17.11. Hence, it is from the perspective o....