TaxTMI 
TaxTMI 
TaxTMI 
2023 (5) TMI 1260
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....fter 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) of PC Act, 1988 (as amended in 2018) was regi....
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....utory 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 on the chargesheet is not a ground to reject this application when on....
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....dy 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 order as the Ld. Spl. Judge granted default bail to respondents herein without appre....
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....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 were transferred to overseas companies from the accounts of the fictitious Bandra Books entities. T....
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....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., Crl. A No. 429 of 2021 decided on 21.02.2022. e) Ld. SPP further submits that the meaning of an incomplete chargesheet was explained ....
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....ng 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. SPP has further drawn the attention of this Court to a judgement of this Court in Chitra Ramakrishna v CBI, 2022 SCC OnLine Del 3124, which has been reli....
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....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; * Anantha Satya Udaya Bhaskara Rao Anantha Babu v State of Andhra Pradesh, Crl. Petition No. 6954/2022; * Ranjit Kumar Borah v CBI, Bail Appl Nos. 229/2022, 173/2022 & 459/2022; * Maninder Singh v State (NCT of ....
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....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 accused, would be an erroneous interpretation. Ld. SPP has relied on the judgement in State of Haryana and Others v. Ch. Bhajan Lal and Others, 1992 Cri. L.J. 527. g) Ld. SPP submits that there is no merit in the argument propounded by the Ld. Counsel for the respondents with respect to the chargeshe....
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....mplete. 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 accused, is the sole prerogative of the investigating agency. Ld. SPP has invited the attention of this Court to the order of the Hon'ble Supreme Court in SLP (Crl.) No (s). 4123/2021 titled Vishwanath Biradar v Deepika & Anr. l) Ld. SPP additionally argued that the Respondents in the current case were apprehended due to their role as the ....
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....urther 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 is apparent from the report u/s 173 Cr.P.C. and the documents filed therewith. Ld. SPP submits that it is settled that conspiracy is like a moving train where conspirators can get in and get out at any stage, and it is not necessary or essential that all the parties should have been present from start to finish and take part in each and every act of the other conspirators. Thus, the role of co-accused ha....
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....tements 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 period. It has be submitted that in fact even in the said case it was held that Section 173(2) Cr.P.C. prescribes for filing of final report which empowers the Court to take cognizance and Section 173 (8) Cr.P.C. allows further investigation. f) Ld. SPP submits that furthermore in Tunde Gbaja v CBI (supra), the FIR was registered for offences under the IPC for which chargesheet had to be filed within 90 days. The accused was arrested for co....
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....39;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 is termed as incomplete by the investigating officer, the power of a Magistrate to take cognizance would not be lost. l) Ld. SPP for the CBI submits that thus the impugned order passed by the Ld. Spl. Judge granting default bail to the respondents is bad in law, unjustified, illegal and perverse. It is trite that this Court can interfere with an order if such an order is unreasonable, illegal, perverse or based on irrelevant materials/evidence on record, and in order to secure ends ....
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....ial 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 2192020 E004 registered by the CBI, New Delhi and (iii) FIR bearing No. RC 006 2020 A0005 registered by the CBI, Lucknow since around April 2020. It has been submitted that despite there being no emergent need to arrest the Respondents and take them in custody, the CBI arrested the Respondents on 19.07.2022. The 90-day period from the arrest of the Respondents was due to expire on 17.10.2022. It is pertinent to note that from the several individuals/ entities referred to in the Complaint, the CBI deliberately following its pick and choose policy a....
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....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 FIR as co-conspirators and admittedly not been investigated. Investigation qua ARLLP & GRLLP is admittedly incomplete. 4. Public servants It is alleged in the Complaint that the Respondents, "in conspiracy with others, including public servants" committed the offences of conspiracy, criminal breach of trust, cheating, falsification of accounts, etc. The Complaint, whilst referring to officials of the consortium of banks, states that the role of unknown public servants may be looked into during the course of investigation. Admittedly, the CBI has not named/investigated any official of the consortiu....
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....B 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 investments abroad that have not come to light and for seizure/ forfeiture of the same. 4. Examination with regard to loans extended to 65 entities to the tune of 14,000 crores. None of the 65 entities have been made an Accused, which were claimed to be under investigation in the Remand Application. The list of 65 entities to whom loans were advanced was a part of the Complaint. 5. Interrogation with regards to voluminous documents/ digital data related to 95 entities belonging to various suspects/ accused with which both accused are to be confronted. Admittedly only 43 companies out of the alleged 95 entities belonging to the Respondent Nos. 1 and 2 have been made a....
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....hat 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 Kumar Paul v. State of Assam, (2017) 15 SCC 67 * Satender Kumar Antil v. CBI,(2022) 10 SCC 51 l) It has been submitted that further investigation (as opposed to initial investigation into the FIR) is only in respect of fresh or new information coming to light, subsequent to filing of the chargesheet. Reliance has been placed on Vinay Tyagi v. Irshad Ali (2013) 5 SCC 762. m) It has been further submitted that cognizance is not the relevant basis for determining if investigation is complete for the purpose of default bail under Section 167(2), Cr.P.C. Reliance has been placed on Suresh Kumar Bhikamchand Jain v. State of Maharashtra, (2013) 3 SCC 77; Judgment dated 01.05.2023 in Crl. Appeal No. 1011 of 2023 titled Judgebir Singh v. National Inv....
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.... 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 and sent up for trial. Only one accused was not investigated in this case as he was absconding. Whereas in present case admittedly, the chargesheet has not been filed with respect to several accused persons/ entities mentioned in the FIR who have not yet been investigated.; * The Supreme Court in the said case observed "Whether an investigation in fact has remained pending and the investigating officer has submitted the charge-sheet only with a view to curtail the right of the accused would essentially be a question of fact." * Further, it was held that so long as chargesheet is not filed within the meaning of Subsection (2) of Section 173 of the Code, investigation remains pending. Pertinently, S. 173 (2) Cr.P.C. uses the words „as soon as it is completed‟. b) This Court in Chitra Ramkrishna (supra....
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....asons: * 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 cards were found and the offences under Section 419 and 420, IPC were added. * Since the addition of the offences were only based on fresh material that came to light after the completion of the initial investigation. This Court held that the accused would not be entitled to default bail in the facts of that case. f) It has been further submitted that the judgment rendered in State of Maharashtra v. Sharad Vinayak Dongre, AIR (1995) SC 231 does not support the case of the CBI for the following reasons: * In the said case, the bulk of the evidence against the accused persons had already been recorded and filed along with the chargesheet and investigation was pending only in respect of some documents. Further, in the said case, the challenge was to an order taking cognizance and not an Order under Section 167(2).Cr.P.C. * A categorical statement was made on behalf of the investigating agency that it did not intend to file a supplementary chargesheet,....
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....aid 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 was incomplete. l) Furthermore, it has been submitted that the judgement of the Hon'ble Apex Court in SFIO v. Rahul Modi, 2022 SC OnLine 153 does not assist the CBI in any manner. In the said case the legality of the chargesheet or the completeness of the investigation were not in question before the Court. Ld. Senior counsel submits in fact, the said judgment strengthens the case of the Respondents since the Supreme Court held that cognizance is irrelevant for the purpose of Section 167(2), Cr. P.C. The same view has also been reiterated in Judgebir Singh v. NIA (supra). m) Ld. Senior counsels submit that the respondents filed the application for statutory bail on 29.10.2022. However, the same was kept pending, thereby violating the dictum of the Hon'ble Supreme Court which held that all applications for statutory bail must be considered expeditiously. It has been submitted that the cognizance was taken vide order dated 26.11.2022 and the Applicant's application was allowed on 03.12.2022. Thus, the Applicants/Responden....
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....0 days where the investigation relates to an offence punishable with death imprisonment for life or imprisonment for a term not less than ten years. Section 167 (2) (a) (ii) states that the detention cannot exceed 60 days where the investigation relates to any other offence. Section 167 (2) (a) further provides that the accused persons shall be released on bail if he is prepared to and does furnish bail if the investigation is not completed (emphasis supplied) within 60 days or 90 days as the case may be. The perusal of section 167 (2) Cr. P.C. makes it clear that the magistrate can authorise the detention of the accused for the 60/90 days as the case may be, if he is satisfied that adequate grounds exist for doing so. Thus, under Section 167 (2) the magistrate has no power to authorize detention beyond the period of 60 days or 90 days, depending upon the facts of the case, if the investigation is not completed. Thus as per Cr. P.C., it's completion of investigation and not filing of the charge sheet. 24. Section 173 provides filing of the report of the police officer on completion of investigation. Section 173 (2) provides the procedure of forwarding a police report in the form p....
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....f all these provisions are read in tandem, the necessary corollary is that what is required is the completion of the investigation and not mere filing of the report. Merely because the report has been filed and investigation is not completed, cannot fulfil the basic purpose and intention of the legislature as provided under Section 167 Cr. P.C. 27. It is pertinent to mention that for this reason, the period of remand as provided earlier was enhanced by virtue of amendment carried out in the year 1978, pursuant to the 41st Law Commission Report. 28. Before proceeding further, it is also necessary to have a glance at the definition of inquiry or trial as provided under the Code. Section 2 (g) of the Code defined 'inquiry' as every inquiry, other than a trial, conducted under this Code by a Magistrate or Court. The trial begins after framing of the charges and ends with a conviction or acquittal. Chapter XVIII to Chapter XXI of Cr. P.C. lays down the provisions for conducting trial, which is immediately after XVII which relates to the framing of charge. 29. Before proceeding further, it is also pertinent to mention that right to speedy trial also goes to the root of the fun....
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.... learned defence counsels during the course of arguments that substantial investigation even qua the present accused persons is incomplete. The question to be considered is that whether the material evidence having been placed on record by CBI against the present respondents/accused persons is sufficient to conduct the trial in respect of the offences alleged against him. The offence alleged against the accused persons are very serious and very high in magnitude. The material collected by the investigating agency so far, to the mind of this Court falls too short. Rather, if, this report is considered to be a complete investigation qua the accused persons, the investigating agency will suffer a lot. The Court as a guardian of the administration of justice has to ensure that there is strict compliance of the provisions. The investigating agency in its anxiety of keeping the accused persons in custody may take a plea that investigation is complete. However, the best judge in this regard should be the trial Court. 32. This Court considers that the learned Trial has rightly made an observation that now the time has come when the legislature will have to make certain provisions where th....
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....e overarching fundamental right guaranteed under Article 21. 17.11. Hence, it is from the perspective of upholding the fundamental right to life and personal liberty under Article 21 that we shall clarify and reconcile the various judicial interpretations of Section 167(2) for the purpose of resolving the dilemma that has arisen in the present case." 35. It is pertinent to mention here that neither of the parties have discussed the merits of the case. It is also important to mention that the learned ASJ has passed a detailed and reasoned order inter alia holding that the charge sheet so filed was incomplete. I consider that there is no ground to interfere with or alter this opinion. It is a settled proposition that it is the jurisdiction of the Magistrate/learned Special Judge alone to decide that whether the material placed by the prosecution along with the report (charge sheet) was having sufficient evidence or not. Since the learned Special Judge has recorded a reasoned and conscious view that the charge sheet so filed on the face of it was incomplete, therefore this Court finds it difficult to interfere with the same. It is also pertinent to mention that though the cognizance ....