H. B. Chaturvedi vs C.B.I.
2010 Latest Caselaw 2823 Del

*             IN THE HIGH COURT OF DELHI AT NEW DELHI

+       BAIL APPLN. 572/2010 & CRL.M.(BAIL) 459/2010

                                          Reserved on:        24th May, 2010
%                                     Pronounced on:          31st May, 2010

H. B. CHATURVEDI                                               ..... Petitioner

                              Through:    Mr Sidharth Luthra, Sr. Adv. with
                                          Mr Aarohi Bhalla, Adv.


                        versus

C.B.I.                                                       ..... Respondent

                              Through:    Ms Sonia Mathur and Mr Sushil
                                          Kumar Dubey, Advs. with Mr A.K.
                                          Tripathi, Inspector, CBI.


CORAM:
HON'BLE MR JUSTICE SIDDHARTH MRIDUL

         1.        Whether reporters of local papers may be allowed
                   to see the judgment?                                Yes.
         2.        To be referred to the Reporter or not?              Yes.
         3.        Whether the judgment should be reported
                   in the Digest?                                      Yes.

SIDDHARTH MRIDUL, J

1. This is a petition under Section 439 of the Code of Criminal

Procedure (CrPC) for grant of bail in the case registered vide RC No.

BDI/2009 E 0005 under Section 120B read with Sections 420, 468 and

478 of the Indian Penal Code (IPC). The petitioner was arrested by the

Central Bureau of Investigation (CBI) on 19th February, 2010 and

remained in police custody till 27th February, 2010. The petitioner has

been in judicial custody thereafter and has been chargesheeted along

with five other co-accused in a case of defrauding the Industrial

Development Bank of India (IDBI).

2. Briefly stated the facts of the prosecution case are that the

petitioner along with Sanjay Chaturvedi, Sumit Chaturvedi, Amit

Chaturvedi, Praveen Juneja all of M/s Shamken Multifab Ltd (SML)

and M/s Shamken Multifab Ltd and other unknown persons are

parties to a criminal conspiracy during the year 2000-01 in the matter

of obtaining Rupee Term Loan (RTL) of Rs.15 crores from the IDBI by

submitting false information and forged documents showing

utilization of the loan proceeds of Rs.15 crores and siphoning off all

the funds, so received from the IDBI, for purposes other than the

purpose for which the loan was sanctioned and thereby cheating the

IDBI. The prosecution states that the above named accused persons in

criminal conspiracy prepared and used forged documents as genuine

i.e. Chartered Accountants Certificate, No Lien Account Statements of

the bank, invoices showing purchase of machines, while in fact no

equipment/machinery was purchased from the said loan proceeds and

the amount was diverted for purposes other than the purpose for

which the loan was sanctioned. The company had faxed forged/false

invoices of M/s Sulzer and M/s Staubli on 13th February, 2001 to the

IDBI from the Fax Number owned by H.B. Chaturvedi and as per the

vouchers the deliveries have been made before June, 2000 and all the

equipments are imported against LCs. According to the CBI these

forged invoices detail the basis on which the accused persons claimed

the disbursement of term loan from the IDBI and ultimately received

the payment. Thus the accused availed the term loan facility of Rs.15

crores from the IDBI by furnishing false and fabricated statements of

No Lien Account and thereby inducing the bank to release the loan

instalments. Further, the loan amount so obtained was siphoned off by

them by transferring the amount to other group accounts of the

company and to clear their other outstandings.

3. The petitioner filed an application for grant of bail which was

dismissed by the court of the Chief Metropolitan Magistrate vide

order dated 4th March, 2010 on the ground that the investigation is

still at a preliminary stage and if the accused is admitted to bail there

is every likelihood that relevant documents required for the purpose

of investigation and for unearthing the entire fraud alleged to have

been committed by the accused persons may never see the light of the

day as there is every likelihood that accused will tamper the witnesses

and destroy the evidence.

4. The petitioner thereafter filed an application for grant of bail

before the Additional Sessions Judge which application was dismissed

vide order dated 17th March, 2010.

5. The petitioner feeling aggrieved has filed the present

application seeking grant of bail to which status report has been filed

by the CBI.

6. The learned senior counsel, Mr Sidharth Luthra, appearing on

behalf of the petitioner, first submitted that the petitioner, who is 76

years of age, is a chronic heart patient and has been suffering from

coronary heart disease since 1998 with 100 per cent blockage in the

major arteries resulting in no blood supply to the specific heart areas

thereby lowering the heart efficiency. Also, that the petitioner

requires regular medical attention as his heart efficiency is merely 25

per cent and also that the petitioner has been advised that a device

known as "Intra Cardiac Defibrillator (ICD)" needs to be inserted into

the body of the petitioner. Furthermore, the petitioner is a high risk

patient prone to sudden cardiac death due to ventricular fibrillation

and the stress of custody is likely to impact his condition negatively.

7. Learned senior counsel appearing on behalf of the petitioner

then argued that the charge sheet has been filed and cognizance

taken on 22nd May, 2010 and that the petitioner is, therefore, not

required for any purpose. It was next argued on behalf of the

petitioner that the petitioner has been in judicial custody since 28th

February, 2010 and has not been required by the CBI for any purpose

and that the evidence has already been collected qua the petitioner. It

was lastly urged that prior to the arrest of the petitioner amount had

already been paid to the IDBI and that an scheme of arrangement

under Section 391 of the Companies Act, 1956 has been filed which is

pending before the Hon'ble Allahabad High Court.

8. Per contra, it is argued by Ms Sonia Mathur, counsel appearing

on behalf of the CBI that the trial court has ordered further

investigation and that the petitioner is the Chairman-cum-Managing

Director of the company that has defrauded the IDBI to the tune of

Rs.15 crores. The learned counsel has also contended that the present

is an economic offence which stands on a different footing and that,

therefore, bail should not be granted to the petitioner. The learned

counsel further contended that the medical condition of the petitioner

is being monitored by the Jail Authorities and the regular review of

the petitioner along with prescribed medication are being provided to

him. It has been furthermore contended on behalf of the learned

counsel for the CBI that by simply extending a proposal of settlement

may absolve an accused and the company from civil liability but it can

in no manner be said to absolve them from their criminal liability.

9. Before proceeding to weigh the relative contentions of the

counsel for the parties it would be necessary to extract the relevant

portions of the judgments relied upon by them:

(i) In Anil Mahajan v. Commissioner of Customs & ANR.,

84 (2000) DLT 854, this court after considering the

judgments, inter alia, in Gurcharan Singh & Others v.

State (Delhi Administration), AIR 1978 SC 179 and

Gudikanti Narasimhulu and Others v. Public Prosecutor,

Air 1978 SC 729, summarized the legal position as follows:

"14. The legal position emerging from the above discussion can be summarised as follows :

(a) Personal liberty is too precious a value of our Constitutional System recognised under Article 21 that the crucial power to negate it is a great trust exercisable not casually but judicially, with lively concern for the cost to the individual and the community. Deprivation of personal freedom must be founded on the most serious considerations relevant to the welfare objectives of society specified in the Constitution.

(b) As a presumably innocent person the accused person is entitled to freedom and every opportunity to look after his own case and to establish his innocence. A man on bail has a better chance to prepare and present his case than one remanded in custody. An accused person who enjoys freedom is in a much better position to look after his case

and properly defend himself than if he were in custody. Hence grant of bail is the rule and refusal is the exception.

(c) The object of bail is to secure the attendance of the accused at the trial. The principal rule to guide release on bail should be to secure the presence of the applicant to take judgment and serve sentence in the event of the Court punishing him with imprisonment.

(d) Bail is not to be withheld as a punishment.

Even assuming that the accused is prima facie guilty of a grave offence, bail cannot be refused in an indirect process of punishing the accused person before he is convicted.

(e) Judges have to consider applications for bail keeping passions and prejudices out of their decisions.

(f) In which case bail should be granted and in which case it should be refused is a matter of discretion subject only to the restrictions contained in Section 437(1) of the Criminal Procedure Code. But the said discretion should be exercised judiciously.

(g) The powers of the Court of Session or the High Court to grant bail under Section 439(1) of Criminal Procedure Code are very wide and unrestricted. The restrictions mentioned in Section 437(1) do not apply to the special powers of the High Court or the Court of Session to grant bail under Section 439(1). Unlike under Section 437(1), there is no ban imposed under Section 439(1) against granting of bail by the High Court or the Court of Session to persons accused of an offence punishable with death or imprisonment for life. However while considering an application for bail under Section 439(1), the High Court or the Court of Sessions will have to exercise its judicial discretion also bearing in mind, among other things, the rationale behind the ban imposed under Section 437(1) against granting bail to persons accused of offences punishable with death or imprisonment for life.

(h) There is no hard and fast rule and no inflexible principle governing the exercise of such discretion by the Courts. There cannot be an inexorable formula in the matter of granting bail. The facts and circumstances of each case will govern the exercise of judicial discretion in granting or refusing bail. The answer to the question whether to grant bail

or not depends upon a variety of circumstances, the cumulative effect of which must enter into the judicial verdict. Any one single circumstance cannot be treated as of universal validity or as necessarily justifying the grant or refusal of bail.

(i) While exercising the discretion to grant or refuse bail the Court will have to take into account various considerations like the nature and seriousness of the offence; the circumstances in which the offence was committed; the character of the evidence; the circumstances which are peculiar to the accused; a reasonable apprehension of witnesses being influenced and evidence being tampered with; the larger interest of the public or the State; the position and status of the accused with reference to the victim and the witness; the likelihood of the accused fleeing from justice; the likelihood of the accused repeating the offence; the history of the case as well as the stage of investigation etc. In view of so many variable factors the considerations which should weigh with the Court cannot be Exhaustively set out. However, the two paramount considerations are: (i) the likelihood of the accused fleeing from justice and (ii) the likelihood of the accused tampering with prosecution evidence. These two considerations in fact relate to ensuring a fair trial of the case in a Court of justice and hence it is essential that due and proper weight should be bestowed on these two factors.

(j) While exercising the power under Section 437 of the Criminal Procedure Code in cases involving non-bailable offences except cases relating to offences punishable with death or imprisonment for life, judicial discretion would always be exercised by the Court in favor of granting bail subject to sub-section 3 of Section 437 with regard to imposition of conditions, if necessary. Unless exceptional circumstances are brought to the notice of the Court which might defeat proper investigation and a fair trial, the Court will not decline to grant bail to a person who is not accused of an offence punishable with death or imprisonment for life.

(k) If investigation has not been completed and if the release of the accused on bail is likely to hamper the investigation, bail can be

refused in order to ensure a proper and fair investigation.

(l) If there are sufficient reasons to have a reasonable apprehension that the accused will flee from justice or will tamper with prosecution evidence he can be refused bail in order to ensure a fair trial of the case.

(m) The Court may refuse bail if there are sufficient reasons to apprehend that the accused will repeat a serious offence if he is released on bail.

(n) For the purpose of granting or refusing bail there is no classification of the offences except the ban under Section 437(1) of the Criminal Procedure Code against grant of bail in the case of offences punishable with death or life imprisonment. Hence there is no statutory support or justification for classifying offences into different categories such as economic offences and for refusing bail on the ground that the offence involved belongs to a particular category. When the Court has been granted discretion in the matter of granting bail and when there is no statute prescribing a special treatment in the case of a particular offence the Court cannot classify the cases and say that in particular classes bail may be granted but not in others. Not only in the case of economic offences but also in the case of other offences the Court will have to consider the larger interest of the public or the State. Hence only the considerations which should normally weigh with the Court in the case of other non-bailable offences should apply in the case of economic offences also. It cannot be said that bail should invariably be refused in cases involving serious economic offences.

(o) Law does not authorise or permit any discrimination between a foreign National and an Indian National in the matter of granting bail. What is permissible is that, considering the facts and circumstances of each case, the Court can impose different conditions which are necessary to ensure that the accused will be available for facing trial. It cannot be said that an accused will not be granted bail because he is a foreign national."

(ii) In Bail Application No. 2179/2009 pronounced on 21 st

December, 2009 a Single Bench of this Court referring to

the decision in State of Gujarat v. Mohanlal Jitamalji

Porwal and Anr., AIR 1987 SC 1321, extracted the

relevant portion thus:

"The entire Community is aggrieved if the economic offenders who ruin the economy of the State are not brought to books. A murder may be committed in the heat of moment upon passions being aroused. An economic offence is committed with cool calculation and deliberate design with an eye on personal profit regardless of the consequence to the Community. A disregard for the interest of the Community can be manifested only at the cost of forfeiting the trust and faith of the Community in the system to administer justice in an even handed manner without fear of criticism from the quarters which view white collar crimes with a permissive eye unmindful of the damage done to the National Economy and National Interest."

In the said judgment the Single Bench also noticed the

judgment of the Hon'ble Supreme Court in Suresh

Chandra Ramanlal v. State of Gujarat, 2008 (7) SCC 591,

wherein "a case involving cheating and forgery in respect

of funds of a bank, the Hon'ble Supreme Court even while

grating bail on verified medical grounds, imposed a

condition that he would deposit a sum of Rs.40 lakhs with

the bank in four monthly instalments. This was despite the

fact that in the case before the Hon'ble Supreme Court,

there were as many as 49 accused and each one of them

had already been enlarged on bail and that included the

Chairman, Vice-Chairman, Managing Director, 11 other

Directors of the bank and the case of the appellant, Ex.

Vice-Chairman of the bank, was that he had resigned in

the year 1999, whereas the FIR was registered in the year

2002."

10. In the instant case the FIR was registered on source information

and before registration of the present FIR preliminary enquiry was

conducted by the CBI. It has nowhere been disclosed on whose

statement the FIR was registered and no one from the bank from

which loan was availed came forward alleging that the bank has been

cheated by the accused persons. In the order passed by the ACMM at

the time of hearing submissions on the aspect of cognizance in the

case, it has been observed that the Investigating Officer (IO) has not

been able to point out even an iota of evidence in the testimony of the

bank witnesses exhibiting that they were deceived by the inducement

given by the accused persons. The IO has further not clarified, if, as

per the statements given by the bank officials, the machines were

working there then how and from where they were procured and if no

machine was procured then how the bank officials given their report.

The learned ACMM has, therefore, opined that the above instances

show that the investigation has not been conducted completely and

the matter requires further investigation on the aspect of involvement

of the bank officials. It is in this behalf that the trial court has ordered

further investigation.

11. Another aspect is that the petitioner has been in judicial

custody, after initial police custody of one week, for a period over 90

days and has already been chargesheeted. The petitioner is 76 years

of age and admittedly is a chronic heart patient suffering from

coronary heart disease since 1998. Further, the petitioner is a high

risk patient prone to sudden cardiac episode due to ventricular

fibrillation and has been recommended the insertion into his body of

an "Intra Cardiac Defibrillator". Also, nothing has been urged on

behalf of the CBI to raise a reasonable apprehension that the

petitioner will tamper with the prosecution evidence if he is released

on bail. Further, nothing has been urged to suggest that the CBI has a

reasonable apprehension that the petitioner will flee from justice if he

is released on bail. From the material placed on record and the

conduct of the petitioner in appearing before the CBI when

summoned before his arrest, it is clear that the petitioner is an

established businessman with roots in the Society.

12. Bail, it has been held in a catena of decisions, is not to be

withheld as a punishment. Even assuming that the accused is prima

facie guilty of a grave offence, bail cannot be refused in an indirect

process of punishing the accused person before he is convicted.

Furthermore, there is no justification for classifying offences into

different categories such as economic offences and for refusing bail

on the ground that the offence involved belongs to a particular

category. It cannot, therefore, be said that bail should invariably be

refused in cases involving serious economic offences.

13. The charge sheet in the present case has been filed and

cognizance taken on 22nd May 2010 and the petitioner is, therefore,

not required for any purpose. It is also seen that evidence has already

been collected qua the petitioner and the CBI has not thought it

appropriate to ask for custodial interrogation of the petitioner during

the long period of 90 days when the petitioner was in judicial custody.

One more consideration which weighs with the Court is that a scheme

of arrangement under Section 391 of the Companies Act, 1956 has

been filed by SML Company and is pending finalization before the

Hon'ble Allahabad High Court. Under the scheme of arrangement the

IDBI and the petitioner were already agreed on the terms and

conditions for the repayment of the loan extended to the company at

the instance of the petitioner and other co-accused.

14. Having regard to the entire facts and circumstances of the case,

I do not find any justification for detaining the petitioner in prison any

longer. Therefore, the petitioner who is in custody since 19th

February, 2010 should be released on bail on furnishing a personal

bond in the sum of Rs.5,00,000/- (Rupees five lakhs) with two sureties

in the like amount to the satisfaction of the trial court and subject to

the conditions that (a) he shall surrender his passport, if not already

seized; (b) he shall not leave the country without permission of the

trial court; and (c) he shall not tamper with the evidence or do any act

which will create a reasonable ground to assume that the petitioner is

trying to create hurdle in the fair investigation or trial of the case

which will entail cancellation of his bail.

15. With the above directions the bail application is allowed.

However, expression of any opinion hereinbefore may not be treated

as an expression on the merits of the case.

SIDDHARTH MRIDUL, J.

MAY 31, 2010 mk