Delhi High Court
Chitra Ramkrishna vs Central Bureau Of Investigation ... on 28 September, 2022
$~26
* IN THE HIGH COURT OF DELHI AT NEW DELHI
Reserved on: August 16, 2022
Decided on: September 28, 2022
+ BAIL APPLN. 1522/2022 & CRL.M. (BAIL) 587/2022
CHITRA RAMKRISHNA ..... PETITIONER
Through: Mr. N. Hariharan, Senior
Advocate with Mr. Rony
Oommen John, Mr. Shivam
Batra, Mr. Anubhav Nandan
Tyagi, Mr. Akhil
Ranganathan and Mr.
Arshdeep Singh, Advocates.
V
CENTRAL BUREAU OF INVESTIGATION
(CBI) THROUGH THE INVESTIGATING
OFFICER ..... RESPONDENT
Through: Mr. Anupam S. Sharrma,
SPP-CBI with Mr. Anurag
K.Andley, Mr. Prakarsh
Airan, and Ms. Harpreet
Kalsi, Advocates.
Mr. Puspal Paul, DSP-CBI.
%
CORAM:
HON'BLE MR. JUSTICE SUDHIR KUMAR JAIN
JUDGMENT
1. The present bail application is filed under section 439 read with 482
of the Code Of Criminal Procedure, 1973 (hereinafter referred to as
"the Code") for grant of regular bail in FIR bearing no
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RC/AC1/2018/A0011 dated 28.05.2018 registered at PS CBI/AC-I for
offences punishable under sections 120B/204 IPC and sections
7/12/13(2) read with 13(1)(d) of the Prevention of Corruption
Act,1988 (hereinafter referred to as „PC Act‟) and section 66 of the
Information Technology Act, 2000. The petitioner prayed as under:
a) Allow the present application;
b) Grant regular bail to the Applicant and direct her release
in connection with FIR No. RC/AC1/2018/A0011 dated
28.05.2018 lodged with P.S. CBI/AC-I;
c) Pass any other order/s, which this Hon‟ble court may
deem fit and proper in the interest of justice.
2. The facts as alleged in FIR are that Sanjay Gupta who was owner
and promoter of M/s OPG Securities Pvt. Ltd. during 2010 to 2014
abused the server architecture of National Stock Exchange (hereinafter
referred to as "NSE") in criminal conspiracy with unknown officials
of NSE. Sanjay Gupta with the help of his brother in law namely
Aman Kokrady and other unknown persons in furtherance of the
criminal conspiracy managed data centre staff of NSE who passed the
information regarding switching on time of NSE exchange servers.
OPG Securities Pvt. Ltd. by unknown officials of NSE was given
access to technologically latest and least crowded servers at that
particular period which helped OPG Securities Pvt. Ltd. to be mostly
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to login firstly on the Exchange Server of the NSE and this particular
setup of server gives a 10:1 (Approx.) speed advantage in comparison
to other brokers. The information was disseminated till 2014 by
exchange server to the brokers attached with co-location facility
through 'tick by tick' (TBT) based system architecture. The
architecture data was disseminated in a sequential manner whereby the
stock broker who connected first to the server of Stock Exchange
received ticks i.e. market feed before the stock broker who connected
later. Sanjay Gupta had enjoyed unfair access to co-location facility of
NSE between 2010 to 2014 that enabled OPG Securities Pvt. Ltd. to
login first to the secondary server and to get the data before everyone
else which allowed a split second faster access to the data feed of
NSE. A split-second faster access is considered to result in huge gains
for any stock trader.
2.1 NSE did not have the system of starting TBT servers (tick by tick
server) at a fixed time every day. Sanjay Gupta with the help of and
from unknown persons managed the data centers staff of NSE who
passed the information regarding switching on time of NSE exchange
servers. NSE improved the system of imbalance load factor among
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different TBT co-location server during October 2012 and introduced
load balancer among the various TBT co-location servers. Load
balancer ensured that the load is evenly distributed among the TBT
servers. There were back up servers were also available in NSE for
providing connection to the servers of the brokers only in case if
primary servers had some technical glitch or failure. The servers of all
other brokers were connected to the primary servers of NSE but
Sanjay Gupta once again dishonestly and fraudulently managed the
data centre staff of NSE who started to let OPG Securities Pvt. Ltd.
connected to the backup servers which were with zero load and
therefore had provided far better and fast access to the market feed to
the OPG Security Pvt. Ltd. in comparison to other brokers. This had
resulted in wrongful gain to OPG Securities Pvt. Ltd. and wrongful
loss to other brokers/investors.
2.2 SEBI on receiving the complaints of exploitation of TBT
architecture by OPG Securities Pvt. Ltd. conducted enquiry.
According to Technical Advisory Committee (TAC) Report, OPG
Securities gained materially by exploiting the TBT architecture of
NSE which also revealed that OPG Securities had consistently logged
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in first on selected TBT servers on most of the trading days during the
period 2010 to 2014 and also had access to servers with better
hardware. As per forensic review of the NSE's co-location facility
conducted by Deloittee Touche Thmatsu, OPG Securities was the first
in most cases during trading sessions.
2.3 Sanjay Gupta dishonestly and fraudulently influenced the officials
of SEBI and bribe money was also exchanged between Sanjay Gupta
and some unknown officials of SEBI to ensure the favorable report in
the on-going enquiry being carried out by SEBI against the role of
OPG Securities Pvt. Ltd in the misuse of TBT architecture of NSE.
Sanjay Gupta deliberately directed his employees to delete some
important mails, text massages, logs etc. related to co-location to
destroy evidence.
2.4 Ajay Narottam Shah was found to be instrumental in exploitation
of NSE, TBT architecture as he had collected NSE trade data to carry
out research and thereafter passed it to private persons who in turn
developed an algo software named „Chanakya' which was sold to
selected brokers including OPG Securities and by using Chanakya
exploited TBT architecture of NSE by using Chanakya Software.
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2.5 Accordingly, present FIR was got registered under sections 120-B
/204 of the IPC and sections 7/12/13(2) read with 13(1) (d) of the PC
Act and under section 66 of the Information Technology Act, 2000.
3. It was revealed during investigation that the applicant/accused
Chitra Ramakrishna (hereinafter referred to as "the
applicant/accused") worked as Joint MD, NSE from 2009 till 31st
March, 2013 and exercised the powers of MD. She was appointed as
MD and CEO of NSE on 1st April, 2013. The co-location was
conceptualized and implemented during her tenure as Joint MD and
was responsible for day to day operations of the exchange during the
relevant period. Muralidharan Natarajan, CTO of NSETECH (a
subsidiary of NSE) was responsible for placing co-location
architecture at NSE and was reporting to the applicant/accused. It was
also revealed that during the period 2010-15 when the
applicant/accused was managing the affairs of NSE, OPG Securities
Pvt. Ltd. had connected to the secondary POP server on 670 trading
days in the Futures & Options segment. The investigation regarding
allegations of preferential access granted to certain brokers by officials
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of NSE and undue gains made out of it during the tenure of the
applicant/accused and Anand Subramanian is underway.
3.1 It was surfaced during investigation that SEBI had passed an order
dated 11.02.22 in the matters pertaining to illegal appointment of
Anand Subramanian as „Chief Strategic Advisor‟ (CSA), his
re-designation as 'Group Operating Officer' and Advisor to MD' and
sharing of internal confidential information of NSE with unknown
person by the applicant/accused. The respondent/ CBI received a
request from the Ministry of Finance, Govt. of India to investigate the
issues arising out of SEBI Final Order dated 11.02.2022. The
respondent/CBI took up investigation as it has a serious bearing on the
integrity and functioning of NSE and in turn on the
robustness/integrity of National Financial System and issue
highlighted in the order of SEBI dated 11.02.2022 was linked with
ongoing investigation by CBI.
4. Anand Subramanian during further investigation was found to be
well connected with the applicant/accused prior to his engagement as
Chief Strategic Advisor at NSE in January, 2013. The
applicant/accused entered into a criminal conspiracy with the Anand
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Subramanian and illegally and arbitrarily appointed Anand
Subramanian in NSE. It was further surfaced that Anand Subramanian
was offered to join NSE as Chief Strategic Advisor to MD with effect
from 01.04.2013 vide NSE letter dated 18.01.2013 and his
appointment was approved by the applicant/accused, then Joint
Managing Director (JMD) vide internal note dated 18.01 2013. The
applicant/accused did not obtain approval for the appointment of
Anand Subramanian from Sh. Ravi Narain, then MD despite
designation of the post was "Chief Strategic Advisor to MD" and even
the draft contract agreement was also dictated by the
applicant/accused.
4.1 It was also surfaced in investigation that then HR Head was not
aware of any details for processing the recruitment of Anand
Subramanian and also did not have any document related to him. The
application form of Anand Subramanian was also filled up on a later
date. The applicant/accused by misusing her official position fixed an
abnormally high initial compensation of Anand Subramanian and his
previous experience was not relevant to the position for which he was
appointed at NSE. Anand Subramanian prior to joining NSE was Vice
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President, Leasing & Repair Services of Transafe Services Limited, a
subsidiary of M/s Balmer & Lawrie and his last drawn compensation
was approximately Rs 14 lakhs per annum. He was offered a
disproportionately high annual remuneration of Rs. 1.68 crores for
working 4 days in a week despite he was not having any relevant
experience.
4.2 It was further surfaced in investigation that the applicant/accused
entered into criminal conspiracy with Anand Subramanian and
arbitrarily enhanced his compensation at frequent intervals without
any reasonable basis and by grossly abusing her official position and
even without taking any inputs from HR department. No document
was available in NSE regarding evaluation of performance of Anand
Subramanian having been carried out by the applicant/accused. The
applicant/accused dictated the internal notes for enhancement of salary
of Anand Subramania who was paid compensation of approximately
Rs 11.94 crores during the period with effect from 01.04.2013 to
21.10.2016.
4.3 The applicant/accused by misusing her official position
re-designated the post of Anand Subramanian as Group Operating
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Officer (GOO) & Advisor to MD from 01.04.2015 without bringing
the same to the notice of Nomination and Remuneration Committee
(NRC) of NSE and the NSE Board.
4.4 Anand Subramanian who was holding a position higher in
hierarchy to the Head of Departments was required to be designated as
Key Managerial Person (KMP) as per regulation 2 (1) (i) of SECC
Regulations 2012 and compensation given to him as GOO and
Advisor to MD was required to be disclosed in the Annual Report of
the NSE as per regulation 27 (5) of the said regulations. Anand
Subramanian being GOO was part of senior management and his
re-designation and remuneration was required to have approval of
NRC as per section 178 of Companies Act 2013. He was not
designated as KMP as required under SECC Regulations, 2012 and his
remuneration /re-designation was not brought to the notice of NRC or
the board as required under section 178 of Companies Act, 2013. The
motive of the applicant/accused was to give Anand Subramanian huge
monetary and status benefit by circumventing the established and laid
down process.
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4.5 It was also surfaced during investigation regarding leakage of data
unauthorizedly from NSE that the applicant/accused was
communicating with an external e-mail ID
"[email protected]" through her e-mail IDs. A search was
also conducted at the premises of Anand Subramanian who in
disclosure statement under section 27 of Indian Evidence Act admitted
having operated the e-mail ID [email protected] and
incriminating e-mails were also recovered.
4.6 It was established during investigation that the applicant/accused
entered into criminal conspiracy and in pursuance of conspiracy and
by abusing her official position as Joint MD as well as MD of NSE
illegally and arbitrarily appointed Anand Subramanian as Chief
Strategic Advisor to MD and disproportionately hiked his
compensation and also re-designated him as Group Operating Officer
without taking approval of NRC or Board.
4.7 The applicant/accused and Anand Subramanian have committed
offences punishable under section 120-B IPC read with section13 (1)
(d) read with section 13 (2) of the PC Act and substantive offences
thereof. The applicant/accused was arrested and is in custody since
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06.03.2022. The investigation qua these allegations has been
completed and charge sheet under sections 13(1)(d) and 13(2) of the
PC Act read with 120B IPC qua the applicant/accused and Anand
Subramanian has already been filed on 21.04.22 wherein it is also
mentioned that further investigation is kept open qua the offences
forming part of other transactions for which supplementary charge
sheet would be filed after completion of the further investigation. The
sanction for prosecution against the applicant/accused and Anand
Subramanian is awaited from the competent authority.
5. The applicant/accused filed an application under section 438 of the
Code for grant of anticipatory bail bearing no 47/2022 titled as Chitra
Ramkrishna V CBI which was dismissed vide order dated
05.03.2022 by the court of Sh. Sanjeev Aggarwal, Special Judge (PC
Act) (CBI)-02, Rouse Avenue District Courts, New Delhi.
6. The applicant/accused also filed an application under section 439 of
the Code for grant of bail bearing no 65/2022 titled as CBI V Chitra
Ramkrishna which was dismissed by the court of Sh. Sanjeev
Aggarwal, Special Judge (PC Act) (CBI)-02, Rouse Avenue, District
Courts, New Delhi vide order dated 12.05.2022.
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7. The applicant/accused also filed an application under section 167
(2) of the Code on ground that since investigation qua the offences as
alleged in FIR is not completed by the respondent/CBI and no final
report has been filed as such the applicant/accused should be given
benefit of default bail and be released forthwith which was dismissed
by the court of Sh. Rakesh Kumar-III, Special Judge (PC Act) (CBI)-
02, Rouse Avenue, District Courts, New Delhi vide dated 28.05.2022.
8. The applicant/accused in application for grant of regular bail which
is under consideration stated that the applicant/accused in custody for
about seventy (70) days without being named in FIR or any offence
being committed by her. The respondent/CBI has filed a charge sheet
on 21.04.2022 against the applicant/accused and Anand Subramanium
as co-accused but without obtaining prosecution sanction and as such
no cognizance can be taken on said charge sheet. The Special Judge
has relied extensively on the said charge sheet while passing the order
dated 12.05.2022 which is against the principles of natural justice and
criminal jurisprudence. The charge sheet filed by the respondent/ CBI
is an incomplete charge sheet and investigation for other allegations
i.e. the main offences as alleged in the FIR is underway and a report
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under section 173 of the Code could be filed on completion of
investigation. In the charge sheet dated 21.04.2022, none of the
allegations as mentioned in FIR dated 28.05.2018 were dealt with or
investigated and on contrary a completely new offence was created
and investigated by the respondent/CBI.
8.1 The applicant/accused is a Chartered Accountant and a reputed
professional in the financial markets with no prior criminal
antecedents. No concrete criminal role can be attributed to the
applicant/accused at this stage as Final Report has not yet been filed in
present FIR. The applicant/accused joined investigation on
18.02.2022, 19.02.2022, 20.02.2022, and 24.02.2022, at Mumbai in
pursuance of notice dated 17.02.2022 and also joined investigation in
Delhi. The applicant/accused was arrested on 06.03.2022. The
applicant/accused also mentioned facts as stated in FIR and surfaced
during investigation. The respondent/CBI has not arrested any person
as named in FIR or surfaced during investigation and investigation
qua them and offences is still pending and no charge sheet has been
filed by the respondent/CBI till date.
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8.2 The applicant/accused was one of the initial members of M/s.
National Stock Exchange Ltd. (NSE) which is company registered
under the Companies Act, 1956 whereof 54% shareholding is owned
by public at large, and 46% shareholding is owned by trading
members but no portion is owned by any State/Central Government.
The applicant has never been a public servant. The applicant/accused
was the Joint Managing Director (JMD) in year 2010 and was
appointed as the Managing Director (MD) and Chief Executive
Officer (CEO) of NSE with effect from 01.04.2013. The
applicant/accused resigned from her position at on 02.12.2016 and
was appointed as Chairperson of Malaviya National Institute of
Technology (MNIT), Jaipur for a three-year term till January 2019 by
the Ministry of HRD, Government of India. The role of the
applicant/accused during relevant period was to manage affairs and
functions of the NSE but was not directly involved in the ground-level
process of handling the technical aspects or servers or access thereto
of the stock exchange markets. The present FIR was lodged in the year
2018.
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8.3 SEBI conducted enquiry in pursuance of complaints made against
NSE in respect of its co-location facilities and issued various
show-cause notices. It was alleged in respect of the applicant/accused
that NSE and its employees had committed fraudulent and unfair trade
practices and violated SECC Regulations besides raising other
allegations against other persons which was culminating into
institution of Case No. WTM/GM/EFD/03/2018-2019. SEBI vide
order dated 30.04.2019 passed in Case No.WTM/GM/EFD/03/2018-
2019 directed that the applicant/accused in her capacity as former MD
& CEO of NSE should disgorge 25% of her salary drawn for FY
2013-14 and was prohibited from associating with a listed company
or market corporation for five years. The penalty was imposed on
principles of vicarious liability principles only on account of alleged
administrative violations and omissions only as specific allegation qua
fraudulent and unfair trade practices was not proved. The order dated
30.04.2019 was challenged vide Appeal No 297/2019 before the
Securities Appellate Tribunal (SAT), Mumbai and vide Order dated
06.06.2019, the operation of order dated 30.04.2019 was stayed during
the pendency of the Appeal.
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8.4 A separate and independent case was also filed before SEBI on the
basis of various allegations pertaining to human resources issue stating
that the applicant/accused misused her powers delegated by NSE
Board in appointment of Anand Subramaniam as Chief Strategic
Advisor with NSE; indulged in financial misdeeds relating to fixation
and frequent revision of compensation of Anand Subramaniam; failed
to raise concerns with respect to delegation of wide powers to Anand
Subramaniam; shared internal confidential information of NSE with
an unknown person in charge of email ID [email protected]
and allowed her decision-making to be influenced by such unknown
person alleging such person to be a "siddhapurusha"/"paramhansa".
However in said case no allegation against the applicant/accused
subject-matter of present FIR was made. SEBI vide order dated
11.02.2022 passed in Case No WTM/AB/MRD/DSA/21/2021-22
directed for imposition of monetary penalty of Rs. 3 Crore, directed
NSEIL to transfer the withheld variable pay bonus and other
emoluments due to the applicant/accused to the Investor Protection
Fund and restrained the applicant/accused from associating with any
market institution for three (3) years.
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8.5 The applicant/accused on 17.02.2022 received a notice under
section 160 of the Code from the respondent/CBI to join investigation
in present FIR case and thereafter the applicant/accused has joined
investigation in Mumbai and Delhi. The applicant/accused was
arrested on 06.03.2022 despite being joined investigation and due to
dismissal of application for grant of bail.
8.6 The applicant/accused sought regular bail on grounds that case of
the respondent/CBI against the applicant/accused pertains to
negligence in administration of NSE which is a civil wrong but not a
criminal offence. The respondent/CBI has not alleged that the
applicant/accused had any mens rea towards commission of any crime
or committed any act towards committing any crime. The resolution
dated 11.08.2015 (D-44) passed by the Board of NSE clearly detailed
the roles & responsibilities of co-accused Anand Subramaniam as well
as his appointment on the determined salary was approved by the
Board. During tenure of the applicant/accused as MD of NSE from
2013-2016, a decision was taken to phase out TBT (tick-by-tick)
technology which was the brainchild of her predecessor Mr. Ravi
Narain who was MD till 2013 and the architecture was designed and
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implemented by Mr Ravi Apte and Mr. N. Murlidaran. The
appointment of co-accused Anand Subramaniam was within the full
knowledge and acceptance of the Board Members of NSE as well as
the HR department head Mr. Chandrasekar Mukherjee who has
acknowledged and appreciated the good work and performance of
Anand Subramaniam and recommended an increase in his roles &
responsibilities as well as salary. There was not a single complaint /
allegation regarding the performance of Anand Subramaniam or any
loss caused to NSE or any of the investors due to his actions or
inactions.
8.6.1 The applicant/accused had joined investigation on numerous
dates with the respondent/CBI in Mumbai and New Delhi and search
and seizure were also carried out qua the applicant/accused on
24.02.2022. The applicant/accused vide order dated 07.03.2022 was
remanded to police custody and was subjected to custodial
interrogation as such further custody of the applicant/accused is not
required in the matter. There are no concrete allegations or any
specific role attributed against the applicant/accused in present FIR.
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8.6.2 The respondent/CBI alleged that during 2010 to 2014, the
accused as named in FIR had abused the server architecture (tick-by-
tick) of NSE, thereby enabling M/s. OPG Securities Pvt. Ltd. to log-in
first to the server of the NSE and get the data split-second faster and as
such unfair advantage was given to M/s. OPG Securities Pvt. Ltd.
M/s. OPG Securities Pvt. Ltd. was also permitted to connect to the
backup servers which had very less load, thereby far better and faster
access to the market feed was given. The accused as named in FIR had
dishonestly and fraudulently induced the officials of SEBI with bribe
money in order to get a favourable report from SEBI. NSE officials
had provided trade data to the accused Ajay Shah who, in turn,
developed algo-trading software named "Chanakya" which was sold
to selected brokers and they were benefited by exploiting tick-by-tick
architecture by using the said software. The applicant/accused is not
connected with these allegations.
8.6.3 The co-location facility was the brainchild of Shri Ravi Narain
and conceived and introduced in Indian Market during his tenure as
Managing Director. To place co-location system was the responsibility
of Sh. N. Muralidaran and the applicant/accused had no direct concern
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with the system. Mr. Muralidharan was reporting to Mr Ravi Narain
directly and or through the applicant/accused on matters relating to the
co-location facility and not to the applicant/accused directly.
8.6.4 The scope of investigation was expanded by the respondent/CBI
to include Anand Subramaniam whose appointment was done in
consonance with the powers exercised by the Managing Director and
increase in the mandate of the work handled by Anand Subramaniam
was approved by the Board of Directors. There was no illegality in
appointing a person as an advisor or group operating officer in a non-
public/ non-government institution like the NSE. The much emphasis
was laid on the alleged emails exchanged between the
applicant/accused and email ID [email protected] However
said email ID was accessed by Anand Subramaniam, who at that time,
was already employed with NSE and was having access to all
information.
8.6.5 The respondent/CBI has not established any link or nexus
between appointment of Anand Subramaniam with sharing of emails
and information by the applicant/accused to alleged commission of
crimes in connection with the co-location system.
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8.6.6 The case as per the nature of allegations is primarily
documentary, technical and civil in nature and relevant documents,
electronic and physical have already been seized by the
respondent/CBI.
8.6.7 The applicant/accused meets the triple test for grant of bail
which are i) the applicant/accused is NOT a flight-risk; ii) the
applicant/accused is NOT a threat to any witness and c) the
applicant/accused NO possibility of tampering of any evidence.
8.6.8 The applicant/accused is a single mother of a 24 years old
daughter and is the primary caretaker for her 85 year old mother who
is suffering from various age-related ailments. The applicant/accused
is having deep roots in the society and is a reputed member of the
society. There is no possibility or apprehension of tampering of
witnesses / evidence or extension of threats. It was prayed that regular
bail be granted to the applicant/accused.
9. The respondent/CBI in Status Report submitted the facts as
mentioned in present FIR and also facts which were surfaced during
further investigation as detailed hereinabove. It is stated that the bail
application be dismissed as the applicant/accused is highly influential
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and is capable of influencing the witnesses. The examination of other
witnesses is being carried out to unearth the whole conspiracy related
to co-location set up. The applicant/accused may destroy the e-mails/
digital evidence. The investigation is also underway to identify trading
members/entities who had also illegally benefitted from the colocation
and to collect evidences against them. The execution report of MLAT
is awaited from USA.
10. The application filed under section 167 (2) of the Code was
pending before the concerned court at the time of filing present
application for grant of regular bail and said bail application was
dismissed by the court of Sh. Rakesh Kumar-III, Special Judge (PC
Act) (CBI)-02, Rouse Avenue, District Courts, New Delhi vide dated
28.05.2022.
The learned Senior Advocate for the applicant/accused during course
of arguments also stated that the applicant/accused is also entitled for
statutory bail/default bail under section 167(2) (a)(ii) of the Code
besides grant of bail on merit as per section 439 of the Code.
11. The learned Senior Counsel on merit argued that bail is rule and
jail is the exception. The applicant/accused being a woman has spent
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more than 140 days in judicial custody since the date of her arrest on
06.03.2022. The case of the respondent/CBI against the
applicant/accused pertains to negligence in the administration of NSE
which is a civil wrong and is not a criminal offence and as such
criminal proceedings cannot be misused to defeat her right to be
enlarged on bail in the present FIR.
11.1 The applicant/accused is not named as an accused in FIR which
was registered in May, 2018. The applicant/accused is only accused
who is arrested along with co-accused Anand Subramanium. The
persons against whom the main allegations were registered by the CBI
and are believed to be the beneficiaries have not been arrested. The
respondent/CBI did not allege that the applicant/accused has ever
received any amounts/benefits from the main accused persons/entities
out of the alleged crime to show collusion or conspiracy. The
applicant/accused was never summoned by CBI to assist in the
investigation for a period of nearly 4 years. The arrest of the
applicant/accused after such a long period of time in March, 2022 is
arbitrary and contrary to the principles of natural justice.
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11.2 The applicant/accused capacity of MD & CEO of NSE had the
power to appoint and employ co-accused Anand Subramaniam which
was conferred by virtue of Board Resolution (BR) dated 23.02.2005.
BR authorised the applicant/accused to appoint advisors & consultants
with such powers and duties and upon such terms as she thinks fit, for
managing the business affairs of the Company i.e. NSE. The
appointment of co-accused Anand Subramaniam was within the
knowledge and acceptance of the Board Members of NSE as well as
the HR department / head Mr. Chandrasekar Mukherjee, who has
acknowledged and appreciated the good work and performance of
Anand Subramaniam. There was not a single complaint/allegation
regarding the performance of Anand Subramaniam or any loss caused
to NSE or any of the investors due to his actions or inactions.
11.3 The Board Resolution dated 11.08.2015 passed by the Board of
Directors clearly detailed the roles & responsibilities of co-accused
Anand Subramaniam, as well as his appointment on the determined
salary was approved by the Board. Anand Subramanian was not
appointed as a Key Managerial Personnel KMP as he was not
handling any KMP functions and role did not require approval of
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Nomination and Remuneration Committee (NRC). Anand
Subramaniam was appointed as a consultant on a contractual basis and
was advising on non-core business functions.
11.4 Mr. Ravi Narain, Managing Director, NSE conceived and
introduced co-location facility in 2009. Mr. N Muralidharan, MD,
CEO of NSE IT was responsible for the design and implementation of
the co-location facilities and Mr. Ravi Apte (CTO from 2007 to 2012)
was responsible for the choice of architecture, design and
implementation of the co-location facilities. No authority including
SEBI has found any fault with the architecture of the co-location
facility implemented at the NSE. The technical Committee and all
technical advisors of NSE including Mr. Muralidharan have
unanimously agreed on the choice of architecture. During the tenure of
the Applicant as MD, the TCP-IP architecture was eventually phased
out and a Multicast Broadcast system was implemented. The
applicant/accused being the MD, was not responsible for all alleged
wrong-doings including co-location and the appointment of Anand
Subramanian as NSE is a large organisational setup with proper and
well-defined division of powers/responsibilities.
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11.5 The concerned court in order dated 12.05.2022 whereby
application for grant of regular bail was rejected erred in relying on
contents of the charge sheet dated 21.04.2022 despite that cognizance
has not yet been taken, sanction to prosecute the applicant/accused
under PC Act has not been obtained by the respondent/CBI and copy
of the charge-sheet was not supplied to the applicant/accused.
11.6 The respondent/CBI laid much emphasis on the alleged emails
exchanged between the applicant/accused and the email ID
[email protected] by alleging that information of NSE
including its organisational structure, dividend scenario, financial
results, human resources policy and related issues, response to
regulator, future projects etc. was shared with the above email ID from
2013 to 2016 but as the respondent/CBI said email ID was accessed by
co-accused Anand Subramaniam who at that time was already
employed with the NSE and was having access to these information.
Thus the allegation of the respondent/CBI that sensitive information
was leaked and shared with outsiders does not survive. Even otherwise
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these allegations do not form part of FIR registered in the year 2018
and Show Cause proceedings initiated by SEBI into the co-location
aspects, and were part of a separate SEBI proceedings.
11.7 The nature of allegations is primarily documentary, technical &
civil in nature and the relevant documents, electronic and physical
have already been seized. The continued custody of the
applicant/accused will not advance any cause of justice. The applicant
has cooperated with the investigation. The applicant/accused has
always co-operated with the respondent/CBI in investigation and
custodial interrogation of the applicant/accused has already been
conducted.
11.8 SEBI vide order dated 30.04.2019 held that allegations of fraud
against NSE stood disproved and consequently do not survive against
the applicant/applicant and directed that the applicant/accused in her
capacity as former MD & CEO of NSE should disgorge 25% of her
salary drawn for FY 2013 -14 only on principles of vicarious liability
principles due to alleged failure to ensure implementation of principle
of equal fair and transparent access under the SECC Regulations.
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There was no element of fraud or mens rea on the part of the
applicant/accused in co-location issue involving OPG Securities.
11.9 The applicant/accused satisfies the triple-test for grant of bail that
the applicant/accused is not a flight risk, there is no possibility to
tamper with evidence or influencing witnesses by the
applicant/accused. The offences under investigation pertain to the
periods i.e. 2010-2014 regarding co-location facilities and 2013-2016
regarding appointment of Anand Subramanian for which documentary
evidences have already been collected by the respondent/CBI. There is
no allegation against the applicant/respondent that she had ever
attempted to tamper with evidence to influence witnesses since the
registration of the FIR in 2018.
11.10 The Supreme Court regarding economic offences recently held
that even economic offences have different aspects including the
gravity of the offence, period of the sentence and other attending
circumstances and bail ought not be denied on that basis alone. The
learned Senior Counsel relied on Satender Kumar Antil V CBI &
another, SLP Crl. No 5191 of 2021 decided on 11.07.2022, P.
Chidambaram V Directorate of Enforcement, (2020) 13 SCC 791
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and Sanjay Chandra v. CBI, (2012) 1 SCC 40. The learned Senior
Counsel stated that the applicant/accused be granted bail on such
reasonable terms and conditions as imposed by this court.
12. The Special Public Prosecutor for the respondent/CBI argued at
length and also submitted written arguments and argued that present
RC was got registered for offences punishable under sections 120-B
and 204 IPC; under section 7, 12 & 13(2) read with section 13(1)(d) of
Prevention of Corruption Act, 1988 and under section 66 of
Information Technology Act, 2000 on 28.05.2018 regarding co-
location and passing of confidential information by officials of NSE to
M/s OPG Securities leading to wrongful gain to M/s OPG Securities
and was detrimental to the larger public interest. The respondent/CBI
was investigating the case relating to co-location architectural system
of NSE which compromised the integrity of the trading system. A
letter dated 05.03.2022 was received from Ministry of Finance
mentioning therein that the enquiry by SEBI revealed sharing of
confidential information by its CEO with some unknown persons
thereby compromising the integrity of NSE which may have relevance
to the co-location which was already being investigated by the
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respondent/CBI. SEBI had imposed heavy fines on the
applicant/accused for causing wrongful gain to Anand Subramaniam
in course of her employment to the detriment to the corporate
governance of the NSE as well as larger public interest.
12.1 The respondent/CBI was requested to investigate the issue raised
in the order passed by SEBI. The respondent/CBI had already
registered RC in co-location issue and passing of information so issues
disclosed in the letter were also included in the investigation. It was
surfaced during investigation that accused including the
applicant/accused had adopted several ingenious ways to amass illegal
wealth which resulted in public injury. The investigation in the present
case relate to conspiracies which are independent to each other and are
distinct conspiracies. The investigation has already been completed
with regards to one of the method adopted to amass wealth and cause
wrongful gain to themselves by abuse of appointment of Anand
Subramanian as Chief Strategic Advisor to MD at NSE and thereafter
disproportionately increasing the salary of Anand Subramanian by the
applicant/accused from time to time, besides re-designating Anand
Subramanian in 2015 and thereafter delegating substantial powers to
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him without making him KMP (Key Management Person), without
bringing it in notice and approval of the Nomination and
Remuneration Committee(NRC) of NSE.
12.2 The applicant/accused and Anand Subramanian were known to
each other since 1999. The applicant/accused in pursuance conspiracy
with Anand Subramanian got appointed him in NSE illegally and
arbitrarily. The application form dated 01.04.2013 of appointment of
Anand Subramanian with NSE was submitted subsequent to contact
agreement which is dated 18.01.2013. The pre-employment
documents pertaining to Anand Subramanian were not handed over to
HR of NSE or kept in his personal file. The applicant/accused also
approved internal approval note dated January 18.01.2013 and also
dictated draft contract agreement. HR Department of NSE did not
make any communication with Anand Subramanian. There was no
interview, medical or advertisement for this post. And Anand
Subramanian was directly appointed by the applicant/accused without
following the procedure. The applicant/accused did not obtain
approval from then MD for designation of the post of Anand
Subramaniam as Chief Strategic Advisor to MD.
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12.3 Anand Subramanian despite without relevant experience was
offered an annual remuneration of Rs. 1.68 crores per annum for
working 4 days in a week which was 1100% in comparison to his
previous salary. The applicant/accused frequently enhanced
compensation of Anand Subramanian without any reasonable basis
and performance evaluation and by misusing her official position.
12.4 The applicant/accused re-designated Anand Subramanian as
„Group Operating Officer and Advisor to MD with effect from 01. O4.
2015 vide letter dated 01.04.2015. Anand Subramanian was working
as a senior executive position and required approval from NRC and
was required to be designated as KMP as per regulation 2 (1) (i) of
SECC Regulations 2012. The compensation given to Anand
Subramanian as GOO and Advisor to MD was required to be
disclosed in the Annual Report of the NSE as per regulation 27 (5).
SEBI in its order dated 11.02.2022 clearly stated the role played by the
applicant/accused and Anand Subramanian in the matter of the illegal
appointment of Anand Subramanian.
12.5 The applicant/accused granted more powers to Anand
Subramanian with more financial benefits without following the due
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process. The substantial powers were given to Anand Subramanian.
The Board was kept in the dark that Anand Subramanian was a
consultant and Advisor to MD. The investigation with regards to the
employment of Anand Subramaniam appointed by the
applicant/accused is complete and regarding this charge sheet has
already been filed.
12.6 The applicant/accused and Anand Subramanian are responsible
for Co-Location. The team which was responsible for setting up co-
location was reporting to the applicant/accused and further the team of
Ravi Apte and N. Muralidharan which was responsible for setting up
the co-location was reporting to Anand Subramanian. The
applicant/accused was communicating with an external e-mail ID
"[email protected]" through her e-mail IDs. Anand
Subramanian also in disclosure statement under section 27 of Indian
Evidence Act admitted having operated said email ID
"[email protected]" and accessed the said e-mail ID.
12.7 The employment of Anand Subramaniam establishes grave and
serious economic offence which shakes the credibility of NSE and the
entire financial securities system. Sanjay Gupta of M/s OBG
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Securities has been arrested and the investigation with regards to the
co-location matter is at an advanced stage. The magnitude of the scam
is still under investigation which is one of the biggest scams in the
stock market and confidence of the investors needs to be restored. FIR
being RC No. 221 2022 E 0019/EO-III and 221 2022 E 0030/EO-III
implicating the applicant/accused have also been registered. The
Special Public Prosecutor argued that the bail application be
dismissed.
CONSIDERATION OF BAIL APPLICATION AS PER
SECTION 439 OF THE CODE
13. The facts in brief which are reflecting from perusal of material
placed on record that present RC was got registered for offences
punishable under sections 120-B and 204 IPC; under section 7, 12 &
13(2) read with section 13(1)(d) of PC Act, 1988 and under section 66
of I.T. Act, 2000 dated on allegations of co-location and passing of
confidential information to M/s OPG Securities by officials of NSE
which led to wrongful gain to M/s OPG Securities. Accordingly the
respondent/CBI conducted investigation relating to co-location
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architectural system of NSE. The applicant/accused is not named as an
accused in present FIR.
13.1 The applicant/accused worked as Joint MD in NSE from 2009 till
31.03.2013 and was appointed as MD and CEO of NSE on 1st April,
2013. It was surfaced during investigation that the applicant/accused
and Anand Subramanian were known to each other since 1999 and
applicant/accused got appointed Anand Subramanian in NSE. SEBI
passed an order dated 11.02.22 pertaining to illegal appointment of
Anand Subramanian as „Chief Strategic Advisor‟ (CSA), his re-
designation as 'Group Operating Officer' and Advisor to MD' and
sharing of internal confidential information of NSE with unknown
person by the applicant/accused. The respondent/ CBI received a
request from the Ministry of Finance, Govt. of India vide letter dated
05.03.2022 to investigate the issues arising out of SEBI Final Order
dated 11.02.2022 which revealed sharing of confidential information
by its CEO with unknown persons which compromised integrity of
NSE. The respondent/CBI was requested to conduct investigation. The
respondent/CBI included issues disclosed in the letter of Ministry of
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Finance in the investigation already undertaken in respect of co-
location issue and passing of information.
13.2 It was surfaced during investigation that the applicant/accused
approved internal approval note dated January 18.01.2013. Anand
Subramanian was offered annual remuneration of Rs. 1.68 crores per
annum for working 4 days in a week and his compensation was
enhanced frequently by the applicant/accused. The applicant/accused
re-designated Anand Subramanian as „Group Operating Officer
(GOO) and Advisor to MD with effect from 01. O4. 2015 vide letter
dated 01.04.2015. Anand Subramanian was required to be designated
as KMP as per regulation 2 (1) (i) of SECC Regulations 2012 and the
compensation given to Anand Subramanian as GOO and Advisor to
MD was required to be disclosed in the Annual Report of the NSE as
per regulation 27 (5).
13.3 The co-location was conceptualized and implemented during her
tenure as Joint MD and Muralidharan Natarajan, CTO of NSETECH
(a subsidiary of NSE) was responsible for placing co-location
architecture at NSE. The applicant/accused was found to be
communicating with an external e-mail ID
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"[email protected]" through her e-mail IDs which was also
admitted by Anand Subramanian in disclosure statement under section
27 of Indian Evidence Act and also admitted having operated said
email ID "[email protected]" and accessed the said e-mail
ID.
14. The present FIR/RC pertains to financial irregularities committed
in NSE by Sanjay Gupta in connivance with unknown officials of
NSE and illegal appointment of Anand Subramanian by the
applicant/accused. The Supreme Court in various judgments has taken
note of financial irregularities and its serious impact on national
finance and economy and held that these cases be looked and
examined in sensitivity. It was also held that economic offence(s) are
in itself a class of its own and they need to be viewed seriously and
have to be considered as grave offences affecting the economy of the
country as a whole, thereby posing serious threat to the financial
health of the country.
14.1 It was held in Rohit Tandon V ED, AIR 2017SC5309 as under:-
21. The consistent view taken by this Court is that economic
offences having deep-rooted conspiracies and involving huge
loss of public funds need to be viewed seriously and
considered as grave offences affecting the economy of the
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country as a whole and thereby posing serious threat to the
financial health of the country.
It was also held in Y.S. Jagan Mohan Reddy V Central Bureau
of Investigation, (2013)7SCC439 as under:-
15) Economic offences constitute a class apart and need to be
visited with a different approach in the matter of bail. Then
economic offence having deep rooted conspiracies and
involving huge loss of public funds needs to be viewed
seriously and considered as grave offences affecting the
economy of the country as a whole and thereby posing
serious threat to the financial health of the country.
16. While granting bail, the court has to keep in mind the
nature of accusations, the nature of evidence in support
thereof, the severity of the punishment which conviction will
entail, the character of the accused, circumstances which are
peculiar to the accused, reasonable possibility of securing
the presence of the accused at the trial, reasonable
apprehension of the witnesses being tampered with, the
larger interests of the public/State and other similar
considerations.
The Supreme Court in Nimmagadda Prasad V CBI (2013) 7
SCC 466 after relying on State of Gujrat V Mohanlal Jitamalji
Porwal and another, (1987) 2 SCC 364 held as under:-
26) Unfortunately, in the last few years, the country has been
seeing an alarming rise in white-collar crimes, which has
affected the fibre of the country's economic structure.
Incontrovertibly, economic offences have serious
repercussions on the development of the country as a whole.
In State of Guiarat vs. Mohanlal Jitamalii Porwal and Anr.
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(1987) 2 sec 364 this Court, while considering a request of
the prosecution for adducing additional evidence, inter alia,
observed as under:-
"5 ..... The entire Community is aggrieved if the economic
offenders who ruin the economy of the State are not
brought to book. 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 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 .... "
The Supreme Court in P. Chidambaram V Directorate of
Enforcement, Criminal Appeal No.1831/2019 arising out of SLP
(Criminal) No. 10493 of 2019 decided on 04.12.2019 held as under:-
21. Thus from cumulative perusal of the judgments cited on
either side including the one rendered by the Constitution
Bench of this Court, it could be deduced that the basic
jurisprudence relating to bail remains the same inasmuch as
the grant of bail is the rule and refusal is the exception so as
to ensure that the accused has the opportunity of securing
fair trial. However, while considering the same the gravity of
the offence is an aspect which is required to be kept in view
by the Court. The gravity for the said purpose will have to
be gathered from the facts and circumstances arising in each
case. Keeping in view the consequences that would befall on
the society in cases of financial irregularities, it has been
held that even economic offences would fall under the
category of "grave offence" and in such circumstance while
considering the application for bail in such matters, the
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Court will have to deal with the same, being sensitive to the
nature of allegation made against the accused. One of the
circumstances to consider the gravity of the offence is also
the term of sentence that is prescribed for the offence the
accused is alleged to have committed. Such consideration
with regard to the gravity of offence is a factor which is in
addition to the triple test or the tripod test that would be
normally applied. In that regard what is also to be kept in
perspective is that even if the allegation is one of grave
economic offence, it is not a rule that bail should be denied
in every case since there is no such bar created in the
relevant enactment passed by the legislature nor does the
bail jurisprudence provides so. Therefore, the underlining
conclusion is that irrespective of the nature and gravity of
charge, the precedent of another case alone will not be the
basis for either grant or refusal of bail though it may have a
bearing on principle. But ultimately the consideration will
have to be on case to case basis on the facts involved therein
and securing the presence of the accused to stand trial.
ISSUE PERTAINING TO PUBLIC SERVANT
15. The counsel for the applicant/accused argued that the
applicant/accused is not a public servant. The applicant/accused was
the Joint Managing Director (JMD) in year 2010 and was appointed as
the Managing Director (MD) and Chief Executive Officer (CEO) of
NSE with effect from 01.04.2013 and the applicant/accused resigned
from her position at on 02.12.2016. The Supreme Court in K.C.
Sharma V Delhi Stock Exchange & others, Appeal (Civil) 7055 of
2002 decided on 01st April, 2005 observed that NSE is a statutory
body and a State within the meaning of Article 12 of the Constitution
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of India and officials of NSE are public servants in terms of Section
2(c)(viii) of the PC Act, 1988. So argument advanced by the learned
Senior Counsel is without any force.
ISSUE PERTAINING TO SANCTION
16. The learned Senior Counsel for the applicant/accused argued that
the respondent/CBI has not obtained the permission for prosecution
sanction against the applicant/accused and as such cognizance cannot
be taken against the applicant/accused. The said argument advanced
by the learned Senior Counsel for the applicant/accused is without any
legal force as the grant of sanction is not a condition precedent for
completion of investigation. The Supreme Court in Suresh Kumar
Bhikamchand Jain V State of Maharashtra & another, 2013
Crl.L.J.1625 held that grant of sanction is not contemplated
under section 167 of the Code which is related to completion of
investigation in respect of different types of cases within a stipulated
period and the right of an accused to be released on bail on the failure
of the investigating authorities to do so. It was observed as under:-
19. Having regard to the above, we have no hesitation in
holding that notwithstanding the fact that the prosecution
had not been able to obtain sanction to prosecute the
accused, the accused was not entitled to grant of statutory
bail since the charge-sheet had been filed well within the
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period contemplated under Section 167(2)(a)(ii) Cr.P.C.
Sanction is an enabling provision to prosecute, which is
totally separate from the concept of investigation which is
concluded by the filing of the charge-sheet. The two are on
separate footings.
ABUSE OF SERVER ARCHITECTURE OF NSE
17. In regard to abuse of server architecture of SEBI, CBI has
registered present FIR pertaining to co-location and passing of
information to M/s OPG Securities Pvt. Ltd. by unknown officials of
SEBI. The applicant/accused is not named in FIR and no specific
allegations are made in FIR against the applicant/accused. The
applicant/accused has joined investigation on at Mumbai in pursuance
of notice dated 17.02.2022 and at Delhi. The learned Senior Counsel
for the applicant/accused argued that the role of the applicant/accused
during relevant period was to manage affairs and functions of the NSE
but was not directly involved in the ground-level process of handling
the technical aspects or servers or access thereto of the stock exchange
markets.
17.1 SEBI conducted enquiry in pursuance of complaints made against
NSE in respect of its co-location facilities on allegations that NSE and
its employees had committed fraudulent and unfair trade practices and
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violated SECC Regulations which was culminating into institution of
Case No. WTM/GM/EFD/03/2018-2019 and SEBI vide order dated
30.04.2019 which is a exhaustive and detailed order directed that the
applicant/accused in her capacity as former MD & CEO of NSE
should disgorge 25% of her salary drawn for FY 2013-14 and was
prohibited from associating with a listed company or market
corporation for five years. The relevant potion of order dated
30.04.2019 is reproduced as under:-
iii) Chitra Ramkrishna, Noticee No. 3, (former MD & CEO
of NSE):
a. shall disgorge 25% of the salary drawn for FY 2013-14, to
the IPEF created by SEBI under Section 11 of the SEBI Act,
through NSE, within a period of 45 days from the date of
this order;
b. shall be prohibited from associating with a listed company
or a Market Infrastructure Institution or any other market
intermediary for a period of Five (5) years;
17.1.1 The order dated 30.04.2019 does not reflect that the penalty
was imposed on principles of vicarious liability principles only on
account of alleged administrative violations and omissions only as
specific allegation qua fraudulent and unfair trade practices was not
proved as argued by the learned Senior Counsel for the
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applicant/accused. It is correct that the order dated 30.04.2019 was
challenged vide Appeal No 297/2019 before the Securities Appellate
Tribunal (SAT), Mumbai and the operation of order dated 30.04.2019
was stayed during the pendency of the Appeal vide Order dated
06.06.2019.
18. It is also apparent that a separate and independent case was also
filed before SEBI on the basis of various allegations including sharing
of internal confidential information of NSE by the applicant/accused
with an unknown person in charge of email ID
[email protected] SEBI in its order dated 11.02.2022
passed in Case No WTM/AB/MRD/DSA/21/2021-22 also referred
communication of the applicant/accused with an unknown person in
charge of email ID [email protected] It is true that no such
allegation against the applicant/accused were made in present FIR but
these facts surfaced during further investigation conducted in
pursuance of present FIR/RC.
19. The learned Senior Counsel for the applicant/accused further
argued that a decision was taken to phase out TBT (tick-by-tick)
technology which was the brainchild of her predecessor Mr. Ravi
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Narain who was MD till 2013 and the architecture was designed and
implemented by Mr Ravi Apte and Mr. N. Murlidaran, during tenure
of the applicant/accused as MD of NSE from 2013-2016. He further
argued that as per allegations of the respondent/CBI that during 2010
to 2014, the accused as named in FIR had abused the server
architecture (tick-by-tick) of NSE and as such enabled M/s. OPG
Securities Pvt. Ltd. to log-in first to the server of the NSE resulted into
unfair advantage was to M/s. OPG Securities Pvt. Ltd. but the
applicant/accused is not connected with these allegations and other
allegations as made in present FIR. As mentioned hereinabove that the
applicant/accused during investigation was found communicating with
an unknown person in charge of email ID [email protected]
and this fact is also admitted by Anand Subramanian. The Senior
Public Prosecutor for the respondent/CBI also argued that the
applicant/accused and Anand Subramanian are responsible for Co-
Location and team of Ravi Apte and N. Muralidharan which was
responsible for setting up the co-location was reporting to Anand
Subramanian. The investigation regarding role of the
applicant/accused regarding abuse of server architecture (tick-by-tick)
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of NSE is still underway and as such arguments advanced by the
learned senior counsel does not provide much help to the
applicant/accused. At this stage participation of the applicant/accused
in abuse of server architecture of NSE by the applicant/accused cannot
be ruled out and it requires comprehensive investigation by the
respondent/CBI.
APPOINTMENT OF ANAND SUBRAMANIAN WITH NSE
20. The Special Public Prosecutor argued that the applicant/accused
had illegally appointed Anand Subramanian without following due
process.
20.1 It is appearing from record that the present FIR was got
registered under sections 120-B /204 of the IPC and sections
7/12/13(2) read with 13(1) (d) of the Prevention of Corruption Act and
under section 66 of the Information Technology Act, 2000 relating to
abuse of server architecture of NSE besides other allegations as
mentioned in FIR. The applicant/accused worked as Joint MD, NSE
from 2009 till 31st March, 2013 and exercised the powers of MD and
was appointed as MD and CEO of NSE on 1st April, 2013. Anand
Subramanian was offered to join NSE as Chief Strategic Advisor to
MD with effect from 01.04.2013 vide NSE letter dated 18.01.2013 on
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approval of the applicant/accused, then Joint Managing Director
(JMD) vide internal note dated 18.01 2013 with annual compensation
of Rs. 1.68 crores for working 4 days in a week. Anand Subramanian
was re-designated as „Group Operating Officer (GOO) and Advisor to
MD with effect from 01. O4. 2015 vide letter dated 01.04.2015 by the
applicant/accused.
20.2 It is apparent that the respondent/ CBI received a request from
the Ministry of Finance, Govt. of India vide letter dated 05.03.2022 to
investigate the issues arising out of SEBI order dated 11.02.2022
which was passed in the matters pertaining to illegal appointment of
Anand Subramanian as „Chief Strategic Advisor‟ (CSA), his re-
designation as 'Group Operating Officer' and Advisor to MD' and
other issues. The respondent/CBI took up investigation and issue
highlighted in the order dated 11.02.2022 was found to be linked with
ongoing investigation by CBI in pursuance of present FIR.
20.3 The Senior Public Prosecutor for the respondent/CBI argued that
Anand Subramanian was illegally and arbitrarily appointed by the
applicant/accused by highlighting facts as surfaced during
investigation that Anand Subramanian was known to the
applicant/accused prior to his appointment as Chief Strategic Advisor
at NSE in January, 2013; the applicant/accused did not obtain
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approval for the appointment of Anand Subramanian from Sh. Ravi
Narain, then MD despite designation of the post was "Chief Strategic
Advisor to MD"; the draft contract agreement was also dictated by the
applicant/accused; HR Head was not aware of any details for
processing the recruitment of Anand Subramanian and also did not
have any document related to him; the application form of Anand
Subramanian was also filled up on a later date; abnormally high initial
compensation was fixed and his previous experience was not relevant
to the position for which he was appointed at NSE; the
applicant/accused enhanced compensation paid to Anand Subramanian
at frequent intervals without any reasonable basis and without taking
any inputs from HR department; there was no evaluation of
performance of Anand Subramanian to be carried out by the
applicant/accused besides other facts.
20.4 It was further highlighted by the Senior Public Prosecutor for the
respondent/CBI that the applicant/accused by misusing her official
position re-designated the post of Anand Subramanian as Group
Operating Officer (GOO) & Advisor to MD from 01.04.2015 without
bringing to the notice of Nomination and Remuneration Committee
(NRC) of NSE and its approval as per section 178 of Companies Act
2013 and the NSE Board. Anand Subramanian was not designated as
Key Managerial Person (KMP) as per regulation 2 (1) (i) of SECC
Regulations 2012 as he was holding a position higher in hierarchy to
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the Head of Departments and compensation given to him as GOO and
Advisor to MD was required to be disclosed in the Annual Report of
the NSE as per regulation 27 (5) of the said regulations.
21. The learned Senior Counsel for the applicant/accused during
course of arguments laid emphasis that the applicant/accused in
capacity of MD & CEO had the power to appoint and employ Anand
Subramaniam which was conferred by virtue of Board Resolution
(BR) dated 23.02.2005 which authorised the applicant/accused to
appoint advisors & consultants with such powers and duties and upon
such terms as she thinks fit, for managing the business affairs of NSE;
the appointment of Anand Subramaniam was within the knowledge
and acceptance of the Board Members of NSE as well as the HR
department/head Mr. Chandrasekar Mukherjee; Board Resolution
dated 11.08.2015 clearly detailed the roles & responsibilities of Anand
Subramaniam, as well as his appointment on the determined salary
was approved by the Board: Anand Subramanian was not appointed as
a Key Managerial Personnel (KMP) as he was not handling any KMP
functions and role did not require approval of Nomination and
Remuneration Committee (NRC) and Anand Subramaniam was
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appointed as a consultant on a contractual basis and was advising on
non-core business functions.
22. Board Resolution dated 23.02.2005 perused. Clause 9 of said
resolution deals with "Delegation of powers to Deputy Managing
Director" It reads as under:-
The Board considered the need for delegation of powers to
Ms. Chitra Ramkrishna, Deputy Managing Director,
Besides the powers which are being delegated to her by the
Managing Director from time to time, since several day to
day decision are required in be taken by her. The Board
discussed the matter and delegated the following general and
financial power to Ms. Chitra Ramkrishna, Deputy
Managing Director and while exercising such powers she
should act subject to the superintendence control and
direction of the Board of directors and the Managing
Director of NSEIL and also ratified the decisions taken by
the Deputy Managing Director pursuant to delegation of
powers made by the Managing Director
22.1 The applicant/accused was also given power vide Board
Resolution dated 23.02.2005 to appoint, employ, remove, dismiss,
discharge, suspend, re-appoint, re-employ, or replace for the
management of the business affairs of the company, officers,
managers, secretaries and other employees, solicitors, advocates,
accountants, advisers in the areas of systems and software , security,
taxation, law accounts, etc technicians, medical practitioners of the
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company and with such powers and duties and upon such terms as the
Deputy Managing Director may think fit. However this power was not
absolute and was subject to the superintendence control and direction
of the Board of directors and the Managing Director of NSEIL. The
appointment of Anand Subramanian was required to be made by the
applicant/accused as per procedure and was not subjected to whims
and fancies of the applicant/accused.
22.2 Minutes of the 125th Meeting of the Board of Directors of NSE
held on 11.08.2015 as referred by the learned Senior Counsel are
perused and in this meeting "Delegation of power to Group Operating
Officer" was discussed. It was resolved as under:-
The Board noted that with the overall growth in the business
activities and also due for various news initiative undertaken
by the exchange. It is imperative that business decision and
execution of certain powers to Mr. Subramanian Anand
Group Operating Officer in order to further smoothen the
day to day conduct of business operations of the Exchange
subject to statutory restriction and conditions in any laid
down by the Board or the Managing Director in this regard.
The board discussed the matter and delegated the following
powers to Mr. Subramanian Anand, Group operating
Officer, subject to statutory restrictions and conditions if
any laid down by the Board or the Managing Director in this
regard.
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Vide this Minutes certain powers were delegated to Anand
Subramanian as Group Operating Officer but it does not reflect that
his re-designation as Group Operating Officer was as per Rules and
Regulations and after following mandatory statutory provisions.
22.3 The learned Senior Counsel for the applicant/accused in written
arguments also referred e-mail dated 10.05.2016 sent by
Chandershekhar Mukherjee (HRD) to R. Jayakumar (SECRE) wherein
it was mentioned and clarified that Anand Subramanian is a consultant
and not on roles of NSE and is not handling any KMP function. It was
further mentioned that he is advising non-core functions. It is also case
of the respondent/CBI that Anand Subramanian was not designated as
Key Managerial Person (KMP) as per regulation 2 (1) (i) of SECC
Regulations 2012 although he was holding a position higher in
hierarchy to the Head of Departments. SEBI in order dated 11.02.2022
made detailed examination regarding illegalities committed by the
applicant/accused regarding initial appointment of Anand
Subramanian and thereafter his re-designation. The arguments
advanced by the learned Senior Counsel are without much factual and
legal force.
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23. The learned Senior Counsel for the applicant/accused also argued
that bail is rule and jail is the exception. The applicant/accused was
arrested on 06.03.2022. He further argued that the allegations against
the applicant/accused pertain to negligence in the administration of
NSE which is a civil wrong and is not a criminal offence; the
applicant/accused is not named as an accused in FIR and is only
accused who is arrested along with Anand Subramanium and other
persons against whom the main allegations were registered by the CBI
and are believed to be the beneficiaries have not been arrested; the
respondent/CBI did not allege that the applicant/accused has ever
received any amounts/benefits from the main accused persons/entities
out of the alleged crime to show collusion or conspiracy and the
applicant/accused was never summoned by CBI to assist in the
investigation for a period of nearly 4 years; nature of allegations is
primarily documentary and technical in nature and the relevant
documents, electronic and physical have already been seized; the
applicant/accused has always co-operated with the respondent/CBI in
investigation and custodial interrogation of the applicant/accused has
already been conducted. The applicant/accused satisfies the triple-test
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for grant of bail that the applicant/accused is not a flight risk, there is
no possibility to tamper with evidence or influencing witnesses by the
applicant/accused.
23.1 It is true that the applicant/accused was not named in FIR and
was arrested about four years after registration of FIR. The role of the
applicant/accused and Anand Subramanian was surfaced during
investigation in pursuance of present FIR and in particular when the
investigation was conducted by the respondent/CBI after order dated
11.02.2022 passed by SEBI and letter written by the Ministry of
Finance. As mentioned in written arguments submitted by the Senior
Public Prosecutor for the respondent/CBI, Sanjay Gupta owner of the
OPG Securities Pvt. Ltd. has already been arrested. The investigation
is still pending. The allegations against the applicant/accused are
serious and grave and are directly related to national economy and
financial interests. After considering gravity and seriousness of
offence subject matter of present FIR and subsequent investigation, no
ground for regular bail under section 439 of the Code is made out. It is
pertinent to mention that every piece of legal and factual arguments
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advanced by the learned Senior Counsel for the applicant/accused and
the Senior Public Prosecutor is considered in right perspective.
BAIL UNDER SECTION 167(2) OF THE CODE
24. The learned Senior Counsel for the applicant/accused with regard
to entitlement of the applicant/accused for default bail argued that the
statutory right to bail U/s 167(2) of the Code is a fundamental right
under Article 21 of the Constitution. The applicant/accused in custody
since 06.03.2022 and the respondent/CBI has failed to complete
investigation in respect of all the offences as mentioned in FIR and to
file a Final Report under section 173 of the Code within sixty days
from the date of the arrest of the applicant/accused who is in custody
for more than 60 days. The respondent/CBI has filed an
incomplete/piece-meal charge sheet before the concerned court on
21.04.2022 i.e. 46th day from the date of arrest but investigation qua
other offences is pending. He further argued that filing of
incomplete/piece meal charge sheet is not permissible as it was filed to
deny the right to default bail to the applicant/accused. The incomplete
charge sheet has been filed only with respect to sections 13 (1)(d) and
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13(2) of the PC Act and section 120 B IPC and not with respect to
other offences as alleged in the FIR.
24.1 The investigation with respect to other allegations under section
66 of IT Act 2000, section 204 IPC and sections 7 and 12 of the PC
Act is pending and yet to be completed. The respondent/CBI yet to
receive relevant information from Microsoft (USA) with respect to the
offences for which investigation is stated to be completed. The
submission of the respondent/CBI about completion of investigation
for any of the head as mentioned in charge sheet is without any
substance. The respondent/CBI has not investigated the offences for
which custody of the applicant/accused was sought or given by the
concerned court at the time of remand or subsequently while sending
the petitioner to judicial custody.
24.2 The Special Judge has continued to extend the judicial custody of
the applicant under section 167 of the Code and not under section 309
of the Code due to non-taking of cognizance for want of sanction
which is not permissible in law after lapse of period of 60 days from
the date of arrest / first remand. The learned Senior Counsel cited
Fakhrey Alam V State of UP, 2021 SCC On Line 532; Tunde
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Gbaja V CBI, 2007 SCC On Line Del 450; M Ravindran V DRI,
(2021) 2 SCC 485 and Rakesh Kumar Paul V State of Assam;
(2017) 15 SCC 67.
25. The Special Public Prosecutor for the respondent/CBI argued that
report under section 173 of the Code was filed within the mandatory
period as prescribed under section 167(2) of the Code. The petitioner
has pleaded that the petitioner is entitled for statutory bail as
incomplete charge sheet was filed as further investigation on the other
issues is still pending but the right of an accused under section 167(2)
of the Code ceases once the charge sheet has been filed and right
under section 167(2) cannot be revived due to reason that further
investigation is pending within the meaning of sub-section 8 of
Section 173 of the Code. The Special Public Prosecutor for the
respondent/CBI relied on Dinesh Dalmia V CBI, 2008 Cri.LJ.337 and
Abdul Azeez PV V NIA, 2014 AIR SCW 6537.
25.1 The Special Public Prosecutor for the respondent/CBI further
argued that the purpose of police report with details as mentioned
under section 173(2) of the Code is to enable the Magistrate to satisfy
himself that whether on the basis of report and the material filed along
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with it, a case for taking cognizance has been made out or not. If the
police report and annexed material is sufficient to satisfy the
Magistrate for taking cognizance then his power is not fettered by any
label given by the investigating agency to the report under section
173(2) of the Code or by mentioning therein that investigation is
pending and supplementary charge sheet shall be filed. It is the
jurisdiction of the Magistrate alone to decide whether the material
placed by the prosecution is sufficient or not and whether the charge
sheet is incomplete charge sheet. The reliance was placed on State of
Maharashtra V Sharadchandra Vinayak Dogre & others, AIR
1995 SC 231 and Narendra Kumar Amin V CBI,
MANU/SC/0038/2015.
25.2 The Special Judge vide order dated 28.05.2022 also held that the
charge sheet was complete containing all the details and was filed by
mentioning therein the relevant sections. The provision of section
167(2)(a)(i) & (ii) of the Code relates to completion of investigation
pertaining to an „offence‟ and not regarding „transactions'. The
Special Public Prosecutor relied on Y.S. Jagan Mohan Reddy V
CBI, 2013 Cri. L.J. 2734 where in one RC several transactions were
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investigated regarding which separate charge-sheets were filed and the
cases were tried as separate cases after taking cognizance. The
Supreme Court refused to consider pendency of investigation in other
transactions as a ground for bail holding that economic offences are a
class apart
25.3 The Special Public Prosecutor for the respondent/CBI further
argued that mere fact that the cognizance is yet to be taken by the
Magistrate for want of sanction cannot be consideration for grant of
statutory bail in view of the State of Maharashtra V Sharadchandra
Vinayak Dongre and others, AIR 1995 SC 231, SFIO V Rahul
Modi, AIR 2022 SC 902, Suraj V State of Delhi NCT, Bail
Application no. 120/2022 and Deepender Kumar Srivastava V
State, MANU/DE/4193/2006.The accused continues to be in the
custody of the Magistrate during the period i.e. between section 167
and section 309 of the Code and cannot be deemed to be under illegal
custody. The charge sheet filed against the petitioner is complete and
is sufficient to take cognizance against the petitioners and as such is
not entitled to statutory bail merely because further investigation
regarding other transactions is pending.
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26. The application filed by the applicant/accused under section
167(2)(a)(ii) of the Code for grant of default bail titled as CBI V
Chitra Ramkrishna was dismissed by the court of Sh. Rakesh
Kumar-III, Special Judge (PC Act) (CBI)-02, Rouse Avenue, District
Courts, New Delhi vide dated 28.05.2022. The relevant portion of
order dated 28.05.2022 is reproduced as under:-
17. From the above discussed judgments, I am of the opinion
that if a charge-sheet has been submitted while investigation
is not complete for one reason or the other, it cannot be said
that it is a document which has no effect in law being not in
accordance with law and that for that reason alone, it must
be deemed to be one with a view to circumvent or defeat the
provision of Section 167(2) of Cr. P. C.
18. More so there is no bar to further investigation and
Section 173(8) of Cr. P. C. cannot be limited in its operation
in respect of offences which are already the subject matter of
police report. There is no merit in the arguments that
merely because further investigation after filling of the
police report is to be on as permitted by sub Section 8 of 173
Cr. P. C., the applicant would be entitled to be released on
bail U/s 167(2) of the Code.
20. The very purpose of completing the investigation within
60 days/90 days as postulated U/s 167(2) Cr. P. C. is that an
accused who is in JC or whose liberty has been curtailed
cannot remain incarcerated indefinitely due to non
completion of investigation on the part of the investigating
agency in a time bound manner. Rather it should be
completed in above specified time failing which he will be
entitled to statutory bail U/s 167(2) Cr. P. C.
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21. In the present case, the charge-sheet was filed on 46th
day i.e. well within time. The charge-sheet filed in sum and
substance meet all the requirements of Sec. 173(2) Cr. P. C.
(a) to (g). The charge-sheet clearly describes in detail of all
the material collected by th IO/Investigating agency during
the investigation, as also role played by Chitra Ramakrishna
and Anand Subramanium, including what offence(s) were
committed and by whom which was in terms of Clause (d) of
Section 173 (2) Cr. P. C. on the basis of material collected by
the investigating agency/IO. The details of
Section(s)/offence(s) 120 B, 204 IPC and Section. 7, 12, 13(2),
r/w 13(2) (d) of PC Act and substantive offences thereof have
also been mentioned in the charge-sheet filed U/s 173 (2)
Cr.P. C. So far as Sanction is concerned, it is totally separate
from the concept of investigation.
22. In my opinion, charge-sheet has been filed mentioning
the relevant sections and after completion of the
investigation against the applicant/accused. Only because
the prayer of further investigation is appearing in the
concluding part of the charge-sheet would not confer a right
upon the accused to claim bail U/s 167(2) of Cr. P. C. Hence,
application U/s 167(2) of Cr. P. C. is dismissed.
27. Chapter XII of the Code deals with information to the police and
their power to investigate. Section 173 of the Code deals with report
of police officer on completion of investigation. Sub section (1)
provides that every investigation shall be completed without
unnecessary delay. Sub section (2) proves that the investigating officer
shall forward the police report or charge sheet after completion of
investigation to the magistrate who is empowered to take cognizance.
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Sub section (8) deals with further investigation if further evidence oral
or documentary is obtained by the investigating officer. The Code
does not use and define the expression „charge sheet‟ or „final report‟.
28. The provisions under the Code relating to remand of an accused
during the stage of investigation and after cognizance is taken
indicates that the legislature intended investigation of certain crimes to
be completed within 60 days or 90 days depending upon nature of
offence. The accused acquires an indefeasible right to be granted bail
if the investigation is not completed by the investigating authorities
within stipulated time and if the accused offers to furnish bail. The
court does not have option except to release the accused on bail. If
once the charge sheet is filed then such right came to an end and the
accused would be entitled to pray for regular bail on merits. The right
to bail under the proviso to section 167(2) of the Code is commonly
known as „default bail‟ or „compulsive bail‟. It is granted due to
default of the investigating agency in not completing the investigation
within the prescribed time irrespective of the merits of the case.
Section 167(2) of the Code reads as under:-
Section 167. Procedure when investigation cannot be
completed in twenty four hours.--
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(2) The Magistrate to whom an accused person is forwarded
under this section may, whether he has or has no
jurisdiction to try the case, from time to time, authorise the
detention of the accused in such custody as such Magistrate
thinks fit, for a term not exceeding fifteen days in the whole;
and if he has no jurisdiction to try the case or commit it for
trial, and considers further detention unnecessary, he may
order the accused to be forwarded to a Magistrate having
such jurisdiction:
Provided that
(a) the Magistrate may authorise the detention of the
accused person, otherwise than in the custody of the police,
beyond the period of fifteen days, if he is satisfied that
adequate grounds exist for doing so, but no Magistrate
shall authorise the detention of the accused person in
custody under this paragraph for a total period exceeding,
(i) ninety days, where the investigation relates to an
offence punishable with death, imprisonment for life or
imprisonment for a term of not less than ten years;
(ii) sixty days, where the investigation relates to any other
offence, and, on the expiry of the said period of ninety
days, or sixty days, as the case may be, the accused person
shall be released on bail if he is prepared to and does
furnish bail, and every person released on bail under this
subsection shall be deemed to be so released under the
provisions of Chapter XXXIII for the purposes of that
Chapter;
(b) no Magistrate shall authorise detention of the accused
in custody of the police under this section unless the
accused is produced before him in person for the first time
and subsequently every time till the accused remains in the
custody of the police, but the Magistrate may extend
further detention in judicial custody on production of the
accused either in person or through the medium of
electronic video linkage;
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(c) no Magistrate of the second class, not specially
empowered in this behalf by the High Court, shall
authorise detention in the custody of the police.
Explanation I. For the avoidance of doubts, it is hereby
declared that, notwithstanding the expiry of the period
specified in paragraph (a), the accused shall be detained in
custody so long as he does not furnish bail.
Explanation II. If any question arises whether an accused
person was produced before the Magistrate as required
under clause (b), the production of the accused person may
be proved by his signature on the order authorising
detention or by the order certified by the Magistrate as to
production of the accused person through the medium of
electronic video linkage, as the case may be.
Provided further that in case of a woman under eighteen
years of age, the detention shall be authorised to be in the
custody of a remand home or recognised social institution."
In common legal parlance, the right to bail under the
Proviso to Section 167(2) is commonly referred to as „default
bail‟ or „compulsive bail‟ as it is granted on account of the
default of the investigating agency in not completing the
investigation within the prescribed time, irrespective of the
merits of the case.
29. Before entering into critical and analytical analysis of facts, it is
necessary to discuss scope and magnitude of section 167(2) of the
Code. The Supreme Court and High Courts in various cases have
considered object and scope of section 167 (2) of the Code. The
Supreme Court in Satender Kumar Antil V Central Bureau of
Investigation and another, 2022 SCC OnLine SC 825 reiterated by
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observing that it is duty of the courts to see to it that an accused gets
the benefit of Section 167(2) of the Code and any detention beyond
this period would certainly be illegal being an affront to the liberty of
the person concerned. It was observed as under:-
Section 167(2) was introduced in the year 1978, giving
emphasis to the maximum period of time to complete the
investigation. This provision has got a laudable object
behind it, which is to ensure an expeditious investigation and
a fair trial, and to set down a rationalised procedure that
protects the interests of the indigent sections of society. This
is also another limb of Article 21. Presumption of innocence
is also inbuilt in this provision. An investigating agency has
to expedite the process of investigation as a suspect is
languishing under incarceration. Thus, a duty is enjoined
upon the agency to complete the investigation within the
time prescribed and a failure would enable the release of the
accused. The right enshrined is an absolute and indefeasible
one, inuring to the benefit of suspect. Such a right cannot be
taken away even during any unforeseen circumstances......
29.1 The Supreme Court in Uday Mohanlal Acharya V State of
Maharashtra, (2001) 5 SCC 453 discussed and highlighted
indefeasible right accrues in favour of the accused for being released
on bail on account of default by the investigating agency in the
completion of the investigation within the period prescribed. It was
observed as under:-
13.3. On the expiry of the said period of 90 days or 60 days,
as the case may be, an indefeasible right accrues in favour of
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the accused for being released on bail on account of default
by the investigating agency in the completion of the
investigation within the period prescribed and the accused is
entitled to be released on bail, if he is prepared to and
furnishes the bail as directed by the Magistrate.
13.4. When an application for bail is filed by an accused for
enforcement of his indefeasible right alleged to have been
accrued in his favour on account of default on the part of the
investigating agency in completion of the investigation
within the specified period, the Magistrate/court must
dispose of it forthwith, on being satisfied that in fact the
accused has been in custody for the period of 90 days or 60
days, as specified and no chargesheet has been filed by the
investigating agency. Such prompt action on the part of the
Magistrate/court will not enable the prosecution to frustrate
the object of the Act and the legislative mandate of an
accused being released on bail on account of the default on
the part of the investigating agency in completing the
investigation within the period stipulated.
13.5. If the accused is unable to furnish bail, as directed by
the Magistrate, then the conjoint reading of Explanation I
and proviso to subsection 2 of Section 167, the continued
custody of the accused even beyond the specified period in
paragraph (a) will not be unauthorised, and therefore, if
during that period the investigation is complete and
chargesheet is filed then the so called indefeasible right of
the accused would stand extinguished.
30. The Supreme Court in M Ravindran V The Intelligence Officer,
(2021)2SCC485 while tracing history of enactment of section 167(2)
of the Code and practice of filing preliminary charge sheets being
followed by the investigating officers observed that Article 21 of the
Constitution of India provides that no person shall be deprived of his
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life or personal liberty except according to procedure established by
law and as per Maneka Gandhi v. Union of India, (1978) 1 SCC 248
that such a procedure cannot be arbitrary, unfair or unreasonable. It
was further observed that the history of Section 167(2) of the
Code and the safeguard of „default bail‟ contained in the proviso
thereto is intrinsically linked to Article 21 and is nothing but a
legislative exposition of the constitutional safeguard that no person
shall be detained except in accordance with rule of law. The Supreme
Court while tracing jurisprudential history of section 167 of The Code
laid emphasis on safeguard attached with section 167 of the Code
observed as under:-
17. Before we proceed to expand upon the parameters of the
right to default bail under Section 167(2) as interpreted by
various decisions of this Court, we find it pertinent to note
the observations made by this Court in Uday Mohanlal
Acharya [Uday Mohanlal Acharya v. State of Maharashtra,
(2001) 5 SCC 453 : 2001 SCC (Cri) 760] on the fundamental
right to personal liberty of the person and the effect of
deprivation of the same as follows: (SCC p. 472, para 13)
"13. ... Personal liberty is one of the cherished objects of the
Indian Constitution and deprivation of the same can only be
in accordance with law and in conformity with the
provisions thereof, as stipulated under Article 21 of the
Constitution. When the law provides that the Magistrate
could authorise the detention of the accused in custody up to
a maximum period as indicated in the proviso to sub-section
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(2) of Section 167, any further detention beyond the period
without filing of a challan by the investigating agency would
be a subterfuge and would not be in accordance with law
and in conformity with the provisions of the Criminal
Procedure Code, and as such, could be violative of Article
21 of the Constitution."
17.1. Article 21 of the Constitution of India provides that
"no person shall be deprived of his life or personal liberty
except according to procedure established by law". It has
been settled by a Constitution Bench of this Court in
Maneka Gandhi v. Union of India [Maneka Gandhi v. Union
of India, (1978) 1 SCC 248] , that such a procedure cannot
be arbitrary, unfair or unreasonable. The history of the
enactment of Section 167(2) CrPC and the safeguard of
"default bail" contained in the proviso thereto is
intrinsically linked to Article 21 and is nothing but a
legislative exposition of the constitutional safeguard that no
person shall be detained except in accordance with rule of
law.
17.2 Under Section 167 of the Code of Criminal Procedure,
1898 („1898 Code‟) which was in force prior to the
enactment of the CrPC, the maximum period for which an
accused could be remanded to custody, either police or
judicial, was 15 days. However, since it was often
unworkable to conclude complicated investigations within 15
days, a practice arose wherein investigative officers would
file „preliminary chargesheets‟ after the expiry of the
remand period. The State would then request the magistrate
to postpone commencement of the trial and authorize
further remand of the accused under Section 344 of the 1898
Code till the time the investigation was completed and the
final chargesheet was filed. The Law Commission of India in
Report No. 14 on Reforms of the Judicial Administration
(Vol. II, 1948, pages 758760) pointed out that in many cases
the accused were languishing for several months in custody
without any final report being filed before the Courts. It was
also pointed out that there was conflict in judicial opinion as
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to whether the magistrate was bound to release the accused
if the police report was not filed within 15 days.
recommended the need for an appropriate provision
specifically providing for continued remand after the expiry
of 15 days, in a manner that "while meeting the needs of a
full and proper investigation in cases of serious crime, will
still safeguard the liberty of the person of the individual."
Further, that the legislature should prescribe a maximum
time period beyond which no accused could be detained
without filing of the police report before the magistrate. It
was pointed out that in England, even a person accused of
grave offences such as treason could not be indefinitely
detained in prison till commencement of the trial.
17.4 The suggestion made in Report No. 14 was reiterated by
the Law Commission in Report No. 41 on The Code of
Criminal Procedure, 1898 (Vol. I, 1969, pages 7677). The
Law Commission reemphasized the need to guard against
the misuse of Section 344 of the 1898 Code by filing
„preliminary reports‟ for remanding the accused beyond the
statutory period prescribed under Section 167. It was
pointed out that this could lead to serious abuse wherein
"the arrested person can in this manner be kept in custody
indefinitely while the investigation can go on in a leisurely
manner." Hence the Commission recommended fixing of a
maximum time limit of 60 days for remand. The
Commission considered the reservation expressed earlier in
Report No. 37 that such an extension may result in the 60
day period becoming a matter of routine. However, faith
was expressed that proper supervision by the superior
Courts would help circumvent the same.
17.5 The suggestions made in Report No. 41 were taken note
of and incorporated by the Central Government while
drafting the Code of Criminal Procedure Bill in 1970.
Ultimately, the 1898 Code was replaced by the
present CrPC. The Statement of Objects and Reasons of
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the CrPC provides that the Government took the following
important considerations into account while evaluating the
recommendations of the Law Commission:
"3. The recommendations of the Commission were
examined carefully by the Government, keeping in view
among others, the following basic considerations:--
(i) an accused person should get a fair trial in accordance
with the accepted principles of natural justice;
(ii) every effort should be made to avoid delay in
investigation and trial which is harmful not only to the
individuals involved but also to society; and
(iii) the procedure should not be complicated and should,
to the utmost extent possible, ensure fair deal to the poorer
sections of the community."
17.6 It was in this backdrop that Section167(2) was enacted
within the present day CrPC, providing for time limits on
the period of remand of the accused, proportionate to the
seriousness of the offence committed, failing which the
accused acquires the indefeasible right to bail. As is evident
from the recommendations of the Law Commission
mentioned supra, the intent of the legislature was to balance
the need for sufficient time limits to complete the
investigation with the need to protect the civil liberties of the
accused. Section 167(2) provides for a clear mandate that the
investigative agency must collect the required evidence
within the prescribed time period, failing which the accused
can no longer be detained. This ensures that the
investigating officers are compelled to act swiftly and
efficiently without misusing the prospect of further remand.
This also ensures that the Court takes cognizance of the case
without any undue delay from the date of giving information
of the offence, so that society at large does not lose faith and
develop cynicism towards the criminal justice system.
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17.7 Therefore, as mentioned supra, Section 167(2) is
integrally linked to the constitutional commitment
under Article 21 promising protection of life and personal
liberty against unlawful and arbitrary detention, and must
be interpreted in a manner which serves this purpose. In this
regard we find it useful to refer to the decision of the three -
Judge Bench of this Court in Rakesh Kumar Paul v. State of
Assam, (2017) 15 SCC 67, which laid down certain seminal
principles as to the interpretation of Section
167(2), CrPC though the questions of law involved were
somewhat different from the present case. The questions
before the three Judge Bench in Rakesh Kumar Paul were
whether, firstly, the 90 day remand extension under Section
167(2)(a)(i) would be applicable in respect of offences where
the maximum period of imprisonment was 10 years, though
the minimum period was less than 10 years. Secondly,
whether the application for bail filed by the accused could be
construed as an application for default bail, even though the
expiry of the statutory period under Section 167(2) had not
been specifically pleaded as a ground for bail. The majority
opinion held that the 90 day limit is only available in respect
of offences where a minimum ten year imprisonment period
is stipulated, and that the oral arguments for default bail
made by the counsel for the accused before the High Court
would suffice in lieu of a written application. This was based
on the reasoning that the Court should not be too technical
in matters of personal liberty. Madan B. Lokur, J. in his
majority opinion, pertinently observed as follows:
"29. Notwithstanding this, the basic legislative intent of
completing investigations within twenty four hours and
also within an otherwise time bound period remains
unchanged, even though that period has been extended
over the years. This is an indication that in addition to
giving adequate time to complete investigations, the
legislature has also and always put a premium on personal
liberty and has always felt that it would be unfair to an
accused to remain in custody for a prolonged or indefinite
period. It is for this reason and also to hold the
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investigating agency accountable that time limits have
been laid down by the legislature...
x x x
32...Such views and opinions over a prolonged period
have prompted the legislature for more than a century to
ensure expeditious conclusion of investigations so that an
accused person is not unnecessarily deprived of his or her
personal liberty by remaining in prolonged custody for an
offence that he or she might not even have committed. In
our opinion, the entire debate before us must also be
looked at from the point of view of expeditious conclusion
of investigations and from the angle of personal liberty
and not from a purely dictionary or textual perspective as
canvassed by the learned counsel for the State.
x x x
41. We take this view keeping in mind that in matters of
personal liberty and Article 21 of the Constitution, it is not
always advisable to be formalistic or technical. The history
of the personal liberty jurisprudence of this Court and
other constitutional courts includes petitions for a writ of
habeas corpus and for other writs being entertained even
on the basis of a letter addressed to the Chief Justice or the
Court." (emphasis supplied)
Therefore, the Courts cannot adopt a rigid or formalistic
approach whilst considering any issue that touches upon the
rights contained in Article 21.
17.8 We may also refer with benefit to the recent judgement
of this Court in S. Kasi v. State Through The Inspector of
Police Samaynallur Police Station Madurai District
(Criminal Appeal No. 452 of 2020 dated 19 th June, 2020),
2020 SCC OnLine SC 529, wherein it was observed that the
indefeasible right to default bail under Section 167(2) is an
integral part of the right to personal liberty under Article
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21, and the said right to bail cannot be suspended even
during a pandemic situation as is prevailing currently. It
was emphasized that the right of the accused to be set at
liberty takes precedence over the right of the State to carry
on the investigation and submit a chargesheet.
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 three fold objectives expressed by the legislature
namely ensuring a fair trial, expeditious investigation and
trial, and setting down a rationalized 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 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.
31. Various High Courts also deliberated scope and ambit of section
167(2) of the Code. The Kerala High Court in S.M. Purtado V Dy.
S.P., C.B.I., Kochin, 1996 Crl.L.J. 3042 observed that the
investigation under section 167 of the Code can involve one or more
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offences against the accused persons. The investigation of a case
cannot be split up in such a way to file piece-meal reports before
Court. Section 173 of the Code does not stipulate a piece-meal
investigation and filing of incomplete charge sheet before Court. It
contemplates filing of a charge/refer report after completion of the
entire investigation of the case in respect of all offences and where
several offences are involved in a case, a charge report could be laid
before the court only after the investigation is over and formation of
an opinion regarding all the offences alleged against the accused. It
was further held as under:-
11. In the decision reported in Vijayaraghavan v. CBI 1984
Ker LT 522 : 1984 Cri LJ 1277, this Court held that the
investigation of a cases relates to the entire transaction of
which information is given and not merely one of the
offences committed in the course of the transaction. In
paragraph 10, this Court held thus:
10. The expression 'case' used in the provisions under
examination has to be understood in the general sense and
not in a narrow or technical way. The words 'offence' and
'case' are not synonymous, though an offence always leads
to a case and a case would always involve an offence or
offences. An occurrence or transaction may involve
commission of only one offence; or it may involve several
offences. When a police officer receives information about
the commission of a cognizable offence, and records the
same, he is said to register a case, sometimes called a crime
case. 'Case' understood in this general sense means that
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the case before the police officer arising from the
information placed before him regarding an occurrence in
which an offence or offences are committed. 'Case' relates
to the transactions of which information is given and not
merely one of the offences committed during the course of
the transaction.
This Court further held that when Section 173 speaks of
completion of investigation, it must ordinarily be taken to
refer to completion of investigation of all the facts and
circumstances relating to the case, whether the transaction
involves one offence or plurality of offences and a final
report or charge sheet under Section 173 could be filed
only after completion of the investigation in the case
relating to all the offences arising in the case. We are in
respectful agreement with the said finding arrived at by U.
L. Bhat, J., as he than was. Viewed in that light, it must be
held that the 'charge report' stated to have been filed by
the CBI on 10-4-1996 cannot be said to be a final report as
contemplated under Section 173 of the Code and we must
say that the prosecution was not justified in making piece-
meal charge report in respect of various offences alleged to
have been committed by the petitioners. In the absence of
completion of the investigation of the case against the
petitioners, we hold that the Magistrate cannot take
cognizance of the case as contemplated under Section
309 of the Code.
12. A Magistrate can take cognizance of an offence only on
filing of a report under Section 173(2) of the Code. Unless
power is conferred by law, there is no inherent power to
remand an accused to custody. Holding so, in the decision
reported in Natabar Parida v. State of Orissa , the Supreme
Court proceeded to say that under Section 167(2) proviso
and under Section 309(2) of the new Code, the power of
remand of jail custody conferred on the Magistrate during
the pendency of the investigation is only under the former
Section and not under the latter Section. The Supreme
Court also held that Section 309(2) is attracted only after
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cognizance of an offence is taken or commencement of the
trial has proceeded.
13. A remand under Section 309(2) of the Code can be made
only after taking cognizance of the offence. That being the
position, in the absence of a final report regarding all the
offences alleged to have been committed by the accused
persons, it has to be held that the Magistrate has not taken
cognizance of the offences as required by Section 309(2) of
the Code. The Magistrate is not empowered to order remand
of the accused to judicial custody unless final report as
contemplated under Section 173(2) of the Code is laid before
Court.
14. Thus, in the light of the report filed by the CBI, a further
investigation in respect of the offences under the Official
Secrets Act, IPC, Act and the Order is necessary. If final
report is laid before Court and the Magistrate takes
cognizance of the offence, a further report under Section
173(8) of the Code regarding commission of offences or
involvement of the accused in connection with the other
offences can be made. But in the absence of a final report in
respect of all the offences, it cannot be said that a final
report under Section 173(2) in respect of the offences alleged
to have been committed by the petitioners under the Official
Secrets Act could be legally filed by invoking the provisions
of Section 173(8) of the Code. The finding of the Court below
to the contra is, in our view, illegal.
15. Admittedly, no final report has been filed by the CBI
against the petitioners in respect of the various offences. In
its absence, the prosecution is not justified in resorting
to Section 173(8) of the Code to submit a further report in
respect of the alleged involvement of the petitioners under
the Official Secrets Act, IPC, Act and the Order. Since the
investigation of the case is not complete, we find no reason to
deny the statutory bail to the petitioners under Section
167(2) of the Code.
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16. The Supreme Court has held that in the scheme of the
1973 Code, remand to custody during investigation can be
made only under Section 167 of the Code and remand to
custody under Section 309 can be made only after taking
cognizance of the offence by the Court. The result is that if
the investigation is not over and the period mentioned
in Section 167(2) to detain the accused is custody is over, by
invoking Section 309 of the Code, the custody of the accused
cannot be extended and are to be released on bail.
31.1 The learned Single Judge of this Court after referring,
considering and discussing Uday Mohanlal Acharya and S.M.
Purtado in Tunde Gbaja V Central Bureau of Investigation, 2007
(95) DRJ 429 observed as under:-
20. It is well known that the court takes cognizance of the
crime, not the offender. The argument that the respondent
filed a charge-sheet, within time, when it did, is not correct.
The charge-sheet pertains only to the offence under
the Foreigners Act, for which, as per proviso to Section
167(2) had to be filed within 60 days. But for the other
offences, in respect of which the period prescribed, for filing
the charge sheet is 90 days, no charges were indicated.
Though the right of the investigating agency to file a
supplementary charge sheet, or a further report
(under Section 173(8) pursuant to order of the court) cannot
be disputed, yet the fact remains that there cannot be part
charge sheet, as has been contended in the present case.
Therefore, following the decision in S.M.Purtado's case, as
well as the Supreme Court ruling in Uday Mohanlal
Acharya, it has to be concluded that the petitioner is entitled
to be enlarged on bail. This is without prejudice to such
other rights the respondents may have in law, to place
further materials in support of the case, before the trial
Court.
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31.2 The Telangana High Court in C. Parthasarthy V Director of
Enforcement, Criminal Petitions No 3786, 4127 & 4137 of 2022
decided on 17th May, 2022 after referring M Ravindran held as
under:-
16. From the above decision, it is clear that a time limit for
completing investigation was incorporated in order to
ensure that the accused does not languish in jail for the
investigative authority's failure to complete investigation. It
was held that the right to statutory bail accrues on a person
if the charge sheet is not filed within the prescribed period of
sixty days. The said right to bail is indefeasible and is
interlinked with personal liberty as envisaged under Article
21 of the Constitution of India.
21. The Supreme Court in Satya Narain Musadi v. State of
Bihar, (1980)3SCC152 discussing Section 173(2) of the
Cr.P.C. has held that a charge sheet can be filed only after
the completion of investigation. The relevant paragraph is
extracted below:
9. Section 173(2)(1) provides that on completion of the
investigation the police officer investigating into a
cognizable offence shall submit a report in the form
prescribed by the State Government and stating therein
(a) the names of the parties; (b) the nature of the
information; (c) the names of the persons who appear to
be acquainted with the circumstances of the case; (d)
whether any offence appears to have been committed and,
if so, by whom (e) whether the accused has been arrested;
(f) whether he has been released on his bond and, if so,
whether with or without sureties; and (g) whether he has
been forwarded in custody under Section 170. Sub-section
(5) of Section 173 makes it obligatory upon the police
officer to forward along with the report all documents or
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relevant extracts thereof on which the prosecution
proposes to rely and the statements recorded
under Section 161 of all the persons whom the prosecution
proposes to examine as witnesses at the trial.
Similarly, the Supreme Court in Manu Sharma v. State
(NCT of Delhi), (2010)6SCC1 has held that the object behind
Section 173 of the Cr.P.C. is to complete the investigation
and file the charge sheet. The idea is to ensure that
cognizance is taken without any delay. The relevant
paragraph is extracted below:
206. Section 173 commands the investigating agency to
complete the investigation expeditiously without
unnecessary delay and when such an investigation is
completed, the officer in charge of the police station shall
forward to a Magistrate empowered to take cognizance of
offence on a police report the details in the form as may be
prescribed by the State Government and provide the
information required under this section.
22. From the above decisions, it is clear that a charge sheet
can be filed only after the completion of investigation.
Investigation is said to be completed if sufficient material is
collected by the Investigating Officer based on which
cognizance can be taken under Section 167 of the Cr.P.C.
31.2.1 The learned Single Judge of the Telangana High Court also
referred M Ravindran wherein the Supreme Court deprecate practice
of filing preliminary charge sheets to seek extension of remand
beyond the statutory period. It was further observed that it was to
discourage such abuse of process that a statutory limit of sixty days
was incorporated in Section 167(2) to complete the investigation and
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file the charge sheet. A complaint/charge sheet filed without
completing the investigation cannot be used to circumvent the right of
statutory bail under Section 167(2) of the Cr.P.C.
31.3 The Bombay High Court in Sharadchandra Vinayak Dongre V
State of Maharashtra,1991MahLJ656 discussed a distinction
between completion of investigation and further investigation and
observed that it is only after the completion of investigation and filing
of charge sheet that further investigation can be resorted to. In other
words, Section 173(8) of the Code comes into picture only after
completion of investigation and filing of the charge sheet
under Section 173(2) of the Code Further, the court held that by filing
incomplete charge sheets, the State cannot circumvent Section
167(2) of the Code. It was held as under:-
23. Reference here may usefully be made to a decision of the
Supreme Court in Abhinandan Jha v. Dinesh Mitra, AIR
1968 SC 117, which points out that the investigation
under the Code takes in several aspects and stages ending
ultimately with the formation of an opinion by the police as
to whether, as from the material covered and collected, a
case is made out to place the accused before the Magistrate
for trial and the submission of either a charge-sheet or a
final report is dependent on the nature of the opinion so
formed. The formation of the said opinion by the police is
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the final step in the investigation evidenced by the "police
report" contemplated under section 173(2) of the Code.
24. In my view, a plain reading of section 173 of the Code
shows that every investigation must be completed without
unnecessary delay and as soon as it is completed, the
Officer-in-charge of the Police Station shall forward a report
to the Magistrate in the form prescribed. Therefore, there is
no question of sending up of a "police report" within the
meaning of section 173, sub-section (2) of Criminal
Procedure Code until the investigation is completed. Any
report sent before the investigation is completed will not be a
police report within the meaning of sub-section (2) of section
173 of the Criminal Procedure Code read with section 2(r) of
the Code and there is no question of the Magistrate taking
cognizance of the offence within the meaning of section
190(1)(b) of the Code on the basis of an incomplete charge-
sheet. In the present case, admittedly an incomplete charge-
sheet has been filed and it is specifically stated therein that
the investigation is not yet completed. The application,
Exhibit 2, clearly further recites that the investigation is not
completed and this fact is even admitted before me as stated
in the reply affidavit filed by the Investigating Officer
opposing the present Application. Consequently, the
incomplete charge-sheets cannot be treated as a "police
report" at all as contemplated under section 173(2) of the
Code to entitle the Magistrate to take cognizance of the
offences. The learned Counsel for the applicants is right in
contending that the definition of "police report" as given
in the Code cannot be enlarged under the guise of
interpretation and it is contended that when the meaning of
a statutory provision is plain and clear, the Court should not
be impelled by factors like practical difficulties
and inconvenience. The learned Counsel appears to be
further right when he canvassed that the expression
"incomplete charge-sheet" does not occur anywhere in the
Code and that forwarding of a "police report" after the
completion of the investigation is the requirement of sub-
section (2) of section 173 of the Code. Any report or
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statement of facts in the form of an "incomplete charge-
sheet" does not become "police report" by merely giving a
particular nomenclature.
25. The learned Counsel for the State contended that the
new provision added in sub-section (8) of section 173 of the
Code can be resorted to by the Investigating Officer for
collecting further evidence. According to him, it tends to
indicate that the investigation is not shut but remains in
suspended animation till the police report is sent to the
Magistrate. As has already been pointed out, a police report
as defined in section 2(r) of the Code can only be filed "as
soon as the investigation is completed". If it is not complete;
no such report can be filed. When no report is forwarded as
required by the Code, the Magistrate cannot take
cognizance. Thus, unless all these steps are crossed, sub-
section (8) cannot be pressed in aid for collecting further
evidence which really can be called in aid if further evidence
is discovered after the filing of the charge-sheet or the police
report on the completion of the investigation.
26. As stated earlier, sub-section (2) of section 173 of the
Code also speaks of taking cognizance of the offence by a
Magistrate on a police report. Thus, without the police
report as defined in section 2(r) of the Code, the Magistrate
is not empowered and is incapacitated to take cognizance
and unless cognizance has been taken, sub-section (8) cannot
be set in motion.
27. The question thus emerges naturally is, whether the
Magistrate can take cognizance on the admittedly
"incomplete charge-sheet" forwarded by the police. The
answer stubbornly and admittedly must be in the negative,
because the investigation is yet incomplete and the "police
report" yet remains to be filed. Thus, the filing of the
incomplete charge-sheet cannot circumvent the provisions of
sub-section (2) of section 173 of the Code and incomplete
report or an incomplete charge-sheet with whatsoever
expression it may be called does not meet the obligatory
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requirements of law. If the view as contended by the State is
accepted, the provisions of section 167(2) or to say section
468 of the Criminal Procedure Code can always be
circumvented by the prosecution and the apparent
legislative intents under those provisions would not only be
not effectuated but undoubtedly stultified.
31.4 The Andhra Pradesh High Court in Akula Ravi Teja V State of
A.P., (2021)1ALT(Cri)291 dealt with a situation where a 'preliminary
charge sheet' was filed without completing the investigation. The
Court therein held that an incomplete charge sheet filed without
completing the investigation cannot be used to defeat the right of
statutory bail under Section 167(2) of the Cr.P.C. The relevant
paragraphs are extracted below:
19. Now the crucial question that arises for determination is
whether filing a preliminary charge-sheet without
completing the investigation would defeat the right of the
accused to claim default bail under proviso (a) to Section
167(2) Cr.P.C. In this context, it is relevant to note that the
Parliament in its wisdom, considering the right of the
accused to speedy investigation, stipulated period of time in
proviso (a) to Section 167(2) Cr.P.C. stating that in all
offences which are punishable with death or life
imprisonment or with 10 years imprisonment, the
investigation is to be completed within 90 days and in other
offences, the investigation is to be completed within 60 days.
The Code clearly envisaged that if the prosecuting agency
fails to complete the investigation within the said stipulated
period of time as contemplated under the Code, the accused
is entitled to claim default bail. The said right conferred by
the statute on the accused is an indefeasible right and he is
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entitled to bail as a matter of right on account of the default
committed by the prosecuting agency in completing the
investigation within the time stipulated by the statute.
20. It is significant to note that a plain reading of proviso (a)
to Section 167(2) Cr.P.C. makes it manifest that what is
required to claim for default bail under proviso (a)
to Section 167(2) Cr.P.C. is failure on the part of the
Investigating Agency to complete the investigation within
the stipulated period of time. In other words, it is the default
committed by the Investigating Agency to complete the
entire investigation within the stipulated time that confers
right on the accused to claim for default bail. So, filing of
charge-sheet is not the criteria or the actual test to be
applied to decide whether the accused is entitled to default
bail or not. It is relevant to note that the charge-sheet after
completion of investigation will be filed to enable the Court
to take cognizance of the offence. So, the Court cannot
take cognizance of the offence on the basis of a preliminary
charge-sheet filed without completing the entire
investigation. Therefore, the crucial aspect that needs to be
ascertained to consider the claim of the accused for default
bail is whether the investigation is completed within the
stipulated time of 90 days or not. So, when the Investigating
Agency files only preliminary charge- sheet within the said
stipulated time keeping the investigation pending or without
completing the investigation, it will not under any
circumstances defeat the right conferred on the accused to
claim for default bail. By mere filing a preliminary charge-
sheet without completing the entire investigation and filing a
final and full-fledged charge-sheet, the prosecuting agency
cannot vanquish the indefeasible statutory right of the
accused to claim for default bail.
21. The 3-Judge Bench of the Supreme Court in the case
of Rakesh Kumar Paul v. State of Assam2 held that right to
personal liberty under Article 21 of the Constitution of India
includes right to speedy investigation and entitlement to
"default bail" where statutory period of filing charge-sheet
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has expired and accused has applied and is willing to furnish
bail.
22. A plain reading of Section 167 Cr.P.C. makes it
abundantly clear that it is not the intention of the legislation
that charge-sheet is to be filed within the stipulated period.
The intention of the legislation is that the investigation is to
be completed within the stipulated time. Nowhere in Section
167 Cr.P.C. it is stated that the charge-sheet is to be filed
within the prescribed period of time. All that it is stated
in Section 167 Cr.P.C. is that the investigation is to be
completed within the said stipulated period of 90 days or 60
days, as the case may be. Therefore, the Court has to see
whether the investigation is completed or not while
considering the plea of the accused for grant of default bail.
Generally, charge-sheet will be filed only after completion of
the investigation. So, when the charge- sheet is filed, it
indicates that investigation is completed. Therefore, it is in
practice that when the Investigating Agency files the charge-
sheet that the Courts usually presume that the investigation
is completed. However, it is to be noticed that at times, even
when the investigation is not fully completed that the police
are in the habit of filing preliminary charge-sheet or an
incomplete charge-sheet keeping some part of the
investigation pending as a clever contrivance and subterfuge
to prevent the accused from claiming default bail by
exercising his right conferred under the Code. So, Courts
must be on guard and should not fall in the trap of such
trickery and tactics of the investigating agency when they
only file preliminary charge-sheet without fully completing
the investigation. Therefore, the real test to be applied to
ascertain whether the accused is entitled to default bail or
not in a given case is not to see whether the charge-sheet is
filed or not. It has to be ascertained whether the entire
investigation is completed or not within the stipulated period
of time and whether the said charge-sheet is filed after
completion of the entire investigation or not. A preliminary
charge-sheet filed without completing the entire
investigation cannot be allowed to serve as an impediment to
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come in the way of exercising the statutory right of the
accused for default bail.
23. The very contents of the charge-sheet, which are
extracted above, clinchingly establishes that the
investigation is not completed and many crucial witnesses
are yet to be examined to prove the overt acts of the accused
in this crime and some other evidence as stated by the
investigating officer is still to be secured. Therefore, on
account of default committed by the prosecuting agency in
completing the investigation within the stipulated period
of time, the petitioner acquired an indefeasible right to claim
default bail under proviso (a) to Section 167(2) Cr.P.C.
24. In a petition filed under proviso (a) to Section
167(2) Cr.P.C. for grant of default bail, no discretion is
vested with the Magistrate/Court to deny bail to him. In the
judgment of the aforesaid 3-Judge Bench of the Apex Court,
it is clearly held that no discretion is vested with the Court
while granting default bail where accused satisfies the
prerequisite for grant thereof. The Apex Court in another
case Rajnikant JivanlalPatel v. Intelligence Officer, Narcotic
Control Bureau, New Delhi3 held as follows: "The right to
bail under Section 167(2) proviso (a) thereto is absolute. It is
a legislative command and not Court's discretion. If the
investigating agency fails to file charge-sheet before the
expiry of 90/60 days, as the case may be, the accused in
custody should be released on bail. But at that stage, merits
of the case are not to be examined. Not at all. In fact, the
Magistrate has no power to remand a person beyond the
stipulated period of 90/60 days."
Therefore, the legal position is very clear that irrespective of
the gravity of the offence and the nature and seriousness of
the offence, the moment the accused claims bail under
proviso (a) to Section 167(2) Cr.P.C. on account of the
default committed by the Investigating Agency to complete
the investigation within the stipulated time, and he is
prepared to furnish bail, the Court has no other option
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except to grant bail to him. The very nature of right which is
"indefeasible right" indicates that the said right cannot be
defeated or frustrated once accrued to the accused. Even
filing of preliminary charge-sheet cannot defeat the said
right.
25. Therefore, in the considered opinion of the Court, after
analysing the law on the point, it would be more in
consonance with the legislative mandate to hold that mere
filing preliminary charge-sheet without completing the
investigation will not defeat the indefeasible statutory right
of the accused to claim for default bail. In a way the right to
claim bail by a remanded accused touches the personal
liberty of an individual guaranteed under the Constitution of
India. Personal liberty is a valuable right of an individual
and it is one of the cherished objects of the Indian
Constitution. It can be deprived only in accordance with law
and in conformity with the provisions thereof, as stipulated
under Article 21 of the Constitution. Therefore, when the
law mandates that the Magistrate could authorise detention
of the accused in custody up to a maximum period as
indicated in the proviso to sub- section (2) of Section
167 Cr.P.C. any further detention beyond the period when,
the investigation is not completed and the final charge-sheet
is not filed on completion of the entire investigation by the
Investigating Agency would be a subterfuge and would not
be in accordance with law and in conformity with the
provisions of the Criminal Procedure Code. Therefore, it
could be violative of Article 21 of the Constitution of India.
32. The filing of charge-sheet is sufficient compliance with the
provisions of proviso (a) to Section 167(2) of the Code and taking of
cognizance is not material to section 167 of the Code. The scheme
of the Code is such that once the investigation stage is completed, the
court proceeds to the next stage, which is the taking of cognizance and
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trial. In Serious Fraud Investigation Office V Rahul Modi,
AIR2022 SC902 which is also relied upon by the Special Public
Prosecutor for the respondent/CBI, the High Court considered the
regular bail applications filed by the respondent Nos. 1 and 2 on
31.05.2019 and directed their release on bail on the ground that they
were entitled to statutory bail on sole reason given for grant of bail by
the High Court is that the trial court has not taken cognizance of the
complaint before the expiry of the 60-day period which entitled the
respondent Nos. 1 and 2 to statutory bail, as a matter of indefeasible
right. The issue which was under consideration before the Supreme
Court was whether an accused is entitled for statutory bail
under Section 167(2) of the Code on the ground that cognizance has
not been taken before the expiry of 60 days or 90 days, as the case
may be, from the date of remand. It was observed as under:-
9.......The scheme of the provisions relating to remand of an
accused first during the stage of investigation and thereafter,
after cognizance is taken, indicates that the legislature
intended investigation of certain crimes to be completed
within the period prescribed therein, according to this Court
in Bhikamchand Jain (supra). This Court held that in the
event of investigation not being completed by the
investigating authorities within the prescribed period, the
accused acquires an indefeasible right to be granted bail, if
he offers to furnish bail. This Court was of the firm opinion
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that if on either the 61st day or the 91st day, an accused
makes an application for being released on bail in default of
charge-sheet having been filed, the court has no option but
to release the accused on bail. However, once the charge-
sheet was filed within the stipulated period, the right of the
accused to statutory bail came to an end and the accused
would be entitled to pray for regular bail on merits. It was
held by this Court that the filing of charge-sheet is sufficient
compliance with the provisions of proviso (a) to Section
167(2), CrPC and that taking of cognizance is not material
to Section 167. The scheme of CrPC is such that once the
investigation stage is completed, the court proceeds to the
next stage, which is the taking of cognizance and trial.
During the period of investigation, the accused is under the
custody of the Magistrate before whom he or she is first
produced, with such Magistrate being vested with power to
remand the accused to police custody and/or judicial
custody, up to a maximum period as prescribed
under Section 167(2).
10. It is clear from the judgment of this Court in
Bhikamchand Jain (supra) that filing of a charge-sheet is
sufficient compliance with the provisions of Section
167, CrPC and that an accused cannot demand release on
default bail under Section 167(2) on the ground that
cognizance has not been taken before the expiry of 60 days.
The accused continues to be in the custody of the Magistrate
till such time cognizance is taken by the court trying the
offence, which assumes custody of the accused for the
purpose of remand after cognizance is taken. The conclusion
of the High Court that the accused cannot be remanded
beyond the period of 60 days under Section 167 and that
further remand could only be at the post-cognizance stage, is
not correct in view of the judgment of this Court in
Bhikamchand Jain (supra).
33. The Supreme Court in Fakhrey Alam V The State of Uttar
Pradesh, 2021(5) SCALE346 observed that there can only be one
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charge sheet but there is no restriction on filing of number of
supplementary charge sheets. It was observed as under:-
9. On the second aspect, it is urged that what is called as the
second charge sheet is really a supplementary charge sheet
as there is no restriction on the number of supplementary
charge sheets which can be filed but there will be only one
charge sheet in view of 1 (2020) 10 SCC 616 judgment of this
Court in the case of Vinay Tyagi vs. Irshad Ali @ Deepak &
Ors., (2013)5scc762.
11. On the second aspect we cannot lose sight of the fact that
what was envisaged by the Legislature was that the
investigation should be completed in 24 hours but practically
that was never found feasible. It is in these circumstances
that Section 167 of the Cr.P.C. provided for time period
within which the investigation should be completed,
depending upon the nature of offences. Since, liberty is a
Constitutional right, time periods were specified in the
default of which the accused will have a right to default bail,
a valuable right.
34. The petitioners in Abdul Azeez P V and others V National
Investigation Agency, 2014 AIR SCW 6537 relied on by the
respondent/CBI filed a petition before the Special Court, NIA Cases
by submitting that they were entitled to get statutory bail
under Section 167(2) of the Code in as much as the investigating
agency had failed to file the final report within 180 days. It was further
submitted that the bank account details and mobile phone call details
of the petitioners as stated in the charge-sheet itself were yet to be
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verified and that the charge-sheet filed in court was not a final report
as contemplated under Section 173(2) of the Code. The submissions
were negated by the Special Court by holding that the petitioners were
not entitled to statutory bail under Section 167(2) of the Code which
was challenged in the High Court of Kerala at Ernakulam. The High
Court went through the charge-sheet and found that the materials so
disclosed and adverted to in the charge-sheet did show that it was a
final report. The High Court dismissed the appeal which was
challenged before the Supreme Court. It was observed as under:-
4. Having gone through the charge-sheet, we are not
persuaded to take a different view. The materials adverted
to show that it was a final report on the facets investigated
into by the investigating agency. Furthermore, the requisite
sanctions as required under Sections 18 and 18A of the
UAPA and so also under Section 7 of the Explosive
Substances Act were also accorded by the concerned
authorities. The charge-sheet so filed before the learned
Special Court was complete in all respects so as to enable the
learned Special Court to take cognizance in the matter.
Merely because certain facets of the matter called for
further investigation it does not deem such report anything
other than a final report. In our opinion Section 167(2) of
Cr.P.C. stood fully complied with and as such the petitioners
are not entitled to statutory bail under Section 167(2) of
Cr.P.C.
5. The special leave petition is, therefore, dismissed.
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35. The Supreme Court in Dinesh Dalmia V C.B.I, 2008Crl.L.J.337
observed that a charge sheet is a final report within the meaning of
Sub-section (2) of Section 173 of the Code and is filed so as to enable
the court concerned to apply its mind as to whether cognizance of the
offence thereupon should be taken or not. The power of the
investigating officer to make a prayer for making further investigation
in terms of Sub-section (8) of Section 173 is not taken away only
because a charge sheet under Sub-section (2) thereof has been filed. A
further investigation is permissible even if order of cognizance of
offence has been taken by the Magistrate. It was observed asunder:-
28. It is a well-settled principle of interpretation of statute
that it is to be read in its entirety. Construction of a statute
should be made in a manner so as to give effect to all the
provisions thereof. Remand of an accused is contemplated
by the Parliament at two stages; pre-cognizance and post
cognizance. Even in the same case depending upon the
nature of charge sheet filed by the investigating officer in
terms of Section 173 of the Code, a cognizance may be taken
as against the person against whom an offence is said to have
been made out and against whom no such offence has been
made out even when investigation is pending. So long a
charge sheet is not filed within the meaning of Sub-section
(2) of Section 173 of the Code, investigation remains
pending. It, however, does not preclude an investigating
officer, as noticed hereinbefore, to carry on further
investigation despite filing of a police report, in terms of
Sub-section (8) of Section 173 of the Code.
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36. The Supreme Court in Suresh Kumar Bhikamchand Jain V
State of Maharashtra & another, 2013 Crl.L.J.1625 held that once a
charge-sheet is filed within the stipulated time, the question of grant of
default bail or statutory bail does not arise and filing of charge-sheet is
sufficient compliance with the provisions of Section 167(2)(a)(ii) of
the Code. It is not material whether cognizance is taken or not as far
as Section 167 of the Code is concerned. It was also observed that
grant of sanction is not contemplated under section 167 of the Code
which is related to completion of investigation in respect of different
types of cases within a stipulated period and the right of an accused to
be released on bail on the failure of the investigating authorities to do
so. It was observed as under:-
18. None of the said cases detract from the position that once
a charge-sheet is filed within the stipulated time, the
question of grant of default bail or statutory bail does not
arise. As indicated hereinabove, in our view, the filing of
charge-sheet is sufficient compliance with the provisions
of Section 167(2)(a)(ii) in this case. Whether cognizance is
taken or not is not material as far as Section 167 Cr.P.C. is
concerned. The right which may have accrued to the
Petitioner, had charge-sheet not been filed, is not attracted
to the facts of this case. Merely because sanction had not
been obtained to prosecute the accused and to proceed to the
stage of Section 309 Cr.P.C., it cannot be said that the
accused is entitled to grant of statutory bail, as envisaged
in Section 167 Cr.P.C. The scheme of the Cr.P.C. is such
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that once the investigation stage is completed, the Court
proceeds to the next stage, which is the taking of cognizance
and trial. An accused has to remain in custody of some
court. During the period of investigation, the accused is
under the custody of the Magistrate before whom he or she
is first produced. During that stage, under Section
167(2) Cr.P.C., the Magistrate is vested with authority to
remand the accused to custody, both police custody and/ or
judicial custody, for 15 days at a time, up to a maximum
period of 60 days in cases of offences punishable for less
than 10 years and 90 days where the offences are punishable
for over 10 years or even death sentence. In the event, an
investigating authority fails to file the charge-sheet within
the stipulated period, the accused is entitled to be released
on statutory bail. In such a situation, the accused continues
to remain in the custody of the Magistrate till such time as
cognizance is taken by the Court trying the offence, when
the said Court assumes custody of the accused for purposes
of remand during the trial in terms of Section 309 Cr.P.C.
The two stages are different, but one follows the other so as
to maintain a continuity of the custody of the accused with a
court.
19. Having regard to the above, we have no hesitation in
holding that notwithstanding the fact that the prosecution
had not been able to obtain sanction to prosecute the
accused, the accused was not entitled to grant of statutory
bail since the charge-sheet had been filed well within the
period contemplated under Section 167(2)(a)(ii) Cr.P.C.
Sanction is an enabling provision to prosecute, which is
totally separate from the concept of investigation which is
concluded by the filing of the charge-sheet. The two are on
separate footings.
37. The Supreme Court in State of Maharashtra V Sharadchandra
Vinayak Dongre, 1995 SCC (1) 42 observed that the power of
Magistrate to take cognizance is not lost even if the investigating
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officer termed the police report as incomplete. It was observed as
under:-
7. The purpose of the submission of the police report with
the details as mentioned above, is to enable the Magistrate to
satisfy himself, whether on the basis of the report and the
material filed along with the police report, a case for taking
cognizance has been made out or not. After applying his
mind to the police report and the material submitted
therewith, if the Magistrate is satisfied that cognizance of the
offence is required to be taken, he shall proceed further in
accordance with the provisions of the Code of Criminal
Procedure. Section 190(1)(b) CrPC provides that a
Magistrate has the power to take cognizance upon a police
report of such facts as are provided therein on being
satisfied that the case is a fit one for taking cognizance of the
offence. Therefore, if the police report and the material filed
therewith is sufficient to satisfy the Magistrate that he
should take cognizance, his power is not fettered by the label
which the investigating agency chooses to give to the report
submitted by it under Section 173(2) CrPC. Merely, because
the prosecution had filed an application, after submission of
the charge-sheet, seeking permission to file "supplementary
charge-sheet", it could not affect the jurisdiction of the
Magistrate to take cognizance, if he was otherwise satisfied
from the material placed before him along with the charge-
sheet that cognizance of the offence was required to be
taken. It is the jurisdiction of the Magistrate and Magistrate
alone to decide whether the material placed by the
prosecution with the report (charge-sheet) was sufficient to
take cognizance or not. The power of the Magistrate to take
cognizance cannot be controlled by the investigating agency,
whose duty is only to investigate and place the facts and the
evidence before the Magistrate.
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38. The supreme court in Rakesh Kumar Paul V State of Assam,
(2017) 15 SCC 67 also held that the indefeasible right for default bail
accrued to the petitioner when the period of 60 days for completing
the investigation and filing a charge-sheet came to an end and the
indefeasibility right accruing to the accused in enforceable only prior
to the filing of the charge-sheet and does not survive thereafter, if
already not availed of. If the charge-sheet is not filed then right for
default bail has ripened into status of indefeasibility which cannot be
frustrated by the prosecution and the courts on any pretext.
39. The legal position pertaining to scope of section 167(2) of the
Code emanating from above referred decisions can be summarised as
under:-
i) The object of the section 167(2) of the Code is to ensure an
expeditious investigation and a fair trial and is another limb
of Article 21.
ii) The accused has indefeasible right in his favour for being
released on bail on account of default by the investigating
agency to complete investigation within the prescribed
period.
iii) It is duty of the courts to ensure that benefit of Section
167(2) of the Code be given to the accused and detention
beyond statutory period would be illegal being opposed to
the liberty of the accused.
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iv) Section 173 of the Code does not stipulate a piece-meal
investigation and filing of incomplete charge sheet before
Court and contemplates filing of a final report after
completion of the entire investigation of the case in respect
of all offences and where several offences are involved in a
case. The practice of filing preliminary charge sheets to seek
extension of remand beyond the statutory period should be
deprecated.
v) The charge report can be filed before the court only after
the investigation is over and formation of an opinion
regarding all the offences alleged against the accused.
vi) There is a distinction between completion of investigation
and further investigation. The further investigation can be
resorted to only after the completion of investigation and
filing of charge sheet.
vii) The investigating agency cannot circumvent section
167(2) of the Code by filing incomplete charge sheets. The
police report or charge sheet cannot be send within the
meaning of section 173 (2) till the investigation is completed
and any report sent before the investigation is completed
will not be a police report within the meaning of section 173
(2) of the Code.
viii) The incomplete charge sheet filed without completing
the investigation cannot be used to defeat the right of
statutory bail under Section 167(2) of the Code.
ix) The right of the accused to statutory bail came to an end
once the charge sheet is filed within the stipulated period.
The filing of charge sheet is sufficient compliance with the
provisions of section 167(2) of the Code and taking of
cognizance is not material to Section 167.
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x) There can only be one charge sheet but there is no
restriction on filing of number of supplementary charge
sheets.
xi) The charge-sheet can be said to be complete when it
enable the court to take or not to take cognizance of the
offence after application of mind and if certain facets called
for further investigation does not render such report
anything other than a final report.
xii) The power of Magistrate to take cognizance is not lost
even if the police report is termed as incomplete by the
investigating officer.
xiii) If the charge-sheet is not filed then right for default bail
has ripened into status of indefeasibility which cannot be
frustrated by the prosecution and the courts on any pretext.
xiii) Economic offences having deep rooted conspiracies and
involving huge loss of public funds, constitute a class apart
and need to be viewed seriously.
40. It is reflecting from record that the respondent/CBI registered FIR
bearing no RC/AC1/2018/A0011 dated 28.05.2018 registered at PS
CBI/AC-I for offences punishable under sections 120B/204 IPC and
sections 7/12/13(2) read with 13(1)(d) of the PC Act and section 66 of
the Information Technology Act, 2000 wherein the applicant/accused
was implicated. The respondent/ CBI received a request from the
Ministry of Finance, Govt. of India vide letter dated 05.03.2022 to
investigate the issues arising out of SEBI order dated 11.02.2022
which was passed in the matters pertaining to illegal appointment of
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Anand Subramanian as „Chief Strategic Advisor‟ (CSA), his re-
designation as 'Group Operating Officer' and Advisor to MD' and
other issues. The respondent/CBI took up investigation and issue
highlighted in the order dated 11.02.2022 was found to be linked with
ongoing investigation by the respondent/CBI in pursuance of present
FIR. The applicant/accused was arrested on 06.03.2022. The
respondent/CBI did not complete investigation in respect of all the
offences as mentioned in FIR. The respondent/CBI has filed charge
sheet before the concerned court on 21.04.2022 i.e. 46th day from the
date of arrest only for offences punishable under sections 13 (1)(d)
and 13(2) of the PC Act and section 120 B IPC. The investigation
pertaining to other offences under section 66 of IT Act 2000, section
204 IPC and sections 7 and 12 of the PC Act is still pending and not
completed. The Special Judge, CBI has not taken the cognizance on
charge sheet filed on 21.04.2022 for want of sanction to prosecute the
applicant/accused and Anand Subramanian.
41. Issue which needs judicial consideration and assessment is that
whether filing of charge sheet by the respondent/CBI before
concerned court on 21.04.2022 pertaining to offences punishable
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under sections 13 (1)(d) and 13(2) of the PC Act and section 120 B
IPC is sufficient compliance of section 167 (2) of the Code to deny
statutory bail or default bail to the applicant/accused as argued by the
respondent/CBI or said charge sheet is incomplete or piece meal
charge sheet and does not fall within ambit of section 167(2) of the
Code as argued by the learned Senior Counsel for the
applicant/accused.
42. In view of the legal position pertaining to section 167(2) of the
Code as discussed hereinabove, section 173 of the Code only permits
filing of a final report after completion of the entire investigation in
respect of all offences and does not permit a piece-meal investigation
and filing of incomplete charge sheet before Court. The charge sheet
filed by the respondent/CBI is a piece meal charge sheet and is not
filed in respect all offences subject matter of present FIR. The
respondent/CBI is not legally permitted to pick one portion of
investigation and to complete it and thereafter file piece meal charge
sheet in respect of few offences subject matter of FIR and to left open
investigation in respect of other offences and subsequent filing of
charge sheet in respect of left over offences. This would be complete
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negation of section 167(2) of the Code. The investigating agency
cannot be permitted to fragment or break FIR for the purpose of
different charge sheets and this will tantamount to negation of section
167(2) and would against mandate of Article of 21 of the Constitution.
The practice of filing such types of charge sheets to seek extension of
remand beyond the statutory period was deprecated by the Superior
Courts in past. The investigating agency is required to form opinion
regarding all offences subject matter of FIR after completion of entire
investigation.
42.1 There is no force in the arguments advanced by the Special
Public Prosecutor for the respondent/CBI that the right of the
applicant/accused under section 167(2) of the Code has come to an
end immediately after filing of charge sheet on 21.04.2022 and said
right under section 167(2) cannot be revived due to reason that further
investigation is pending within the meaning of sub-section 8 of
Section 173 of the Code. As mentioned and discussed hereinabove
that there is a distinction between completion of investigation and
further investigation. The respondent/CBI has conducted and
concluded part investigation pertaining to alleged illegalities
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committed by the applicant/accused in initial appointment of Anand
Subramanian and subsequent re-designation and other related issues
but investigation pertaining to allegations made in FIR is still pending
which cannot be termed as further investigation within ambit of
section 173 (8) of the Code. The further investigation can be resorted
to only after the completion of investigation and filing of complete
charge sheet.
42.1.1 The decisions rendered in Dinesh Dalmia CBI, 2008
Cri.LJ.337 and Abdul Azeez PV V NIA, 2014 AIR SCW 6537 and
cited by the Special Public Prosecutor do not provide much assistance
to arguments of the Special Public Prosecutor for the respondent/CBI.
In Abdul Azeez P V and others V National Investigation Agency,
investigation only pertaining to minor details such as the bank account
details and mobile phone call details was pending for verification. The
Special Court negated submissions for grant of statutory bail. The
High Court after going through the charge-sheet found that the
materials so disclosed and adverted to in the charge-sheet did show
that it was a final report and dismissed the appeal. The Supreme Court
observed that the charge-sheet so filed before the Special Court was
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complete in all respects so as to enable the learned Special Court to
take cognizance and merely because certain facets of the matter called
for further investigation it does not deem such report anything other
than a final report and dismissed the special leave petition. In present
case substantial investigation arising out of present FIR is still pending
and even allegations as made in charge sheet filed on 21.04.2022
regarding illegal appointment of Anand Subramanian are also directly
related to pending investigation pertaining to abuse of server
architecture.
42.1.2 In Dinesh Dalmia V C.B.I., the Supreme Court observed that a
charge sheet is a final report within the meaning of Sub-section (2)
of Section 173 of the Code and is filed if it enables the court to apply
its mind as to whether cognizance of the offence thereupon should be
taken or not and the power of the investigating officer for making
further investigation in terms of section 178 (8) of the Code is not
taken away only because a charge sheet under Sub-section (2) thereof
has been filed. A further investigation is permissible even if order of
cognizance of offence has been taken by the Magistrate. The
investigation arising out of present FIR is incomplete investigation as
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only one part of investigation regarding alleged appointment of Anand
Subramanian is completed and pending investigation qua other
offences for which charge sheet is not filed is still pending. It is not a
case of further investigation as argued by the Special Public
Prosecutor.
42.2 There cannot be any dispute to the legal proposition that the
purpose of police report under section 173(2) of the Code is to enable
the Magistrate to satisfy himself on issue of taking cognizance or not.
The concerned Special Court can take cognisance only in respect of
some of offences for which charge sheet was filed on 21.04.22 but
cannot take cognizance in respect of offence for which investigation is
still pending and charge sheet is not filed. It is not permissible within
mandate of legal provisions as contained in sections 173(2) and 167(2)
to take cognizance in piece meal or in parts. It would amount to
negation of indefeasible right given to the accused under section
167(2) of the Code. The constitutional right under section 167(2) of
the Code and granted to accused in case of non-completion of
investigation within stipulated period cannot be interpreted to
convenience of investigating agency. In the present case, the
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respondent/CBI itself preferred to club investigation of issues arising
out of SEBI order dated 11.02.2022 with investigation of offences
subject matter of present FIR. The investigating agency cannot
circumvent section 167(2) of the Code by filing incomplete charge
sheet and cannot be filed within the meaning of section 173 (2) till the
investigation is completed and any report sent before the investigation
is completed will not be a police report within the meaning of section
173 (2) of the Code. The respondent/CBI cannot take shelter of filing
charge sheet in respect of offences pertaining to alleged illegal
appointment of Anand Subramanian by giving nomenclature of
complete charge sheet or final report as per section 173(2) of the Code
to defeat the right of statutory bail under Section 167(2) of the Code.
42.3 The Special Judge while dismissing application for grant of
statutory bail vide order dated 28.05.2022 did not appreciate legal
provisions pertaining to section 167(2) in right perspective by holding
that the charge sheet was complete containing all the details and was
filed by mentioning therein the relevant sections. The Special Judge
did not appreciate difference between incomplete investigation and
further investigation and accepted both phrases as carrying same
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meaning. The Special Judge did not correctly observed and held that
the charge-sheet filed on 21.04.2022 clearly describes details of all the
material collected by the IO/Investigating agency during the
investigation regarding role played by the applicant/accused and
Anand Subramanium. The charge sheet filed on 21.04.2022 was
confined to the investigation related to alleged illegal appointment of
Anand Subramanian and subsequent re-designation and is not related
to their role in abuse of server architecture. There can only be one
charge sheet out of investigation although there is no restriction on
filing of number of supplementary charge sheets. The decision in Y.S.
Jagan Mohan Reddy V CBI cited by the Special Public Prosecutor
for the respondent/CBI where in one RC several transactions were
investigated regarding which separate charge-sheets were filed and the
cases were tried as separate cases after taking cognizance and the
Supreme Court refused to consider pendency of investigation in other
transactions as a ground for bail holding that economic offences are a
class apart. It is true that present FIR involves huge financial and
economic offences but in present investigation, the offences for which
charge sheet was filed on 21.04.2022 and offences for which
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investigation arising out of present FIR is still pending are
interconnected and interlinked and cannot be separated and even this
reflecting from Status Report filed by the respondent/CBI and written
arguments submitted on behalf of the respondent/CBI. Moreover, the
applicant/accused was arrested for offences subject matter of present
FIR and her arrest is not confined to offences for which charge sheet
was filed on 21.04.22.
43. There is legal force and supported by judicial decisions as
mentioned hereinabove that the respondent/CBI has failed to complete
investigation in respect of all the offences as mentioned in FIR and to
file a Final Report under section 173 of the Code within stipulated
time i.e. sixty days from the date of the arrest of the applicant/accused
and filed an incomplete/piece-meal charge sheet before the concerned
court on 21.04.2022 i.e. 46th day from the date of arrest.
44. After considering all facts, the application is allowed and the
applicant is admitted to bail as per section 167(2) of the Code on
furnishing a personal bond in the sum of Rs.5,00,000/- (Rupees Five
Lakhs Only) with one surety of the like amount to the satisfaction of
the concerned trial Court subject to the following conditions:-
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i. The applicant/accused shall not leave the country
without prior permission of the Court;
ii. The applicant/accused shall surrender her
passport before the concerned trial Court, if not
surrendered yet, within 07 days of release from
the custody, in pursuance of this order;
iii. The applicant/accused shall co-operate and
participate in the investigation as and when
directed by the Investigating Officer;
iv. The applicant/accused shall not temper with the
evidence and shall not influence the witnesses;
v. The applicant/accused shall provide her contact
number to the concerned Investigating Officer
and shall keep her mobile in operational mode so
that the Investigating Officer as and when
required can contact her.
45. The present bail application alongwith pending applications, if
any, stands disposed of.
46. Nothing in this order shall affect the final merits of the case.
SUDHIR KUMAR JAIN
(JUDGE)
SEPTEMBER 28, 2022
N/SD
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