Serious Fraud Investigation Office vs Rahul Modi

Serious Fraud Investigation Office vs Rahul Modi -  Supreme Court Judgement 2022 

Reportable

IN THE SUPREME COURT OF INDIA

CRIMINAL APPELLATE JURISDICTION

Criminal Appeal Nos.185-186 of 2022

(Arising out of Special Leave Petition (Crl.) Nos. 5180-5181 of 2019)

Serious Fraud Investigation Office .... Appellant(s)

Versus

Rahul Modi & Ors. …. Respondent (s)

J U D G M E N T

L. NAGESWARA RAO, J.

Leave granted.

1. The order dated 31.05.2019 passed by the High Court

of Punjab and Haryana granting bail to Respondent Nos. 1

and 2 is assailed in this Appeal by the Serious Fraud

Investigation Office (“SFIO”).

2. An investigation was directed to be conducted into the

affairs of Adarsh Group of Companies and LLPs by the Central

Government in exercise of the powers conferred under

Section 212(1)(c) of the Companies Act, 2013 and subsections (2) and (3)(c)(i) of Section 43 of the Limited Liability

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Partnership Act, 2008. Inspectors were appointed by the

Director, SFIO to carry out the investigation. Respondent

Nos. 1 and 2 were arrested pursuant to the approval granted

by the Director, SFIO on 10.12.2018. On 20.12.2018, the

High Court of Delhi directed interim release of Respondent

Nos. 1 and 2 in Writ Petition (Criminal) Nos. 3842 of 2018 and

3843 of 2018. The order of the High Court was set aside by

this Court on 27.03.2019, following which Respondent Nos. 1

and 2 surrendered on 01.04.2019. Respondent Nos. 1 and 2

were remanded to 14 days’ judicial custody on 05.04.2019.

On account of continuation of the investigation, the Special

Court, Gurugram extended the judicial custody of

Respondent Nos. 1 and 2 to 16.05.2019. In the meanwhile,

Respondent Nos. 1 and 2 filed regular bail applications for

being released on bail before the High Court on 03.05.2019.

The applications were directed to be listed on 21.05.2019 by

the High Court. The High Court further directed the trial

court to consider any application that may be filed by

Respondent Nos.1 and 2 under Section 167 of the Code of

Criminal Procedure, 1973 (“CrPC”), in the meanwhile. On

16.05.2019, the Special Court extended the judicial custody

of Respondent Nos.1 and 2 till 30.05.2019.

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3. Criminal complaint under Section 439(2) read with

Section 212(15) of the Companies Act, 2013 was filed before

the Special Court, Gurugram on 18.05.2019. The Special

Court directed registration of the complaint and listed the

matter on 24.05.2019 for considering summoning of the

accused persons. Respondent Nos. 1 and 2 filed applications

for statutory bail under Section 167(2) of the CrPC on

20.05.2019. The said applications were dismissed by the

Sessions Judge, Gurugram on 22.05.2019 on the ground that

the complaint under Section 439(2) of the Companies Act,

2013 was filed on 18.05.2019, i.e., before the expiry of the

60-day period prescribed in proviso (a) to Section 167(2) of

the CrPC. The High Court considered the regular bail

applications filed by 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. The 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 Respondent Nos. 1 and 2 to

statutory bail, as a matter of indefeasible right.

4. We have heard Mr. Aman Lekhi, learned Additional

Solicitor General appearing on behalf of the Appellant, Mr.

Vikram Choudhri, learned Senior Counsel appearing on behalf

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of Respondent Nos.1 and 2 and Mr. Mukul Rohatgi, learned

Senior Counsel for the Intervenor. The learned ASG

submitted that the High Court committed a serious error in

granting statutory bail to Respondent Nos. 1 and 2, in spite of

the fact that the complaint was filed well before the expiry of

60 days from the date of the remand. An egregious error has

been committed by the High Court in holding that cognizance

also has to be taken before the expiry of the 60-day period,

or else, the accused would be entitled to statutory bail under

Section 167(2), CrPC. He stated that the mischief that is

sought to be addressed under Section 167(2) is failure to

complete the investigation. According to the scheme of the

CrPC, on completion of investigation, the final

report/complaint is filed under Section 173(2), CrPC.

Statutory bail under Section 167(2), CrPC can be granted

only in a case where investigation is not complete within the

prescribed period and not otherwise. He submitted that the

judgment of the High Court is contrary to the law laid down

by this Court in Suresh Kumar Bhikamchand Jain v. State

of Maharashtra & Anr.

1

.

5. It was argued on behalf of Respondent Nos. 1 and 2

that the High Court was justified in granting statutory bail to

1 (2013) 3 SCC 77

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them as, admittedly, cognizance was not taken before the

expiry of the 60-day period. Placing reliance on a judgment

of this Court in Sanjay Dutt v. State

2

, Mr. Chaudhri argued

that the maximum period of detention that the accused can

be remanded to under Section 167, CrPC is 60 days, beyond

which detention can be extended only if the accused is

unable to furnish bail. He submitted that this Court in

Mohamed Iqbal Madar Sheikh & Ors. v. State of

Maharashtra

3

 explained the judgment in Sanjay Dutt

(supra) and held that the right under Section 167(2), CrPC

cannot be exercised after the charge-sheet has been

submitted and cognizance has been taken. It was further

argued that an accused has a right to seek statutory bail

under the proviso to Section 167(2) even after the chargesheet is filed, till the court takes cognizance.

6. An application for intervention was filed by Rahul

Kothari. The Intervenor filed an application for statutory bail

which was rejected by the trial court and upheld by the High

Court. Special Leave Petition (Criminal) Diary No. 12089 of

2021 filed by him is pending consideration of this Court. As

the issue raised for consideration in the said special leave

petition is the same that arises in the present Appeals, the

2 (1994) 5 SCC 410

3 (1996) 1 SCC 722

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Intervenor has sought permission to participate and make

submissions. Mr. Mukul Rohatgi, learned Senior Counsel

appearing for the Intervenor, submitted that there is a

conflict of opinion regarding the interpretation of Section

167(2), CrPC. According to him, this Court in Madar Sheikh

(supra) has taken a view that an accused can invoke his right

for statutory bail if the court has not taken cognizance of the

complaint before the expiry of the statutory period from the

date of remand. This Court in Bhikamchand Jain (supra)

has taken a different view without referring to the judgment

of this Court in Madar Sheikh (supra). Mr. Rohatgi

submitted that this Court in M. Ravindran v. Intelligence

Officer, Directorate of Revenue Intelligence

4

 took the

same view as that of this Court in Madar Sheikh (supra),

without reference to the judgment in Bhikamchand Jain

(supra). He relied upon an order of this Court dated

23.02.2021 passed in Criminal Appeal Nos. 701-702 of 2020

by which another Division Bench of this Court referred a

similar issue to a larger bench. He further placed reliance

upon another order dated 12.03.2021 of this Court by which

two other special leave petitions have been tagged on with

Criminal Appeal Nos. 701-702 of 2020, which were referred

4 (2021) 2 SCC 485

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to a larger bench. He submitted that Special Leave Petition

(Criminal) Nos. 2111-2112 of 2021, which were subjectmatter of the order dated 12.03.2021, raise the same issue

that falls for consideration in these Appeals, i.e., the right of

an accused to claim statutory bail in case cognizance is not

taken before the expiry of the prescribed period of 60 or 90

days, as the case may be. To settle the conflicting opinions

of this Court, it is imminently necessary to refer this matter

to a larger bench, according to Mr. Rohatgi.

7. Respondent Nos. 1 and 2 are the directors of Adarsh

Group of Companies and LLPs, who were accused of

committing an offence under Section 447 of the Companies

Act, 2013, Section 120-B read with Sections 417, 418, 420,

406, 463, 467, 468, 471, 474 of the Indian Penal Code, 1860

(“IPC”). The undisputed facts are that the complaint under

Section 439(2) of the Companies Act, 2013 was filed on

18.05.2019, which was before the expiry of the 60-day period

from the date of the remand. The applications filed for

statutory bail were dismissed by the Special Court on

22.05.2019, on the ground that the charge-sheet was filed

before the expiry of 60 days. Respondent Nos. 1 and 2 did

not argue before the Special Court that they were entitled for

statutory bail, even after filing of the charge-sheet before the

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expiry of the 60-day period, as cognizance had not been

taken. The trial court disposed of the applications for

statutory bail, on being so directed by an order dated

10.05.2019 passed by the High Court in regular bail

applications filed by Respondent Nos. 1 and 2. The said

regular bail applications were taken up for hearing by the

High Court and by the impugned order, bail was granted to

Respondent Nos. 1 and 2 on the ground that cognizance had

not been taken by the court before the expiry of 60 days.

However, while doing so, the High Court failed to consider

the order dated 22.05.2019 passed by the trial court

dismissing the applications seeking statutory bail.

8. The only point that arises for our consideration in this

case is whether an accused is entitled for statutory bail

under Section 167(2), CrPC 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. Section

167(2), CrPC reads as below:

167. Procedure when investigation cannot be

completed in twenty-four hours.

xxx xxx xxx xxx xxx

(2) The Magistrate to whom an accused person is forwarded

under this section may, whether he has or has not jurisdiction

to try the case, from time to time, authorise the detention of

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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 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

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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;

(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.

9. The issue is squarely covered by a judgment of this

Court in Bhikamchand Jain (supra), as contended by the

Appellant. It is necessary to closely examine the judgment

passed in Bhikamchand Jain (supra). The petitioner in the

said case was arrested on 11.03.2012 on the allegation of

misappropriation of amounts meant for development of

slums in Jalgaon City. The petitioner therein was accused of

committing offences punishable under Sections 120-B, 409,

411, 406, 408, 465, 466, 468, 471, 177 and 109 read with

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Section 34, IPC and also under Sections 13(1)(c), 13(1)(d)

and 13(2) of the Prevention of Corruption Act, 1988. The

contention of the petitioner therein was that he could not

have been remanded to custody in view of cognizance not

being taken for want of sanction within the statutory period

of 90 days. 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

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 chargesheet 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

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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). Acknowledging the fact that an accused has

to remain in custody of some court, this Court concluded that

on filing of the charge-sheet within the stipulated period, 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, CrPC. This Court clarified that the two stages are

different, with one following the other so as to maintain

continuity of the custody of the accused with a court.

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

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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).

11. The point that requires to be considered is whether this

Court has taken a different view in Sanjay Dutt (supra),

Madar Sheikh (supra) and M. Ravindran (supra). In

Sanjay Dutt (supra), this Court held that the indefeasible

right accruing to the accused is enforceable only prior to the

filing of challan and it does not survive or remain

enforceable, on the challan being filed. It was made clear

that once the challan has been filed, the question of grant of

bail has to be considered and decided only with reference to

the merits of the case under the provisions relating to grant

of bail to an accused after the filing of the challan. In light of

the above findings, this Court held that the custody of the

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accused after the challan has been filed is not governed by

Section 167(2) but different provisions of the CrPC.

12. In Madar Sheikh (supra), which was relied upon by the

learned Senior Counsel appearing for Respondent Nos. 1 and

2 and the Intervenor, the appellants therein were taken into

custody on 16.01.1993. The charge-sheet was submitted on

30.08.1993. Though the appellants were entitled to be

released in view of the charge-sheet not being filed within

the statutory period prescribed under Section 20(4)(b) of the

Terrorist and Disruptive Activities (Prevention) Act, 1987 read

with proviso (a) to Section 167(2), CrPC, they did not make

an application for release on bail on the ground of default in

completion of the investigation within the statutory period.

After filing of the charge-sheet and cognizance having been

taken, they continued to be in custody on the basis of orders

of remand passed under other provisions of the CrPC.

Refusing to grant relief of statutory bail in the said fact

situation, this Court held that the right conferred on an

accused under Section 167(2) cannot be exercised after the

charge-sheet has been submitted and cognizance has been

taken. A plain reading of the judgment in Madar Sheikh

(supra) would show that reference to the right of statutory

bail becoming unenforceable after cognizance having been

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taken is in view of the facts of the said case, where this Court

denied statutory bail to the appellants therein on the ground

that charge-sheet was filed and cognizance had also been

taken, with orders of remand passed under other provisions

of the CrPC. Thereafter, they were not entitled for bail under

Section 167(2).

13. Application for bail under Section 167(2), CrPC fell for

consideration of this Court in M. Ravindran (supra). In the

said case, the appellant was arrested and remanded to

judicial custody on 04.08.2018 for offences punishable under

the Narcotics Drugs and Psychotropic Substances Act, 1985.

On 01.02.2019, the appellant therein filed an application for

bail under Section 167(2) on the ground that investigation

was not complete and charge-sheet had not been filed within

the statutory period. The trial court granted bail under

Section 167(2), which was set aside by the High Court of

Madras by judgment dated 21.11.2019. Challenging the said

judgment of the High Court, the appellant approached this

Court. The crucial fact in the said case is that the appellant

therein filed an application on 01.02.2019 at 10.30 a.m.

before the trial court and on the same day at 4.25 p.m., an

additional complaint was filed against the appellant, on the

basis of which dismissal of the bail application was sought.

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This Court restored the order of the trial court while setting

aside the judgment of the High Court, by holding that the

accused is deemed to have “availed of” or enforced his right

to be released on default bail, once application for bail has

been filed under Section 167(2) on expiry of the stipulated

time period. Taking into account the fact that before the

expiry of 180 days, no charge-sheet had been submitted nor

any application filed seeking extension of time to investigate,

this Court held that the appellant was entitled to be released

on statutory bail notwithstanding the subsequent filing of an

additional complaint. The point that was decided in the said

case was that the filing of an additional complaint after the

accused has availed his right to be released on default bail,

should not deter the courts from enforcing this indefeasible

right, if the charge-sheet was not filed before the expiry of

the statutory period. Reference was made by this Court to

Madar Sheikh (supra) in M. Ravindran (supra). This Court

observed that no prior application for bail was filed in Madar

Sheikh (supra) though the charge-sheet was submitted after

the expiry of the statutory period. This Court repeated the

findings recorded in Madar Sheikh (supra) that the right to

bail cannot be exercised once the charge-sheet has been

submitted and cognizance has been taken. As stated above,

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the said conclusion in Madar Sheikh (supra) was arrived at

with reference to the facts of the case.

14. The issue that arose for consideration before this Court

in Criminal Appeal Nos. 701-702 of 2020 relates to whether

the date of remand is to be included in computation of the

period of 60 days or 90 days, as contemplated under proviso

(a) to Section 167(2), for considering the claim for default

bail. Taking note of the divergence of opinions on the said

point, this Court felt the need for consideration of the issue

by a larger bench. The later order dated 12.03.2021 passed

in SLP (Crl.) Nos. 2105-2106 of 2021 and SLP (Crl.) Nos.

2111-2112 of 2021 is for tagging all those matters along with

Criminal Appeal Nos. 701-702 of 2020. The submission made

on behalf of the petitioners therein and recorded in the said

order relates to the filing of a charge-sheet on the last day

without a list of witnesses and documents not amounting to a

proper filing of charge-sheet. Mr. Rohatgi referred to the SLP

(Crl.) No. 2111-2112 of 2021 and submitted that one of the

points raised relates to cognizance being taken before the

expiry of the statutory period under Section 167, CrPC. It is

clear that a reference to a larger bench pertains to the issue

of exclusion or inclusion of the date of remand for

computation of the period prescribed under Section 167.

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Therefore, there is no requirement for referring this case to a

larger bench.

15. A close scrutiny of the judgments in Sanjay Dutt

(supra), Madar Sheikh (supra) and M. Ravindran (supra)

would show that there is nothing contrary to what has been

decided in Bhikamchand Jain (supra). In all the above

judgments which are relied upon by either side, this Court

had categorically laid down that the indefeasible right of an

accused to seek statutory bail under Section 167(2), CrPC

arises only if the charge-sheet has not been filed before the

expiry of the statutory period. Reference to cognizance in

Madar Sheikh (supra) is in view of the fact situation where

the application was filed after the charge-sheet was

submitted and cognizance had been taken by the trial court.

Such reference cannot be construed as this Court introducing

an additional requirement of cognizance having to be taken

within the period prescribed under proviso (a) to Section

167(2), CrPC, failing which the accused would be entitled to

default bail, even after filing of the charge-sheet within the

statutory period. It is not necessary to repeat that in both

Madar Sheikh (supra) and M. Ravindran (supra), this

Court expressed its view that non-filing of the charge-sheet

within the statutory period is the ground for availing the

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indefeasible right to claim bail under Section 167(2), CrPC.

The conundrum relating to the custody of the accused after

the expiry of 60 days has also been dealt with by this Court

in Bhikamchand Jain (supra). It was made clear that the

accused remains in custody of the Magistrate till cognizance

is taken by the relevant court. As the issue that arises for

consideration in this case is squarely covered by the

judgment in Bhikamchand Jain (supra), the order passed by

the High Court on 31.05.2019 is hereby set aside.

16. For the aforementioned reasons, the Appeals are

allowed.

 .....................................J.

 [ L. NAGESWARA RAO ]

 ...................................J.

 [ B. R. GAVAI ]

New Delhi,

February 07, 2022.

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