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
11 | P a g e
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
14 | P a g e
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.
17 | P a g e
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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