SERIOUS FRAUD INVESTIGATION OFFICE versus RAHUL MODI & ORS.

[2022] 1 S.C.R. 597

SERIOUS FRAUD INVESTIGATION OFFICE

RAHUL MODI & ORS.

(Criminal Appeal Nos. 185-186 of 2022)

FEBRUARY 07, 2022

[L. NAGESWARA RAO AND B. R. GAVAI, JJ.]

Code of Criminal Procedure, 1973: s.167(2) – Filing of acharge-sheet is sufficient compliance with the provisions ofs.167and that an accused cannot demand release on default bailunder s.167(2) on the ground that cognizance has not been takenbefore the expiry of 60 days – The indefeasible right of an accusedto seek statutory bail under Section 167(2) arises only if the charge-sheet has not been filed before the expiry of the statutory period.

Allowing the appeals, the Court

HELD: 1 It is clear from the judgment of this Court inBhikamchand Jain that filing of charge-sheet is sufficientcompliance with the provisions of Section 167, CrPC and that anaccused cannot demand release on default bail under Section167(2) on the ground that cognizance has not been taken beforethe expiry of 60 days. The accused continues to be in the custodyof the Magistrate till such time cognizance is taken by the courttrying the offence, which assumes custody of the :accused for thepurpose of remand after cognizance is taken. The conclusion ofthe High Court that the accused cannot be remandedbeyond theperiod of 60 days under Section 167 and that further remand couldonly be at the post-cognizance stage, is not correct in view of thejudgment of this Court in Bhikamchand Jain. [Para 10][605-C-E]

2. close scrutiny of the judgments in Sanjay Dutt, MadarSheikh and M. Ravindran would show that there is nothingcontrary to what has been decided in Bhikamchand Jain. In allthese judgments which are relied upon by either side, this Courthad categorically laid down that the indefeasible right of anaccused to seek statutory bail under Section 167(2), CrPC arisesonly if the charge-sheet has not been filed before the expiry of

Athe statutory period. Reference to cognizance in Madar Sheikhis in view of the fact situation where the application was filedafter the charge-sheet was submitted and cognizance had beentaken by the trial court. Such reference cannot be construed asthis Court introducing an additional requirement of cognizancehaving to be taken within the period prescribed under provisoB(a) to Section 167(2), CrPC, failing which the accused would beentitled to default bail, even after filing of the charge-sheet withinthe statutory period. [Para 15][607-G-H; 608-A-C]

Suresh Kumar Bhikamchand Jain v. State ofMaharashtra &Anr. (2013) 3 SCC 77 : [2013]C1 SCR 1037; Sanjay Dutt v. State (1994) 5 SCC 410 :[1994] 3 Suppl. SCR 263; M. Ravindran v. IntelligenceOfficer, Directorate of Revenue Intelligence (2021) 2SCC 485 – relied on.

Mohamed Iqbal Madar Sheikh & Ors. v. State ofDMaharashtra (1996) 1 SCC 722 : [1996] 1 SCR 183 –referred to.

Case Law Reference

CRIMINAL APPELLATE JURISDICTION: Criminal AppealFNos. 185-186 of 2022.

From the Judgment and Order dated 31.05.2019 of the High Courtof Punjab and Haryana at Chandigarh in CRMM-20688 of 2019 andCRMM-20691 of 2019.

Aman Lekhi, ASG, Zoheb Hussain, Ms. Kanu Agrawal, UdaiGKhanna, Ujjwal Sinha, Aniket Seth, Ritwiz Rishabh, Arvind KumarSharma, Advs. for the Appellant.

Vikram Chaudhri, Mukul Rohatgi, Sr. Advs., Ranjit Kumar Sharma,Dr. Monika Gusain, Mahesh Agarwal, Sanjay Aggarwal, Arshit Anand,Pranjal Krishna, E. C. Agrawala, Advs. for the Respondents.H

The Judgment of the Court was delivered by

L. NAGESWARA RAO, J.

Leave granted.

1. The order dated 31.05.2019 passed by the High Court of Punjaband Haryana granting bail to Respondent Nos. 1 and 2 is assailed in thisAppeal by the Serious Fraud Investigation Office (“SFIO”).

2. An investigation was directed to be conducted into the affairsof Adarsh Group of Companies and LLPs by the Central Government inexercise of the powers conferred under Section 212(1)(c) of theCompanies Act, 2013 and sub-sections (2) and (3)(c)(i) of Section 43 ofthe Limited Liability Partnership Act, 2008. Inspectors were appointedby the Director, SFIO to carry out the investigation. Respondent Nos. 1and 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 directedinterim 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 wasset 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 wereremanded to 14 days’ judicial custody on 05.04.2019. On account ofcontinuation of the investigation, the Special Court, Gurugram extendedthe judicial custody of Respondent Nos. 1 and 2 to 16.05.2019. In themeanwhile, Respondent Nos. 1 and 2 filed regular bail applications forbeing released on bail before the High Court on 03.05.2019. Theapplications were directed to be listed on 21.05.2019 by the High Court.The High Court further directed the trial court to consider any applicationthat may be filed by Respondent Nos.1 and 2 under Section 167 of theCode of Criminal Procedure, 1973 (“CrPC”), in the meanwhile. On16.05.2019, the Special Court extended the judicial custody of RespondentNos.1 and 2 till 30.05.2019.

3. Criminal complaint under Section 439(2) read with Section212(15) of the Companies Act, 2013 was filed before the Special Court,Gurugram on 18.05.2019. The Special Court directed registration of thecomplaint and listed the matter on 24.05.2019 for considering summoningof the accused persons. Respondent Nos. 1 and 2 filed applications forstatutory bail under Section 167(2) of the CrPC on 20.05.2019. The saidapplications were dismissed by the Sessions Judge, Gurugram on22.05.2019 on the ground that the complaint under Section 439(2) of the

BCD

ACompanies Act, 2013 was filed on 18.05.2019, i.e., before the expiry ofthe 60-day period prescribed in proviso (a) to Section 167(2) of the CrPC.The High Court considered the regular bail applications filed byRespondent Nos. 1 and 2 on 31.05.2019 and directed their release onbail on the ground that they were entitled to statutory bail. The solereason given for grant of bail by the High Court is that the trial court hasBnot taken cognizance of the complaint before the expiry of the 60-dayperiod, which entitled Respondent Nos. 1 and 2 to statutory bail, as amatter of indefeasible right.4. We have heard Mr. Aman Lekhi, learned Additional SolicitorCGeneral appearing on behalf of the Appellant, Mr. Vikram Choudhri,learned Senior Counsel appearing on behalf of Respondent Nos.1 and 2and Mr. Mukul Rohatgi, learned Senior Counsel for the Intervenor. Thelearned ASG submitted that the High Court committed serious error ingranting statutory bail to Respondent Nos. 1 and 2, in spite of the factthat the complaint was filed well before the expiry of 60 days from theDdate of the remand. An egregious error has been committed by the HighCourt in holding that cognizance also has to be taken before the expiryof the 60-day period, or else, the accused would be entitled to statutorybail under Section 167(2), CrPC. He stated that the mischief that issought to be addressed under Section 167(2) is failure to complete theEinvestigation. According to the scheme of the CrPC, on completion ofinvestigation, the final report/complaint is filed under Section 173(2),CrPC. Statutory bail under Section 167(2), CrPC can be granted only ina case where investigation is not complete within the prescribed periodand not otherwise. He submitted that the judgment of the High Court iscontrary to the law laid down by this Court in Suresh KumarFBhikamchand Jain v. State of Maharashtra & Anr.[1].

5. It was argued on behalf of Respondent Nos. 1 and 2 that theHigh Court was justified in granting statutory bail to them as, admittedly,cognizance was not taken before the expiry of the 60-day period. Placingreliance on judgment of this Court in Sanjay Dutt v. State[2], Mr. ChaudhriGargued that the maximum period of detention that the accused can beremanded to under Section 167, CrPC is 60 days, beyond which detentioncan be extended only if the accused is unable to furnish bail. He submitted

1 (2013) 3 SCC 77H2 (1994) 5 SCC 410

that this Court in Mohamed Iqbal Madar Sheikh & Ors. v. State ofMaharashtra[3] explained the judgment in Sanjay Dutt (supra) and heldthat the right under Section 167(2), CrPC cannot be exercised after thecharge-sheet has been submitted and cognizance has been taken. Itwas further argued that an accused has right to seek statutory bailunder the proviso to Section 167(2) even after the charge-sheet is filed,till the court takes cognizance.

6. An application for intervention was filed by Rahul Kothari. TheIntervenor filed an application for statutory bail which was rejected bythe trial court and upheld by the High Court. Special Leave Petition(Criminal) Diary No. 12089 of 2021 filed by him is pending considerationof this Court. As the issue raised for consideration in the said specialleave petition is the same that arises in the present Appeals, the Intervenorhas sought permission to participate and make submissions. Mr. MukulRohatgi, learned Senior Counsel appearing for the Intervenor, submittedthat there is conflict of opinion regarding the interpretation of Section167(2), CrPC. According to him, this Court in Madar Sheikh (supra)has taken view that an accused can invoke his right for statutory bail ifthe court has not taken cognizance of the complaint before the expiry ofthe statutory period from the date of remand. This Court in BhikamchandJain (supra) has taken different view without referring to the judgmentof this Court in Madar Sheikh (supra). Mr. Rohatgi submitted that thisCourt in M. Ravindran v. Intelligence Officer, Directorate of RevenueIntelligence[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 CriminalAppeal Nos. 701-702 of 2020 by which another Division Bench of thisCourt referred similar issue to larger bench. He further placed relianceupon another order dated 12.03.2021 of this Court by which two otherspecial leave petitions have been tagged on with Criminal Appeal Nos.701-702 of 2020, which were referred to larger bench. He submittedthat Special Leave Petition (Criminal) Nos. 2111-2112 of 2021, whichwere subject-matter of the order dated 12.03.2021, raise the same issuethat falls for consideration in these Appeals, i.e., the right of an accusedto claim statutory bail in case cognizance is not taken before the expiryof the prescribed period of 60 or 90 days, as the case may be. To settle

3 (1996) 1 SCC 722

4 (2021) 2 SCC 485

Athe conflicting opinions of this Court, it is imminently necessary to referthis matter to larger bench, according to Mr. Rohatgi.

7. Respondent Nos. 1 and 2 are the directors of Adarsh Group ofCompanies and LLPs, who were accused of committing an offenceunder Section 447 of the Companies Act, 2013, Section 120-B read withBSections 417, 418, 420, 406, 463, 467, 468, 471, 474 of the Indian PenalCode, 1860 (“IPC”). The undisputed facts are that the complaint underSection 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 theremand. The applications filed for statutory bail were dismissed by theSpecial Court on 22.05.2019, on the ground that the charge-sheet wasCfiled before the expiry of 60 days. Respondent Nos. 1 and 2 did notargue before the Special Court that they were entitled for statutory bail,even after filing of the charge-sheet before the expiry of the 60-dayperiod, as cognizance had not been taken. The trial court disposed of theapplications for statutory bail, on being so directed by an order datedD10.05.2019 passed by the High Court in regular bail applications filed byRespondent Nos. 1 and 2. The said regular bail applications were takenup for hearing by the High Court and by the impugned order, bail wasgranted to Respondent Nos. 1 and 2 on the ground that cognizance hadnot been taken by the court before the expiry of 60 days. However,while doing so, the High Court failed to consider the order datedE22.05.2019 passed by the trial court dismissing the applications seekingstatutory bail.

8. The only point that arises for our consideration in this case iswhether an accused is entitled for statutory bail under Section 167(2),CrPC on the ground that cognizance has not been taken before theFexpiry of 60 days or 90 days, as the case may be, from the date ofremand. Section 167(2), CrPC reads as below:

167. Procedure when investigation cannot be completed intwenty-four hours.

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(2) The Magistrate to whom an accused person is forwardedunder this section may, whether he has or has not jurisdiction totry the case, from time to time, authorise the detention of theaccused in such custody as such Magistrate thinks fit, for termnot exceeding fifteen days in the whole; and if he has no jurisdiction

to try the case or commit it for trial, and considers further detentionunnecessary, he may order the accused to be forwarded to aMagistrate having such jurisdiction:

Provided that —

(a)the Magistrate may authorise the detention of the accusedperson, otherwise than in custody of the police, beyond theperiod of fifteen days, if he is satisfied that adequate groundsexist for doing so, but no Magistrate shall authorise the detentionof the accused person in custody under this paragraph for atotal period exceeding—

(i) ninety days, where the investigation relates to an offencepunishable with death, imprisonment for life or imprisonmentfor term of not less than ten years;

(ii) sixty days, where the investigation relates to any otheroffence,

and, on the expiry of the said period of ninety days, or sixtydays, as the case may be, the accused person shall be releasedon bail if he is prepared to and does furnish bail, and everyperson released on bail under this sub-section shall be deemedto be so released under the provisions of Chapter XXXIII forthe purposes of that Chapter;

(b) no Magistrate shall authorise detention of the accused incustody of the police under this section unless the accused isproduced before him in person for the first time andsubsequently every time till the accused remains in the custodyof the police, but the Magistrate may extend further detentionin judicial custody on production of the accused either in personor through the medium of electronic video linkage;

(c) no Magistrate of the second class, not specially empoweredin this behalf by the High Court, shall authorise detention in thecustody of the police.

Explanation I.—For the avoidance of doubts, it is hereby declaredthat, notwithstanding the expiry of the period specified in paragraph(a), the accused shall be detained in custody so long as he doesnot furnish bail.

AExplanation II.—If any question arises whether an accusedperson was produced before the Magistrate as required underclause (b), the production of the accused person may be provedby his signature on the order authorising detention or by the ordercertified by the Magistrate as to production of the accused personthrough the medium of electronic video linkage, as the case mayBbe.

9. The issue is squarely covered by judgment of this Court inBhikamchand Jain (supra), as contended by the Appellant. It isnecessary to closely examine the judgment passed in BhikamchandJain (supra). The petitioner in the said case was arrested on 11.03.2012Con the allegation of misappropriation of amounts meant for developmentof slums in Jalgaon City. The petitioner therein was accused of committingoffences punishable under Sections 120-B, 409, 411, 406, 408, 465, 466,468, 471, 177 and 109 read with Section 34, IPC and also under Sections13(1)(c), 13(1)(d) and 13(2) of the Prevention of Corruption Act, 1988.DThe contention of the petitioner therein was that he could not have beenremanded to custody in view of cognizance not being taken for want ofsanction within the statutory period of 90 days. The scheme of theprovisions relating to remand of an accused first during the stage ofinvestigation and thereafter, after cognizance is taken, indicates that thelegislature intended investigation of certain crimes to be completed withinEthe period prescribed therein, according to this Court in BhikamchandJain (supra). This Court held that in the event of investigation not beingcompleted by the investigating authorities within the prescribed period,the accused acquires an indefeasible right to be granted bail, if he offersto furnish bail. This Court was of the firm opinion that if on either the

F61[st] day or the 91[st] day, an accused makes an application for beingreleased on bail in default of charge-sheet having been filed, the courthas no option but to release the accused on bail. However, once thecharge-sheet was filed within the stipulated period, the right of theaccused 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 thatGthe filing of charge-sheet is sufficient compliance with the provisions ofproviso (a) to Section 167(2), CrPC and that taking of cognizance is notmaterial to Section 167. The scheme of CrPC is such that once theinvestigation stage is completed, the court proceeds to the next stage,which is the taking of cognizance and trial. During the period ofHinvestigation, the accused is under the custody of the Magistrate before

whom he or she is first produced, with such Magistrate being vestedwith power to remand the accused to police custody and/or judicialcustody, up to maximum period as prescribed under Section 167(2).Acknowledging the fact that an accused has to remain in custody ofsome court, this Court concluded that on filing of the charge-sheet withinthe stipulated period, the accused continues to remain in the custody ofthe Magistrate till such time as cognizance is taken by the court tryingthe offence, when the said court assumes custody of the accused forpurposes of remand during the trial in terms of Section 309, CrPC. ThisCourt clarified that the two stages are different, with one following theother so as to maintain continuity of the custody of the accused with acourt.

10. It is clear from the judgment of this Court in BhikamchandJain (supra) that filing of charge-sheet is sufficient compliance withthe provisions of Section 167, CrPC and that an accused cannot demandrelease on default bail under Section 167(2) on the ground that cognizancehas not been taken before the expiry of 60 days. The accused continuesto be in the custody of the Magistrate till such time cognizance is takenby the court trying the offence, which assumes custody of the accusedfor the purpose of remand after cognizance is taken. The conclusion ofthe High Court that the accused cannot be remanded beyond the periodof 60 days under Section 167 and that further remand could only be atthe post-cognizance stage, is not correct in view of the judgment of thisCourt in Bhikamchand Jain (supra).

11. The point that requires to be considered is whether this Courthas taken different view in Sanjay Dutt (supra), Madar Sheikh (supra)and M. Ravindran (supra). In Sanjay Dutt (supra), this Court held thatthe indefeasible right accruing to the accused is enforceable only priorto the filing of challan and it does not survive or remain enforceable, onthe challan being filed. It was made clear that once the challan has beenfiled, the question of grant of bail has to be considered and decided onlywith reference to the merits of the case under the provisions relating togrant of bail to an accused after the filing of the challan. In light of theabove findings, this Court held that the custody of the accused after thechallan has been filed is not governed by Section 167(2) but differentprovisions of the CrPC.

12. In Madar Sheikh (supra), which was relied upon by the learnedSenior Counsel appearing for Respondent Nos. 1 and 2 and the Intervenor,

Athe appellants therein were taken into custody on 16.01.1993. The charge-sheet was submitted on 30.08.1993. Though the appellants were entitledto be released in view of the charge-sheet not being filed within thestatutory period prescribed under Section 20(4)(b) of the Terrorist andDisruptive Activities (Prevention) Act, 1987 read with proviso (a) toSection 167(2), CrPC, they did not make an application for release onBbail on the ground of default in completion of the investigation within thestatutory period. After filing of the charge-sheet and cognizance havingbeen taken, they continued to be in custody on the basis of orders ofremand passed under other provisions of the CrPC. Refusing to grantrelief of statutory bail in the said fact situation, this Court held that theCright conferred on an accused under Section 167(2) cannot be exercisedafter the charge-sheet has been submitted and cognizance has beentaken. plain reading of the judgment in Madar Sheikh (supra) wouldshow that reference to the right of statutory bail becoming unenforceableafter cognizance having been taken is in view of the facts of the saidcase, where this Court denied statutory bail to the appellants therein onDthe ground that charge-sheet was filed and cognizance had also beentaken, 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 forconsideration of this Court in M. Ravindran (supra). In the said case,Ethe appellant was arrested and remanded to judicial custody on 04.08.2018for offences punishable under the Narcotics Drugs and PsychotropicSubstances Act, 1985. On 01.02.2019, the appellant therein filed anapplication for bail under Section 167(2) on the ground that investigationwas not complete and charge-sheet had not been filed within the statutoryFperiod. The trial court granted bail under Section 167(2), which was setaside by the High Court of Madras by judgment dated 21.11.2019.Challenging the said judgment of the High Court, the appellant approachedthis Court. The crucial fact in the said case is that the appellant thereinfiled 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 filedGagainst the appellant, on the basis of which dismissal of the bail applicationwas sought. This Court restored the order of the trial court while settingaside the judgment of the High Court, by holding that the accused isdeemed to have “availed of” or enforced his right to be released ondefault bail, once application for bail has been filed under Section 167(2)Hon expiry of the stipulated time period. Taking into account the fact that

before the expiry of 180 days, no charge-sheet had been submitted norany application filed seeking extension of time to investigate, this Courtheld that the appellant was entitled to be released on statutory bailnotwithstanding the subsequent filing of an additional complaint. Thepoint that was decided in the said case was that the filing of an additionalcomplaint after the accused has availed his right to be released on defaultbail, should not deter the courts from enforcing this indefeasible right, ifthe 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 forbail was filed in Madar Sheikh (supra) though the charge-sheet wassubmitted after the expiry of the statutory period. This Court repeatedthe findings recorded in Madar Sheikh (supra) that the right to bailcannot be exercised once the charge-sheet has been submitted andcognizance has been taken. As stated above, the said conclusion in MadarSheikh (supra) was arrived at with reference to the facts of the case.14. The issue that arose for consideration before this Court inCriminal Appeal Nos. 701-702 of 2020 relates to whether the date ofremand is to be included in computation of the period of 60 days or 90days, as contemplated under proviso (a) to Section 167(2), for consideringthe claim for default bail. Taking note of the divergence of opinions onthe said point, this Court felt the need for consideration of the issue by alarger 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 fortagging all those matters along with Criminal Appeal Nos. 701-702 of2020. The submission made on behalf of the petitioners therein andrecorded in the said order relates to the filing of charge-sheet on thelast day without list of witnesses and documents not amounting to aproper filing of charge-sheet. Mr. Rohatgi referred to the SLP (Crl.)No. 2111-2112 of 2021 and submitted that one of the points raised relatesto cognizance being taken before the expiry of the statutory period underSection 167, CrPC. It is clear that reference to larger bench pertainsto the issue of exclusion or inclusion of the date of remand for computationof the period prescribed under Section 167. Therefore, there is norequirement for referring this case to larger bench.

15. close scrutiny of the judgments in Sanjay Dutt (supra),Madar Sheikh (supra) and M. Ravindran (supra) would show thatthere is nothing contrary to what has been decided in Bhikamchand

AJain (supra). In all the above judgments which are relied upon by eitherside, this Court had categorically laid down that the indefeasible right ofan accused to seek statutory bail under Section 167(2), CrPC arisesonly if the charge-sheet has not been filed before the expiry of thestatutory period. Reference to cognizance in Madar Sheikh (supra) isin view of the fact situation where the application was filed after theBcharge-sheet was submitted and cognizance had been taken by the trialcourt. Such reference cannot be construed as this Court introducing anadditional requirement of cognizance having to be taken within the periodprescribed under proviso (a) to Section 167(2), CrPC, failing which theaccused would be entitled to default bail, even after filing of the charge-Csheet within the statutory period. It is not necessary to repeat that inboth Madar Sheikh (supra) and M. Ravindran (supra), this Courtexpressed its view that non-filing of the charge-sheet within the statutoryperiod is the ground for availing the indefeasible right to claim bail underSection 167(2), CrPC. The conundrum relating to the custody of theaccused after the expiry of 60 days has also been dealt with by thisDCourt in Bhikamchand Jain (supra). It was made clear that the accusedremains in custody of the Magistrate till cognizance is taken by therelevant court. As the issue that arises for consideration in this case issquarely covered by the judgment in Bhikamchand Jain (supra), theorder passed by the High Court on 31.05.2019 is hereby set aside.

E16. For the aforementioned reasons, the Appeals are allowed.

Devika Gujral

Appeals allowed.