CENTRAL BUREAU OF INVESTIGATION versus SANTOSH KARNANI & ANR

[2023] 3 S.C.R.

ACENTRAL BUREAU OF INVESTIGATION

SANTOSH KARNANI & ANR.

(Criminal Appeal No. 1148 of 2023)

APRIL 17, 2023

[SURYA KANT AND J. K. MAHESHWARI, JJ.]

Prevention of Corruption Act, 1988 – ss. 7, 13(1), 13(2) –Code of Criminal Procedure, 1973 – s. 41A, 438 – Constitution ofCIndia – Art. 21 – Tax Department initiated search and seizure actionagainst the complainant’s company – Respondent- AdditionalCommissioner of Income Tax was handling the case of thecomplainant – Allegation against the respondent that he made ademand of illegal gratification to help the complainant with his case– The said conversation of demand between the complainant andDthe respondent was recorded in digital voice recorder – trapwas then laid – Respondent had asked to deposit an amount in afirm’s account – Complainant’s employee was sent to the firm withthe bribe amount along with personnel from the ACB trap team andthe bribe amount was deposited with the firm and it wasEacknowledged by the respondent to the complainant over call –Thereafter, when an ACB team went to arrest the respondent, healong with the staff members physically assaulted the ACB teamand escaped the office – FIR was registered u/ss. 7, 13(1) and 13(2)of the Prevention of Corruption Act, 1988 – Respondent preferredan application for grant of anticipatory bail before the SpecialFJudge, which was rejected – However, the same was allowed by theHigh Court with direction that despite anticipatory bail, the CBIcould apply for police remand of the respondent and that upon thecompletion of the police remand, the respondent would be set freeimmediately – On appeal, held: The purported recording ofGconversation between the complainant and respondent wherein hethanked the complainant, after the deposit of amount in the firm’saccount, is reasonable link to connect respondent with the depositof illegal gratification in firm, thereby prima facie showingacceptance thereof – The manner in which respondent forcefullyevaded his arrest with the help of his colleagues and got the evidenceH

destroyed, is strong circumstance to indicate his complicity at thisstage – There appears to be well-organised syndicate comprisingofficers and officials of the Income Tax Department, businessmenand Hawala traders, who are in tandem – Such nexus needs to beunearthed through investigation – Therefore, the impugned judgmentand order of the High Court set aside and the anticipatory bailapplication of respondent dismissed.

Bail – Anticipatory bail – Relevant factors for grant or refusalof anticipatory bail – The judicial discretion of the Court shall beguided by various relevant factors and largely it will depend uponthe facts and circumstances of each case – The Court must draw adelicate balance between liberty of an individual as guaranteedunder Article 21 of the Constitution and the need for fair and freeinvestigation, which must be taken to its logical conclusion.

Prevention of Corruption Act, 1988 – s. 17A – Prior Approvalof Investigation – Requirement of – The First Proviso to S. 17Astates that such approval is not necessary in cases involving arrestof the person on the spot on the charges of accepting undueadvantage – Also, prior approval or sanction to investigate suchan officer in trap case is likely to defeat the very purpose of trapand the investigation, which is not the underlying intention of thelegislature.

Code of Criminal Procedure, 1973 – s. 438 – Cancellation ofBail – Cancellation of bail must be done only for cogent andoverwhelming reasons – All that to be ensured is that the High Courtexercises its discretion judiciously, cautiously and strictly inconformity with the basic principles laid down by the Supreme Courtfrom time to time in series of decisions.

Disposing of the appeals, the Court

HELD: 1. The manner in which Respondent No. 1 forcefullyevaded his arrest with the help of his colleagues and got theevidence destroyed, is strong circumstance to indicate hiscomplicity at this stage though clear picture would emerge onlyon completion of investigation. [Para 30][494-H; 495-A]

2. The nature and gravity of the alleged offence should havebeen kept in mind by the High Court. Corruption poses serious

Athreat to our society and must be dealt with iron hands. It notonly leads to abysmal loss to the public exchequer but alsotramples good governance. The common man stands deprivedof the benefits percolating under social welfare schemes and isthe worst hit. [Para 31][495-B-C]

B3. From the material placed on record, it seems that primafacie, the allegations against Respondent No. 1 cannot be brushedaside lightly at this stage. There appears to be well-organisedsyndicate comprising officers and officials of the Income TaxDepartment, businessmen and Hawala traders, who are in tandem.Such nexus needs to be unearthed through an unimpaired andCunobstructed investigation. [Para 32][495-C-D]

3. Section 17A merely contemplates that police officers shallnot conduct any enquiry, inquiry or investigation into any offencealleged to have been committed by public servant where thealleged offence is relatable to any recommendation made orDdecision taken in discharge of official functions or duties, withoutthe previous approval of the competent authority. The first provisoto the section states that such approval is not necessary in casesinvolving arrest of the person on the spot on the charges ofaccepting undue advantage. As may be seen, the first proviso toESection 17A refers to cases wherein public servant is chargedwith acceptance of an undue advantage or attempt thereof. priorapproval or sanction to investigate such an officer in trap caseis likely to defeat the very purpose of trap and the investigation,which is not the underlying intention of the legislature. Theinvestigation against Respondent No. 1, being an accused ofFdemanding bribe, did not require any previous approval of theCentral Government. That apart, the accusation againstRespondent No. 1 does not revolve around any recommendationsmade or decisions taken by him in his quasi -judicial oradministrative capacity. [Paras 33, 34][495-E-H]G

4. It is true that cancellation of bail must be done only forcogent and overwhelming reasons. Nevertheless, setting asidean unjustified order granting bail is distinct from cancellation ofbail. This Court would not, invariably intervene into the judicial

CENTRAL BUREAU OF INVESTIGATION v. SANTOSHKARNANI & ANR.

discretion exercised by the High Court while granting bail to anaccused. All that to be ensured is that the High Court exercisesits discretion judiciously, cautiously and strictly in conformity withthe basic principles laid down by this Court from time to time ina series of decisions. [Para 35][496-A-B]

Sushila Aggarwal v. State (NCT of Delhi) (2020) 5 SCC1 : [2020] 2 SCR 1 - followed.

Siddharam Satlingappa Mhetre v. State of Maharashtra(2011) 1 SCC 694 : [2010] 15 SCR 201; GurbakshSingh Sibbia v. State of Punjab (1980) 2 SCC 565 :[1980] 3 SCR 383 – relied on.

State Rep. By The CBI v. Anil Sharma (1997) 7 SCC187 : [1997] 3 Suppl. SCR 737; Prem Shankar Prasadv. State of Bihar (2021) SCC OnLine SC 955; State ofMadhya Pradesh v. Pradeep Sharma (2014) 2 SCC 171: [2013] 12 SCR 772; Lavesh v. State (NCT of Delhi)(2012) 8 SCC 730 : [2012] 7 SCR 469; Arnesh Kumarv. State of Bihar (2014) 8 SCC 273 : [2014] 8 SCR 128Dolat Ram v. State of Haryana (1995)1 SCC 349 :[1994] 5 Suppl. SCR 278 – referred to.

Case Law Reference

From the Judgment and Order dated 19.12.2022 of the High Courtof Gujarat at Ahmedabad in CRLMA No. 20871 of 2022.

480SUPREME COURT REPORTS

AWITH

Criminal Appeal No. 1149 of 2023.

Tushar Mehta, SG, Maninder Singh, Sr. Adv., Rajat Nair, AmitSharma B, K Kaul, Madhav Sinhal, Pratyush Shrivastava, AnandhVenkataramani, Mrs. Vijayalakshmi Venkataramani, Vinayak Mehrotra,BSiddharth Dharmadhikari, Abhikalp Pratap Singh, Prabhas Bajaj, Ms.Shreya Saxena, Ms. Mansi Sood, Chitvan Singhal, Ms. Sonali Jain,Abhishek Kumar Pandey, Raman Yadav, Arvind Kumar Sharma, Advs.for the Appellant.

Mukul Rohatgi, Narender Hooda, Shyam Divan, Sr. Advs., Ms.CDiksha Rai, Bhadrish S. Raju, Alok Sangwan, Sumit Kumar Sharma,Shaurya Lamba, Uday Aditya Banerjee, Ankit Agarwal, PrateekDhankhar, Advs. for the Respondents.

The Judgment of the Court was delivered by

SURYA KANT, J.D

1. Leave granted.

2. The Appellants in the two Criminal Appeals, the Central Bureauof Investigation & Rupesh Balwantbhai Brambhatt (hereinafter,“complainant”) respectively, are aggrieved by the order dated 19[th]EDecember, 2022 passed by the High Court of Gujarat at Ahmedabadallowing the anticipatory bail application filed by Respondent No. 1 inconnection with FIR registered as C.R. No. RC0292022A0011 of 2022before CBI/ACB/Gandhinagar Police Station, District Gandhinagar forthe offence under Section 7 of the Prevention of Corruption Act, 1988as amended in 2018.F

BACKGROUND

3. The complainant is businessman engaged in the constructionbusiness that goes by the name: Safal Construction Pvt. Ltd. In February2019, Respondent No. 1, an IRS Officer, posted as AdditionalGCommissioner of Income Tax, Ahmedabad, conducted survey for thefinancial year 2018-19 under Section 133A of the Income Tax Act, 1961against Safal Construction Pvt. Ltd. whereunder the group disclosed anadditional income of Rs. 50 crores.

4. Thereafter, in September 2021, search and seizure action wasinitiated by the Investigation Wing of Income Tax Department,Ahmedabad against Safal Construction Pvt. Ltd. Following thesesearches, some papers related to the complainant’s business were seizedand the Central Circle, Range-1 Division initiated the procedure for raisinga demand notice. It is the complainant’s case that he found out thatRespondent No. 1 was handling his case and would be preparing theappraisal memo. Subsequently, the complainant and Respondent No. 1met frequently in connection with the case and it is alleged that duringthese interactions, Respondent No. 1 threatened to ruin the complainant’sbusiness and demanded illegal gratification.

5. On 29[th] September, 2022, Respondent No. 1 allegedly contactedthe complainant and told him to meet him on 3[rd] October, 2022.Accordingly, the complainant met Respondent No. 1 at the Income TaxOffice where Respondent No. 1 demanded illegal gratification of Rs. 30lakhs to help the complainant with his case. This conversation wasrecorded by the complainant on Digital Voice Recorder which hasbeen handed over to the investigating authorities and transcript of thesame has also been provided to this Court. The complainant was directedto deposit the amount in the account of one Vardhman in the DharaAngadia Firm.6. The complainant lodged complaint the next morning with ACBPolice Station, Ahmedabad city at 07:15 hours and trap was then laid.The complainant’s employee was sent to the Angadia firm with the bribemoney amounting to Rs. 30 lakhs along with personnel from the ACBtrap team. Upon depositing Rs. 30 lakhs with Dhara Angadia firm, thecomplainant contacted Respondent No. 1 through WhatsApp call whichwas recorded by the ACB team wherein Respondent No. 1 acknowledgedpayment of the amount. Immediately thereafter, one ACB team went todetain and arrest Respondent No. 1, who along with some staff members,is alleged to have physically assaulted the ACB team and escaped fromthe office due to the ensuing chaos. It is also claimed that RespondentNo. 1, while escaping from the office, handed over his mobile phone toa colleague. Simultaneously, another ACB team recovered the bribeamount deposited with Dhara Angadia.

7. FIR No. 12/2022 was thus, registered against Respondent No.1 under Sections 7, 13(1) and 13(2) of the Prevention of Corruption Act,1988 on 4[th] October, 2022.

A8. Owing to the gravity of the case, on 12[th] October, 2022, thecase was transferred to the Central Bureau of Investigation (hereinafter,“CBI”) and FIR No. 12/2022 was re-registered as C.R. No.RC0292022A0011 of 2022 under Section 7 of the Prevention ofCorruption Act, 1988. The FIR records that Respondent No. 1 evadedarrest by the ACB team and was still at large at the time of re-registrationBof the FIR.

9. Thereafter, notice under Section 41A, Code of CriminalProcedure (hereinafter, “CrPC”) was issued to Respondent No. 1 callingupon him to appear before the CBI but Respondent No. 1 failed to respond.COn 17[th] October, 2022, Respondent No. 1 wrote letter to theInvestigating Officer that he had suffered severe anxiety & depressiondue to the allegations levelled against him and had, thus, gone to hishome state of Rajasthan for medical treatment. He sought four days’time to join the investigation.

D10. During investigation Smit Thakkar, owner of Dhara Angadiafirm, informed the authorities that the illegal gratification was depositedin the account of one Malav Ajitbhai Mehta. It is also claimed that priorto the deposit of the amount, Malav Mehta informed Smit Thakkar thatRs. 30 lakhs would be deposited in the account and would have to betransferred to another person on the same day.E

11. Another notice under Section 41A was issued to RespondentNo. 1 and again, he failed to appear before the CBI. On 26[th] October,2022, Respondent No. 1 again sought one week’s time to appear beforethe Investigating Officer vide communication sent from the email IDof Blue Heaven Hotel, Jaipur. Subsequently, some more Section 41AFnotices were issued to Respondent No. 1, to which he sought more timeto join the investigation on various grounds. He simultaneously preferredan application for grant of anticipatory bail.

12. By an order dated 3[rd] November, 2022, the City Civil & SessionsGCourt at Ahmedabad rejected Respondent No. 1’s application foranticipatory bail. The Special Judge - CBI Court No. 3 observed thatRespondent No. 1 instead of cooperating with the investigating agency,had absconded and got himself admitted in hospital in Rajasthan toevade the process of law. Some of the observations made by the SpecialJudge, CBI Court, are to the following effect:H

“Thus, the ground of ill health pleaded by the Learned Advocatefor the applicant would hold no ground as this Court is of candidopinion that the applicant instead of cooperating with theInvestigating Agency had absconded and had got himself admittedin hospital at his native in Rajasthan with view to evade theprocess of law.

In view of the aforesaid facts and circumstances, this Court is ofa candid opinion that custodial interrogation of the present applicantis must to reach to unearth the larger conspiracy. It is necessaryto unveil the modus operandi adopted by the applicant incommitting the larger conspiracy and without interrogation, it wouldbe impossible to collect the relevant evidence resulting intoincomplete investigation. It is also crystal clear that the applicantwith view to avoid arrest has filed the present application andtherefore, instead of cooperating in the investigation have tried tothwart the ·same and thus, it can be said that the applicant is notcooperating in the investigation.

This Court also cannot lose sight of the fact that investigation inthe matter is still under progress and releasing the applicant at thispremature stage would pave way for the applicant to influencethe investigation, hamper the witnesses and tamper the evidence.”

13. The Court eventually held that custodial interrogation ofRespondent No. 1 was necessary to reach the root of the matter.

14. Aggrieved by the order of the Special Judge, CBI Court,Respondent No. 1 applied for anticipatory bail before the High Court ofGujarat. Meanwhile, on 22[nd] November, 2022, the Court of Special CBIJudge issued non-bailable warrant against Respondent No. 1.

15. The High Court, vide impugned order dated 19[th] December,2022, granted anticipatory bail to Respondent No. 1. The High Courtobserved that there is doubt regarding the acceptance of illegalgratification, as it was deposited in the account of Vardhman in DharaAngadia firm and there is no evidence with respect to acceptance of theamount by Respondent No. 1. The reasons on the basis of which theHigh Court proceeded to grant anticipatory bail are recorded in paragraph12 of its order, which states as follows:

A“12. This Court has considered following aspects;

(i) The FIR is registered on 12.10.2022 for the offence whichis alleged to have taken place on 04.10.2022.

(ii) Learned APP under instructions of IO is unable to bring onrecord any special circumstances against the applicant.

(iii) The role attributed to the applicant- accused;

(iv) That the applicant is Additional Income Tax Commissionerand no any other criminal antecedents against him;

(v) There is creating serious doubt about demand andCacceptance of the amount;

(vi) There is no discovery or recovery from the applicant;”

16. The High Court further directed that despite grant ofanticipatory bail, CBI could apply for police remand of Respondent No.D1 and that if the same was granted by the competent Magistrate,Respondent No. 1 would be set free immediately upon completion of thepolice remand. The relevant part of the impugned order to this effectreads as under:

“16. Despite this order, it would be open for the InvestigatingEAgency to apply to the competent Magistrate, for police remandof the applicant. The applicant shall remain present before thelearned Magistrate on the first date of hearing of such applicationand on all subsequent occasions, as may be directed by the learnedMagistrate. This would be sufficient to treat the accused in thejudicial custody for the purpose of entertaining application of theFprosecution for police remand. This is, however, without prejudiceto the right of the accused to seek stay against an order of remand,if, ultimately, granted and the power of the learned Magistrate toconsider such request in accordance with law. It is clarified thatthe applicant even if, remanded to the police custody, uponGcompletion of such period of police remand, shall be set freeimmediately, subject to other conditions of this anticipatory bailorder. At the trial, the Trial Court shall not be influenced by theprima facie observations made by this Court while enlarging theapplicant on bail. Rule is made absolute. Direct service ispermitted.”

17. Following the High Court’s directions, Respondent No. 1 joinedthe investigation and appeared on three days but is stated to have notproduced his mobile phone(s) though he was asked to do so repeatedly.The CBI, then, applied for police remand of Respondent No. 1 and, on30[th] December, 2022, the Special Judge, CBI Court No. 3 partly allowedthe said application. The Court, upon perusal of the case diary, observedthat the allegations against Respondent No. 1 seem well-founded andthat remand is necessary for the purpose of investigation to collect themissing link of evidence and to unearth the larger conspiracy. Theapplication was allowed in the following terms:

“The Accused Mr. Santosh Kumar Karnani is directed to appearand surrender himself to the custody of Investigating Officer, CBI/ACB/ Gandhinagar from 10.00 am to 7.00 pm on dated 31/12/2022, 01/01/2023, 02/01/2023 and on 03/01/2023, in connectionwith RC-0292022A0011 GNR. It is further directed that accusedshall be set free at 7.00 pm on respective dates.

Further as per the direction of Honourable Gujarat High Court,upon completion of aforesaid period of remand, the accused beset free upon expiry of remand period and report be submitted tothis Court along with copies of medical examination paper/Certificate. The case diary be handed back to the InvestigatingOfficer.

The accused is hereby directed to give full cooperation toInvestigating officer to carry out proper investigation of this case.

The Investigating Officer is hereby directed to strictly adhere tothe guidelines laid down by the Hon’ble Supreme Court of Indiain case of D.K. Basu vs. State of W.B. reported in AIR 1997SC 610 and Honourable Gujarat High Court, while the accusedis in custody and refrain from any custodial ill-treatment ortorture”

18. CBI, thereafter, preferred an application for suspension of theaforesaid order before Special CBI Court on the ground that they wishto challenge it before the High Court of Gujarat. Hence, Special Judge,CBI Court No. 3 stayed operation of its order till 7[th] January, 2023. Thiswas later extended by the Court till the final disposal of the SpecialLeave Petition (Crl.) No. 295 of 2023.

ASUBMISSIONS

19. Assailing the impugned order granting anticipatory bail toRespondent No. 1, Mr. Tushar Mehta, learned Solicitor General of Indiaon behalf of the CBI made the following submissions:

i.Considering the gravity and seriousness of the offence andBthe position held by Respondent No. 1, the High Court erredin exercising its discretionary jurisdiction under Section 438of the CrPC;

ii.The High Court did not appreciate the material collectedagainst Respondent No. 1 which establishes clear demandC& acceptance of bribe by him in view of his voice recordingsseeking an amount of Rs. 30 lakhs from the complainantand acknowledging payment thereof. The relevant voicerecordings have been analysed and the voices have beenidentified to be those of Respondent No. 1 and theDcomplainant;

iii.The High Court grossly erred in observing that the FIRwas registered after long delay on 12[th] October, 2022.On that day, the CBI had only re-registered FIR No. 12/2022 which was initially registered by ACB Police Stationon 4[th] October, 2022.E

iv.Respondent No. 1’s name was included in the ‘Agreed List’in respect of Group officers of the Income TaxDepartment for the year 2015 and thus, his service recordis not clean;

Fv.Respondent No. 1 evaded arrest when the ACB team raidedhis office after he had acknowledged the payment of thebribe money over WhatsApp call. Respondent No. 1 &his colleagues used criminal force to deter the ACB teamfrom effecting arrest and collecting material evidence. Whiledoing so, Respondent No. 1 handed over his mobile phone,Gwhich is crucial piece of evidence, to his colleague toensure that the same was not seized by the investigatingagency. This has been recorded in the CCTV cameras ofthe office;

vi.The audio recordings and video footage have been examinedHby the Directorate of Forensic Science, Gujarat certifying

their genuineness. The report concludes that there are nosigns of alteration in the same;

vii.Respondent No. 1 falsely pleaded that he had taken casualleave from the competent authority and misled theinvestigating agency by sending reply to the notice issuedunder Section 41A, CrPC through the email ID of BlueBHeaven Hotel, Jaipur. Upon investigation, it was found thatRespondent No. 1 had never stayed at that hotel;

viii.During investigation, reliable evidence has come on recordto show that other Income Tax officials were hands in glovewith Respondent No. 1, which is also evident from the activerole played by some officials in helping Respondent No.1to avoid arrest by the ACB on 4[th] October, 2022. Custodialinterrogation is highly necessary to ascertain the deeperplot at play and to examine the involvement of other IncomeTax officials;

ix.Respondent No. 1 appeared before the CBI after theprotection granted by the High Court but did not handoverhis mobile handsets which are crucial piece of evidenceand is, thus, not cooperating with the investigation. Custodialinterrogation is necessary in this case to take theinvestigation to its logical conclusion;

x.Reliance has been placed on the judgment of this Court inState Rep. By The CBI v. Anil Sharma[1] to argue that“custodial interrogation is qualitatively more elicitation-oriented than questioning suspect who is well ensconcedwith favourable order under Section 438 of the Code. Ina case like this, effective interrogation of suspected personis of tremendous advantage in disinterring many usefulinformation and also materials which would have beenconcealed. Success in such interrogation would elude if thesuspected person knows that he is well protected andinsulated by pre-arrest bail order during the time he isinterrogated. Very often interrogation in such conditionwould reduce to mere ritual.”;

Axi.Reliance has also been placed on the decisions in PremShankar Prasad v. State of Bihar[2], State of MadhyaPradesh v. Pradeep Sharma[3] and Lavesh v. State (NCTof Delhi)[4] to urge that anticipatory bail should not be grantedto an absconder;

Bxii.The High Court passed an unusual order directing that theinvestigating agency would be at liberty to apply to thecompetent Magistrate for police remand of Respondent No.1 and in the same breath, prevented custodial interrogationof the main suspect.

C20. Supporting the above submissions on behalf of the CBI, Mr.Maninder Singh, learned Senior Counsel appearing for the complainant,made following additions:

i.The High Court ignored the observations & findings of thelearned Sessions Court recorded while rejectingDRespondent No. 1’s application for anticipatory bail. Thesaid Court had gone through the material on record, includingthe case papers, and then only observed that custodialinterrogation was necessary to enable the investigationagency to reach the core of the matter.

Eii.The High Court failed to appreciate the unequivocal demandof Rs. 30 lakhs made by Respondent No. 1, which wasrecorded by the complainant on Digital Voice Recorderand acceptance of that bribe money through Dhara AngadiaFirm.

F21. On the other hand, Mr. Mukul Rohatgi and Mr. Shyam Divan,learned Senior Counsels strongly refuted the insinuations made againstRespondent No. 1 and defended the High Court order granting pre-arrest bail with the following submissions:

i.The allegations levelled against Respondent No. 1 are falseand concocted. Respondent No. 1 never raised any demandGfor gratification as alleged by the complainant. RespondentNo. 1 had no connection with the search and seizure action

2 2021 SCC OnLine SC 955.3 (2014) 2 SCC 171.H4 (2012) 8 SCC 730.

taken against the complainant’s company in September 2021or with the preparation of the appraisal report. RespondentNo. 1 is not the Assessing Officer of the complainant’scase and the matter is entrusted to some other officer;

ii.There is no evidence of demand or acceptance of bribewhich are sine qua non for establishing the offence. Intrap cases under Section 7 of Prevention of Corruption Act,the conversation of demand is to be recorded by thecomplainant in the presence of independent panchas andthe trap laying Officer has to ensure that there is nopossibility of any tampering. In the present case, the voicerecording of the alleged demand has been done withoutany police involvement and thus, holds no evidentiary value.The alleged deposit of the amount was made in an Angadiafirm which is unknown to Respondent No. 1 and cannot betermed as acceptance of bribe. Respondent No. 1 has noconnection with Malav Ajitbhai Mehta, who is stated to bethe owner of the account wherein the amount was depositedand Respondent No. 1 was not present at the site of theAngadia firm;

iii.The complainant has animosity with Respondent No. 1due to the past survey action taken for the financial year2018-19 against his company which led to disclosure ofadditional income of Rs. 50 crores. This fact has not beendisclosed in the FIR. The complainant has falselyimplicated Respondent No. 1 due to his apprehensions thatRespondent No. 1 will impose huge tax liability on him &his company;

iv.A perusal of FIR No. 12/2022 shows that it was registeredon 4[th] October, 2022 at 9:30 pm while the acts of the allegeddemand, laying down of the trap, deposit of money at DharaAngadia and the raid at Respondent No. 1’s office occurredon 3[rd] October, 2022 and during the daytime on 4[th] October,2022. Additionally, there is no record of the complainantmeeting police officials prior to the registration of FIR. Thedelay in registration of FIR which is more than 24 hoursafter the alleged demand of illegal gratification, has not beenexplained;

Av.Only Respondent No. 1 is sought to be arrested by the CBI.The owner or employees of Dhara Angadia firm have notbeen arrested and the High Court order granting anticipatorybail to Malav Mehta has not been challenged by the CBIbefore this Court;

Bvi.CBI has misused the provisions of Section 41A of the CrPCto arrest Respondent No. 1. bare perusal of the provisionand the guidelines laid down by this Court in Arnesh Kumarv. State of Bihar[5] suggest that notice under Section 41Awould be issued only when the investigating agency doesnot require the custody of person. In the present case,Cnotices under Section 41A were issued post the raidconducted by ACB team at Respondent No. 1’s office bywhich time they had decided to arrest him;

vii.As per settled law of this Court, Respondent No. 1 cannotbe termed as an absconder as he was availing his legalDremedies. However, despite this, the investigating agencypublished notices in the media and pasted ‘Wanted’ posterswith Respondent No. 1’s name, photo and designation atvarious places, which indicates mala fides of theinvestigation agency;

Eviii.The bona fides of Respondent No. 1 are evident from hisconduct post the grant of anticipatory bail. As directed bythe High Court, Respondent No. 1 appeared before the CBIon at least four occasions, as and when called. RespondentNo. 1 has also voluntarily given his voice samples. GivenFthe fact that Respondent No. 1 is cooperating with theinvestigation, custodial interrogation is not required. The HighCourt erred in directing that, despite the grant of anticipatorybail, the investigating agency would be at liberty to apply tothe competent Magistrate for police remand. This part ofthe order was to the disadvantage of Respondent No. 1 butGhe abided by the same and appeared before the Court whenthe CBI applied for police remand;

ix.Respondent No. 1 has an impeccable service record as isevident from his posting to one of the most sensitive

H5 (2014) 8 SCC 273.

assignments in the department. Such postings are only givento senior officers with clean images. His integrity is beyonddoubt and he has an unblemished past record. There is nocase of disproportionate assets against Respondent No. 1;

x.Section 17A of the Prevention of Corruption Act, 1988 asamended in 2018, provides for bar on any enquiry, inquiryor investigation by police officer into an alleged offenceby public servant, where the alleged offence relates toany decision taken or recommendation made in exercise ofofficial functions or duties, without the previous approvalof the competent authority. In this case, the investigatingagency has not complied with the mandatory procedure ofSection 17A and has initiated investigation on the complaintwithout any prior approval of the Competent Authority. Thebreach of these mandatory conditions vitiates theproceedings initiated against Respondent No. 1;

xi.In these circumstances, the High Court has rightly grantedanticipatory bail to Respondent No. 1 and has providedadequate reasoning for the same in paragraph 12 of theimpugned order;

xii.Cancellation of bail has to be dealt with on completelydifferent footing in comparison to refusal of bail and ‘cogentand overwhelming’ reasons are necessary to cancel bailonce granted. Reliance has been placed in this regard onDolat Ram v. State of Haryana[6] wherein two-judgeBench of this Court held that:

“4. Rejection of bail in non-bailable case at the initialstage and the cancellation of bail so granted, have to beconsidered and dealt with on different basis. Very cogentand overwhelming circumstances are necessary for anorder directing the cancellation of the bail, alreadygranted. Generally speaking, the grounds for cancellationof bail, broadly (illustrative and not exhaustive) are:interference or attempt to interfere with the due courseof administration of justice or evasion or attempt to evadethe due course of justice or abuse of the concession

Agranted to the accused in any manner. The satisfactionof the court, on the basis of material placed on the recordof the possibility of the accused absconding is yet anotherreason justifying the cancellation of bail. However, bailonce granted should not be cancelled in mechanicalmanner without considering whether any superveningBcircumstances have rendered it no longer conducive toa fair trial to allow the accused to retain his freedom byenjoying the concession of bail during the trial.”

xiii.No supervening circumstances for cancellation of bail havebeen pointed out by the CBI or the complainant.C

ANALYSIS

22. The law on grant of anticipatory bail has been summed-up bythis Court in Siddharam Satlingappa Mhetre v. State of Maharashtra[7],after due deliberation on the parameters evolved by the Constitution BenchDin Gurbaksh Singh Sibbia v. State of Punjab[8]. This Court held thus:

“112. The following factors and parameters can be taken intoconsideration while dealing with anticipatory bail:

(i) The nature and gravity of the accusation and the exact role ofthe accused must be properly comprehended before arrest is made;

(ii) The antecedents of the applicant including the fact as towhether the accused has previously undergone imprisonment onconviction by court in respect of any cognizable offence;

(iii) The possibility of the applicant to flee from justice;

F(iv) The possibility of the accused’s likelihood to repeat similar orother offences;

(v) Where the accusations have been made only with the objectof injuring or humiliating the applicant by arresting him or her;

(vi) Impact of grant of anticipatory bail particularly in cases ofGlarge magnitude affecting very large number of people;

(vii) The courts must evaluate the entire available material againstthe accused very carefully. The court must also clearly comprehend

7 (2011) 1 SCC 694.H8 (1980) 2 SCC 565.

the exact role of the accused in the case. The cases in which theaccused is implicated with the help of Sections 34 and 149 of thePenal Code, 1860 the court should consider with even greater careand caution because over-implication in the cases is matter ofcommon knowledge and concern;

(viii) While considering the prayer for grant of anticipatory bail, abalance has to be struck between two factors, namely, no prejudiceshould be caused to the free, fair and full investigation and thereshould be prevention of harassment, humiliation and unjustifieddetention of the accused;

(ix) The court to consider reasonable apprehension of tamperingof the witness or apprehension of threat to the complainant;

(x) Frivolity in prosecution should always be considered and it isonly the element of genuineness that shall have to be consideredin the matter of grant of bail and in the event of there being somedoubt as to the genuineness of the prosecution, in the normal courseof events, the accused is entitled to an order of bail.”

23. In Sushila Aggarwal v. State (NCT of Delhi)[9], theConstitution Bench reiterated that while deciding applications foranticipatory bail, courts should be guided by factors like the nature andgravity of the offences, the role attributed to the applicant, and the factsof the case.

24. The time-tested principles are that no straitjacket formula canbe applied for grant or refusal of anticipatory bail. The judicial discretionof the Court shall be guided by various relevant factors and largely it willdepend upon the facts and circumstances of each case. The Court mustdraw delicate balance between liberty of an individual as guaranteedunder Article 21 of the Constitution and the need for fair and freeinvestigation, which must be taken to its logical conclusion. Arrest hasdevastating and irreversible social stigma, humiliation, insult, mental painand other fearful consequences. Regardless thereto, when the Court, onconsideration of material information gathered by the InvestigatingAgency, is prima facie satisfied that there is something more than amere needle of suspicion against the accused, it cannot jeopardise theinvestigation, more so when the allegations are grave in nature.

A25. Keeping these principles in mind, we proceed to evaluate therival submissions. At the outset, it is to be noted that the High Court fellin factual error in observing that FIR was registered on 12[th] October,2022 for the offence alleged to have taken place on 3[rd] and 4[th] October,2022. The FIR was registered by the ACB against Respondent No. 1 on4[th] October, 2022 under Sections 7, 13(1) and 13(2) of the Prevention ofBCorruption Act, 1988 and was re-registered by CBI on 12[th] October,2022.

26. Further, the primary ground assigned by the High Court togrant anticipatory bail to Respondent No. 1 is that there was doubt as tothe acceptance of the bribe amount since records of Dhara AngadiaCfirm had not been produced establishing any link between RespondentNo. 1 & the firm.

27. The CBI has produced the case diary which contains thestatement made by Smit Thakkar, who handles Dhara Angadia firm. Hehas clearly stated that Malav Mehta was the owner of Vardhman accountDand had informed him that 30 lakhs rupees would be deposited in hisaccount on 4[th] October, 2022, which in turn had to be sent to someoneelse. The purported recording of conversation between the complainantand Respondent No. 1 wherein Respondent No. 1 thanked thecomplainant, after the deposit of amount in the Vardhman account, is aEreasonable link to connect Respondent No. 1 with the deposit of illegalgratification in Dhara Angadia firm, thereby prima facie showingacceptance thereof.

28. Regarding the alleged discrepancy of delay of more than 24hours in the registration of FIR, we find from the material producedFbefore us that the complainant started narrating the complaint at 07:15hours and it ended at 08:00 hours on 4[th] October, 2022. The panchnama,annexed in the case diary, provides details of the trap laid by the ACBand lists all the activities of the ACB team on that day, thereby dispellingany doubts of mala fides on the part of the investigating agencies.

G29. We have also gone through the statement of Mr. Vivek Johri,Assistant Commissioner of Income Tax who has stated that RespondentNo. 1 handed over his mobile phone to him before leaving the office,which Mr. Johri later threw away.

30. The manner in which Respondent No. 1 forcefully evaded hisarrest with the help of his colleagues and got the evidence destroyed, isH

strong circumstance to indicate his complicity at this stage though aclear picture would emerge only on completion of investigation.

31. The nature and gravity of the alleged offence should havebeen kept in mind by the High Court. Corruption poses serious threatto our society and must be dealt with iron hands. It not only leads toabysmal loss to the public exchequer but also tramples good governance.The common man stands deprived of the benefits percolating under socialwelfare schemes and is the worst hit. It is aptly said, “Corruption is atree whose branches are of an unmeasurable length; they spreadeverywhere; and the dew that drops from thence, Hath infected somechairs and stools of authority.” Hence, the need to be extra conscious.

32. From the material placed on record, it seems that prima facie,the allegations against Respondent No. 1 cannot be brushed aside lightlyat this stage. There appears to be well-organised syndicate comprisingofficers and officials of the Income Tax Department, businessmen andHawala traders, who are in tandem. Such nexus needs to be unearthedthrough an unimpaired and unobstructed investigation.

33. The contention that prior approval of investigation, as mandatedunder Section 17A of Prevention of Corruption Act, has not been obtainedand thus, the proceedings initiated against Respondent No. 1 stand vitiated,has no legal or factual basis. Section 17A merely contemplates that policeofficers shall not conduct any enquiry, inquiry or investigation into anyoffence alleged to have been committed by public servant where thealleged offence is relatable to any recommendation made or decisiontaken in discharge of official functions or duties, without the previousapproval of the competent authority. The first proviso to the sectionstates that such approval is not necessary in cases involving arrest ofthe person on the spot on the charges of accepting undue advantage.

34. As may be seen, the first proviso to Section 17A refers tocases wherein public servant is charged with acceptance of an undueadvantage or attempt thereof. prior approval or sanction to investigatesuch an officer in trap case is likely to defeat the very purpose of trapand the investigation, which is not the underlying intention of thelegislature. The investigation against Respondent No. 1, being an accusedof demanding bribe, did not require any previous approval of the CentralGovernment. That apart, the accusation against Respondent No. 1 doesnot revolve around any recommendations made or decisions taken byhim in his quasi-judicial or administrative capacity.

A35. It is true that cancellation of bail must be done only for cogentand overwhelming reasons. Nevertheless, setting aside an unjustifiedorder granting bail is distinct from cancellation of bail. This Court wouldnot, invariably intervene into the judicial discretion exercised by the HighCourt while granting bail to an accused. All that to be ensured is that theHigh Court exercises its discretion judiciously, cautiously and strictly inBconformity with the basic principles laid down by this Court from time totime in series of decisions.

36. The Constitution Bench in Sushila Aggarwal (supra)observed that:

“92.11. The correctness of an order granting bail, can be consideredby the appellate or superior court at the behest of the State orinvestigating agency, and set aside on the ground that the courtgranting it did not consider material facts or crucial circumstances.”

SUMMATIOND

37. Having considered the nature of allegations, material on recordand the settled legal principles on grant of anticipatory bail, we are of theview that, howsoever hard or harsh it may be, the High Court ought tohave refrained itself from extending protection against arrest toERespondent No. 1 in exercise of its discretionary jurisdiction under Section438 of the CrPC.

38. Assuming Respondent No. 1 had some valid apprehensionsthat the actions of ACB (State Police) were actuated with extraneousreasons, he can no longer say so once the investigation has beenFtransferred to CBI. We do not find any allegation of personal vendetta,victimisation, bias or ulterior motive against the Central Agency. In anycase, CBI is expected to carry out free, fair and dispassionateinvestigation with faithful observance to the rights of an accused, who issubjected to custodial interrogation.

G39. The appeals are, accordingly, allowed. The impugned judgmentand order of the High Court dated 19[th] December, 2022 is set aside andthe anticipatory bail application of Respondent No. 1 is dismissed. As aconsequence thereto, the order dated 30[th] December, 2022 passed bythe Special Judge, CBI Court No. 3 partly allowing CBI’s application forremand is also set aside.H

40. We clarify that this Court has expressed only prima facieopinion on the merits of the allegations for the limited purpose to refuseor grant pre-arrest bail. If Respondent No. 1 moves an application forgrant of regular bail before an appropriate Court, the same shall beconsidered on its own merits and in accordance with law, uninfluencedby the observations made hereinabove.

41. The appeals are disposed of in the above terms.

42. Pending application(s), if any, stand disposed of as well.

Ankit Gyan(Assisted by : Mahendra Yadav, LCRA)

Appeals disposed of.