Conclusion: Bail was allowed to accused person of committing fraud, misappropriation of money to the tune of Rs.1800 crores as investigation had not been completed despite the filing of the complaint on 30.10.2021.
Held: CBI had registered case against M/s Jay Polychem India Limited and its Directors with the allegations of committing of fraud and misappropriation of money to the tune of Rs.1800 crores in respect of loan taken from consortium of 12 banks led by SBI also with the allegations of creating transactions with fictitious entities, fabricating and manipulating financial statements and stock statements and siphoning off the money on personal and family expenses etc. In that case while the investigation was going on by the CBI, Enforcement Directorate registered the ECIR in March 2021. Later search proceedings were conducted by the ED on 02.09.2021. Accused/applicants were called to join the investigation on 03.09.2021 and on the same day they were arrested by the ED. Accused/applicants remained in custody of ED and thereafter remanded to judicial custody on 15.09.2021 which stood extended from time to time. In the present application it was stated that in the remand extension application it was stated that ED has filed the complaint on 30.10.2021, however in the same application in para no.2 it was also mentioned that investigation in the matter was still continuing and require gathering of additional evidence, examination and confrontation of voluminous data to various persons, who had been summoned during the investigation and investigation was still in progress. It was in the application that upon knowledge of above said facts, present application was being moved on the ground that since ED has admitted that its investigation was still continuing, despite filing of complaint on 30.11.2021. Therefore the said complaint was for incomplete investigation and accused were entitled for statutory bail u/s 167(2) Cr.P.C. as the investigation in the matter had not completed. The Special Judge held that though ED was empowered to carry further investigation but accused persons to my mind were certainly entitled for bail in this case u/s 167(2) Cr.P.C. as by own assertion of ED, investigation had not been completed despite the filing of the complaint on 30.10.2021. Therefore, accused persons/applicants were ordered to be admitted on bail upon furnishing of bail bond for sum of Rs.1,00,000/- with one surety of equal amount to the satisfaction of CMM/ACMM on duty as well as subject to various conditions.
FULL TEXT OF THE JUDGMENT/ORDER of DELHI HIGH COURT
1. This order will decide bail application jointly moved by accused Sandeep Singh Madhok and Satender Singh Madhok, filed u/s 167(2) Cr.P.C. seeking ‘default’ or ‘Statutory bail’ in ECIR No.DLZOI/15/2021, wherein accused were arrested on 03.09.2021.
2. Precise facts leading to filing of present application are that CBI had registered RC No.0742020E0008 on 01.12.2020 u/s 420, 467, 471 IPC as well as u/s 13(2), 13(1)(d) of P.C. Act against M/s Jay Polychem India Limited and its Directors with the allegations of committing of fraud and misappropriation of money to the tune of Rs.1800 crores in respect of loan taken from consortium of 12 banks led by SBI also with the allegations of creating transactions with fictitious entities, fabricating and manipulating financial statements and stock statements and siphoning off the money on personal and family expenses etc. In that case while the investigation was going on by the CBI, Enforcement Directorate registered the ECIR in March 2021. Later search proceedings were conducted by the ED on 02.09.2021. Accused/applicants were called to join the investigation on 03.09.2021 and on the same day they were arrested by the ED. Accused/applicants remained in custody of ED and thereafter remanded to judicial custody on 15.09.2021 which stood extended from time to time.
3. In the present application it is stated that in the remand extension application dated 01.11.2021 it is stated that ED has filed the complaint on 30.10.2021, however in the same application in para no.2 it is also mentioned that investigation in the matter is still continuing and require gathering of additional evidence, examination and confrontation of voluminous data to various persons, who have been summoned during the investigation and investigation is still in progress. It is in the application that upon knowledge of above said facts, present application is being moved on the ground that since ED has admitted that its investigation is still continuing, despite filing of complaint on 30.11.2021. Therefore the said complaint is for incomplete investigation and accused are entitled for statutory bail u/s 167(2) Cr.P.C. as the investigation in the matter has not completed.
4. It appears from the record that the present application was moved on 01.11.2021 before the ld. Predecessor of this court.
5. Reply to this application was filed by ED stating therein that accused/applicants are not entitled for default bail. It is stated that accused were arrested on 03.09.2021 and Directorate had filed the complaint on 30.10.2021 along with the original relied upon documents, within 60 days of the arrest of the accused/applicants as per the provision of Section 167(2)(a) (ii) Cr.P.C. It is stated that investigation in respect of applicants is complete and on the basis of material gathered, offence of money laundering is established. It is stated that further investigation is being undertaken in terms of governing statutes i.e. Section 44 Explanation (ii) of Prevention of Money Laundering Act. It is stated therefore that no case is made out for default bail merely because investigation is pending.
6. Written arguments on behalf of accused/ applicants were filed along with copy of judgments relied upon. Written arguments have also been filed by ED. During the pendency of the present application as per the orders from Principal District & Sessions Judgecum Special Judge (PC Act), RADC this matter transferred to this court.
7. I have heard Sh.N. Hariharan, ld. Senior counsel for the accused/applicants as well as Sh.N.K. Matta, ld. Special Public Prosecutor for ED.
8. It is argued by ld. Senior counsel for accused/ applicants that ED in its application dated01.11.2021 while seeking extension of judicial remand of accused/applicants has mentioned at para no.2 that it has filed the complaint on 30.10.2021 but since the proceeds of crime siphoned off is to the tune of Rs.1800 crores, the entire amount is yet to be recovered and investigation in the matter is still continuing. He further refers to para 5 of the application wherein it is stated that judicial custody of the accused/applicants is required during the investigation.
9. It is submitted by ld. Senior counsel that even if a complaint filed by the ED on 30.10.2021 but said complaint would not be considered to be complaint in the eyes of law when investigation has not been completed. He further submits that as per the provisions of Cr.P.C. report of investigation is to be filed u/s 173(2) Cr.P.C. as soon as the investigation is complete. Ld. Senior counsel submits that Section 173(8) Cr.P.C. though empowers the investigating agency to carry out further investigation but same to be carried out only upon obtaining of any further evidence, after filing of the report u/s 173(2) Cr.P.C. Ld. Senior counsel for the accused/applicants submits that provision of Section 44 Explanation (ii) of PMLA are pari materia to Section 173(8) Cr.P.C. He submits that therefore even in matter being investigated by the ED under PMLA, since the punishment for the offence u/s 3 of PMLA is upto 7 years, therefore investigation must be completed within 60 days from the date of the arrest of the accused. He submits that section 44(ii) of PMLA can be invoked only when the investigation is complete and further investigation is required, upon receiving of any new or further evidence.
10. Reliance has been placed on the observations of Madurai Bench of Madras High Court in PMC Mercantile Private Limited vs. State and others (Criminal RC No.231/2013 decided on 31.07.2014). He further relied upon the judgment of Rajasthan High Court in Kamlesh Chaudhary vs. State of Rajasthan 2020 (3) RLW 2507. He submits that the said judgment was affirmed by Hon’ble Supreme court on 05.01.2021. Ld. Senior counsel has also placed reliance on judgment of Kerala High Court in S.M. Purtado and others vs. Dy. SP CBI and others 1996 Crl.L.J. 3406. Ld. Senior counsel for the accused/applicants also relied upon judgment of Delhi High Court in Tundea Gabja vs. CBI (2007) CCR 238 Del. beside the judgments of Supreme Court in Fakre Alam vs. State of UP (Crl. Appeal No.319/2021 decided on 15.03.2021), M. Ravindran vs. Intelligence Officer DRI (2021) 2 SCC 485.
11. On the other hand Sh.N.K. Matta, ld. Special Prosecutor for ED submitted that Directorate has already filed the complaint regarding commission of offence u/s 3 or PMLA before expiry of 60 days from the arrest of the accused/applicants as such they are not entitled for default bail. Ld. SPP for ED while referring to the provision of Section 71 of PMLA submits that provisions of this Act have overriding effect to any provisions of other law if it is inconsistent with the provisions of PMLA. Further Section 65 makes it clear that provisions of Cr.P.C. would apply to the proceedings of money laundering Act in so far as they are not inconsistent to provisions of PMLA. He submits that further investigation and filing of subsequent complaint in matter of PMLA would be governed by Section 44 Explanation (ii) and not by Section 173(8) of Cr.P.C.
12. Ld. SPP for ED further submits that section 44 Explanation (ii) is specific provision enacted by the legislature in its wisdom knowing well that investigation of offence of money laundering involve tracing of voluminous evidence of padding, layering, fabrication of documents and other material for laundering the money. Therefore the investigation cannot be completed within any time line. Therefore he submits that Explanation (ii) of section 44 enables the Directorate to file further complaint even after filing of the complaint for carrying out the further investigation.
13. Ld. SPP for ED submits that the perusal of the complaint filed by the ED on 30.10.2021 would make it clear that it has been mentioned in para 6.6 of the complaint that ED has collected the evidence of laundering of proceeds of crime, to the tune of Rs.611.23 cr. He submits that investigation for offence of laundering to that extent is complete and therefore it cannot be stated that investigation is incomplete. He submits that it has been made clear in para 6.7 that further investigation is still in progress and remaining proceeds of crime is being traced. Ld. SPP for ED has relied upon the judgment of Apex Court in Abdul Aziz PV vs. NIA (2014) 16 SCC 453, Suresh Kumar Dhikam Chand Jain vs. State of Maharashtra and others (2013) 3 SCC 77, CBI vs. R.S. Pai and others (2002) SCC 82, Uday Mohan Lal Acharya vs. State of Maharashtra (2001) 5 SCC 453, Suresh Mahata vs. State of West Bengal (1997) SCC OnLine Cal. 23, Narender Kumar Amin vs. CBI (2015) 3 SCC 417.
14. Having heard the rival submissions at bar and having gone through the judicial record. First of all it be noted that in common legal parlance right to bail under the proviso to Section 167(2) of Cr.P.C. is commonly referred as default bail or compulsive bail, as it is granted on account of default of investigating agency in not completing the investigation within the prescribed time, irrespective of merits of the case. Plain reading of the provisions of Section 167 of Cr.P.C. would show that once the maximum period provided for investigation prescribed under first proviso (a) to section 167(2) Cr.P.C., is over and no charge sheet is filed, accused becomes entitled to be released on bail. Right to seek bail u/s 167(2) Cr.P.C. has been considered to be a statutory right and even taken as a fundamental right, which flows from Article 21 of the Constitution of India. Since the right for default bail accrues only upon failure of the investigating agency to file the charge sheet, therefore moot question for consideration would be as to when in the law it is considered that investigation is complete and what is the effect of Section 173(8) of Cr.P.C.
15. In the facts of the present case admittedly before expiry of 60 days since the date accused remanded to judicial custody, Directorate has filed the complaint in this case on 30.10.2021. The interesting point of law involved in the present application is that once the ED has mentioned in para 6.6 of its complaint as well as in remanded extension application that its investigation is still going on, whether complaint filed would make out the investigation to be completed for money laundering and effect of section 44 Explanation (ii) of PMLA.
16. So the question for consideration is whether the filing of the complaint by ED and also reserving the right to carry on further investigation and to file subsequent complaint as empowered u/s 44 Explanation (ii) of PML Act, would tantamount to incomplete investigation or filing of the complaint would be considered to be complete investigation for offence of money laundering.
17. Generally the investigation of the ED is to be carried out as per the provisions of Cr.P.C. therefore the provisions of Cr.P.C. are the guiding factors. Section 173 (8) has been inserted in Code of Criminal Procedure after its Amendment of 1973 empowering the police to make further investigation in respect of the offence after submission of charge-sheet. Reading the bare provision of Sec. 173 (8) of Code, empowers the investigating agency to carry out ‘further investigation’ if it obtains further evidence, oral or documentary. Section 173(8) has to be read along with section 173(2). Language of bare provision of section 173(8) of Code makes it clear that further investigation is not prohibited, even after filing of report u/s 173(2), if SHO/IO obtains ‘further evidence’. Therefore this provision appears to have been made to cover those situations where investigating agency has filed report under Sec. 173 (2) of Code, however thereafter some further evidence comes in its notice, then under that provision a supplementary charge-sheet can be submitted on further investigation when fresh evidence is available.
18. Expression ‘further evidence’ used in sub section (8) has been matter of interpretation. There has been view that generally I. O. can conduct ‘further investigation’ if he gets further or new evidence, after filing of charge sheet under sec. 173 (2) of Code. Then there has also been view that it is not necessary that there should be a discovery of new material for lodging an additional charge-sheet in the case. If the very material is misunderstood by the Police Station Officer or IO and if he has received proper light from his superiors, he can certainly file an additional charge-sheet.
19. However, it has been consistent view of Superior Courts that Section 173 (8) empowers investigating agency for further investigation, when once investigation was complete and report in terms of Sec. 173 (2) has been filed. In other words, ‘further investigation’ is not continuation of investigation involving filing of series of different charge sheet/ report at different point of time, without demarcating any line of completion of investigation.
20. There may not be any provision in law empowering Courts of law, to direct investigating agency to complete investigation. Still when section 2 (r) of Cr. P.C. defines the expression “police report” as a report forwarded by a police officer to a magistrate under Section 173 (2) of Cr. P.C. with all the particulars as provided. It means filing of charge sheet under Sec. 173 (2) is considered to be completion of investigation unless obviously, court directs for further investigation or investigating agency itself consider necessary for filing of charge sheet to supplement earlier investigation. Fact remains there is statutory necessity to fix a stage when it is taken that investigation is complete, which in Cr. P. C is when Charge sheet or Report is filed u/s 173 (2) of Code. Such Statutory necessity is also relevant for taking of cognizance of the offence as well as for considering application for ‘statutory bail’ under sec. 167 (2) of Code, in cases where accused is in judicial custody.
21. If section 173 (8) is interpreted in a manner that investigating agency can continue with its investigation, despite filing of charge sheet, the consequence would be there would be no demarcation of any line or stage to take up application filed u/s 167 (2) of Code in those matters where accused is in judicial custody. So, it cannot be intention of legislature that there may not be a stage for court to assume or take that investigation is complete, for taking cognizance of offence or even for deciding any application filed under section 167 (2) of Code.
22. Such view finds support from the observations of Madras High Court in PMC Mercantile Private Limited vs. State (supra) which reads :
“Code of Criminal Procedure contemplates submission of a final report only on completion of the investigation and whatever report that might have been submitted by the Investigating Officer before completion of the investigation will not satisfy the requirements of Section 173 (2) Cr.P.C. and that such report shall be termed incomplete report based on which no cognizance of the offences can be taken by the Judicial Magistrate or the Judge as the case may be. In this regard, this Court wants to make the distinction between an incomplete report followed by a final report and a final report which may be followed by a further final report on further investigation under Section 173 (8) Cr.P.C. In case of a report before completion of the investigation, it shall not be a police report as contemplated under the said provision and taking cognizance of the offences based on such report shall be an error apparent on the face of the record. In case of such incomplete report, the police cannot fall back on Section 173 (8) Cr.P.C. to baptise their continuation of the investigation as a further investigation contemplated under Section 173 (8) Cr.P.C. On the other hand, Section 173 (8) Cr.P.C. comes into picture only after the completion of the investigation and submission of the final report. It presupposes that the Investigating Officer had collected all the materials which had been brought to his notice and submitted the final report based on such materials and that after the filing of such final report, new materials come to his knowledge, whereupon he embarks upon further investigation. On the other hand, for the purpose of denying the statutory right conferred on the accused persons under the proviso to Sub-section 2 of Section 167, the police cannot adopt the practice of filing interim reports or incomplete reports and the Magistrate or the Judge as the case may be, also cannot take cognizance of the offences based on such interim or incomplete reports.”
23. Before I discuss the other judgments relied upon it would be appropriate to also understand the provision of Explanation (ii) to section 44 of PMLA which was added with the said section by way of Amendment through Finance Act of 2019. The said Explanation reads as under :
“the complaint shall be deemed to include any subsequent complaint in respect of further investigation that may be conducted to bring any further evidence, oral or documentary against any accused person in respect of offence, for which complaint has already been filed whether named in original complaint or not.”
24. Such provision appears to be more or less similarly worded as the provision of section 173(8) of Cr.P.C. Reading this provision does not give any other meaning except that even if Directorate has filed the complaint, it is not precluded from carrying out further investigation to bring any further evidence (oral or documentary) against any accused named or not in the earlier complaint. This provision appears to have been made apparently to remove the ambiguity on account of use of word ‘complaint’ in PML Act. The effect of the provision is that like in any criminal case investigated under Cr.P.C., filing of complaint by Directorate does not preclude for carrying out further investigation if it obtains any further evidence. Thus, the import and effect of this provision is also the same as that of section 173(8) of Cr.P.C. Therefore to my mind subsequent complaint can be filed by Directorate only upon completing of investigation and on obtaining any further evidence, on which the investigation could not be done earlier.
25. Ld. SPP for ED has argued strenuously that the nature of offence of money laundering is such that it becomes sometimes not possible to complete the investigation within a time frame and therefore the provision of Explanation (ii) were added to section 44 of the Act which would have any overriding effect than the provision of Section 173(8) of Cr.P.C. in view of section 65 of the Act.
26. No doubt the investigation in the offence of money laundering involves tracing of different evidence of layering, padding, fabrication of documents etc. and this process requires unearthing of evidence and documents, analyzing the same and to ascertain the laundering of the proceeds of crime but once the accused has been arrested the onus lies on the Directorate to complete the investigation within the time frame. If no time frame is fixed and Explanation (ii) added to Section 44 is taken on the face of it, the primary question would arise that even if Directorate can file supplement complaint but what would be the maximum time line within which investigation should be completed if accused is judicial custody and ED takes a plea of non-application of section 167(2) of Cr.P.C. Even in cases investigated by ED there cannot be any uncertainty as to the time line for completion of investigation if accused has been kept in judicial custody. If ED is unable to complete the investigation within a particular time line on account of peculiar nature of the offence, obviously there cannot be insistence for keeping the accused in judicial custody. I am of the view that provision of section 167(2) of Cr.P.C. probably has been meant for a situation like this. Therefore I am of the view that Explanation (ii) attached to section 44 of PMLA cannot be taken to defeat the very purpose of section 167(2) Cr.P.C.
27. In the facts of the present case it is mentioned in para 6.7 of the complaint that further investigation in the matter is still in progress and remaining proceeds of crime amount is being traced. Para 9.2 of the complaint also mentions that complainant craves leave of the court to file further complaints to initiate necessary action as contemplated under PMLA with regard to other accused persons and also against accused Satender Singh Madhok and others, on the outcome of the investigation which is still in progress.
28. Such assertion in the complaint itself shows that investigation is in continuation even after filing of complaint. No doubt complaint mentions collecting of evidence of laundering of money to the tune of Rs.611.23 crores but ED admits that its investigation is still going on for remaining proceeds of crime against the accused/applicants as well as others which simply means that investigation was not complete. No other meaning can be drawn except that the investigation was not complete. This court has no issues with regard to the right of ED to carry out the investigation, but when it comes to question of considering the bail u/s 167(2) Cr.P.C., this court would have to line to understand as to when the investigation is deemed to be completed. On this aspect no specific provision of PMLA has been pointed out to show non-application of section 167(2) Cr.P.C. laying down limits of 60/90 days as per the punishment prescribed for offences, for completing the investigation. Even if the investigation of money laundering involves tedious process of collecting evidence and analyzing the same but if the accused has been kept in judicial custody he to my mind has a right that either investigation qua should complete or be released on bail. In this case ED is not denying that its investigation qua accused/ applicants is also going on.
29. Coming now to the case law. Kerala High Court in S.M. Putado and others vs. Dy. SP CBI (supra) has held that investigation of a case cannot be split up in such a way to file piece meal report. Section 173 Cr.P.C. does not stipulate piece meal investigation and filing of incomplete charge sheet before the court. It contemplates filing of charge sheet/ report after the completion of entire investigation of the case in respect of all offences.
30. Ld. SPP for ED has relied upon judgment of Abdul Aziz PV vs. NIA (supra). That case was involving offences under IPC, Arms Act, Explosive Substances Act as well as under section 18 of UAPA. In that case contention was since the charge sheet has not been filed within maximum period of 180 days, statutory bail us/ 167(2) Cr.P.C. was sought. Trial court and High Court found that the investigation was complete in all aspects and therefore denied application of section 167(2) Cr.P.C. Such findings were even upheld by Hon’ble Supreme Court, holding in para 4 that the report filed int eh court was final report on the facets investigated into by the investigating agency, even requisite sanction required under UAPA and Explosives Substances Act was also obtained. Merely because that certain facets of matter called for further investigation, it was held that it does not deem that such report was not complete or investigation was incomplete.
31. Facts in the above said case were different than the present one, firstly because in this case admittedly ED has not stated that its investigation is complete with regard to the offence of laundering. It only states that evidence of laundering has been collected only for Rs.611 cr but its investigation is still going on for tracing the remaining proceeds of crime. Complaint also mentions that its investigation is also going on qua accused/ applicants beside others. Therefore the above said judgment of Abdul Aziz (supra) cannot be applied as a laying down of a legal proposition.
32. Another judgment relied upon on behalf of ED is of Suresh Kumar Bhikam Chand Jain vs. State of Maharashtra (supra). In that case it was held that benefit of section 167(2) for grant of default bail cannot be invoked when the charge sheet has been filed and only sanction to prosecute the accused has not been obtained. It was held that investigation was complete and therefore mere non-filing of sanction for prosecution was not considered to be a reason to term the investigation to be incomplete. Again such is not the factual position in this case.
33. Judgment of Apex Court in CBI vs. R.S. Pai (supra) was also on the different legal context. In that case it was held that scheme of section 173(8) Cr.P.C. makes it clear that even after filing of charge sheet, further investigation if called for, is not precluded. It was further held that when investigating officer gathers additional evidence, he can produce that evidence even after submission of charge sheet. Having gone through the entire judgment, it rather reiterate the legal position as discussed above that section 173(8) enables for further investigation on tracing or new or additional evidence and does not preclude investigating agency to file further charge sheet even if the charge sheet u/s 173(2) Cr.P.C. was earlier filed. The issue in the context of the present case is not regarding the power to carry out further investigation but the main issue in this case is that for the purpose of deciding the application u/s 167(2) whether any investigating agency can take benefit of section 173(8) by filing charge sheet in parts.
34. Therefore other judgments as relied upon by ld. SPP for ED are distinguishable on facts and legal context.
35. Hon’ble Supreme Court in Rakesh Kumar Paul vs. State of Assam AIR 2017 SC 3948 in the context of section 167(2) Cr.P.C. has held in para 29 that basic legislative intent of completing the investigation within 24 hours and also within an otherwise time bound period remains unchanged, even though the period has been extended over the years. This is an indication that in addition to giving adequate time for investigation, the legislature has also put a premium on the personal liberty and has always felt that it would be unfair to an accused to remain in custody for a prolonged or indefinite period.
36. It would be appropriate in this context to discuss the recent judgment of Hon’ble Supreme Court in Fakre Alam vs. State of UP (supra) wherein accused was arrested for alleged offences under IPC, Arms Act and UAPA in 1967 under one FIR. Charge sheet in respect of offences of IPC and Arms Act was filed but not for offence under UAPA. Accused thereafter moved an application for default bail u/s 167(2) Cr.P.C. Two days thereafter charge sheet under UAPA was also filed. Trial court and Hon’ble Allahabad rejected the default bail application, primarily on the ground that second charge sheet filed for offences of UAPA was in the form of a supplementary charge sheet. Hon’ble Supreme Court however did not agree with such conclusion of High Court and held that State cannot take advantage of the fact that in one case there is one charge sheet and supplementary charge sheet to extend the time limit beyond the period specified in section 167(2) Cr.P.C.
37. Though even the facts of Fakre Alam vs. State (supra) were also different but the ratio laid down in the said judgment is very specific that law does not permit the State to extend the maximum period stipulated u/s 167(2) Cr.P.C. by filing supplementary charge after the charge sheet to contend that it was part of the initial investigation but of different offence registered under the same FIR.
38. Thus, for the reasons stated above I find that though ED is empowered to carry further investigation but accused persons to my mind are certainly entitled for bail in this case u/s 167(2) Cr.P.C. as by own assertion of ED, investigation has not been completed despite filing of the complaint on 30.10.2021. Therefore, accused persons/applicants Sandeep Singh Madhok and Satender Singh Madhok are ordered to be admitted on bail upon furnishing of bail bond for sum of Rs.1,00,000/- with one surety of equal amount to the satisfaction of ld. CMM/ACMM on duty as well as subject to following conditions :
(i) Accused/applicants shall not leave the country without prior permission of the court.
(ii) Accused/applicants shall not tamper with the evidence in any manner.
(iii) The accused/applicants shall not try to contact any witness directly or indirectly nor shall influence any witness in any manner.
(iv) Accused/applicants shall surrender their passports, if any, in the court.
(v) Accused/applicants shall join the investigation as and when required by the IO.
39. Bail application stands allowed.