# CENTRAL BUREAU OF INVESTIGATION v. SANTOSH KARNANI & ANR

- **Citation:** [2023] 3 S.C.R. 476
- **Court:** Supreme Court of India
- **Decided:** 2023-04-17
- **Case number:** Criminal Appeal No. 1148 of 2023
- **Bench:** Surya Kant, J. K. Maheshwari
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/central-bureau-of-investigation-v-santosh-karnani-anr-36896
- **Pages:** 22

## Headnote

Prevention of Corruption Act, 1988 - ss. 7, 13(1), 13(2) -
Code of Criminal Procedure, 1973 - s. 41A, 438 - Constitution of
India - Art. 21 - Tax Department initiated search and seizure action
against the complainant's company - Respondent- Additional
Commissioner of Income Tax was handling the case of the
complainant - Allegation against the respondent that he made a
demand of illegal gratification to help the complainant with his case
- The said conversation of demand between the complainant and
the respondent was recorded in a digital voice recorder - A trap
was then laid - Respondent had asked to deposit an amount in a
firm's account - Complainant's employee was sent to the firm with
the bribe amount along with personnel from the ACB trap team and
the bribe amount was deposited with the firm and it was
acknowledged by the respondent to the complainant over a call -
Thereafter, when an ACB team went to arrest the respondent, he
along with the staff members physically assaulted the ACB team
and escaped the office - FIR was registered u/ss. 7, 13(1) and 13(2)
of the Prevention of Corruption Act, 1988 - Respondent preferred
an application for grant of anticipatory bail before the Special
Judge, which was rejected - However, the same was allowed by the
High Court with a direction that despite anticipatory bail, the CBI
could apply for police remand of the respondent and that upon the
completion of the police remand, the respondent would be set free
immediately - On appeal, held: The purported recording of
conversation between the complainant and respondent wherein he
thanked the complainant, after the deposit of amount in the firm's
account, is a reasonable link to connect respondent with the deposit
of illegal gratification in firm, thereby prima facie showing
acceptance thereof - The manner in which respondent forcefully
evaded his arrest with the help of his colleagues and got the evidence
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destroyed, is a strong circumstance to indicate his complicity at this
stage - There appears to be a well-organised syndicate comprising
officers and officials of the Income Tax Department, businessmen
and Hawala traders, who are in tandem - Such a nexus needs to be
unearthed through investigation - Therefore, the impugned judgment
and order of the High Court set aside and the anticipatory bail
application of respondent dismissed.
Bail - Anticipatory bail - Relevant factors for grant or refusal
of anticipatory bail - The judicial discretion of the Court shall be
guided by various relevant factors and largely it will depend upon
the facts and circumstances of each case - The Court must draw a
delicate balance between liberty of an individual as guaranteed
under Article 21 of the Constitution and the need for a fair and free
investigation, which must be taken to its logical conclusion.
Prevention of Corruption Act, 1988 - s. 17A - Prior Approval
of Investigation - Requirement of - The First Proviso to S. 17A
states that such approval is not necessary in cases involving arrest
of the person on the spot on the charges of accepting undue
advantage - Also, a prior approval or sanction to investigate such
an officer in a trap case is likely to defeat the very purpose of trap
and the investigation, which is not the underlying intention of the
legislature.
Code of Criminal Procedure, 1973 - s. 438 - Cancellation of
Bail - Cancellation of bail must be done only for cogent and
overwhelming reasons - All that to be ensured is that the High Court
exercises its discretion judiciously, cautiously and strictly in
conformity with the basic principles laid down by the Supreme Court
from time to time in series of decisions.
Disposing of the appeals, the Court
HELD: 1. The manner in which Respondent No. 1 forcefully
evaded his arrest with the help of his colleagues and got the
evidence destroyed, is a strong circumstance to indicate his
complicity at this stage though a clear picture would emerge only
on completion of investigation. [Para

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[2023] 3 S.C.R.
[2023] 3 S.C.R. 476
476
CENTRAL BUREAU OF INVESTIGATION
v.
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 of
India - Art. 21 - Tax Department initiated search and seizure action
against the complainant's company - Respondent- Additional
Commissioner of Income Tax was handling the case of the
complainant - Allegation against the respondent that he made a
demand of illegal gratification to help the complainant with his case
- The said conversation of demand between the complainant and
the respondent was recorded in a digital voice recorder - A trap
was then laid - Respondent had asked to deposit an amount in a
firm's account - Complainant's employee was sent to the firm with
the bribe amount along with personnel from the ACB trap team and
the bribe amount was deposited with the firm and it was
acknowledged by the respondent to the complainant over a call -
Thereafter, when an ACB team went to arrest the respondent, he
along with the staff members physically assaulted the ACB team
and escaped the office - FIR was registered u/ss. 7, 13(1) and 13(2)
of the Prevention of Corruption Act, 1988 - Respondent preferred
an application for grant of anticipatory bail before the Special
Judge, which was rejected - However, the same was allowed by the
High Court with a direction that despite anticipatory bail, the CBI
could apply for police remand of the respondent and that upon the
completion of the police remand, the respondent would be set free
immediately - On appeal, held: The purported recording of
conversation between the complainant and respondent wherein he
thanked the complainant, after the deposit of amount in the firm's
account, is a reasonable link to connect respondent with the deposit
of illegal gratification in firm, thereby prima facie showing
acceptance thereof - The manner in which respondent forcefully
evaded his arrest with the help of his colleagues and got the evidence
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destroyed, is a strong circumstance to indicate his complicity at this
stage - There appears to be a well-organised syndicate comprising
officers and officials of the Income Tax Department, businessmen
and Hawala traders, who are in tandem - Such a nexus needs to be
unearthed through investigation - Therefore, the impugned judgment
and order of the High Court set aside and the anticipatory bail
application of respondent dismissed.
Bail - Anticipatory bail - Relevant factors for grant or refusal
of anticipatory bail - The judicial discretion of the Court shall be
guided by various relevant factors and largely it will depend upon
the facts and circumstances of each case - The Court must draw a
delicate balance between liberty of an individual as guaranteed
under Article 21 of the Constitution and the need for a fair and free
investigation, which must be taken to its logical conclusion.
Prevention of Corruption Act, 1988 - s. 17A - Prior Approval
of Investigation - Requirement of - The First Proviso to S. 17A
states that such approval is not necessary in cases involving arrest
of the person on the spot on the charges of accepting undue
advantage - Also, a prior approval or sanction to investigate such
an officer in a trap case is likely to defeat the very purpose of trap
and the investigation, which is not the underlying intention of the
legislature.
Code of Criminal Procedure, 1973 - s. 438 - Cancellation of
Bail - Cancellation of bail must be done only for cogent and
overwhelming reasons - All that to be ensured is that the High Court
exercises its discretion judiciously, cautiously and strictly in
conformity with the basic principles laid down by the Supreme Court
from time to time in series of decisions.
Disposing of the appeals, the Court
HELD: 1. The manner in which Respondent No. 1 forcefully
evaded his arrest with the help of his colleagues and got the
evidence destroyed, is a strong circumstance to indicate his
complicity at this stage though a clear picture would emerge only
on completion of investigation. [Para 30][494-H; 495-A]
2. The nature and gravity of the alleged offence should have
been kept in mind by the High Court. Corruption poses a serious
CENTRAL BUREAU OF INVESTIGATION v. SANTOSH
KARNANI & ANR.
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threat to our society and must be dealt with iron hands. It not
only leads to abysmal loss to the public exchequer but also
tramples good governance. The common man stands deprived
of the benefits percolating under social welfare schemes and is
the worst hit. [Para 31][495-B-C]
3. From the material placed on record, it seems that prima
facie, the allegations against Respondent No. 1 cannot be brushed
aside lightly at this stage. There appears to be a well-organised
syndicate comprising officers and officials of the Income Tax
Department, businessmen and Hawala traders, who are in tandem.
Such a nexus needs to be unearthed through an unimpaired and
unobstructed investigation. [Para 32][495-C-D]
3. Section 17A merely contemplates that police officers shall
not conduct any enquiry, inquiry or investigation into any offence
alleged to have been committed by a public servant where the
alleged offence is relatable to any recommendation made or
decision taken in discharge of official functions or duties, without
the previous approval of the competent authority. The first proviso
to the section states that such approval is not necessary in cases
involving arrest of the person on the spot on the charges of
accepting undue advantage. As may be seen, the first proviso to
Section 17A refers to cases wherein a public servant is charged
with acceptance of an undue advantage or attempt thereof. A prior
approval or sanction to investigate such an officer in a trap case
is likely to defeat the very purpose of trap and the investigation,
which is not the underlying intention of the legislature. The
investigation against Respondent No. 1, being an accused of
demanding a bribe, did not require any previous approval of the
Central Government. That apart, the accusation against
Respondent No. 1 does not revolve around any recommendations
made or decisions taken by him in his quasi -judicial or
administrative capacity. [Paras 33, 34][495-E-H]
4. It is true that cancellation of bail must be done only for
cogent and overwhelming reasons. Nevertheless, setting aside
an unjustified order granting bail is distinct from cancellation of
bail. This Court would not, invariably intervene into the judicial
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discretion exercised by the High Court while granting bail to an
accused. All that to be ensured is that the High Court exercises
its discretion judiciously, cautiously and strictly in conformity with
the basic principles laid down by this Court from time to time in
a series of decisions. [Para 35][496-A-B]
Sushila Aggarwal v. State (NCT of Delhi) (2020) 5 SCC
1 : [2020] 2 SCR 1 - followed.
Siddharam Satlingappa Mhetre v. State of Maharashtra
(2011) 1 SCC 694 : [2010] 15 SCR 201; Gurbaksh
Singh 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 SCC
187 : [1997] 3 Suppl. SCR 737; Prem Shankar Prasad
v. State of Bihar (2021) SCC OnLine SC 955; State of
Madhya 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 Kumar
v. State of Bihar (2014) 8 SCC 273 : [2014] 8 SCR 128
Dolat Ram v. State of Haryana (1995)1 SCC 349 :
[1994] 5 Suppl. SCR 278 - referred to.
Case Law Reference
[1997] 3 Suppl. SCR 737
referred to
Para 19
[2013] 12 SCR 772
referred to
Para 19
[2012] 7 SCR 469
referred to
Para 19
[2014] 8 SCR 128
referred to
Para 21
[1994] 5 Suppl. SCR 278
referred to
Para 21
[2010] 15 SCR 201
relied on
Para 22
[1980] 3 SCR 383
relied on
Para 22
[2020] 2 SCR 1
followed
Para 23
CRIMINAL APPELLATE JURISDICTION: Criminal Appeal No.
1148 of 2023.
From the Judgment and Order dated 19.12.2022 of the High Court
of Gujarat at Ahmedabad in CRLMA No. 20871 of 2022.
CENTRAL BUREAU OF INVESTIGATION v. SANTOSH
KARNANI & ANR.
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WITH
Criminal Appeal No. 1149 of 2023.
Tushar Mehta, SG, Maninder Singh, Sr. Adv., Rajat Nair, Amit
Sharma B, A K Kaul, Madhav Sinhal, Pratyush Shrivastava, Anandh
Venkataramani, Mrs. Vijayalakshmi Venkataramani, Vinayak Mehrotra,
Siddharth 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.
Diksha Rai, Bhadrish S. Raju, Alok Sangwan, Sumit Kumar Sharma,
Shaurya Lamba, Uday Aditya Banerjee, Ankit Agarwal, Prateek
Dhankhar, Advs. for the Respondents.
The Judgment of the Court was delivered by
SURYA KANT, J.
1. Leave granted.
2. The Appellants in the two Criminal Appeals, the Central Bureau
of Investigation & Rupesh Balwantbhai Brambhatt (hereinafter,
"complainant") respectively, are aggrieved by the order dated 19th
December, 2022 passed by the High Court of Gujarat at Ahmedabad
allowing the anticipatory bail application filed by Respondent No. 1 in
connection with FIR registered as C.R. No. RC0292022A0011 of 2022
before CBI/ACB/Gandhinagar Police Station, District Gandhinagar for
the offence under Section 7 of the Prevention of Corruption Act, 1988
as amended in 2018.
BACKGROUND
3. The complainant is a businessman engaged in the construction
business that goes by the name: Safal Construction Pvt. Ltd. In February
2019, Respondent No. 1, an IRS Officer, posted as Additional
Commissioner of Income Tax, Ahmedabad, conducted a survey for the
financial year 2018-19 under Section 133A of the Income Tax Act, 1961
against Safal Construction Pvt. Ltd. whereunder the group disclosed an
additional income of Rs. 50 crores.
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4. Thereafter, in September 2021, search and seizure action was
initiated by the Investigation Wing of Income Tax Department,
Ahmedabad against Safal Construction Pvt. Ltd. Following these
searches, some papers related to the complainant's business were seized
and the Central Circle, Range-1 Division initiated the procedure for raising
a demand notice. It is the complainant's case that he found out that
Respondent No. 1 was handling his case and would be preparing the
appraisal memo. Subsequently, the complainant and Respondent No. 1
met frequently in connection with the case and it is alleged that during
these interactions, Respondent No. 1 threatened to ruin the complainant's
business and demanded illegal gratification.
5. On 29th September, 2022, Respondent No. 1 allegedly contacted
the complainant and told him to meet him on 3rd October, 2022.
Accordingly, the complainant met Respondent No. 1 at the Income Tax
Office where Respondent No. 1 demanded illegal gratification of Rs. 30
lakhs to help the complainant with his case. This conversation was
recorded by the complainant on a Digital Voice Recorder which has
been handed over to the investigating authorities and a transcript of the
same has also been provided to this Court. The complainant was directed
to deposit the amount in the account of one Vardhman in the Dhara
Angadia Firm.
6. The complainant lodged a complaint the next morning with ACB
Police Station, Ahmedabad city at 07:15 hours and a trap was then laid.
The complainant's employee was sent to the Angadia firm with the bribe
money amounting to Rs. 30 lakhs along with personnel from the ACB
trap team. Upon depositing Rs. 30 lakhs with Dhara Angadia firm, the
complainant contacted Respondent No. 1 through WhatsApp call which
was recorded by the ACB team wherein Respondent No. 1 acknowledged
payment of the amount. Immediately thereafter, one ACB team went to
detain and arrest Respondent No. 1, who along with some staff members,
is alleged to have physically assaulted the ACB team and escaped from
the office due to the ensuing chaos. It is also claimed that Respondent
No. 1, while escaping from the office, handed over his mobile phone to
a colleague. Simultaneously, another ACB team recovered the bribe
amount 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 4th October, 2022.
CENTRAL BUREAU OF INVESTIGATION v. SANTOSH
KARNANI & ANR. [SURYA KANT, J.]
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8. Owing to the gravity of the case, on 12th October, 2022, the
case 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 of
Corruption Act, 1988. The FIR records that Respondent No. 1 evaded
arrest by the ACB team and was still at large at the time of re-registration
of the FIR.
9. Thereafter, a notice under Section 41A, Code of Criminal
Procedure (hereinafter, "CrPC") was issued to Respondent No. 1 calling
upon him to appear before the CBI but Respondent No. 1 failed to respond.
On 17th October, 2022, Respondent No. 1 wrote a letter to the
Investigating Officer that he had suffered severe anxiety & depression
due to the allegations levelled against him and had, thus, gone to his
home state of Rajasthan for medical treatment. He sought four days'
time to join the investigation.
10. During investigation Smit Thakkar, owner of Dhara Angadia
firm, informed the authorities that the illegal gratification was deposited
in the account of one Malav Ajitbhai Mehta. It is also claimed that prior
to the deposit of the amount, Malav Mehta informed Smit Thakkar that
Rs. 30 lakhs would be deposited in the account and would have to be
transferred to another person on the same day.
11. Another notice under Section 41A was issued to Respondent
No. 1 and again, he failed to appear before the CBI. On 26th October,
2022, Respondent No. 1 again sought one week's time to appear before
the Investigating Officer vide a communication sent from the email ID
of Blue Heaven Hotel, Jaipur. Subsequently, some more Section 41A
notices were issued to Respondent No. 1, to which he sought more time
to join the investigation on various grounds. He simultaneously preferred
an application for grant of anticipatory bail.
12. By an order dated 3rd November, 2022, the City Civil & Sessions
Court at Ahmedabad rejected Respondent No. 1's application for
anticipatory bail. The Special Judge - CBI Court No. 3 observed that
Respondent No. 1 instead of cooperating with the investigating agency,
had absconded and got himself admitted in a hospital in Rajasthan to
evade the process of law. Some of the observations made by the Special
Judge, CBI Court, are to the following effect:
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"Thus, the ground of ill health pleaded by the Learned Advocate
for the applicant would hold no ground as this Court is of a candid
opinion that the applicant instead of cooperating with the
Investigating Agency had absconded and had got himself admitted
in hospital at his native in Rajasthan with a view to evade the
process of law.
...
...
...
In view of the aforesaid facts and circumstances, this Court is of
a candid opinion that custodial interrogation of the present applicant
is a must to reach to unearth the larger conspiracy. It is necessary
to unveil the modus operandi adopted by the applicant in
committing the larger conspiracy and without interrogation, it would
be impossible to collect the relevant evidence resulting into
incomplete investigation. It is also crystal clear that the applicant
with a view to avoid arrest has filed the present application and
therefore, instead of cooperating in the investigation have tried to
thwart the ·same and thus, it can be said that the applicant is not
cooperating in the investigation.
...
...
...
This Court also cannot lose sight of the fact that investigation in
the matter is still under progress and releasing the applicant at this
premature stage would pave way for the applicant to influence
the investigation, hamper the witnesses and tamper the evidence."
13. The Court eventually held that custodial interrogation of
Respondent 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 of
Gujarat. Meanwhile, on 22nd November, 2022, the Court of Special CBI
Judge issued a non-bailable warrant against Respondent No. 1.
15. The High Court, vide impugned order dated 19th December,
2022, granted anticipatory bail to Respondent No. 1. The High Court
observed that there is a doubt regarding the acceptance of illegal
gratification, as it was deposited in the account of Vardhman in Dhara
Angadia firm and there is no evidence with respect to acceptance of the
amount by Respondent No. 1. The reasons on the basis of which the
High Court proceeded to grant anticipatory bail are recorded in paragraph
12 of its order, which states as follows:
CENTRAL BUREAU OF INVESTIGATION v. SANTOSH
KARNANI & ANR. [SURYA KANT, J.]
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"12. This Court has considered following aspects;
(i) The FIR is registered on 12.10.2022 for the offence which
is alleged to have taken place on 04.10.2022.
(ii) Learned APP under instructions of IO is unable to bring on
record any special circumstances against the applicant.
(iii) The role attributed to the applicant- accused;
(iv) That the applicant is a Additional Income Tax Commissioner
and no any other criminal antecedents against him;
(v) There is creating serious doubt about demand and
acceptance of the amount;
(vi) There is no discovery or recovery from the applicant;"
16. The High Court further directed that despite grant of
anticipatory bail, CBI could apply for police remand of Respondent No.
1 and that if the same was granted by the competent Magistrate,
Respondent No. 1 would be set free immediately upon completion of the
police remand. The relevant part of the impugned order to this effect
reads as under:
"16. Despite this order, it would be open for the Investigating
Agency to apply to the competent Magistrate, for police remand
of the applicant. The applicant shall remain present before the
learned Magistrate on the first date of hearing of such application
and on all subsequent occasions, as may be directed by the learned
Magistrate. This would be sufficient to treat the accused in the
judicial custody for the purpose of entertaining application of the
prosecution for police remand. This is, however, without prejudice
to the right of the accused to seek stay against an order of remand,
if, ultimately, granted and the power of the learned Magistrate to
consider such a request in accordance with law. It is clarified that
the applicant even if, remanded to the police custody, upon
completion of such period of police remand, shall be set free
immediately, subject to other conditions of this anticipatory bail
order. At the trial, the Trial Court shall not be influenced by the
prima facie observations made by this Court while enlarging the
applicant on bail. Rule is made absolute. Direct service is
permitted."
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17. Following the High Court's directions, Respondent No. 1 joined
the investigation and appeared on three days but is stated to have not
produced his mobile phone(s) though he was asked to do so repeatedly.
The CBI, then, applied for police remand of Respondent No. 1 and, on
30th December, 2022, the Special Judge, CBI Court No. 3 partly allowed
the said application. The Court, upon perusal of the case diary, observed
that the allegations against Respondent No. 1 seem well-founded and
that remand is necessary for the purpose of investigation to collect the
missing link of evidence and to unearth the larger conspiracy. The
application was allowed in the following terms:
"The Accused Mr. Santosh Kumar Karnani is directed to appear
and 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 connection
with RC-0292022A0011 GNR. It is further directed that accused
shall 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 be
set free upon expiry of remand period and report be submitted to
this Court along with copies of medical examination paper/
Certificate. The case diary be handed back to the Investigating
Officer.
The accused is hereby directed to give full cooperation to
Investigating officer to carry out proper investigation of this case.
The Investigating Officer is hereby directed to strictly adhere to
the guidelines laid down by the Hon'ble Supreme Court of India
in case of D.K. Basu vs. State of W.B. reported in AIR 1997
SC 610 and Honourable Gujarat High Court, while the accused
is in custody and refrain from any custodial ill-treatment or
torture"
18. CBI, thereafter, preferred an application for suspension of the
aforesaid order before Special CBI Court on the ground that they wish
to challenge it before the High Court of Gujarat. Hence, Special Judge,
CBI Court No. 3 stayed operation of its order till 7th January, 2023. This
was later extended by the Court till the final disposal of the Special
Leave Petition (Crl.) No. 295 of 2023.
CENTRAL BUREAU OF INVESTIGATION v. SANTOSH
KARNANI & ANR. [SURYA KANT, J.]
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SUBMISSIONS
19. Assailing the impugned order granting anticipatory bail to
Respondent No. 1, Mr. Tushar Mehta, learned Solicitor General of India
on behalf of the CBI made the following submissions:
i.
Considering the gravity and seriousness of the offence and
the position held by Respondent No. 1, the High Court erred
in exercising its discretionary jurisdiction under Section 438
of the CrPC;
ii.
The High Court did not appreciate the material collected
against Respondent No. 1 which establishes a clear demand
& acceptance of bribe by him in view of his voice recordings
seeking an amount of Rs. 30 lakhs from the complainant
and acknowledging payment thereof. The relevant voice
recordings have been analysed and the voices have been
identified to be those of Respondent No. 1 and the
complainant;
iii.
The High Court grossly erred in observing that the FIR
was registered after a long delay on 12th October, 2022.
On that day, the CBI had only re-registered FIR No. 12/
2022 which was initially registered by ACB Police Station
on 4th October, 2022.
iv.
Respondent No. 1's name was included in the 'Agreed List'
in respect of Group A officers of the Income Tax
Department for the year 2015 and thus, his service record
is not clean;
v.
Respondent No. 1 evaded arrest when the ACB team raided
his office after he had acknowledged the payment of the
bribe money over a WhatsApp call. Respondent No. 1 &
his colleagues used criminal force to deter the ACB team
from effecting arrest and collecting material evidence. While
doing so, Respondent No. 1 handed over his mobile phone,
which is a crucial piece of evidence, to his colleague to
ensure that the same was not seized by the investigating
agency. This has been recorded in the CCTV cameras of
the office;
vi.
The audio recordings and video footage have been examined
by the Directorate of Forensic Science, Gujarat certifying
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their genuineness. The report concludes that there are no
signs of alteration in the same;
vii.
Respondent No. 1 falsely pleaded that he had taken casual
leave from the competent authority and misled the
investigating agency by sending a reply to the notice issued
under Section 41A, CrPC through the email ID of Blue
Heaven Hotel, Jaipur. Upon investigation, it was found that
Respondent No. 1 had never stayed at that hotel;
viii.
During investigation, reliable evidence has come on record
to show that other Income Tax officials were hands in glove
with Respondent No. 1, which is also evident from the active
role played by some officials in helping Respondent No.1
to avoid arrest by the ACB on 4th October, 2022. Custodial
interrogation is highly necessary to ascertain the deeper
plot at play and to examine the involvement of other Income
Tax officials;
ix.
Respondent No. 1 appeared before the CBI after the
protection granted by the High Court but did not handover
his mobile handsets which are a crucial piece of evidence
and is, thus, not cooperating with the investigation. Custodial
interrogation is necessary in this case to take the
investigation to its logical conclusion;
x.
Reliance has been placed on the judgment of this Court in
State Rep. By The CBI v. Anil Sharma1 to argue that
"custodial interrogation is qualitatively more elicitationoriented than questioning a suspect who is well ensconced
with a favourable order under Section 438 of the Code. In
a case like this, effective interrogation of a suspected person
is of tremendous advantage in disinterring many useful
information and also materials which would have been
concealed. Success in such interrogation would elude if the
suspected person knows that he is well protected and
insulated by a pre-arrest bail order during the time he is
interrogated. Very often interrogation in such a condition
would reduce to a mere ritual.";
1 (1997) 7 SCC 187.
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xi.
Reliance has also been placed on the decisions in Prem
Shankar Prasad v. State of Bihar2, State of Madhya
Pradesh v. Pradeep Sharma3 and Lavesh v. State (NCT
of Delhi)4 to urge that anticipatory bail should not be granted
to an absconder;
xii.
The High Court passed an unusual order directing that the
investigating agency would be at liberty to apply to the
competent Magistrate for police remand of Respondent No.
1 and in the same breath, prevented custodial interrogation
of the main suspect.
20. 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 the
learned Sessions Court recorded while rejecting
Respondent No. 1's application for anticipatory bail. The
said Court had gone through the material on record, including
the case papers, and then only observed that custodial
interrogation was necessary to enable the investigation
agency to reach the core of the matter.
ii.
The High Court failed to appreciate the unequivocal demand
of Rs. 30 lakhs made by Respondent No. 1, which was
recorded by the complainant on a Digital Voice Recorder
and acceptance of that bribe money through Dhara Angadia
Firm.
21. On the other hand, Mr. Mukul Rohatgi and Mr. Shyam Divan,
learned Senior Counsels strongly refuted the insinuations made against
Respondent No. 1 and defended the High Court order granting prearrest bail with the following submissions:
i.
The allegations levelled against Respondent No. 1 are false
and concocted. Respondent No. 1 never raised any demand
for gratification as alleged by the complainant. Respondent
No. 1 had no connection with the search and seizure action
2 2021 SCC OnLine SC 955.
3 (2014) 2 SCC 171.
4 (2012) 8 SCC 730.
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taken against the complainant's company in September 2021
or with the preparation of the appraisal report. Respondent
No. 1 is not the Assessing Officer of the complainant's
case and the matter is entrusted to some other officer;
ii.
There is no evidence of demand or acceptance of bribe
which are sine qua non for establishing the offence. In
trap cases under Section 7 of Prevention of Corruption Act,
the conversation of demand is to be recorded by the
complainant in the presence of independent panchas and
the trap laying Officer has to ensure that there is no
possibility of any tampering. In the present case, the voice
recording of the alleged demand has been done without
any police involvement and thus, holds no evidentiary value.
The alleged deposit of the amount was made in an Angadia
firm which is unknown to Respondent No. 1 and cannot be
termed as acceptance of bribe. Respondent No. 1 has no
connection with Malav Ajitbhai Mehta, who is stated to be
the owner of the account wherein the amount was deposited
and Respondent No. 1 was not present at the site of the
Angadia firm;
iii.
The complainant has animosity with Respondent No. 1
due to the past survey action taken for the financial year
2018-19 against his company which led to disclosure of
additional income of Rs. 50 crores. This fact has not been
disclosed in the FIR. The complainant has falsely
implicated Respondent No. 1 due to his apprehensions that
Respondent No. 1 will impose huge tax liability on him &
his company;
iv.
A perusal of FIR No. 12/2022 shows that it was registered
on 4th October, 2022 at 9:30 pm while the acts of the alleged
demand, laying down of the trap, deposit of money at Dhara
Angadia and the raid at Respondent No. 1's office occurred
on 3rd October, 2022 and during the daytime on 4th October,
2022. Additionally, there is no record of the complainant
meeting police officials prior to the registration of FIR. The
delay in registration of FIR which is more than 24 hours
after the alleged demand of illegal gratification, has not been
explained;
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v.
Only Respondent No. 1 is sought to be arrested by the CBI.
The owner or employees of Dhara Angadia firm have not
been arrested and the High Court order granting anticipatory
bail to Malav Mehta has not been challenged by the CBI
before this Court;
vi.
CBI has misused the provisions of Section 41A of the CrPC
to arrest Respondent No. 1. A bare perusal of the provision
and the guidelines laid down by this Court in Arnesh Kumar
v. State of Bihar5 suggest that a notice under Section 41A
would be issued only when the investigating agency does
not require the custody of a person. In the present case,
notices under Section 41A were issued post the raid
conducted by ACB team at Respondent No. 1's office by
which time they had decided to arrest him;
vii.
As per settled law of this Court, Respondent No. 1 cannot
be termed as an absconder as he was availing his legal
remedies. However, despite this, the investigating agency
published notices in the media and pasted 'Wanted' posters
with Respondent No. 1's name, photo and designation at
various places, which indicates mala fides of the
investigation agency;
viii.
The bona fides of Respondent No. 1 are evident from his
conduct post the grant of anticipatory bail. As directed by
the High Court, Respondent No. 1 appeared before the CBI
on at least four occasions, as and when called. Respondent
No. 1 has also voluntarily given his voice samples. Given
the fact that Respondent No. 1 is cooperating with the
investigation, custodial interrogation is not required. The High
Court erred in directing that, despite the grant of anticipatory
bail, the investigating agency would be at liberty to apply to
the competent Magistrate for police remand. This part of
the order was to the disadvantage of Respondent No. 1 but
he abided by the same and appeared before the Court when
the CBI applied for police remand;
ix.
Respondent No. 1 has an impeccable service record as is
evident from his posting to one of the most sensitive
5 (2014) 8 SCC 273.
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assignments in the department. Such postings are only given
to senior officers with clean images. His integrity is beyond
doubt and he has an unblemished past record. There is no
case of disproportionate assets against Respondent No. 1;
x.
Section 17A of the Prevention of Corruption Act, 1988 as
amended in 2018, provides for a bar on any enquiry, inquiry
or investigation by a police officer into an alleged offence
by a public servant, where the alleged offence relates to
any decision taken or recommendation made in exercise of
official functions or duties, without the previous approval
of the competent authority. In this case, the investigating
agency has not complied with the mandatory procedure of
Section 17A and has initiated investigation on the complaint
without any prior approval of the Competent Authority. The
breach of these mandatory conditions vitiates the
proceedings initiated against Respondent No. 1;
xi.
In these circumstances, the High Court has rightly granted
anticipatory bail to Respondent No. 1 and has provided
adequate reasoning for the same in paragraph 12 of the
impugned order;
xii.
Cancellation of bail has to be dealt with on a completely
different footing in comparison to refusal of bail and 'cogent
and overwhelming' reasons are necessary to cancel bail
once granted. Reliance has been placed in this regard on
Dolat Ram v. State of Haryana6 wherein a two-judge
Bench of this Court held that:
"4. Rejection of bail in a non-bailable case at the initial
stage and the cancellation of bail so granted, have to be
considered and dealt with on different basis. Very cogent
and overwhelming circumstances are necessary for an
order directing the cancellation of the bail, already
granted. Generally speaking, the grounds for cancellation
of bail, broadly (illustrative and not exhaustive) are:
interference or attempt to interfere with the due course
of administration of justice or evasion or attempt to evade
the due course of justice or abuse of the concession
6 (1995) 1 SCC 349.
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granted to the accused in any manner. The satisfaction
of the court, on the basis of material placed on the record
of the possibility of the accused absconding is yet another
reason justifying the cancellation of bail. However, bail
once granted should not be cancelled in a mechanical
manner without considering whether any supervening
circumstances have rendered it no longer conducive to
a fair trial to allow the accused to retain his freedom by
enjoying the concession of bail during the trial."
xiii.
No supervening circumstances for cancellation of bail have
been pointed out by the CBI or the complainant.
ANALYSIS
22. The law on grant of anticipatory bail has been summed-up by
this Court in Siddharam Satlingappa Mhetre v. State of Maharashtra7,
after due deliberation on the parameters evolved by the Constitution Bench
in Gurbaksh Singh Sibbia v. State of Punjab8. This Court held thus:
"112. The following factors and parameters can be taken into
consideration while dealing with anticipatory bail:
(i) The nature and gravity of the accusation and the exact role of
the accused must be properly comprehended before arrest is made;
(ii) The antecedents of the applicant including the fact as to
whether the accused has previously undergone imprisonment on
conviction by a court in respect of any cognizable offence;
(iii) The possibility of the applicant to flee from justice;
(iv) The possibility of the accused's likelihood to repeat similar or
other offences;
(v) Where the accusations have been made only with the object
of injuring or humiliating the applicant by arresting him or her;
(vi) Impact of grant of anticipatory bail particularly in cases of
large magnitude affecting a very large number of people;
(vii) The courts must evaluate the entire available material against
the accused very carefully. The court must also clearly comprehend
7 (2011) 1 SCC 694.
8 (1980) 2 SCC 565.
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the exact role of the accused in the case. The cases in which the
accused is implicated with the help of Sections 34 and 149 of the
Penal Code, 1860 the court should consider with even greater care
and caution because over-implication in the cases is a matter of
common knowledge and concern;
(viii) While considering the prayer for grant of anticipatory bail, a
balance has to be struck between two factors, namely, no prejudice
should be caused to the free, fair and full investigation and there
should be prevention of harassment, humiliation and unjustified
detention of the accused;
(ix) The court to consider reasonable apprehension of tampering
of the witness or apprehension of threat to the complainant;
(x) Frivolity in prosecution should always be considered and it is
only the element of genuineness that shall have to be considered
in the matter of grant of bail and in the event of there being some
doubt as to the genuineness of the prosecution, in the normal course
of events, the accused is entitled to an order of bail."
23. In Sushila Aggarwal v. State (NCT of Delhi)9, the
Constitution Bench reiterated that while deciding applications for
anticipatory bail, courts should be guided by factors like the nature and
gravity of the offences, the role attributed to the applicant, and the facts
of the case.
24. The time-tested principles are that no straitjacket formula can
be applied for grant or refusal of anticipatory bail. The judicial discretion
of the Court shall be guided by various relevant factors and largely it will
depend upon the facts and circumstances of each case. The Court must
draw a delicate balance between liberty of an individual as guaranteed
under Article 21 of the Constitution and the need for a fair and free
investigation, which must be taken to its logical conclusion. Arrest has
devastating and irreversible social stigma, humiliation, insult, mental pain
and other fearful consequences. Regardless thereto, when the Court, on
consideration of material information gathered by the Investigating
Agency, is prima facie satisfied that there is something more than a
mere needle of suspicion against the accused, it cannot jeopardise the
investigation, more so when the allegations are grave in nature.
9 (2020) 5 SCC 1.
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25. Keeping these principles in mind, we proceed to evaluate the
rival submissions. At the outset, it is to be noted that the High Court fell
in a factual error in observing that FIR was registered on 12th October,
2022 for the offence alleged to have taken place on 3rd and 4th October,
2022. The FIR was registered by the ACB against Respondent No. 1 on
4th October, 2022 under Sections 7, 13(1) and 13(2) of the Prevention of
Corruption Act, 1988 and was re-registered by CBI on 12th October,
2022.
26. Further, the primary ground assigned by the High Court to
grant anticipatory bail to Respondent No. 1 is that there was doubt as to
the acceptance of the bribe amount since records of Dhara Angadia
firm had not been produced establishing any link between Respondent
No. 1 & the firm.
27. The CBI has produced the case diary which contains the
statement made by Smit Thakkar, who handles Dhara Angadia firm. He
has clearly stated that Malav Mehta was the owner of Vardhman account
and had informed him that 30 lakhs rupees would be deposited in his
account on 4th October, 2022, which in turn had to be sent to someone
else. The purported recording of conversation between the complainant
and Respondent No. 1 wherein Respondent No. 1 thanked the
complainant, after the deposit of amount in the Vardhman account, is a
reasonable link to connect Respondent No. 1 with the deposit of illegal
gratification in Dhara Angadia firm, thereby prima facie showing
acceptance thereof.
28.