# P. CHIDAMBARAM v. DIRECTORATE OF ENFORCEMENT

- **Citation:** [2019] 12 S.C.R. 172
- **Court:** Supreme Court of India
- **Decided:** 2019-09-05
- **Case number:** Criminal Appeal No. 1340 of 2019
- **Bench:** R. Banumathi, A. S. Bopanna
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/p-chidambaram-v-directorate-of-enforcement-33145
- **Pages:** 48

## Headnote

Prevention of Money Laundering Act, 2002 - ss.3 and 4 -
Production of Documents in a sealed cover for custodial
interrogation - Prosecution alleged irregularities in Foreign
Investment Promotion Board (FIPB) clearance given to a company
for receiving foreign investment to the tune of Rs.305 crores against
approved inflow of Rs.4.62 crores - Appellant was the then finance
minister - CBI registered FIR against the appellant and other
accused persons u/s.120 IPC r/w. s.420 IPC, s.8 and s.13(2) r/w.
s.13(1)(d) of the Prevention of Corruption Act, 1988 - Enforcement
Directorate also registered a case u/ss.3 and 4 of PMLA against the
accused persons - High Court dismissed the application for the
grant of anticipatory bail filed by the appellant and held it to be a
classic case of money-laundering - On appeal, before the Supreme
Court, respondent sought to produce the materials so collected in a
sealed cover and requested the Court to peruse the documents and
materials to satisfy the conscience of the Court as to the necessity
for the custodial interrogation - Respondent contended that the
materials so collected cannot be shared with appellant at the initial
stage when the Court was considering the matter for grant of prearrest bail - Appellant contended that respondent cannot rely upon
the documents without furnishing those documents to the appellant
or without questioning the appellant about the materials - Held:
The Court can receive the materials/documents collected during the
investigation and peruse the same to satisfy its conscience that the
investigation is proceeding in the right lines and for the purpose of
consideration of grant of bail/anticipatory bail etc. - In the instant
case, sealed cover was received by the Court, however, the Court
refrained from opening the sealed cover and perusing the documents
because if Court had made observations after perusal of the
materials, it might have caused prejudice to the appellant and other
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172
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co-accused who were not before the Court - Suffice to note that it
was the stage of considering the pre-arrest bail - In the initial stages
of investigation where the Court is considering the question of grant
of regular bail or pre-arrest bail, it is not for the Court to enter into
the demarcated function of the investigation and collection of
evidence/materials for establishing the offence and interrogation
of the accused and the witnesses - Since, the respondent had
collected documents/materials for custodial interrogation of the
appellant, the submission of the respondent was accepted for the
limited purpose of refusing pre-arrest bail to the appellant - Penal
Code, 1860 - s.120B r/w. s.13(1)(d).
Prevention of Money Laundering Act, 2002 - ss.3 and 4 -
Prevention of Corruption Act, 1988 - s.8 and 13(2) - r/w. s.13(1)(d)
- Interrogation of the accused - Interferences of Judiciary in -
Held: Interrogation of the accused and the answers elicited from
the accused and the opinion whether the answers given by the
accused are 'satisfactory' or 'evasive', is purely within the domain
of the investigating agency and the Court cannot substitute its views
by conducting mini trial at various stages of investigation.
Prevention of Money Laundering Act, 2002 - ss.3 and 4 -
Code of Criminal Procedure, 1973 - s.438 - Grant of anticipatory
bail - Prosecution alleged irregularities in Foreign Investment
Promotion Board (FIPB) clearance given to a company for receiving
foreign investment to the tune of Rs.305 crores against approved
inflow of Rs.4.62 crores - Appellant was the then finance minister -
FIR was registered - Enforcement Directorate also registered a case
u/ss. 3 and 4 of PMLA against the accused persons - High Court
dismissed the application for grant of anticipatory bail filed by the
appellant - On appeal, held: Power u/s.438 Cr.P.C. is an
extraordinary power and the same has to be exercised sparingly
more so, in cases of economic offences - Economic o

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SUPREME COURT REPORTS
[2019] 12 S.C.R.
P. CHIDAMBARAM
v.
DIRECTORATE OF ENFORCEMENT
(Criminal Appeal No. 1340 of 2019)
SEPTEMBER 05, 2019
[R. BANUMATHI AND A. S. BOPANNA, JJ.]
Prevention of Money Laundering Act, 2002 - ss.3 and 4 -
Production of Documents in a sealed cover for custodial
interrogation - Prosecution alleged irregularities in Foreign
Investment Promotion Board (FIPB) clearance given to a company
for receiving foreign investment to the tune of Rs.305 crores against
approved inflow of Rs.4.62 crores - Appellant was the then finance
minister - CBI registered FIR against the appellant and other
accused persons u/s.120 IPC r/w. s.420 IPC, s.8 and s.13(2) r/w.
s.13(1)(d) of the Prevention of Corruption Act, 1988 - Enforcement
Directorate also registered a case u/ss.3 and 4 of PMLA against the
accused persons - High Court dismissed the application for the
grant of anticipatory bail filed by the appellant and held it to be a
classic case of money-laundering - On appeal, before the Supreme
Court, respondent sought to produce the materials so collected in a
sealed cover and requested the Court to peruse the documents and
materials to satisfy the conscience of the Court as to the necessity
for the custodial interrogation - Respondent contended that the
materials so collected cannot be shared with appellant at the initial
stage when the Court was considering the matter for grant of prearrest bail - Appellant contended that respondent cannot rely upon
the documents without furnishing those documents to the appellant
or without questioning the appellant about the materials - Held:
The Court can receive the materials/documents collected during the
investigation and peruse the same to satisfy its conscience that the
investigation is proceeding in the right lines and for the purpose of
consideration of grant of bail/anticipatory bail etc. - In the instant
case, sealed cover was received by the Court, however, the Court
refrained from opening the sealed cover and perusing the documents
because if Court had made observations after perusal of the
materials, it might have caused prejudice to the appellant and other
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co-accused who were not before the Court - Suffice to note that it
was the stage of considering the pre-arrest bail - In the initial stages
of investigation where the Court is considering the question of grant
of regular bail or pre-arrest bail, it is not for the Court to enter into
the demarcated function of the investigation and collection of
evidence/materials for establishing the offence and interrogation
of the accused and the witnesses - Since, the respondent had
collected documents/materials for custodial interrogation of the
appellant, the submission of the respondent was accepted for the
limited purpose of refusing pre-arrest bail to the appellant - Penal
Code, 1860 - s.120B r/w. s.13(1)(d).
Prevention of Money Laundering Act, 2002 - ss.3 and 4 -
Prevention of Corruption Act, 1988 - s.8 and 13(2) - r/w. s.13(1)(d)
- Interrogation of the accused - Interferences of Judiciary in -
Held: Interrogation of the accused and the answers elicited from
the accused and the opinion whether the answers given by the
accused are 'satisfactory' or 'evasive', is purely within the domain
of the investigating agency and the Court cannot substitute its views
by conducting mini trial at various stages of investigation.
Prevention of Money Laundering Act, 2002 - ss.3 and 4 -
Code of Criminal Procedure, 1973 - s.438 - Grant of anticipatory
bail - Prosecution alleged irregularities in Foreign Investment
Promotion Board (FIPB) clearance given to a company for receiving
foreign investment to the tune of Rs.305 crores against approved
inflow of Rs.4.62 crores - Appellant was the then finance minister -
FIR was registered - Enforcement Directorate also registered a case
u/ss. 3 and 4 of PMLA against the accused persons - High Court
dismissed the application for grant of anticipatory bail filed by the
appellant - On appeal, held: Power u/s.438 Cr.P.C. is an
extraordinary power and the same has to be exercised sparingly
more so, in cases of economic offences - Economic offences stand
as a different class as they effect the economic fabric of the society
- Grant of anticipatory bail at the stage of investigation may frustrate
the investigating agency in interrogating the accused and in
collecting the useful information and also the materials which might
have been concealed - Success is such interrogation would elude
if the accused knows that he is protected by the order of the Court
- In the instant case, having regard to the materials collected by the
P. CHIDAMBARAM v. DIRECTORATE OF ENFORCEMENT
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respondent- Enforcement Directorate and considering the stage of
investigation, it was not a fit case to grant anticipatory bail.
Code of Criminal Procedure, 1973 - s.438 - Constitution of
India - Art. 21 - Right of anticipatory bail, a part of Art.21 of the
Constitution of India or not - Held: The legislative intent behind
the introduction of s.438 Cr.P.C. is to safeguard the individual's
personal liberty and to protect him from the possibility of being
humiliated and from being subjected to unnecessary police custody.
However, the court must also keep in view that a criminal offence is
not just an offence against an individual, rather the larger societal
interest is at stake - Therefore, a delicate balance is required to be
established between the two rights-safeguarding the personal liberty
of an individual and the societal interest - It cannot be said that
refusal to grant anticipatory bail would amount to denial of the
rights conferred upon the appellant u/Art. 21 of the Constitution of
India.
Words and Phrases - 'reason to believe' - Held: As per
definition in s.26 IPC, a person is said to be have 'reason to believe'
a thing, if he has sufficient cause to believe that thing but not
otherwise - The specified officer must have 'reason to believe' on
the basis of material in his possession that the property sought to
be attached is likely to be concealed, transferred on dealt with in a
manner which may result in frustrating any proceedings for
confiscation of their property under the Prevention of Money -
Laundering Act, 2002.
Words and Phrases - Economic offence - discussed.
Dismissing the appeal, the Court
HELD: Whether Court can look into the documents/
materials collected during investigation.
1. It is well-settled that the court can peruse the case diary/
materials collected during investigation by the prosecution even
before the commencement of the trial inter-alia in circumstances
like:- (i) to satisfy its conscience as to whether the investigation
is proceeding in the right direction; (ii) to satisfy itself that the
investigation has been conducted in the right lines and that there
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is no misuse or abuse of process in the investigation; (iii) whether
regular or anticipatory bail is to be granted to the accused or not;
(iv) whether any further custody of the accused is required for
the prosecution; (v) to satisfy itself as to the correctness of the
decision of the High Court/trial court which is under challenge.
The above instances are only illustrative and not exhaustive.
Where the interest of justice requires, the court has the powers,
to receive the case diary/materials collected during the
investigation. As held in Mukund Lal v. Union of India and Another,
ultimately there can be no better custodian or guardian of the
interest of justice than the court trying the case. Needless to
point out that when the Court has received and perused the
documents/materials, it is only for the purpose of satisfaction of
court's conscience. In the initial stages of investigation, the Court
may not extract or verbatim refer to the materials which the Court
has perused (as has been done in this case by the Single Judge)
and make observations which might cause serious prejudice to
the accused in trial and other proceedings resulting in miscarriage
of justice. [Para 53][206-D-G]
Naresh Kumar Yadav v. Ravindra Kumar and others
(2008) 1 SCC 632 : [2007] 11 SCR 615; Malkiat Singh
and others v. State of Punjab (1991) 4 SCC 341 : [1991]
2 SCR 256; R.K. Krishna Kumar v. State of Assam and
others (1998) 1 SCC 474 : [1997] 6 Suppl. SCR 153;
Mukund Lal v. Union of India and another 1989 Supp.
(1) SCC 622 : [1988] 3 Suppl. SCR 524; Sidharth and
others v. State of Bihar (2005) 12 SCC 545 : [2005] 3
Suppl. SCR 800 - relied on.
Romila Thapar and Others v. Union of India and Others
(2018) 10 SCC 753 : [2018] 11 SCR 951; Directorate
of Enforcement and Another v. P.V. Prabhakar Rao
(1997) 6 SCC 647 : [1997] 3 Suppl. SCR 247; Balakram
v. State of Uttarakhand and others (2017) 7 SCC 668 :
[2017] 5 SCR 367- referred to.
2. The Enforcement Directorate has produced the sealed
cover before this Court containing the materials collected during
P. CHIDAMBARAM v. DIRECTORATE OF ENFORCEMENT
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investigation and the same was received. Vide order dated
29.08.2019, this Court has stated that the receipt of the sealed
cover would be subject to our finding whether the court can
peruse the materials or not. As discussed earlier, this Court has
held that the court can receive the materials/documents collected
during the investigation and peruse the same to satisfy its
conscience that the investigation is proceeding in the right lines
and for the purpose of consideration of grant of bail/anticipatory
bail etc. In the present case, though sealed cover was received,
this Court has consciously refrained from opening the sealed
cover and perusing the documents. Lest, if this Court peruses
the materials collected by the respondent and make some
observations thereon, it might cause prejudice to the appellant
and the other co-accused who are not before this court when
they are to pursue the appropriate relief before various forum.
Suffice to note that at present, this Court is only at the stage of
considering the pre-arrest bail. Since according to the respondent,
they have collected documents/materials for which custodial
interrogation of the appellant is necessary, which this Court deem
appropriate to accept the submission of the respondent for the
limited purpose of refusing pre-arrest bail to the appellant. [Para
54][206-H; 207-A-D]
3. As rightly submitted by Solicitor General that if the
accused are to be confronted with the materials which were
collected by the prosecution/Enforcement Directorate with huge
efforts, it would lead to devastating consequences and would
defeat the very purpose of the investigation into crimes, in
particular, white collar offences. If the contention of the appellant
is to be accepted, the investigating agency will have to question
each and every accused such materials collected during
investigation and in this process, the investigating agency would
be exposing the evidence collected by them with huge efforts
using their men and resources and this would give a chance to
the accused to tamper with the evidence and to destroy the money
trail apart from paving the way for the accused to influence the
witnesses. If the contention of the appellant is to be accepted
that the accused will have to be questioned with the materials
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and the investigating agency has to satisfy the court that the
accused was "evasive" during interrogation, the court will have
to undertake a "mini trial" of scrutinizing the matter at
intermediary stages of investigation like interrogation of the
accused and the answers elicited from the accused and to find
out whether the answers given by the accused are 'evasive' or
whether they are 'satisfactory' or not. This could have never been
the intention of the legislature either under PMLA or any other
statute. [Para 58][208-D-G]
4. Interrogation of the accused and the answers elicited
from the accused and the opinion whether the answers given by
the accused are "satisfactory" or "evasive", is purely within the
domain of the investigating agency and the court cannot substitute
its views by conducting mini trial at various stages of the
investigation. [Para 59][209-G-H]
5. The investigation of a cognizable offence and the various
stages thereon including the interrogation of the accused is
exclusively reserved for the investigating agency whose powers
are unfettered so long as the investigating officer exercises his
investigating powers well within the provisions of the law and
the legal bounds. In exercise of its inherent power under Section
482 Cr.P.C., the court can interfere and issue appropriate direction
only when the court is convinced that the power of the
investigating officer is exercised mala fide or where there is abuse
of power and non-compliance of the provisions of Code of Criminal
Procedure. However, this power of invoking inherent jurisdiction
to issue direction and interfering with the investigation is
exercised only in rare cases where there is abuse of process or
non-compliance of the provisions of Criminal Procedure Code.
[Para 60][209-A-C]
King-Emperor v. Khwaja Nazir Ahmad AIR 1945 PC
18 : [1944] SCC Online PC 29; Abhinandan Jha and
others v. Dinesh Mishra AIR 1968 SC 117 : [1967]
SCR 668; State of Bihar and another v. J.A.C. Saldanha
and others (1980) 1 SCC 554 : [1980] 2 SCR 16 -
relied on.
P. CHIDAMBARAM v. DIRECTORATE OF ENFORCEMENT
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[2019] 12 S.C.R.
Dukhishyam Benupani, Asstt. Director, Enforcement
Directorate (FERA) v. Arun Kumar Bajoria (1998) 1
SCC 52 : [1997] 5 Suppl. SCR 566; M.C. Abraham
and Another v. State of Maharashtra and Others (2003)
2 SCC 649 : [2002] 5 Suppl. SCR 677; Subramanian
Swamy v. Director, Central Bureau of Investigation and
another (2014) 8 SCC 682 : [2014] 6 SCR 873; Divine
Retreat Centre v. State of Kerala and Others (2008) 3
SCC 542 : [2008] 4 SCR 701; State of Bihar and
another v. P.P. Sharma, IAS and another 1992 Supp.
(1) 222 : [1991] 2 SCR 1 - referred to.
6. As held by the Supreme Court in a catena of judgments
that there is a well-defined and demarcated function in the field
of investigation and its subsequent adjudication. It is not the
function of the court to monitor the investigation process so long
as the investigation does not violate any provision of law. It must
be left to the discretion of the investigating agency to decide the
course of investigation. If the court is to interfere in each and
every stage of the investigation and the interrogation of the
accused, it would affect the normal course of investigation. It
must be left to the investigating agency to proceed in its own
manner in interrogation of the accused, nature of questions put
to him and the manner of interrogation of the accused.
[Para 64][211-C-E]
7. It is one thing to say that if the power of investigation
has been exercised by an investigating officer mala fide or noncompliance of the provisions of the Criminal Procedure Code in
the conduct of the investigation, it is open to the court to quash
the proceedings where there is a clear case of abuse of power. It
is a different matter that the High Court in exercise of its inherent
power under Section 482 Cr.P.C., the court can always issue
appropriate direction at the instance of an aggrieved person if
the High Court is convinced that the power of investigation has
been exercised by the investigating officer mala fide and not in
accordance with the provisions of the Criminal Procedure Code.
However, as pointed out earlier that power is to be exercised in
rare cases where there is a clear abuse of power and non-
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compliance of the provisions falling under Chapter-XII of the
Code of Criminal Procedure requiring the interference of the
High Court. In the initial stages of investigation where the court
is considering the question of grant of regular bail or pre-arrest
bail, it is not for the court to enter into the demarcated function
of the investigation and collection of evidence/materials for
establishing the offence and interrogation of the accused and the
witnesses. [Para 65][211-E-H; 212-A]
Whether direction to produce the transcripts could be
issued:-
7A. Since the interrogation of the accused and the questions
put to the accused and the answers given by the accused are part
of the investigation which is purely within the domain of the
investigation officer, unless satisfied that the police officer has
improperly and illegally exercised his investigating powers in
breach of any statutory provision, the court cannot interfere. In
the present case, no direction could be issued to the respondent
to produce the transcripts of the questions put to the appellant
and answers given by the appellant. [Para 66][212-C-D]
Grant of Anticipatory bail in exceptional cases:-
8. Ordinarily, arrest is a part of procedure of the
investigation to secure not only the presence of the accused but
several other purposes. Power under Section 438 Cr.P.C. is an
extraordinary power and the same has to be exercised sparingly.
The privilege of the pre-arrest bail should be granted only in
exceptional cases. The judicial discretion conferred upon the
court has to be properly exercised after application of mind as to
the nature and gravity of the accusation; possibility of applicant
fleeing justice and other factors to decide whether it is a fit case
for grant of anticipatory bail. Grant of anticipatory bail to some
extent interferes in the sphere of investigation of an offence and
hence, the court must be circumspect while exercising such power
for grant of anticipatory bail. Anticipatory bail is not to be granted
as a matter of rule and it has to be granted only when the court is
convinced that exceptional circumstances exist to resort to that
extraordinary remedy. [Para 67][212-E-G]
P. CHIDAMBARAM v. DIRECTORATE OF ENFORCEMENT
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State of M.P. and another v. Ram Kishna Balothia and
another (1995) 3 SCC 221 : [1995] 1 SCR 897; State
Rep. By The CBI v. Anil Sharma (1997) 7 SCC 187 :
[1997] 3 Suppl. SCR 737 ; Sudhir v. State of
Maharashtra and Another (2016) 1 SCC 146 : [2015]
12 SCR 387; Assistant Director, Directorate of
Enforcement v. Hassan Ali Khan (2011) 12 SCC 684;
Adri Dharan Das v. State of W.B. (2005) 4 SCC 303 :
[2005] 2 SCR 188; Siddharam Satlingappa Mhetre v.
State of Maharashtra and Others (2011) 1 SCC 694 :
[2010] 15 SCR 201; Jai Prakash Singh v. State of Bihar
and another (2012) 4 SCC 379 : [2012] 5 SCR 1 75 -
relied on.
9. Ordinarily, arrest is a part of the process of the
investigation intended to secure several purposes. There may
be circumstances in which the accused may provide information
leading to discovery of material facts and relevant information.
Grant of anticipatory bail may hamper the investigation. Pre-arrest
bail is to strike a balance between the individual's right to
personal freedom and the right of the investigating agency to
interrogate the accused as to the material so far collected and to
collect more information which may lead to recovery of relevant
information. [Para 72][214-E-F]
Directorate of Enforcement v. Ashok Kumar Jain (1998)
2 SCC 105 : [1998] 1 SCR 57 ; State of Gujarat v.
Mohanlal Jitamalji Porwal and others (1987) 2 SCC
364 : [1987] (2) SCR 677 ; Y.S. Jagan Mohan Reddy v.
CBI (2013) 7 SCC 439 : [2013] SCR 547 - relied on.
Enforcement Officer, Ted, Bombay v. Bher Chand Tikaji
Bora and others (1999) 5 SCC 720 - referred to.
10. Power under Section 438 Cr.P.C. being an extraordinary
remedy, has to be exercised sparingly; more so, in cases of
economic offences. Economic offences stand as a different class
as they affect the economic fabric of the society. In Directorate of
Enforcement v. Ashok Kumar Jain, it was held that in economic
offences, the accused is not entitled to anticipatory bail. The
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Solicitor General submitted that the "Scheduled offence" and
"offence of money laundering" are independent of each other
and PMLA being a special enactment applicable to the offence of
money laundering is not a fit case for grant of anticipatory bail.
The Solicitor General submitted that money laundering being an
economic offence committed with much planning and deliberate
design poses a serious threat to the nation's economy and
financial integrity and in order to unearth the laundering and trail
of money, custodial interrogation of the appellant is necessary.
Grant of anticipatory bail at the stage of investigation may frustrate
the investigating agency in interrogating the accused and in
collecting the useful information and also the materials which
might have been concealed. Success in such interrogation would
elude if the accused knows that he is protected by the order of
the court. Grant of anticipatory bail, particularly in economic
offences would definitely hamper the effective investigation.
Having regard to the materials said to have been collected by
the respondent-Enforcement Directorate and considering the
stage of the investigation, this Court is of the view that it is not a
fit case to grant anticipatory bail. [Paras 76, 77 and 81][216-E-G;
218-B-C]
Shri Gurbaksh Singh Sibbia and others v. State of
Punjab (1980) 2 SCC 565 : [1980] 3 SCR 383;
Additional District Magistrate, Jabalpur v. Shivakant
Shukla (1976) 2 SCC 521 : [1976] Suppl. SCR 172 ;
Rao Shiv Bahadur Singh and another v. State of Vindhya
Pradesh AIR 1953 SC 394 : [1953] SCR 1188; Santosh
s/o Dwarkadas Fafat v. State of Maharashtra (2017) 9
SCC 714 : [2017] 10 SCR 129; Jai Prakash Singh v.
State of Bihar and Another (2012) 4 SCC 379 : [2012]
5 SCR 1; Nikesh Tarachand Shah v. Union of India
and another (2018) 11 SCC 1 : [2017] 12 SCR 358 -
referred to.
Case Law Reference
[1980] 3 SCR 383
referred to
Para 3
[1976] Suppl. SCR 172
referred to
Para 16
P. CHIDAMBARAM v. DIRECTORATE OF ENFORCEMENT
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[2019] 12 S.C.R.
[1953] SCR 1188
referred to
Para 16
[2017] 10 SCR 129
referred to
Para 17
[2018] 11 SCR 951
referred to
Para 51
[2012] 5 SCR 1
referred to
Para 20
[1997] 3 Suppl. SCR 247
referred to
Para 20
[2017] 12 SCR 358
referred to
Para 37
[2017] 5 SCR 367
referred to
Para 49
[2005] 3 Suppl. SCR 800
relied on
Para 50
[2007] 11 SCR 615
referred to
Para 50
[1991] 2 SCR 256
referred to
Para 50
[1997] 6 Suppl. SCR 153
referred to
Para 51
[1988] 3 Suppl. SCR 524 relied on
Para 51
[1967] SCR 668
relied on
Para 62
[1980] 2 SCR 16
relied on
Para 62
[1997] 5 Suppl. SCR 566
referred to
Para 62
[2002] 5 Suppl. SCR 677
referred to
Para 62
[2014] 6 SCR 873
referred to
Para 62
[2008] 4 SCR 701
referred to
Para 62
[1991] 2 SCR 1
referred to
Para 63
[1995] 1 SCR 897
relied on
Para 69
[1997] 3 Suppl. SCR 737
referred to
Para 71
[2015] 12 SCR 387
referred to
Para 71
(2011) 12 SCC 684
referred to
Para 71
[2005] 2 SCR 188
relied on
Para 73
[2010] 15 SCR 201
referred to
Para 74
[2012] 5 SCR 1
relied on
Para 75
[1998] 1 SCR 57
relied on
Para 76
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[1987] 2 SCR 677
relied on
Para 78
[2013] SCR 547
relied on
Para 79
(1999) 5 SCC 720
referred to
Para 80
CRIMINAL APPELLATE JURISDICTION: Criminal Appeal No.
1340 of 2019
From the Judgment and Order dated 20.08.2019 of the High Court
of Delhi at New Delhi in Bail Application No. 1713 of 2018.
Kapil Sibal, Dr. Abhishek Manu Singhvi, Sr. Advs., Kunal Vajani,
Arshdeep Singh Khurana, Amit Bhandari, Adit Pujari, Hitesh Rai, Akshat
Gupta, Ayush Agarwal, Karan Gogna, Aamir Khan, Aman Singh Brar,
Akshay Sahni, Avishkar Singhavi, Mrs. Shally Bhasin, Advs. for the
Appellant.
Tushar Mehta, SG, K. M. Natraj, ASG, Ms. Sonia Mathur, Sr.
Adv., Zoheb Hossain, Rajat Nair, Ms. Kanu Aggarwal, A.K. Sharma,
Rajeev Ranjan, Bhuvan Kapoor, Varun Chugh, B. Krishna Prasad, Advs.
for the Respondent.
The Judgment of the Court was delivered by
R. BANUMATHI, J.
1. Leave granted.
2. This appeal relates to the alleged irregularities in Foreign
Investment Promotion Board (FIPB) clearance given to the INX Media
for receiving foreign investment to the tune of Rs.305 crores against
approved inflow of Rs.4.62 crores. The High Court of Delhi rejected
the appellant's plea for anticipatory bail in the case registered by Central
Bureau of Investigation (CBI) being RC No.220/2017-E-0011 under
Section 120B IPC read with Section 420 IPC, Section 8 and Section
13(2) read with Section 13(1)(d) of the Prevention of Corruption Act,
1988. By the impugned order dated 20.08.2019, the High Court also
refused to grant anticipatory bail in the case registered by the
Enforcement Directorate in ECIR No.07/HIU/2017 punishable under
Sections 3 and 4 of the Prevention of Money-Laundering Act, 2002.
3. Grievance of the appellant is that against the impugned order
of the High Court, the appellant tried to get the matter listed in the Supreme
Court on 21.08.2019; but the appellant could not get an urgent hearing in
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the Supreme Court seeking stay of the impugned order of the High Court.
The appellant was arrested by the CBI on the night of 21.08.2019. Since
the appellant was arrested and remanded to custody in CBI case, in
view of the judgment of the Constitution Bench in Shri Gurbaksh Singh
Sibbia and others v. State of Punjab (1980) 2 SCC 565, the appellant
cannot seek anticipatory bail after he is arrested. Accordingly, SLP(Crl.)
No.7525 of 2019 preferred by the appellant qua the CBI case was
dismissed as infructuous vide order dated 26.08.2019 on the ground that
the appellant has already been arrested and remanded to custody. This
Court granted liberty to the appellant to work out his remedy in accordance
with law.
4. On 15.05.2017, CBI registered FIR in RC No.220/2017-E-0011
under Section 120B IPC read with Section 420 IPC, Section 8 and Section
13(2) read with Section 13(1)(d) of the Prevention of Corruption Act,
1988 against the accused viz. (i) INX Media through its Director Indrani
Mukherjea; (ii) INX News through its Director Sh. Pratim Mukherjea
@ Peter Mukherjea and others; (iii) Sh. Karti P. Chidambaram; (iv)
Chess Management Services through its Director Sh. Karti P.
Chidambaram and others; (v) Advantage Strategic Consulting through
its Director Ms. Padma Vishwanathan @ Padma Bhaskararaman and
others; (vi) unknown officers/officials of Ministry of Finance, Govt. of
India; and (vii) other unknown persons for the alleged irregularities in
giving FIPB's clearance to INX Media to receive overseas funds of
Rs.305 crores against approved Foreign Direct Investment (FDI) of
Rs.4.62 crores.
5. Case of the prosecution in the predicate offence is that in 2007,
INX Media Pvt. Ltd. approached Foreign Investment Promotion Board
(FIPB) seeking approval for FDI upto 46.216 per cent of the issued
equity capital. While sending the proposal by INX Media to be placed
before the FIPB, INX Media had clearly mentioned in it the inflow of
FDI to the extent of Rs.4,62,16,000/- taking the proposed issue at its
face value. The FIPB in its meeting held on 18.05.2007 recommended
the proposal of INX Media subject to the approval of the Finance Ministerthe appellant. In the meeting, the Board did not approve the downstream
investment by INX Media in INX News. In violation of the conditions of
the approval, the recommendation of FIPB:- (i) INX Media deliberately
made a downstream investment to the extent of 26% in the capital of
INX News Ltd. without specific approval of FIPB which included indirect
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foreign investment by the same Foreign Investors; (ii) generated more
than Rs.305 crores FDI in INX Media which is in clear violation of the
approved foreign flow of Rs.4.62 crores by issuing shares to the foreign
investors at a premium of more than Rs.800/- per share.
6. Upon receipt of a complaint on the basis of a cheque for an
amount of Rs.10,00,000/- made in favour of M/s Advantage Strategic
Consulting Private Limited (ASCPL) by INX Media, the investigation
wing of the Income Tax Department proceeded to investigate the matter
and the relevant information was sought from the FIPB, which in turn,
vide its letter dated 26.05.2008 sought clarification from the INX Media
which justified its action saying that the downstream investment has
been authorised and that the same was made in accordance with the
approval of FIPB. It is alleged by the prosecution that in order to get out
of the situation without any penal provision, INX Media entered into a
criminal conspiracy with Sh. Karti Chidambaram, Promoter Director,
Chess Management Services Pvt. Ltd. and the appellant-the then Finance
Minister of India. INX Media through the letter dated 26.06.2008 tried
to justify their action stating that the downstream investment has been
approved and the same was made in accordance with approval.
7. The FIR further alleges that for the services rendered by Sh.
Karti Chidambaram to INX Media through Chess Management Services
in getting the issues scuttled by influencing the public servants of FIPB
unit of the Ministry of Finance, consideration in the form of payments
were received against invoices raised on INX Media by ASCPL. It is
alleged in the FIR that the very reason for getting the invoices raised in
the name of ASCPL for the services rendered by Chess Management
Services was with a view to conceal the identity of Sh. Karti
Chidambaram inasmuch as on the day when the invoices were raised
and payment was received. It is stated that Sh. Karti Chidambaram was
the Promoter, Director of Chess Management Services whereas ASCPL
was being controlled by him indirectly. It is alleged that the invoices
approximately for an amount of Rs.3.50 crores were falsely got raised
in favour of INX Media in the name of other companies in which Sh.
Karti Chidambaram was having sustainable interest either directly or
indirectly. It is alleged that such invoices were falsely got raised for
creation of acquisition of media content, consultancy in respect of market
research, acquisition of content of various genre of Audio-Video etc. It
is alleged that INX Media Group in his record has clearly mentioned the
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purpose of payment of Rs.10,00,000/- to ASCPL as towards
"management consultancy charges towards FIPB notification and
clarification". Alleging that the above acts of omission and commission
prima facie disclose commission of offence, CBI has registered FIR in
RC No.220/2017-E-0011 on 15.05.2017 under Section 120B read with
Section 420 IPC, Section 8 and Section 13(2) read with Section 13(1)(d)
of the Prevention of Corruption Act, 1988 against the aforesaid accused.
8. On the basis of the said FIR registered by CBI, the Enforcement
Directorate registered a case in ECIR No.07/HIU/2017 against the
aforesaid accused persons for allegedly committing the offence
punishable under Sections 3 and 4 of the Prevention of Money-Laundering
Act, 2002 (PMLA). Ever since the registration of the cases in 2017,
there were various proceedings seeking bail and number of other
proceedings pending filed by Sh. Karti Chidambaram and other accused.
Finally, the Delhi High Court granted bail to Sh. Karti Chidambaram in
INX Media case filed by CBI on 23.03.2018. Thereafter, the appellant
moved Delhi High Court seeking anticipatory bail both in CBI case and
also in money-laundering case filed by Enforcement Directorate. On
25.07.2018, the Delhi High Court granted the appellant interim protection
from arrest in both the cases and the same was extended till 20.08.2019
- the date on which the High Court dismissed the appellant's petition
refusing to grant anticipatory bail.
9. The High Court dismissed the application refusing to grant
anticipatory bail to the appellant by holding that "it is a classic case of
money-laundering". The High Court observed that "it is a clear case
of money-laundering". The learned Single Judge dismissed the
application for anticipatory bail by holding "that the alleged irregularities
committed by the appellant makes out a prima facie case for refusing
pre-arrest bail to the appellant". The learned Single Judge also held
that "considering the gravity of the offence and the evasive reply
given by the appellant to the questions put to him while he was
under the protective cover extended to him by the court are the twin
factors which weigh to deny the pre-arrest bail to the appellant".
Being aggrieved, the appellant has preferred this appeal.
10. Lengthy arguments were heard on number of hearings
stretched over for long time. Learned Senior counsel appearing for the
appellant Mr. Kapil Sibal and Mr. Abhishek Manu Singhvi made
meticulous submissions on the concept of life and liberty enshrined in
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Article 21 of the Constitution of India to urge that the appellant is entitled
to the privilege of anticipatory bail. Arguments were also advanced on
various aspects - whether the court can look into the materials produced
by the respondent-Enforcement Directorate to seek custody of the
appellant when the appellant was not confronted with those documents
on the three dates of interrogation of the appellant conducted on
19.12.2018, 01.01.2019 and 21.01.2019. Interlocutory application was
filed by the appellant to produce the transcripts of the questions put to
the appellant and the answers given by the appellant, recorded by
Enforcement Directorate. Countering the above submissions, Mr. Tushar
Mehta, learned Solicitor General made the submissions that grant of
anticipatory bail is not part of Article 21 of the Constitution of India. Mr.
Tushar Mehta urged that having regard to the materials collected by the
respondent-Enforcement Directorate and the specific inputs and in view
of the provisions of the special enactment-PMLA, custodial interrogation
of the appellant is required and the appellant is not entitled to the privilege
of anticipatory bail.
Contention of Mr. Kapil Sibal, learned Senior counsel:-
11. Mr. Kapil Sibal, learned Senior counsel appearing on behalf of
the appellant submitted that the clearance for INX FDI was approved
by Foreign Investment Promotion Board (FIPB) consisting of six
Secretaries and the appellant as the then Finance Minister granted
approval in the normal course of official business. The learned Senior
counsel submitted that the crux of the allegation is that the appellant's
son Sh. Karti Chidambaram tried to influence the officials of FIPB for
granting ex-post facto approval for downstream investment by INX
Media to INX News; whereas neither the Board members of FIPB nor
the officials of FIPB have stated anything about the appellant's son Sh.
Karti Chidambaram that he approached and influenced them for expost facto approval. The learned Senior counsel contended that the
entire case alleges about money paid to ASCPL and Sh. Karti
Chidambaram is neither the share-holder nor a Director in the said
ASCPL; but the Enforcement Directorate has falsely alleged that Sh.
Karti Chidambaram has been controlling the company-ASCPL. It was
submitted that the appellant has nothing to do with the said ASCPL to
whom money has been paid by INX Media.
12. Taking us through the impugned judgment and the note said to
have been submitted by the Enforcement Directorate before the High
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Court, the learned Senior counsel submitted that the learned Single Judge
has "copied and pasted" paragraphs after paragraphs of the note given
by the respondent in the court. It was urged that there was no basis for
the allegations contained in the said note to substantiate the alleged
transactions/transfer of money as stated in the tabular column given in
the impugned order.
13. So far as the sealed cover containing the materials sought to
be handed over by the Enforcement Directorate, the learned Senior
counsel raised strong objections and submitted that the Enforcement
Directorate cannot randomly produce the documents in the court "behind
the back" of the appellant for seeking custody of the appellant. Strong
objections were raised for the plea of Enforcement Directorate requesting
the court to receive the sealed cover and for looking into the documents/
material collected during the investigation allegedly showing the trail of
money in the name of companies and the money-laundering.
14. The appellant was interrogated by the respondent on three
dates viz. 19.12.2018, 01.01.2019 and 21.01.2019. So far as the
observation of the High Court that the appellant was "evasive" during
interrogation, the learned Senior counsel submitted that the appellant
has well cooperated with the respondent and the respondent cannot allege
that the appellant was "non-cooperative". On behalf of the appellant, an
application has also been filed seeking direction to the respondent to
produce the transcripts of the questioning conducted on 19.12.2018,
01.01.2019 and 21.01.2019. The learned Senior counsel submitted that
the transcripts will show whether the appellant was "evasive" or not
during his questioning as alleged by the respondent.
15. Learned Senior counsel submitted that the provision for
anticipatory bail i.e. Section 438 Cr.P.C. has to be interpreted in a fair
and reasonable manner and while so, the High Court has mechanically
rejected the anticipatory bail. It was further submitted that in case of
offences of the nature alleged, everything is borne out by the records
and there is no question of the appellant being "evasive". The learned
Senior counsel also submitted that co-accused Sh. Karti Chidambaram
and Padma Bhaskararaman were granted bail and the other accused
Indrani Mukherjea and Sh. Pratim Mukherjea @ Peter Mukherjea are
on statutory bail and the appellant is entitled to bail on parity also.
Contention of Mr. Abhishek Manu Singhvi, learned Senior
counsel:-
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16. Reiterating the submission of Mr. Kapil Sibal, Mr. Abhishek
Manu Singhvi, learned Senior counsel submitted that the Enforcement
Directorate cannot say that the appellant was "non-cooperative" and
"evasive". Mr. Singhvi also urged for production of transcripts i.e.
questions put to the appellant and the answers which would show whether
the appellant has properly responded to the questions or not. Placing
reliance upon Additional District Magistrate, Jabalpur v. Shivakant
Shukla (1976) 2 SCC 521, the learned Senior counsel submitted that
the respondent cannot rely upon the documents without furnishing those
documents to the appellant or without questioning the appellant about
the materials collected during the investigation. Reiterating the submission
of Mr. Sibal, Mr. Singhvi contended that the High Court has denied
anticipatory bail to the appellant on the basis of materials produced by
the respondent in the cover before the court which were never shown to
the appellant nor was the appellant confronted with the same. The learned
Senior counsel submitted that the alleged occurrence was of the year
2007-08 and Sections 420 IPC and 120B IPC and Section 13 of the
Prevention of Corruption Act were not part of the "scheduled offence"
of Prevention of Money-Laundering Act in 2008 and were introduced
by a notification dated 01.06.2009 and in view of the protection given
under Article 20(1) of the Constitution of India, there can never be a
retrospective operation of a criminal/penal statute. Placing reliance upon
Rao Shiv Bahadur Singh and another v. State of Vindhya Pradesh
AIR 1953 SC 394, it was contended that the appellant has to substantiate
the contention that the acts charged as offences were offences "at the
time of commission of the offence".