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TMI Blog2022 (10) TMI 49X X X X Extracts X X X X X X X X Extracts X X X X ..... the present application; b) Grant regular bail to the Applicant and direct her release in connection with FIR No. RC/AC1/2018/A0011 dated 28.05.2018 lodged with P.S. CBI/AC-I; c) Pass any other order/s, which this Hon'ble court may deem fit and proper in the interest of justice. 2. The facts as alleged in FIR are that Sanjay Gupta who was owner and promoter of M/s OPG Securities Pvt. Ltd. during 2010 to 2014 abused the server architecture of National Stock Exchange (hereinafter referred to as "NSE") in criminal conspiracy with unknown officials of NSE. Sanjay Gupta with the help of his brother in law namely Aman Kokrady and other unknown persons in furtherance of the criminal conspiracy managed data centre staff of NSE who passed the information regarding switching on time of NSE exchange servers. OPG Securities Pvt. Ltd. by unknown officials of NSE was given access to technologically latest and least crowded servers at that particular period which helped OPG Securities Pvt. Ltd. to be mostly to login firstly on the Exchange Server of the NSE and this particular setup of server gives a 10:1 (Approx.) speed advantage in comparison to other brokers. The information was dissemin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rvers with better hardware. As per forensic review of the NSE's co-location facility conducted by Deloittee Touche Thmatsu, OPG Securities was the first in most cases during trading sessions. 2.3 Sanjay Gupta dishonestly and fraudulently influenced the officials of SEBI and bribe money was also exchanged between Sanjay Gupta and some unknown officials of SEBI to ensure the favorable report in the on-going enquiry being carried out by SEBI against the role of OPG Securities Pvt. Ltd in the misuse of TBT architecture of NSE. Sanjay Gupta deliberately directed his employees to delete some important mails, text massages, logs etc. related to co-location to destroy evidence. 2.4 Ajay Narottam Shah was found to be instrumental in exploitation of NSE, TBT architecture as he had collected NSE trade data to carry out research and thereafter passed it to private persons who in turn developed an algo software named 'Chanakya' which was sold to selected brokers including OPG Securities and by using Chanakya exploited TBT architecture of NSE by using Chanakya Software. 2.5 Accordingly, present FIR was got registered under sections 120-B /204 of the IPC and sections 7/12/13(2) read wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ategic Advisor to MD with effect from 01.04.2013 vide NSE letter dated 18.01.2013 and his appointment was approved by the applicant/accused, then Joint Managing Director (JMD) vide internal note dated 18.01 2013. The applicant/accused did not obtain approval for the appointment of Anand Subramanian from Sh. Ravi Narain, then MD despite designation of the post was "Chief Strategic Advisor to MD" and even the draft contract agreement was also dictated by the applicant/accused. 4.1 It was also surfaced in investigation that then HR Head was not aware of any details for processing the recruitment of Anand Subramanian and also did not have any document related to him. The application form of Anand Subramanian was also filled up on a later date. The applicant/accused by misusing her official position fixed an abnormally high initial compensation of Anand Subramanian and his previous experience was not relevant to the position for which he was appointed at NSE. Anand Subramanian prior to joining NSE was Vice President, Leasing & Repair Services of Transafe Services Limited, a subsidiary of M/s Balmer & Lawrie and his last drawn compensation was approximately Rs 14 lakhs per annum. He was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing operated the e-mail ID [email protected] and incriminating e-mails were also recovered. 4.6 It was established during investigation that the applicant/accused entered into criminal conspiracy and in pursuance of conspiracy and by abusing her official position as Joint MD as well as MD of NSE illegally and arbitrarily appointed Anand Subramanian as Chief Strategic Advisor to MD and disproportionately hiked his compensation and also re-designated him as Group Operating Officer without taking approval of NRC or Board. 4.7 The applicant/accused and Anand Subramanian have committed offences punishable under section 120-B IPC read with section13 (1) (d) read with section 13 (2) of the PC Act and substantive offences thereof. The applicant/accused was arrested and is in custody since 06.03.2022. The investigation qua these allegations has been completed and charge sheet under sections 13(1)(d) and 13(2) of the PC Act read with 120B IPC qua the applicant/accused and Anand Subramanian has already been filed on 21.04.22 wherein it is also mentioned that further investigation is kept open qua the offences forming part of other transactions for which supplementary charge sheet wou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stigated by the respondent/CBI. 8.1 The applicant/accused is a Chartered Accountant and a reputed professional in the financial markets with no prior criminal antecedents. No concrete criminal role can be attributed to the applicant/accused at this stage as Final Report has not yet been filed in present FIR. The applicant/accused joined investigation on 18.02.2022, 19.02.2022, 20.02.2022, and 24.02.2022, at Mumbai in pursuance of notice dated 17.02.2022 and also joined investigation in Delhi. The applicant/accused was arrested on 06.03.2022. The applicant/accused also mentioned facts as stated in FIR and surfaced during investigation. The respondent/CBI has not arrested any person as named in FIR or surfaced during investigation and investigation qua them and offences is still pending and no charge sheet has been filed by the respondent/CBI till date. 8.2 The applicant/accused was one of the initial members of M/s. National Stock Exchange Ltd. (NSE) which is company registered under the Companies Act, 1956 whereof 54% shareholding is owned by public at large, and 46% shareholding is owned by trading members but no portion is owned by any State/Central Government. The applicant ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncerns with respect to delegation of wide powers to Anand Subramaniam; shared internal confidential information of NSE with an unknown person in charge of email ID [email protected] and allowed her decision-making to be influenced by such unknown person alleging such person to be a "siddhapurusha"/"paramhansa". However in said case no allegation against the applicant/accused subject-matter of present FIR was made. SEBI vide order dated 11.02.2022 passed in Case No WTM/AB/MRD/DSA/21/2021-22 directed for imposition of monetary penalty of Rs. 3 Crore, directed NSEIL to transfer the withheld variable pay bonus and other emoluments due to the applicant/accused to the Investor Protection Fund and restrained the applicant/accused from associating with any market institution for three (3) years. 8.5 The applicant/accused on 17.02.2022 received a notice under section 160 of the Code from the respondent/CBI to join investigation in present FIR case and thereafter the applicant/accused has joined investigation in Mumbai and Delhi. The applicant/accused was arrested on 06.03.2022 despite being joined investigation and due to dismissal of application for grant of bail. 8.6 The applican ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... better and faster access to the market feed was given. The accused as named in FIR had dishonestly and fraudulently induced the officials of SEBI with bribe money in order to get a favourable report from SEBI. NSE officials had provided trade data to the accused Ajay Shah who, in turn, developed algo-trading software named "Chanakya" which was sold to selected brokers and they were benefited by exploiting tick-by-tick architecture by using the said software. The applicant/accused is not connected with these allegations. 8.6.3 The co-location facility was the brainchild of Shri Ravi Narain and conceived and introduced in Indian Market during his tenure as Managing Director. To place co-location system was the responsibility of Sh. N. Muralidaran and the applicant/accused had no direct concern with the system. Mr. Muralidharan was reporting to Mr Ravi Narain directly and or through the applicant/accused on matters relating to the co-location facility and not to the applicant/accused directly. 8.6.4 The scope of investigation was expanded by the respondent/CBI to include Anand Subramaniam whose appointment was done in consonance with the powers exercised by the Managing Director and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 10. The application filed under section 167 (2) of the Code was pending before the concerned court at the time of filing present application for grant of regular bail and said bail application was dismissed by the court of Sh. Rakesh Kumar-III, Special Judge (PC Act) (CBI)-02, Rouse Avenue, District Courts, New Delhi vide dated 28.05.2022. The learned Senior Advocate for the applicant/accused during course of arguments also stated that the applicant/accused is also entitled for statutory bail/default bail under section 167(2) (a)(ii) of the Code besides grant of bail on merit as per section 439 of the Code. 11. The learned Senior Counsel on merit argued that bail is rule and jail is the exception. The applicant/accused being a woman has spent more than 140 days in judicial custody since the date of her arrest on 06.03.2022. The case of the respondent/CBI against the applicant/accused pertains to negligence in the administration of NSE which is a civil wrong and is not a criminal offence and as such criminal proceedings cannot be misused to defeat her right to be enlarged on bail in the present FIR. 11.1 The applicant/accused is not named as an accused in FIR which was registered ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and implementation of the co-location facilities. No authority including SEBI has found any fault with the architecture of the co-location facility implemented at the NSE. The technical Committee and all technical advisors of NSE including Mr. Muralidharan have unanimously agreed on the choice of architecture. During the tenure of the Applicant as MD, the TCP-IP architecture was eventually phased out and a Multicast Broadcast system was implemented. The applicant/accused being the MD, was not responsible for all alleged wrong-doings including co-location and the appointment of Anand Subramanian as NSE is a large organisational setup with proper and well-defined division of powers/responsibilities. 11.5 The concerned court in order dated 12.05.2022 whereby application for grant of regular bail was rejected erred in relying on contents of the charge sheet dated 21.04.2022 despite that cognizance has not yet been taken, sanction to prosecute the applicant/accused under PC Act has not been obtained by the respondent/CBI and copy of the charge-sheet was not supplied to the applicant/accused. 11.6 The respondent/CBI laid much emphasis on the alleged emails exchanged between the applic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t/respondent that she had ever attempted to tamper with evidence to influence witnesses since the registration of the FIR in 2018. 11.10 The Supreme Court regarding economic offences recently held that even economic offences have different aspects including the gravity of the offence, period of the sentence and other attending circumstances and bail ought not be denied on that basis alone. The learned Senior Counsel relied on Satender Kumar Antil V CBI & another, SLP Crl. No 5191 of 2021 decided on 11.07.2022, P. Chidambaram V Directorate of Enforcement, (2020) 13 SCC 791 and Sanjay Chandra v. CBI, (2012) 1 SCC 40. The learned Senior Counsel stated that the applicant/accused be granted bail on such reasonable terms and conditions as imposed by this court. 12. The Special Public Prosecutor for the respondent/CBI argued at length and also submitted written arguments and argued that present RC was got registered for offences punishable under sections 120-B and 204 IPC; under section 7, 12 & 13(2) read with section 13(1)(d) of Prevention of Corruption Act, 1988 and under section 66 of Information Technology Act, 2000 on 28.05.2018 regarding colocation and passing of confidential info ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oyment documents pertaining to Anand Subramanian were not handed over to HR of NSE or kept in his personal file. The applicant/accused also approved internal approval note dated January 18.01.2013 and also dictated draft contract agreement. HR Department of NSE did not make any communication with Anand Subramanian. There was no interview, medical or advertisement for this post. And Anand Subramanian was directly appointed by the applicant/accused without following the procedure. The applicant/accused did not obtain approval from then MD for designation of the post of Anand Subramaniam as Chief Strategic Advisor to MD. 12.3 Anand Subramanian despite without relevant experience was offered an annual remuneration of Rs. 1.68 crores per annum for working 4 days in a week which was 1100% in comparison to his previous salary. The applicant/accused frequently enhanced compensation of Anand Subramanian without any reasonable basis and performance evaluation and by misusing her official position. 12.4 The applicant/accused re-designated Anand Subramanian as 'Group Operating Officer and Advisor to MD with effect from 01. O4. 2015 vide letter dated 01.04.2015. Anand Subramanian was working ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... present RC was got registered for offences punishable under sections 120-B and 204 IPC; under section 7, 12 & 13(2) read with section 13(1)(d) of PC Act, 1988 and under section 66 of I.T. Act, 2000 dated on allegations of co-location and passing of confidential information to M/s OPG Securities by officials of NSE which led to wrongful gain to M/s OPG Securities. Accordingly the respondent/CBI conducted investigation relating to co-location architectural system of NSE. The applicant/accused is not named as an accused in present FIR. 13.1 The applicant/accused worked as Joint MD in NSE from 2009 till 31.03.2013 and was appointed as MD and CEO of NSE on 1st April, 2013. It was surfaced during investigation that the applicant/accused and Anand Subramanian were known to each other since 1999 and applicant/accused got appointed Anand Subramanian in NSE. SEBI passed an order dated 11.02.22 pertaining to illegal appointment of Anand Subramanian as 'Chief Strategic Advisor' (CSA), his redesignation as 'Group Operating Officer' and Advisor to MD' and sharing of internal confidential information of NSE with unknown person by the applicant/accused. The respondent/ CBI received a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onomy of the country as a whole, thereby posing serious threat to the financial health of the country. 14.1 It was held in Rohit Tandon V ED, AIR 2017 SC 5309 as under:- 21. The consistent view taken by this Court is that economic offences having deep-rooted conspiracies and involving huge loss of public funds need to be viewed seriously and considered as grave offences affecting the economy of the country as a whole and thereby posing serious threat to the financial health of the country. It was also held in Y.S. Jagan Mohan Reddy V Central Bureau of Investigation, (2013) 7 SCC 439 as under:- 15) Economic offences constitute a class apart and need to be visited with a different approach in the matter of bail. Then economic offence having deep rooted conspiracies and involving huge loss of public funds needs to be viewed seriously and considered as grave offences affecting the economy of the country as a whole and thereby posing serious threat to the financial health of the country. 16. While granting bail, the court has to keep in mind the nature of accusations, the nature of evidence in support thereof, the severity of the punishment which conviction will entail, the cha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ave to be gathered from the facts and circumstances arising in each case. Keeping in view the consequences that would befall on the society in cases of financial irregularities, it has been held that even economic offences would fall under the category of "grave offence" and in such circumstance while considering the application for bail in such matters, the Court will have to deal with the same, being sensitive to the nature of allegation made against the accused. One of the circumstances to consider the gravity of the offence is also the term of sentence that is prescribed for the offence the accused is alleged to have committed. Such consideration with regard to the gravity of offence is a factor which is in addition to the triple test or the tripod test that would be normally applied. In that regard what is also to be kept in perspective is that even if the allegation is one of grave economic offence, it is not a rule that bail should be denied in every case since there is no such bar created in the relevant enactment passed by the legislature nor does the bail jurisprudence provides so. Therefore, the underlining conclusion is that irrespective of the nature and gravity of cha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ich is totally separate from the concept of investigation which is concluded by the filing of the charge-sheet. The two are on separate footings. ABUSE OF SERVER ARCHITECTURE OF NSE 17. In regard to abuse of server architecture of SEBI, CBI has registered present FIR pertaining to co-location and passing of information to M/s OPG Securities Pvt. Ltd. by unknown officials of SEBI. The applicant/accused is not named in FIR and no specific allegations are made in FIR against the applicant/accused. The applicant/accused has joined investigation on at Mumbai in pursuance of notice dated 17.02.2022 and at Delhi. The learned Senior Counsel for the applicant/accused argued that the role of the applicant/accused during relevant period was to manage affairs and functions of the NSE but was not directly involved in the ground-level process of handling the technical aspects or servers or access thereto of the stock exchange markets. 17.1 SEBI conducted enquiry in pursuance of complaints made against NSE in respect of its co-location facilities on allegations that NSE and its employees had committed fraudulent and unfair trade practices and violated SECC Regulations which was culminating int ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nted by Mr Ravi Apte and Mr. N. Murlidaran, during tenure of the applicant/accused as MD of NSE from 2013-2016. He further argued that as per allegations of the respondent/CBI that during 2010 to 2014, the accused as named in FIR had abused the server architecture (tick-by-tick) of NSE and as such enabled M/s. OPG Securities Pvt. Ltd. to log-in first to the server of the NSE resulted into unfair advantage was to M/s. OPG Securities Pvt. Ltd. but the applicant/accused is not connected with these allegations and other allegations as made in present FIR. As mentioned hereinabove that the applicant/accused during investigation was found communicating with an unknown person in charge of email ID [email protected] and this fact is also admitted by Anand Subramanian. The Senior Public Prosecutor for the respondent/CBI also argued that the applicant/accused and Anand Subramanian are responsible for CoLocation and team of Ravi Apte and N. Muralidharan which was responsible for setting up the co-location was reporting to Anand Subramanian. The investigation regarding role of the applicant/accused regarding abuse of server architecture (tick-by-tick) of NSE is still underway and as suc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Chief Strategic Advisor at NSE in January, 2013; the applicant/accused did not obtain approval for the appointment of Anand Subramanian from Sh. Ravi Narain, then MD despite designation of the post was "Chief Strategic Advisor to MD"; the draft contract agreement was also dictated by the applicant/accused; HR Head was not aware of any details for processing the recruitment of Anand Subramanian and also did not have any document related to him; the application form of Anand Subramanian was also filled up on a later date; abnormally high initial compensation was fixed and his previous experience was not relevant to the position for which he was appointed at NSE; the applicant/accused enhanced compensation paid to Anand Subramanian at frequent intervals without any reasonable basis and without taking any inputs from HR department; there was no evaluation of performance of Anand Subramanian to be carried out by the applicant/accused besides other facts. 20.4 It was further highlighted by the Senior Public Prosecutor for the respondent/CBI that the applicant/accused by misusing her official position re-designated the post of Anand Subramanian as Group Operating Officer (GOO) & Advisor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and also ratified the decisions taken by the Deputy Managing Director pursuant to delegation of powers made by the Managing Director 22.1 The applicant/accused was also given power vide Board Resolution dated 23.02.2005 to appoint, employ, remove, dismiss, discharge, suspend, re-appoint, re-employ, or replace for the management of the business affairs of the company, officers, managers, secretaries and other employees, solicitors, advocates, accountants, advisers in the areas of systems and software , security, taxation, law accounts, etc technicians, medical practitioners of the company and with such powers and duties and upon such terms as the Deputy Managing Director may think fit. However this power was not absolute and was subject to the superintendence control and direction of the Board of directors and the Managing Director of NSEIL. The appointment of Anand Subramanian was required to be made by the applicant/accused as per procedure and was not subjected to whims and fancies of the applicant/accused. 22.2 Minutes of the 125th Meeting of the Board of Directors of NSE held on 11.08.2015 as referred by the learned Senior Counsel are perused and in this meeting "Delegation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rrested along with Anand Subramanium and other persons against whom the main allegations were registered by the CBI and are believed to be the beneficiaries have not been arrested; the respondent/CBI did not allege that the applicant/accused has ever received any amounts/benefits from the main accused persons/entities out of the alleged crime to show collusion or conspiracy and the applicant/accused was never summoned by CBI to assist in the investigation for a period of nearly 4 years; nature of allegations is primarily documentary and technical in nature and the relevant documents, electronic and physical have already been seized; the applicant/accused has always co-operated with the respondent/CBI in investigation and custodial interrogation of the applicant/accused has already been conducted. The applicant/accused satisfies the triple-test for grant of bail that the applicant/accused is not a flight risk, there is no possibility to tamper with evidence or influencing witnesses by the applicant/accused. 23.1 It is true that the applicant/accused was not named in FIR and was arrested about four years after registration of FIR. The role of the applicant/accused and Anand Subraman ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) with respect to the offences for which investigation is stated to be completed. The submission of the respondent/CBI about completion of investigation for any of the head as mentioned in charge sheet is without any substance. The respondent/CBI has not investigated the offences for which custody of the applicant/accused was sought or given by the concerned court at the time of remand or subsequently while sending the petitioner to judicial custody. 24.2 The Special Judge has continued to extend the judicial custody of the applicant under section 167 of the Code and not under section 309 of the Code due to non-taking of cognizance for want of sanction which is not permissible in law after lapse of period of 60 days from the date of arrest / first remand. The learned Senior Counsel cited Fakhrey Alam V State of UP, 2021 SCC On Line 532; Tunde Gbaja V CBI, 2007 SCC On Line Del 450; M Ravindran V DRI, (2021) 2 SCC 485 and Rakesh Kumar Paul V State of Assam; (2017) 15 SCC 67. 25. The Special Public Prosecutor for the respondent/CBI argued that report under section 173 of the Code was filed within the mandatory period as prescribed under section 167(2) of the Code. The petitioner has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... BI further argued that mere fact that the cognizance is yet to be taken by the Magistrate for want of sanction cannot be consideration for grant of statutory bail in view of the State of Maharashtra V Sharadchandra Vinayak Dongre and others, AIR 1995 SC 231, SFIO V Rahul Modi, AIR 2022 SC 902, Suraj V State of Delhi NCT, Bail Application no. 120/2022 and Deepender Kumar Srivastava V State, MANU/DE/4193/2006. The accused continues to be in the custody of the Magistrate during the period i.e. between section 167 and section 309 of the Code and cannot be deemed to be under illegal custody. The charge sheet filed against the petitioner is complete and is sufficient to take cognizance against the petitioners and as such is not entitled to statutory bail merely because further investigation regarding other transactions is pending. 26. The application filed by the applicant/accused under section 167(2)(a)(ii) of the Code for grant of default bail titled as CBI V Chitra Ramkrishna was dismissed by the court of Sh. Rakesh Kumar-III, Special Judge (PC Act) (CBI)-02, Rouse Avenue, District Courts, New Delhi vide dated 28.05.2022. The relevant portion of order dated 28.05.2022 is reproduced a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s appearing in the concluding part of the charge-sheet would not confer a right upon the accused to claim bail U/s 167(2) of Cr. P. C. Hence, application U/s 167(2) of Cr. P. C. is dismissed. 27. Chapter XII of the Code deals with information to the police and their power to investigate. Section 173 of the Code deals with report of police officer on completion of investigation. Sub section (1) provides that every investigation shall be completed without unnecessary delay. Sub section (2) proves that the investigating officer shall forward the police report or charge sheet after completion of investigation to the magistrate who is empowered to take cognizance. Sub section (8) deals with further investigation if further evidence oral or documentary is obtained by the investigating officer. The Code does not use and define the expression 'charge sheet' or 'final report'. 28. The provisions under the Code relating to remand of an accused during the stage of investigation and after cognizance is taken indicates that the legislature intended investigation of certain crimes to be completed within 60 days or 90 days depending upon nature of offence. The accused acquires an indefeasible r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... equently every time till the accused remains in the custody of the police, but the Magistrate may extend further detention in judicial custody on production of the accused either in person or through the medium of electronic video linkage; (c) no Magistrate of the second class, not specially empowered in this behalf by the High Court, shall authorise detention in the custody of the police. Explanation I. For the avoidance of doubts, it is hereby declared that, notwithstanding the expiry of the period specified in paragraph (a), the accused shall be detained in custody so long as he does not furnish bail. Explanation II. If any question arises whether an accused person was produced before the Magistrate as required under clause (b), the production of the accused person may be proved by his signature on the order authorising detention or by the order certified by the Magistrate as to production of the accused person through the medium of electronic video linkage, as the case may be. Provided further that in case of a woman under eighteen years of age, the detention shall be authorised to be in the custody of a remand home or recognised social institution." In common legal par ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... agency in the completion of the investigation within the period prescribed and the accused is entitled to be released on bail, if he is prepared to and furnishes the bail as directed by the Magistrate. 13.4. When an application for bail is filed by an accused for enforcement of his indefeasible right alleged to have been accrued in his favour on account of default on the part of the investigating agency in completion of the investigation within the specified period, the Magistrate/court must dispose of it forthwith, on being satisfied that in fact the accused has been in custody for the period of 90 days or 60 days, as specified and no chargesheet has been filed by the investigating agency. Such prompt action on the part of the Magistrate/court will not enable the prosecution to frustrate the object of the Act and the legislative mandate of an accused being released on bail on account of the default on the part of the investigating agency in completing the investigation within the period stipulated. 13.5. If the accused is unable to furnish bail, as directed by the Magistrate, then the conjoint reading of Explanation I and proviso to subsection 2 of Section 167, the continued c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sions of the Criminal Procedure Code, and as such, could be violative of Article 21 of the Constitution." 17.1. Article 21 of the Constitution of India provides that "no person shall be deprived of his life or personal liberty except according to procedure established by law". It has been settled by a Constitution Bench of this Court in Maneka Gandhi v. Union of India [Maneka Gandhi v. Union of India, (1978) 1 SCC 248] , that such a procedure cannot be arbitrary, unfair or unreasonable. The history of the enactment of Section 167(2) CrPC and the safeguard of "default bail" contained in the proviso thereto is intrinsically linked to Article 21 and is nothing but a legislative exposition of the constitutional safeguard that no person shall be detained except in accordance with rule of law. 17.2 Under Section 167 of the Code of Criminal Procedure, 1898 ('1898 Code') which was in force prior to the enactment of the CrPC, the maximum period for which an accused could be remanded to custody, either police or judicial, was 15 days. However, since it was often unworkable to conclude complicated investigations within 15 days, a practice arose wherein investigative officers would file 'p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Report No. 41 were taken note of and incorporated by the Central Government while drafting the Code of Criminal Procedure Bill in 1970. Ultimately, the 1898 Code was replaced by the present CrPC. The Statement of Objects and Reasons of the CrPC provides that the Government took the following important considerations into account while evaluating the recommendations of the Law Commission: "3. The recommendations of the Commission were examined carefully by the Government, keeping in view among others, the following basic considerations:- (i) an accused person should get a fair trial in accordance with the accepted principles of natural justice; (ii) every effort should be made to avoid delay in investigation and trial which is harmful not only to the individuals involved but also to society; and (iii) the procedure should not be complicated and should, to the utmost extent possible, ensure fair deal to the poorer sections of the community." 17.6 It was in this backdrop that Section167(2) was enacted within the present day CrPC, providing for time limits on the period of remand of the accused, proportionate to the seriousness of the offence committed, failing which the accu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of personal liberty. Madan B. Lokur, J. in his majority opinion, pertinently observed as follows: "29. Notwithstanding this, the basic legislative intent of completing investigations within twenty four hours and also within an otherwise time bound period remains unchanged, even though that period has been extended over the years. This is an indication that in addition to giving adequate time to complete investigations, the legislature has also and always put a premium on personal liberty and has always felt that it would be unfair to an accused to remain in custody for a prolonged or indefinite period. It is for this reason and also to hold the investigating agency accountable that time limits have been laid down by the legislature... x x x 32...Such views and opinions over a prolonged period have prompted the legislature for more than a century to ensure expeditious conclusion of investigations so that an accused person is not unnecessarily deprived of his or her personal liberty by remaining in prolonged custody for an offence that he or she might not even have committed. In our opinion, the entire debate before us must also be looked at from the point of view of expeditio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... overarching fundamental right guaranteed under Article 21. 17.11 Hence, it is from the perspective of upholding the fundamental right to life and personal liberty under Article 21 that we shall clarify and reconcile the various judicial interpretations of Section 167(2) for the purpose of resolving the dilemma that has arisen in the present case. 31. Various High Courts also deliberated scope and ambit of section 167(2) of the Code. The Kerala High Court in S.M. Purtado V Dy. S.P., C.B.I., Kochin, 1996 Crl.L.J. 3042 observed that the investigation under section 167 of the Code can involve one or more offences against the accused persons. The investigation of a case cannot be split up in such a way to file piece-meal reports before Court. Section 173 of the Code does not stipulate a piece-meal investigation and filing of incomplete charge sheet before Court. It contemplates filing of a charge/refer report after completion of the entire investigation of the case in respect of all offences and where several offences are involved in a case, a charge report could be laid before the court only after the investigation is over and formation of an opinion regarding all the offences alle ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... take cognizance of the case as contemplated under Section 309 of the Code. 12. A Magistrate can take cognizance of an offence only on filing of a report under Section 173(2) of the Code. Unless power is conferred by law, there is no inherent power to remand an accused to custody. Holding so, in the decision reported in Natabar Parida v. State of Orissa , the Supreme Court proceeded to say that under Section 167(2) proviso and under Section 309(2) of the new Code, the power of remand of jail custody conferred on the Magistrate during the pendency of the investigation is only under the former Section and not under the latter Section. The Supreme Court also held that Section 309(2) is attracted only after cognizance of an offence is taken or commencement of the trial has proceeded. 13. A remand under Section 309(2) of the Code can be made only after taking cognizance of the offence. That being the position, in the absence of a final report regarding all the offences alleged to have been committed by the accused persons, it has to be held that the Magistrate has not taken cognizance of the offences as required by Section 309(2) of the Code. The Magistrate is not empowered to order ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nly to the offence under the Foreigners Act, for which, as per proviso to Section 167(2) had to be filed within 60 days. But for the other offences, in respect of which the period prescribed, for filing the charge sheet is 90 days, no charges were indicated. Though the right of the investigating agency to file a supplementary charge sheet, or a further report (under Section 173(8) pursuant to order of the court) cannot be disputed, yet the fact remains that there cannot be part charge sheet, as has been contended in the present case. Therefore, following the decision in S.M.Purtado's case, as well as the Supreme Court ruling in Uday Mohanlal Acharya, it has to be concluded that the petitioner is entitled to be enlarged on bail. This is without prejudice to such other rights the respondents may have in law, to place further materials in support of the case, before the trial Court. 31.2 The Telangana High Court in C. Parthasarthy V Director of Enforcement, Criminal Petitions No 3786, 4127 & 4137 of 2022 decided on 17th May, 2022 after referring M Ravindran held as under:- 16. From the above decision, it is clear that a time limit for completing investigation was incorporated i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s section. 22. From the above decisions, it is clear that a charge sheet can be filed only after the completion of investigation. Investigation is said to be completed if sufficient material is collected by the Investigating Officer based on which cognizance can be taken under Section 167 of the Cr.P.C. 31.2.1 The learned Single Judge of the Telangana High Court also referred M Ravindran wherein the Supreme Court deprecate practice of filing preliminary charge sheets to seek extension of remand beyond the statutory period. It was further observed that it was to discourage such abuse of process that a statutory limit of sixty days was incorporated in Section 167(2) to complete the investigation and file the charge sheet. A complaint/charge sheet filed without completing the investigation cannot be used to circumvent the right of statutory bail under Section 167(2) of the Cr.P.C. 31.3 The Bombay High Court in Sharadchandra Vinayak Dongre V State of Maharashtra, 1991 Mah LJ 656 discussed a distinction between completion of investigation and further investigation and observed that it is only after the completion of investigation and filing of charge sheet that further investigation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Magistrate to take cognizance of the offences. The learned Counsel for the applicants is right in contending that the definition of "police report" as given in the Code cannot be enlarged under the guise of interpretation and it is contended that when the meaning of a statutory provision is plain and clear, the Court should not be impelled by factors like practical difficulties and inconvenience. The learned Counsel appears to be further right when he canvassed that the expression "incomplete charge-sheet" does not occur anywhere in the Code and that forwarding of a "police report" after the completion of the investigation is the requirement of subsection (2) of section 173 of the Code. Any report or statement of facts in the form of an "incomplete chargesheet" does not become "police report" by merely giving a particular nomenclature. 25. The learned Counsel for the State contended that the new provision added in sub-section (8) of section 173 of the Code can be resorted to by the Investigating Officer for collecting further evidence. According to him, it tends to indicate that the investigation is not shut but remains in suspended animation till the police report is sent to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... heet without completing the investigation would defeat the right of the accused to claim default bail under proviso (a) to Section 167(2) Cr.P.C. In this context, it is relevant to note that the Parliament in its wisdom, considering the right of the accused to speedy investigation, stipulated period of time in proviso (a) to Section 167(2) Cr.P.C. stating that in all offences which are punishable with death or life imprisonment or with 10 years imprisonment, the investigation is to be completed within 90 days and in other offences, the investigation is to be completed within 60 days. The Code clearly envisaged that if the prosecuting agency fails to complete the investigation within the said stipulated period of time as contemplated under the Code, the accused is entitled to claim default bail. The said right conferred by the statute on the accused is an indefeasible right and he is entitled to bail as a matter of right on account of the default committed by the prosecuting agency in completing the investigation within the time stipulated by the statute. 20. It is significant to note that a plain reading of proviso (a) to Section 167(2) Cr.P.C. makes it manifest that what is requ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gation is to be completed within the said stipulated period of 90 days or 60 days, as the case may be. Therefore, the Court has to see whether the investigation is completed or not while considering the plea of the accused for grant of default bail. Generally, charge-sheet will be filed only after completion of the investigation. So, when the charge- sheet is filed, it indicates that investigation is completed. Therefore, it is in practice that when the Investigating Agency files the chargesheet that the Courts usually presume that the investigation is completed. However, it is to be noticed that at times, even when the investigation is not fully completed that the police are in the habit of filing preliminary charge-sheet or an incomplete charge-sheet keeping some part of the investigation pending as a clever contrivance and subterfuge to prevent the accused from claiming default bail by exercising his right conferred under the Code. So, Courts must be on guard and should not fall in the trap of such trickery and tactics of the investigating agency when they only file preliminary charge-sheet without fully completing the investigation. Therefore, the real test to be applied to asc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to complete the investigation within the stipulated time, and he is prepared to furnish bail, the Court has no other option except to grant bail to him. The very nature of right which is "indefeasible right" indicates that the said right cannot be defeated or frustrated once accrued to the accused. Even filing of preliminary charge-sheet cannot defeat the said right. 25. Therefore, in the considered opinion of the Court, after analysing the law on the point, it would be more in consonance with the legislative mandate to hold that mere filing preliminary charge-sheet without completing the investigation will not defeat the indefeasible statutory right of the accused to claim for default bail. In a way the right to claim bail by a remanded accused touches the personal liberty of an individual guaranteed under the Constitution of India. Personal liberty is a valuable right of an individual and it is one of the cherished objects of the Indian Constitution. It can be deprived only in accordance with law and in conformity with the provisions thereof, as stipulated under Article 21 of the Constitution. Therefore, when the law mandates that the Magistrate could authorise detention of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er the 61st day or the 91st day, an accused makes an application for being released on bail in default of charge-sheet having been filed, the court has no option but to release the accused on bail. However, once the charge- sheet was filed within the stipulated period, the right of the accused to statutory bail came to an end and the accused would be entitled to pray for regular bail on merits. It was held by this Court that the filing of charge-sheet is sufficient compliance with the provisions of proviso (a) to Section 167(2), CrPC and that taking of cognizance is not material to Section 167. The scheme of CrPC is such that once the investigation stage is completed, the court proceeds to the next stage, which is the taking of cognizance and trial. During the period of investigation, the accused is under the custody of the Magistrate before whom he or she is first produced, with such Magistrate being vested with power to remand the accused to police custody and/or judicial custody, up to a maximum period as prescribed under Section 167(2). 10. It is clear from the judgment of this Court in Bhikamchand Jain (supra) that filing of a charge-sheet is sufficient compliance with the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... led in court was not a final report as contemplated under Section 173(2) of the Code. The submissions were negated by the Special Court by holding that the petitioners were not entitled to statutory bail under Section 167(2) of the Code which was challenged in the High Court of Kerala at Ernakulam. The High Court went through the charge-sheet and found that the materials so disclosed and adverted to in the charge-sheet did show that it was a final report. The High Court dismissed the appeal which was challenged before the Supreme Court. It was observed as under:- 4. Having gone through the charge-sheet, we are not persuaded to take a different view. The materials adverted to show that it was a final report on the facets investigated into by the investigating agency. Furthermore, the requisite sanctions as required under Sections 18 and 18A of the UAPA and so also under Section 7 of the Explosive Substances Act were also accorded by the concerned authorities. The charge-sheet so filed before the learned Special Court was complete in all respects so as to enable the learned Special Court to take cognizance in the matter. Merely because certain facets of the matter called for furthe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Code is concerned. It was also observed that grant of sanction is not contemplated under section 167 of the Code which is related to completion of investigation in respect of different types of cases within a stipulated period and the right of an accused to be released on bail on the failure of the investigating authorities to do so. It was observed as under:- 18. None of the said cases detract from the position that once a charge-sheet is filed within the stipulated time, the question of grant of default bail or statutory bail does not arise. As indicated hereinabove, in our view, the filing of charge-sheet is sufficient compliance with the provisions of Section 167(2)(a)(ii) in this case. Whether cognizance is taken or not is not material as far as Section 167 Cr.P.C. is concerned. The right which may have accrued to the Petitioner, had charge-sheet not been filed, is not attracted to the facts of this case. Merely because sanction had not been obtained to prosecute the accused and to proceed to the stage of Section 309 Cr.P.C., it cannot be said that the accused is entitled to grant of statutory bail, as envisaged in Section 167 Cr.P.C. The scheme of the Cr.P.C. is such that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... submitted therewith, if the Magistrate is satisfied that cognizance of the offence is required to be taken, he shall proceed further in accordance with the provisions of the Code of Criminal Procedure. Section 190(1)(b) CrPC provides that a Magistrate has the power to take cognizance upon a police report of such facts as are provided therein on being satisfied that the case is a fit one for taking cognizance of the offence. Therefore, if the police report and the material filed therewith is sufficient to satisfy the Magistrate that he should take cognizance, his power is not fettered by the label which the investigating agency chooses to give to the report submitted by it under Section 173(2) CrPC. Merely, because the prosecution had filed an application, after submission of the charge-sheet, seeking permission to file "supplementary charge-sheet", it could not affect the jurisdiction of the Magistrate to take cognizance, if he was otherwise satisfied from the material placed before him along with the chargesheet that cognizance of the offence was required to be taken. It is the jurisdiction of the Magistrate and Magistrate alone to decide whether the material placed by the prosecu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gating agency cannot circumvent section 167(2) of the Code by filing incomplete charge sheets. The police report or charge sheet cannot be send within the meaning of section 173 (2) till the investigation is completed and any report sent before the investigation is completed will not be a police report within the meaning of section 173 (2) of the Code. viii) The incomplete charge sheet filed without completing the investigation cannot be used to defeat the right of statutory bail under Section 167(2) of the Code. ix) The right of the accused to statutory bail came to an end once the charge sheet is filed within the stipulated period. The filing of charge sheet is sufficient compliance with the provisions of section 167(2) of the Code and taking of cognizance is not material to Section 167. x) There can only be one charge sheet but there is no restriction on filing of number of supplementary charge sheets. xi) The charge-sheet can be said to be complete when it enable the court to take or not to take cognizance of the offence after application of mind and if certain facets called for further investigation does not render such report anything other than a final report. xii) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... IPC is sufficient compliance of section 167 (2) of the Code to deny statutory bail or default bail to the applicant/accused as argued by the respondent/CBI or said charge sheet is incomplete or piece meal charge sheet and does not fall within ambit of section 167(2) of the Code as argued by the learned Senior Counsel for the applicant/accused. 42. In view of the legal position pertaining to section 167(2) of the Code as discussed hereinabove, section 173 of the Code only permits filing of a final report after completion of the entire investigation in respect of all offences and does not permit a piece-meal investigation and filing of incomplete charge sheet before Court. The charge sheet filed by the respondent/CBI is a piece meal charge sheet and is not filed in respect all offences subject matter of present FIR. The respondent/CBI is not legally permitted to pick one portion of investigation and to complete it and thereafter file piece meal charge sheet in respect of few offences subject matter of FIR and to left open investigation in respect of other offences and subsequent filing of charge sheet in respect of left over offences. This would be complete negation of section 167( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Special Court was complete in all respects so as to enable the learned Special Court to take cognizance and merely because certain facets of the matter called for further investigation it does not deem such report anything other than a final report and dismissed the special leave petition. In present case substantial investigation arising out of present FIR is still pending and even allegations as made in charge sheet filed on 21.04.2022 regarding illegal appointment of Anand Subramanian are also directly related to pending investigation pertaining to abuse of server architecture. 42.1.2 In Dinesh Dalmia V C.B.I., the Supreme Court observed that a charge sheet is a final report within the meaning of Sub-section (2) of Section 173 of the Code and is filed if it enables the court to apply its mind as to whether cognizance of the offence thereupon should be taken or not and the power of the investigating officer for making further investigation in terms of section 178 (8) of the Code is not taken away only because a charge sheet under Sub-section (2) thereof has been filed. A further investigation is permissible even if order of cognizance of offence has been taken by the Magist ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and was filed by mentioning therein the relevant sections. The Special Judge did not appreciate difference between incomplete investigation and further investigation and accepted both phrases as carrying same meaning. The Special Judge did not correctly observed and held that the charge-sheet filed on 21.04.2022 clearly describes details of all the material collected by the IO/Investigating agency during the investigation regarding role played by the applicant/accused and Anand Subramanium. The charge sheet filed on 21.04.2022 was confined to the investigation related to alleged illegal appointment of Anand Subramanian and subsequent re-designation and is not related to their role in abuse of server architecture. There can only be one charge sheet out of investigation although there is no restriction on filing of number of supplementary charge sheets. The decision in Y.S. Jagan Mohan Reddy V CBI cited by the Special Public Prosecutor for the respondent/CBI where in one RC several transactions were investigated regarding which separate charge-sheets were filed and the cases were tried as separate cases after taking cognizance and the Supreme Court refused to consider pendency of inv ..... X X X X Extracts X X X X X X X X Extracts X X X X
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