In a big jolt to former Finance Minister – P Chidambaram, the Supreme Court most recently on September 5, 2019 in the notable judgment titled P Chidambaram Vs Directorate Of Enforcement in Criminal Appeal No. 1340 of 2019 (Arising out of SLP (Cri.) No. 7523 of 2019) has dismissed the fervent plea of pre-arrest bail plea made by him. It has also made some important observations vis-à-vis application of Prevention of Money Laundering Act and the scope of power vested under Section 438 of CrPC to grant anticipatory bail. The Bench of Apex Court comprising of Justice R Banumathi and Justice AS Bopanna also made it clear that though it disapproved the approach of the High Court Judge in extracting the note produced by the Enforcement Directorate but agreed with his conclusion that it is not a case fit to grant anticipatory bail.
To start with, the ball is set rolling in this noteworthy judgment authored by Justice R Banumathi for herself and Justice AS Bopanna by first and foremost observing in para 2 after granting leave in para 1 that, “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 crore 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.”
Going forward, it is then pointed out in para 3 that, “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 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 (Cri.) 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.”
What’s more, it is then brought out in para 4 that, “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 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.”
Furthermore, it is then also brought out in para 5 that, “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 percent 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 Minister-the 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 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.”
Moving on, para 6 then further states that, “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.”
What is even more damning is what is stated in para 7 that, “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 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.”
Be it noted, it is then illustrated in para 8 that, “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.”
While continuing in the same vein, it is then envisaged in para 9 that, “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 preferred this appeal.”
More importantly, it is then very rightly pointed out in para 55 that, “Of course, while considering the request for anticipatory bail and while perusing the materials/note produced by the Enforcement Directorate/CBI, the learned Single Judge could have satisfied his conscience to hold that it is not a fit case for grant of anticipatory bail. On the other hand, the learned Single Judge has verbatim quoted the note produced by the respondent-Enforcement Directorate. The learned Single Judge was not right in extracting the note produced by the Enforcement Directorate/CBI which in our view, is not a correct approach for consideration of grant/refusal of anticipatory bail. But such incorrect approach of the learned Single Judge, in our view, does not affect the correctness of the conclusion in refusing to grant of anticipatory bail to the appellant in view of all other aspects considered herein.”
Of course, while clarifying that pre-arrest bail should be given only in exceptional cases, it is then made absolutely clear in para 67 that, “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 the exceptional circumstances exist to resort to that extraordinary remedy.”
Needless to say, it is then clarified in para 69 that, “Article 21 of the Constitution of India states that no person shall be deprived of his life or personal liberty except according to procedure prescribed by law. However, the power conferred by Article 21 of the Constitution of India is not unfettered and is qualified by the later part of the Article i.e. “…except according to a procedure prescribed by law.” In State of M.P. and another v. Ram Krishna Balothia and another (1995) 3 SCC 221, the Supreme Court held that the right to anticipatory bail is not a part of Article 21 of the Constitution of India and held as under:-
“7. …..We find it difficult to accept the contention that Section 438 of the Code of Criminal Procedure is an integral part of Article 21. In the first place, there was no provision similar to Section 438 in the old Criminal Procedure Code. The Law Commission in its 41st Report recommended introduction of a provision for grant of anticipatory bail. It observed:
“We agree that this would be a useful advantage. Though we must add that it is in very exceptional cases that such power should be exercised.”
In the light of this recommendation, Section 438 was incorporated, for the first time, in the Criminal Procedure Code of 1973. Looking to the cautious recommendation of the Law Commission, the power to grant anticipatory bail is conferred only on a Court of Session or the High Court. Also, anticipatory bail cannot be granted as a matter of right. It is essentially a statutory right conferred long after the coming into force of the Constitution. It cannot be considered as an essential ingredient of Article 21 of the Constitution. And its non-application to a certain special category of offences cannot be considered as violative of Article 21.” [underlining added]”
Frankly speaking, it is then conceded in para 70 that, “We are conscious of the fact that the legislative intent behind the introduction of Section 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 under Article 21 of the Constitution of India.”
While explaining why anticipatory bail should not be given at the stage of investigation and in economic offences, it is then usefully pointed out in para 81 that, “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, we are of the view that it is not a fit case to grant anticipatory bail.”
Most importantly, while explaining why bail should not be given to P Chidambaram, it is then held in para 82 that, “In a case of money-laundering where it involves many stages of “placement”, “layering i.e. funds moved to other institutions to conceal origin” and “interrogation i.e. funds used to acquire various assets”, it requires systematic and analysed investigation which would be of great advantage. As held in Anil Sharma, success in such interrogation would elude if the accused knows that he is protected by a pre-arrest bail order. Section 438 Cr.P.C. is to be invoked only in exceptional cases where the case alleged is frivolous or groundless. In the case in hand, there are allegations of laundering the proceeds of the crime. The Enforcement Directorate claims to have certain specific inputs from various sources, including overseas banks. Letter rogatory is also said to have been issued and some response have been received by the department. Having regard to the nature of allegations and the stage of the investigation, in our view, the investigating agency has to be given sufficient freedom in the process of investigation. Though we do not endorse the approach of the learned Single Judge in extracting the note produced by the Enforcement Directorate, we do not find any ground warranting interference with the impugned order. Considering the facts and circumstances of the case, in our view, grant of anticipatory bail to the appellant will hamper the investigation and this is not a fit case for exercise of discretion to grant anticipatory bail to the appellant.”
Finally, it also cannot be lost on us as to what is then held in the last para 83 that, “In the result, the appeal is dismissed. It is for the appellant to work out his remedy in accordance with law. As and when the application for regular bail is filed, the same shall be considered by the learned trial court on its own merits and in accordance with law without being influenced by any of the observations made in this judgment and the impugned order of the High Court.”
What followed next was as we saw how a Delhi court on September 5 sent former Union Home Minister and former Finance Minister – P Chidambaram to custody till September 19 in Tihar jail in the INX Media case even as another court granted anticipatory bail to him and his son Karti in the Aircel-Maxis money laundering case. Special Judge Ajay Kumar Kuhar said that, “Having considered all the facts and circumstances of the case, the nature of offences and the stage of investigation, which is still in progress, the accused is remanded in judicial custody till September 19.” In other words, P Chidambaram will be in judicial custody in Tihar jail for the next fourteen days from September 5 to September 19! After being sentenced, P Chidambaram was taken in a blue police bus to Tihar prison from a special CBI court in Rouse Avenue – a distance of 18 km and was ironically lodged in the same jail No. 7 where his son Karti was locked up for 12 days in the same case last year. This is so because Jail No. 7 usually houses those facing ED cases. This is also the first time that a former Union Finance Minister and also a former Union Home Minister has been sent to Tihar jail! But all is not over for Chidambaram.
In conclusion, there can be no gainsaying that his vastly experienced legal team comprising of senior lawyers like Kapil Sibal and Abhishek Manu Singhvi are certainly not going to give up so easily! They will certainly strive to again try more harder when his case comes up for regular bail in a trial court! But they too must have now realized that the going would not be so smooth as they had anticipated earlier which they saw for themselves first in Delhi High Court and now in the Supreme Court!