:1: IN THE HIGH COURT OF JUDICATURE AT BOMBAY CRIMINAL APPELLATE JURISDICTION CRIMINAL APPLICATION NO. 425 OF 2006 Mr Dayanand B. Nayak ...Applicant. V/s State of Maharashtra ...Respondent. --- Shri Shirish Gupte, Sr. Advocate with S.V. Marwadi for the applicant. Shri S.R. Borulkar, P.P. with Shri D.S. Mahispur, APP and Ms. Rajeshree M. Gadhvi, APP for the State. ALONG WITH CRIMINAL APPLICATION NO.426 OF 2006 Mrs. Komal Daya Nayak ...Applicant. V/s State of Maharashtra ...Respondent. -- Shri A.P. Mundargi, Sr. Advocate with Shri S.V. Marwadi for the applicant. Shri S.R. Borulkar, P.P. with Shri D.S. Mahispur, APP and Ms. Rajeshree M. Gadhvi, APP for the State. --- ALONG WITH CRIMINAL APPLICATION NO.427 OF 2006 Rajendra Prabhakar Padte ...Applicant. V/s The State of Maharashtra ...Respondent. --- Shri S.V. Marwadi with Shri Ganesh Gole for the applicant. Shri S.R. Borulkar, P.P. with Shri D.S. Mahispur, APP and Ms. Rajeshree M. Gadhvi, APP for the State. --- :2: CORAM: CORAM: CORAM: V.M. KANADE, J. V.M. KANADE, J. V.M. KANADE, J. DATE: DATE: DATE: 7th & 8th February, 2006 7th & 8th February, 2006 7th & 8th February, 2006 P.C: 1. Heard the learned Counsel appearing on behalf of each of the applicants and the learned Chief Public Prosecutor for the State. 2. All these three applications can be disposed of by a common order since the facts in all the three cases are interlinked and secondly the arguments have been advanced by the learned Counsel for the applicants in these three applications one after another and the learned Chief Public Prosecutor has given reply to all the three applications which have been filed. Essentially, the relief which is claimed in all these three applications is that the applicants are seeking an order of anticipatory bail in the event of their arrest in connection with the FIR which is filed on 20/1/2006 in which it is inter alia alleged that the applicant Shri Dayanand Nayak has misused his position as a public servant and other two applicants viz. Smt. Komal Dayanand Nayak - the wife of the public servant and Shri Padte - the applicant in the third application, had abetted the public servant in amassing wealth which was disproportionate to the :3: known sources of his income and, therefore, the public servant has committed an offence punishable under section 13(1)(e) of the Prevention of Corruption Act, 1988 (hereinafter called "the said Act") and the other two applicants viz. the wife of the public servant and his alleged friend Shri Padte had abetted him in the commission of the said offence and were, therefore, liable to be prosecuted under the provisions of section 13(1)(e) of the said Act read with section 109 of the Indian Penal Code. SUBMISSIONS: SUBMISSIONS: SUBMISSIONS: 3. Shri Gupte, the learned Counsel appearing on behalf of the public servant submitted that the perusal of the FIR discloses that sanction to investigate was granted long time ago and that the investigation was complete as is disclosed from the details which are mentioned in the FIR and, therefore, further custodial interrogation of the public servant was not at all necessary. He further submitted that the public servant had already been suspended and he had no access to the documents or files which are already seized by the Investigating Officer and, therefore, the question of tampering with these documents also did not arise. He invited my attention :4: to the FIR and the details which were given in the FIR regarding various allegations which were made against the public servant and his wife and Shri Padte. He submitted that in cases where the allegations are made under the provisions of section 13(1)(e), custodial interrogation rarely takes place and the applicant is produced before the special court and he is released on bail as a matter of course since there is no question of there being recovery at the instance of the accused or for the purpose of interrogating him personally in respect of the documents which are already seized. He further submitted that apart from the fact that custodial interrogation was not necessary, in the present case, the various events which are mentioned in the application disclose that the action which was being initiated against him was nothing but a malafide action at the behest of certain Officials in the Department and as a result of an enmity which was created between the public servant and the underworld elements which were offended as a result of his meritorious service and, therefore, an attempt was made to remove him from the office. He further submitted that, initially, the allegations were made against him by one Ketan Tirodkar who is an accused in MCOC Case which is still pending before the Special Court, who had made allegations against the :5: present applicant - public servant that he had links with the underworld and that he had donated an amount of Rs 1 crore to a School at his native place which was being run in the name of his mother. He submitted that after these allegations were made, inquiry was made at the highest level in the Department and he was exonerated in the said inquiry by the high ranking Officer and in the said inquiry it transpired that only an amount of Rs 10,000/- was donated by the public servant to the said School and none of the donors had claimed that this amount had been paid on account of any force or threat or under coercion from the public servant. He submitted that after the said journalist - Ketan Tirodkar failed in his attempt to implicate the present applicant in the said case, another allegation was made that the applicant - Shri Dayanand Nayak had links with the underworld and, therefore, the provisions of MCOC Act should be made applicable to him. He submitted that in the case of these allegations also an inquiry was made pursuant to the directions which were given by the High Level Committee and in the said inquiry also, the applicant Shri Dayanand Nayak was exonerated and it was established that he had no links with the underworld and, therefore, the provisions of MCOC Act were not made applicable to him. Shri Gupte, the learned :6: Counsel, submitted that after having failed in the second attempt to implicate the present applicant the said Ketan Tirodkar and others did not want to leave any stone unturned to ensure that the applicant is removed from the service and, therefore, he submitted that the Writ Petition bearing No.64 of 2006 was filed by the said Ketan Tirodkar before the Division Bench of this Court in which the following prayers were made. A] Ordering the Bureau of Anti-corruption to deposit the records and proceedings of the investigations against PSI Nayak and his wife with this Hon’ble Court forthwith; B] Ordering the Director Genera Anti-corruption to file affidavit as to whether there is a prima-facie case against PSI Nayak and his wife and the figures and numbers given by me in this petition are true; C] Ordering immediate suspension and arrest of PSI Nayak; if my contentions are corroborated by the material submitted by the State in this regard. :7: D] Ordering the Director General of Police, State to offer a tightest possible security cover at my residence and for me and my parents till the private complaint proceedings are being conducted in the Court of MCOCA in Special Case 4 of 2003;" E] Any other such relief as this Hon’ble Court may think proper in the interest of justice." He submitted that, thereafter, the Division Bench of this Court on 31/1/2006 passed the following order:- "P.C. "1. We have heard the Petitioner present in person and Mr. Borulkar learned P.P. as well as Mrs. Kantharia A.P.P. for the State. 2. The Petitioner has expressed his serious apprehensions regarding the ongoing investigations by the Anti Corruption Bureau into the disproportionate assets allegedly held/possessed by Mr. Daya Nayak, Police Sub-Inspector under the Mumbai Commissionarate and his family members and therefore, he has :8: prayed for directions in that regard. We have been informed that on the basis of the preliminary report submitted, FIR has been lodged against Mr. Nayak and Mr. Bhonge, Asstt. Commissioner of Police ACB Mumbai has been appointed as the Investigating Officer. We are prima facie satisfied that the issues raised by the Petitioner require considerations. Hence rule. 3. So far as the issue of police protection to the Petitioner is concerned the learned P.P. on instructions states that the Order passed by this Court on 4th November 2003 in that regard in Criminal Writ Petition No. 1573 of 2003 will be followed and implemented by the Police Commissioner, Thane. We order accordingly and at the cost of the State. . The Director General of Anti Corruption Bureau will place before us the progress report into the ongoing investigations every 2 weeks and we are sure that the Investigating Officer and/or the Director General, Anti :9: Corruption Bureau would take appropriate steps, for seizure/attachment of all the properties concerned. In case the Petitioner approaches the I.O., his statement shall be recorded as part of the ongoing investigation. . Liberty to apply for the earlier disposal of the Petition, on completion of the investigation." He further submitted that after the aforesaid Writ Petition was filed, the present complaint had been filed on 20/1/2006. He submitted that, therefore, there was sufficient material which smacked of malafide intention on the part of the said journalist Shri Ketan Tirodkar who himself was an accused in MCOC Case and had, on his own admission, links with the underworld gangster Chhota Shakil. The learned Counsel also invited my attention to the judgment of the Supreme Court in the case of Gurbaksh Singh Sibbia etc. vs The State of Punjab reported in AIR 1980 SC AIR 1980 SC AIR 1980 SC 1632 1632 1632. He submitted that the Supreme Court while considering the guide lines which were laid down by the Full Bench of the Punjab and Haryana High Court had, in terms, set aside the guide lines which were laid down by the Full Bench of Punjab and Haryana High :10: Court in respect of the cases pertaining to the Prevention of Corruption act and held that such a premise or guide line could not be laid down and what was essential in a case where an application under section 438 is filed was to see whether there was sufficient material on record to indicate that the malafide action was being initiated. He also invited my attention to the other observations of the Supreme Court in the said judgment and the guide lines which were laid down by the Supreme Court while considering the said case. He, therefore, submitted that this is a fit case where investigation was already going on for a period of more than one year and, therefore, the question of custodial interrogation did not arise. He further pointed out that the applicant Dayanand Nayak was made a target by various other Officials who had links with the underworld and, therefore, if the applicant is taken into custody, there is every possibility of there being danger to his life and to the life of his wife and, therefore, he submitted that the investigation could be carried out without the applicant and his wife being taken into custody. 4. Shri Mundargi, learned Counsel appearing on behalf of Smt. Komal Dayanand Nayak - wife of Shri Dayanand Nayak, submitted that so far as the said applicant is :11: concerned, she was employed since 1989 and had worked initially at Chennai with one P. Rajaratnam and, thereafter, she was transferred to Mumbai and was working with the Company known as Ojus Housing Finance Pvt. Ltd. He submitted that the FIR discloses that the income of the said applicant prior to 2000-2001 had not been taken into consideration though she had worked since 1989. He further submitted that all the entries in the accounts of the said Company - Ojus Housing Finance Pvt. Ltd. were the entries where monies were deposited by cheques. He submitted that though Ojus Housing Finance Pvt. Ltd. was purchased by the wife of the applicant - Dayanand Nayak in the year 2002, subsequently, she had resigned from the said Company and an intimation to that effect had been given to the Registrar of Companies. He pointed out from the various allegations which were made in the FIR against his client that the said transactions were in no way concerned with the public servant and that they were transactions where the other persons viz. P. Rajaratnam, Manivelan and Naidu were involved who had made representations to various persons in Punjab and other places and who had deposited the said amount in the accounts of the said Company. Some cheques were dishonoured. Some cheques were honoured and the amounts were withdrawn by her in cash and payments had :12: been made. He submitted that in respect of the amounts which were received from the persons from Punjab are concerned, a complaint had been registered against various persons and the investigation had been carried out separately in respect of the assurances which were given by Shri Naidu, Manivelan and others and the applicant Mrs. Komal Dayanand Nayak had not met the complainant in the said complaint and she neither had any concern with the said transaction nor had her husband any connection with the said transaction as his name also had not figured anywhere in the complaint which was filed by the people in Punjab. He submitted that it was not a case of Benami transactions as the persons who had deposited the amount from Punjab were not fictitious persons but their existence was beyond doubt and they had prosecuted the persons who were responsible for perpetrating the fraud. He immediately invited my attention to the other entries which were made in the FIR and strenuously submitted that all those entries indicated, at the highest, that certain cheques were deposited in the Bank Accounts of the Company which cheques, though the amounts involved were huge, had been dishonoured. He submitted that all these transactions did not in any way establish any link with the public servant - Dayanand Nayak and, :13: therefore, it could not be said that Smt. Komal Nayak - the applicant had abetted her husband in acquiring and amassing the wealth. He invited my attention to the judgment of the Supreme Court in the case of D.S. Chennai Vs. K. Inbasagaran reported in 2006 All M.R. (Cri) 304 (S.C.) wherein the Supreme Court had held that if the wife of the public servant had taken responsibility towards the unaccounted money which was found in the house which was raided by the party of the Income-tax Department, that was sufficient explanation, though the wife, in her statement, had admitted that she had committed a breach of the provisions of the Income-tax Act or had committed breach of other provisions of law by selling machinery of the Company. He invited my attention to the observations made by the Supreme Court in the said case. He further submitted that so far as the three flats which were said to have been acquired by the wife of the applicant, he submitted that the documentary evidence indicated that one was taken on lease, the other flat was purchased for a consideration of Rs 10 lakhs which was, in fact, the value which was arrived at on the basis of 300 times rent of the said flat and lastly the third flat had been purchased by her by obtaining a loan from the Bank and part of the amount was paid in cash and the :14: said amount of loan had not been repaid. He submitted that, therefore, so far as these three properties are concerned, there is sufficient material to indicate that the allegations made by the Investigating Officer in the FIR was prima facie not correct and that a fishing and roving inquiry was being made in respect of the affairs of the Company where the applicant - Smt. Komal Nayak had interest alongwith some other persons who were unconnected with the public servant Shri Dayanand Nayak. He submitted that the custodial interrogation of the applicant who is the wife of the public servant was not essential and, therefore, she was entitled to be released on bail in the event of her arrest in connection with the said case. 5. Shri Marwadi, the learned Counsel appearing on behalf of Shri Padte in the third application submitted that there were three allegations which were levelled against the applicant Shri Padte; one was regarding acquisition of Sumo Jeep and a mercedez car and the second in respect of the amount of Rs 13 lakhs which were received by him after withdrawing the same from the Bank and third was in respect of the flat where he was residing. Shri Borulkar, the learned Chief Public Prosecutor, at this stage, clarified that so far as the flat which was in occupation of Shri :15: Padte is concerned, no allegations were made and, therefore, Shri Marwadi did not address the Court on that aspect of the matter. So far as the two vehicles i.e. Sumo Jeep and Mercedez Car are concerned it is submitted that Mercedez Car was purchased in 2002 on behalf of Shri Manivelan, Director of Deve Paints Ltd., who did not have documentary evidence to indicate his residence in Mumbai and, therefore, for RTO purpose the said Car was purchased by him at Mumbai since he was residing in Mumbai and had documents to that effect and later on the said Car had been sold at the instance of Manivelan. He further submitted that so far as Sumo Jeep is concerned, he had purchased the same on loan and there was sufficient documentary evidence to that effect. So far as the amount of Rs 13 lakh was concerned, he submitted that the applicant Shri Padte had sufficient income to indicate how he had acquired that amount. 6. Shri Marwadi, the learned Counsel appearing on behalf of the applicant Shri Padte, adopted the legal submissions made by the learned Counsel Shri Gupte and Shri Mundargi on the question of grant of anticipatory bail in cases of the Prevention of Corruption Act. :16: 7. Shri Borulkar, the learned Chief Public Prosecutor very vehemently, strongly and stoutly opposed the anticipatory bail applications which are filed by the applicants. He submitted that filing of FIR was just an initial step from which the investigation was initiated and that was not a final step as the FIR had been filed after the discreet investigation was made on instructions from the Competent Authority and material had been acquired and only after the Investigating Officer was satisfied that certain material exists, the said FIR had been filed. He, at the outset, denied the allegations made by the learned Counsel Shri Gupte that this FIR has been filed as a result of the allegations which were made by Shri Ketan Tirodkar. He submitted that, at the most, it was a mere coincidence that the Writ Petition had been filed by Shri Ketan Tirodkar in this Court on 16/1/2006 and that the complaint had been lodged on 20/1/2006. He submitted that the perusal of the FIR clearly indicated that there were certain unanswered questions which needed to be probed further and this was possible only after custodial interrogation of the applicants was done by the persons who are expert in the field so that certain answers could be solicited to these unanswered questions. He submitted that, essentially, the firms which were set up by the wife :17: of the public servant were fictitious firms which had been established for the purpose of collecting funds and illegal gratification which was thereafter converted and the money laundering was made through these firms. He invited my attention to various instances which were mentioned in the FIR and particularly the statement which was made by Shri Padte wherein he had stated that the cheque which was received by Smt. Komal Dayanand Nayak was deposited in the Bank and Shri Dayanand Nayak and his wife had asked him to withdraw the amount of Rs 13 lakhs. He submitted that this was one instance which was reflected from the said FIR and it was essential to find out whether there were more such instances of the money removed from the Banks through third person for the benefit of the public servant Shri Dayanand Nayak and his wife Smt. Komal Dayanand Nayak. He submitted that the accounts of the Company showed that huge cheques for the amount of Rs 15 crores, 30 crores etc. were deposited and that though these cheques were dishonoured, no steps appear to have been taken by Smt. Komal Dayanand Nayak for recovery of these amounts or no information was forthcoming regarding the further steps in respect of the said transaction. He submitted that even in respect of the monies which were received from Punjab, all these amounts were :18: withdrawn only by one person viz. Smt. Komal Dayanand Nayak in cash and it was not clear as to what had happened to the amount which was withdrawn. He submitted that though it was alleged that the applicant - Smt. Komal Nayak was only a employee working with the said P. Rajaratnam, subsequently she had been taken as a Director and, thereafter, she had purchased the Company for a sum of Rs 20,000/- and though there was one other Director viz. the brother-in-law of the public servant Shri Dayanand Nayak, the entire account was operated only by Smt. Komal Dayanand Nayak. He submitted that, therefore, it was essential to further interrogate the applicants in order to find out the actual nature of the transaction and that this was possible only after the applicants were interrogated by the Police. He, thereafter, submitted in reply to the submissions made by the learned Counsel for the applicants on the question of malafide and submitted that if the Police Department wanted to take revenge against the applicant Shri Dayanand Nayak, they could have very well involved him in two complaints which were filed against him. He submitted that particularly in the case where a complaint was sought to be lodged against Shri Dayanand Nayak under the provisions of MCOC Act, if at all the intention of the Department was :19: malafide, they could have involved him in the said offence. However, the Department did not take any such steps and when no material was found against the public servant, he submitted that the applicant Shri Dayanand Nayak had been exonerated in the inquiries which were initiated by the High Level Committee. He submitted that if the intention of the Department was to eliminate him, they could have done so in the earlier two inquiries. He submitted that the present case, however, had been filed after the initial investigation had been carried out and though the applicant may have been earlier exonerated, it was in case of an inquiry which was launched on other issues and, therefore, the inquiry could not be equated with the investigation of a criminal complaint which was lodged under the provisions of the Prevention of Corruption Act. He submitted that, therefore, the allegation regarding malafide was not made out and, therefore, there was no material to indicate that the Department had acted in a malafide manner. He relied upon two judgments of the Supreme Court in the case of K.K. Jerath Vs. Union Territory, Chandigarh and Others reported in 1998 SCC (Cri) 809 1998 SCC (Cri) 809 1998 SCC (Cri) 809 and in the case of State of A.P. Vs. Bimal Krishna Kundu and another reported in (1997) 8 SCC 104 (1997) 8 SCC 104 (1997) 8 SCC 104 in support of his submissions wherein the Supreme Court has held that :20: wherever the Government felt, in public interest, it was essential to investigate into the case, the Government should be