Case: P. CHIDAMBARAM Vs. DIRECTORATE OF ENFORCEMENT

3. The genesis of the case in question lies in FIR No. RC2202017-E0011 dated 15.5.2017, registered by the CBI under section 120-B r/w 420 IPC and sections 8 and 13 (2) r/w 13 (1) (d) of PC Act against some known and unknown suspects with allegations that M/s INX Media Private Limited (accused no. 1 in the FIR) sought approval of Foreign Investment Promotion Board (FIPB) for permission to issue by way of preferential allotment, certain equity and convertible, non-cumulative, redeemable preference shares for engaging in the business of creating, operating, managing and broadcasting of bouquet of television channels. The company had also sought approval to make a downstream financial investment to the extent of 26% of the issued and outstanding equity share capital of M/s INX News Private Limited (accused no. 2). The FIPB Board recommended the proposal of INX Media for consideration and approval of the Finance Minister. However, the Board did not approve the downstream investment by INX Media (P) Ltd. in INX News (P) Ltd. Further, in the press release dated 30.5.2007 issued by the FIPB Unit indicating details of proposals approved in the FIPB meeting, quantum of FDI/NRI inflow against M/s INX media was shown as Rs. 4.62 crores. Contrary to the approval of FIPB, M/s INX Media Pvt. Ltd. deliberately and in violation of conditions of approval, made a downstream investment to the extent of 26% capital of INX News and also generated more than Rs. 305 crores FDI in INX Media (P) Ltd. against the approved foreign inflow of Rs. 4.62 crores is the allegation. A complaint is stated to have been received by the investigation wing of the Income Tax department which sought clarifications from the FIPB Unit of Ministry of Finance. The FIPB Unit vide letter dated 26.5.2008, sought clarifications from M/s INX Media Limited. It was further alleged in the FIR that upon receipt of this letter, M/s INX Media in order to avoid punitive action entered into criminal conspiracy with Mr. Karti Chidambaram (accused no. 3 in the FIR who is the son of the appellant). Mr. Karti Chidambaram is alleged to have exercised his influence over the officials of FIPB unit which led to the said officials showing undue favour to M/s INX News (P) Ltd. Thereafter by deliberately concealing the investment received in INX Media (P) Ltd., M/s INX News (P) Ltd. again approached the FIPB Unit and sought permission for the downstream investment. This proposal was favourably considered by the officials of ministry of finance and approved by the then Finance Minister. It was also stated in the FIR that Mr. Karti Chidambaram, in lieu of services rendered to M/s INX Group, received consideration in the form of payments. Information disclosed that invoices for approximately Rs. 3.5 crores were got raised in favour of M/s INX Group in the name of companies in which Mr. Karti Chidambaram was having sustainable interests either directly or indirectly. The appellant herein, who was the then Union Finance Minister, was not however named in the said FIR4. On the basis of the aforementioned FIR, the Respondent Directorate of Enforcement registered a case ECIR/07/HIU/2017 (hereinafter referred to as ECIR case) under section 3 of Prevention of Money Laundering Act, 2002 (hereinafter PMLA), punishable under section 4 of the said Act against the accused mentioned in the FIR. The allegations in the said ECIR case were the same as those in the aforementioned FIR. The appellant was not named an accused in this case as well5. On 23.7.2018, apprehending his arrest by the Respondent, the appellant filed an application before the High Court of Delhi seeking grant of anticipatory bail in the aforementioned ECIR case. The High Court extended interim protection to the appellant until 20.8.2019, when the appellants application seeking anticipatory bail was dismissed6. The appellant then approached this court by filing Criminal Appeal No. 1340 of 2019 (arising out of SLP (Crl.) No. 7523 of 2019) wherein while dismissing the appeal of the appellant, the court concluded that in the instant case, grant of anticipatory bail to the appellant will hamper the investigation and that this is not a fit case for exercise of discretion to grant anticipatory bail. This court applied the following rationale for coming to the said conclusion: there are sufficient safeguards enshrined in the PMLA to ensure proper exercise of power of arrest; grant of anticipatory bail is not to be done as a matter of rule, especially in matters of economic offences which constitute a class apart. Regard must be had to the fact that grant of anticipatory bail at the stage of investigation may frustrate the investigating agency in interrogating the accused and in collecting useful information and also materials which might have been concealed7. In the meanwhile, on 21.8.2019, the appellant was arrested in the CBI case (arising out of the above-mentioned FIR). Since then he has been in custody. In the ECIR case, he was arrested on 16.10.2019 on the grounds that payment of approx. Rs. 3 crores was made at the appellants instance to the companies controlled by his son on account of FIPB work done for INX Group. Further it was stated in the grounds of arrest that the investigation is not fruitful due to the appellants non-cooperation; the appellant has withheld relevant information which is within his exclusive knowledge and thus his custodial interrogation is necessary8. After dismissal of his application seeking anticipatory bail by this court, the appellant moved an application dated 5.9.2019 praying to surrender before the Trial Court (Court of Special Judge (PC Act), CBI) in the ECIR case. This application was rejected on 13.9.2019 in view of the submission on behalf of the respondent Directorate that it was not willing to arrest the appellant at that particular stage since it was completing investigation pertaining to some aspect of the money laundering and only on this background investigation was completed, the interrogation of the appellant would be meaningful. Thereafter, on 11.10.2019, the Respondent Directorate moved an application u/s 267 CrPC seeking issuance of production warrant against the appellant for the purpose of arrest and remand. The allegations which were levelled against the appellant in this application are that in lieu of granting FIPB approval to INX Media Pvt. Ltd., he and his son received a sum of approx. Rs. 3 crores through companies controlled by the son of the Appellant/accused Karti P. Chidambaram. Though INX media in its application did not mention the total amount of FDI inflow which they intended to bring, the appellant without ascertaining their competency, granted approval. Further the appellant became fully aware about the violations made by INX Group when the matter was highlighted by the Income Tax Department and a complaint was also received by him regarding the investment by M/s INX Media into M/s INX News without due approval. Despite this knowledge, the appellant again approved the downstream proposal of INX Group treating it as a fresh approval. Further investigation has revealed that there were at least 17 overseas bank accounts opened by the appellant and co-conspirators. In this regard, summons was issued to 11 persons and statements of some of these persons revealed that the overseas assets were acquired in the name of various shell companies on the instructions of appellants son. Thus, it was stated that a need arises to confront the appellant with the material gathered. This application was allowed by the Trial Court vide order dated 11.10.2019. Thereafter on 14.10.2019, the Respondent inter alia moved an application seeking permission to arrest the appellant. The Trial Court treated this application as an application for interrogation of the appellant and allowed it. Subsequently, on 16.10.2019, the appellant was arrested for the grounds stated supra. Vide order dated 17.10.2019, the Trial Court remanded the appellant to the custody of the Respondent for a period of 7 days9. After his arrest, on 23.10.2019, the appellant moved a regular bail application (Bail Application No. 2718 of 2019) before the High Court u/s 439 of CrPC averring that he is a law abiding citizen having deep roots in the society; he is not a flight risk and is willing to abide by all conditions as may be imposed by the court while granting bail. It was also submitted that the instant case is a documentary case and being a respectable citizen and former Union Minister, he cannot and will not tamper with the documentary record of the instant case which is currently in the safe and secure possession of the incumbent government or the Trial Court. On merits, it was stated by the Appellant that he merely accorded approval to the unanimous recommendation made by the FIPB which was chaired by the Secretary, Economic Affairs and included 5 other secretaries who were all among the senior most IAS officers (one among them was a senior IFS officer) and had a long and distinguished record of service. Anyone familiar with the working of the FIPB would know that no single officer can take a decision on any proposal. Therefore, it is preposterous to allege that any person could have influenced any official of FIPB, including all 6 senior secretaries to the Government of India. Moreover, the ECIR case is a verbatim copy of the FIR dated 15.5.2017 and allegations registered therein and thus the Special Judge erred in granting remand of the appellant in the ECIR case since the offences allegedly committed in both the cases arise out of the same occurrence and have been committed in the course of the same transaction. Further the Special Court committed an error in not accepting the surrender application of the appellant which was an application limited to surrendering before the Trial Court. The Special Court proceeded on an erroneous basis that the desire of an accused is contingent upon the desire of the investigating agency to arrest the accused and that arrest is a condition precedent for surrendering before the Court10. Vide the impugned order, the High Court observed that it has not even been alleged by the Respondent Enforcement Directorate in its counter affidavit that the appellant is a flight risk. Regarding tampering of evidence also the court observed that it is neither argued nor any material is available on record in this regard. Moreover, there is no chance to tamper the material on record as the same is with the investigating agencies, central government or courts. Regarding influencing of witnesses, the court noted that three witnesses have stated in their statements that the appellant and his family members have pressurised them and asked them not to appear before the Enforcement Directorate. However, since their statements have already been recorded, at this stage when the complaint is almost ready to be filed, the Court held that there is no chance to influence any witness. The High Court also took notice of the fact that co-accused have been granted bail. The Court was cognizant of the fact that the appellant has been suffering from illness but the Court opined that the Court has already issued directions to the Jail Superintendent in this regard and therefore this ground is no longer available to the appellant at this stage. The Court noted that during investigation, it has been revealed that there has been layering of proceeds of crime by use of shell companies, most of which are only on paper, and opined that there is cogent evidence collected so far that these shell companies are incorporated by persons who can be shown to be close and connected with the appellant. Next, the Court held that the material in the present case is completely distinct, different and independent from the material which was collected by the CBI in the predicate offence. Even the witnesses in the PMLA investigation are different from the investigation conducted by the CBI. The High Court concluded that prima facie, allegations are serious in nature and the appellant has played key and active role in the present case. On the basis of all these observations, the High Court dismissed the bail application.

Reasoning:
15. Though we have heard the matter elaborately and also have narrated the contention of both sides in great detail including those which were urged on the merits of the matter we are conscious of the fact thatin the instant appeal the consideration is limited to the aspect of regular bail sought by the appellant under Section 439 of Cr.PC16. In the above background, perusal of the order dated 15.11.2019 impugned herein indicates that the learned Single Judge having taken note of the rival contentions in so far as the triple test or the tripod test to be applied while considering an application for grant of regular bail under Sec. 439 Cr.PC, has answered the same in paragraphs 50 to 53 of the order, in favour of the appellant herein. The learned Solicitor General has however sought to contend that though there is not much grievance with regard to the conclusion on flight risk, the finding on likelihood of tampering and influencing witness has not been considered in its correct perspective. The finding in that regard has not been assailed and in such event, the appellant in our opinion cannot be taken by surprise. Even otherwise as rightly observed by the learned Single Judge the evidence and material stated to have been collected is already available with the Investigating agencyIn the present situation the appellant is not in political power nor is he holding any post in the Government of the day so as to be in a position to interfere. In that view such allegation cannot be accepted on its face value. With regard to the witness having written that he is not prepared to be confronted as he is from the same state, the appellant cannot be held responsible for the same when there is no material to indicate that the appellant or anyone on his behalf had restrained or threatened the concerned witness who refused to be confronted with the appellant in custody.Perusal of the cited decisions would indicate that this Court has held that economic offences are also of grave nature, being a class apart which arises out of deep-rooted conspiracies and effect on the community as a whole is also to be kept in view, while consideration for bail is made22. In the above circumstance it would be clear that even after concluding the triple test in favour of the appellant the learned Judge of the High Court was certainly justified in adverting to the issue relating to the gravity of the offence. However, we disapprove the manner in which the conclusions are recorded in paragraphs 57 to 62 wherein the observations are reflected to be in the nature of finding relating to the alleged offenceIf that be the position, in the instant case, the learned Judge while adverting to the materials, ought not have recorded a finding based on the materials produced before him. While the learned Judge was empowered to look at the materials produced in a sealed cover to satisfy his judicial conscience, the learned Judge ought not to have recorded finding based on the materials produced in a sealed cover. Further while deciding the same case of the appellant in Crl. Appeal No.1340 of 2019, after holding so, this Court had consciously refrained from opening the sealed cover and perusing the documents lest some observations are made thereon after perusal of the same, which would prejudice the accused pre-trial. In that circumstance though it is held that it would be open for the Court to peruse the documents, it would be against the concept of fair trial if in every case the prosecution presents documents in sealed cover and the findings on the same are recorded as if the offence is committed and the same is treated as having a bearing for denial or grant of bail24. Having said so, in present circumstance we were not very much inclined to open the sealed cover although the materials in sealed cover was received from the respondent. However, since the learned Single Judge of the High Court had perused the documents in sealed cover and arrived at certain conclusion and since that order is under challenge, it had become imperative for us to also open the sealed cover and peruse the contents so as to satisfy ourselves to that extent. On perusal we have taken note that the statements of persons concerned have been recorded and the details collected have been collated. The recording of statements and the collation of material is in the nature of allegation against one of the co-accused Karti Chidambaram- son of appellant of opening shell companies and also purchasing benami properties in the name of relatives at various places in different countries. Except for recording the same, we do not wish to advert to the documents any further since ultimately, these are allegations which would have to be established in the trial wherein the accused/co-accused would have the opportunity of putting forth their case, if any, and an ultimate conclusion would be reached. Hence in our opinion, the finding recorded by the learned Judge of the High Court based on the material in sealed cover is not justified25. Therefore, at this stage while considering the bail application of the appellant herein what is to be taken note is that, at a stage when the appellant was before this Court in an application seeking for interim protection/anticipatory bail, this Court while considering the matter in Criminal Appeal No.1340/2019 had in that regard held that in a matter of present nature wherein grave economic offence is alleged, custodial interrogation as contended would be necessary and in that circumstance the anticipatory bail was rejected. Subsequently the appellant has been taken into custody and has been interrogated and for the said purpose the appellant was available in custody in this case from 16.10.2019 onwardsAs noted, the appellant has not been named as one of the accused in the ECIR but the allegation while being made against the co-accused it is indicated the appellant who was the Finance Minister at that point, has aided the illegal transactions since one of the co-accusedis the son of the appellant. In this context even if the statements on record and materials gathered are taken note, the complicity of the appellant will have to be established in the trial and if convicted, the appellant will undergo sentence. For the present, as taken note the anticipatory bail had been declined earlier and the appellant was available for custodial interrogation for more than 45 days. In addition to the custodial interrogation if further investigation is to be made, the appellant would be bound to participate in such investigation as is required by the respondent. Further it is noticed that one of the co-accused has been granted bail by the High Court while the other co-accused is enjoying interim protection from arrest. The appellant is aged about 74 years and as noted by the High Court itself in its order, the appellant has already suffered two bouts of illness during incarceration and was put on antibiotics and has been advised to take steroids of maximum strength. In that circumstance, the availability of the appellant for further investigation, interrogation and facing trial is not jeopardized and he is already held to be not a flight risk and there is no possibility of tampering the evidence or influencingintimidating the witnesses. Taking these and all other facts and circumstances including the duration of custody into consideration the appellant in our considered view is entitled to be granted bail. It is made clear that the observations contained touching upon the merits either in the order of the High Court or in this order shall not be construed as an opinion expressed on merits and all contentions are left open to be considered during the course of trial