Filing Piecemeal Chargesheet Defeats Right To Default Bail, Goes Against Article 21: Delhi High Court Grants Bail To Accused In Loan Fraud Case

Permitting the CBI to pick up one aspect of the investigation and file a piece-meal charge sheet to defeat the right of an accused to default bail, goes against the mandate of Article 21 of the Constitution, the Delhi High Court has ruled.

The court was hearing a plea challenging the denial of default bail to an accused in a loan fraud case by the CBI Court in February this year.

In 2020, the CBI registered a case on the complaint of a State Bank of India official on behalf of a consortium of six banks alleging that M/s Arise India Ltd and its directors, alongwith other unknown public servants availed credit facilities from the banks and diverted the borrowed funds for purposes other than those for which they were released. The loan account of the company was declared as a Non-Performing Asset, with a total outstanding amount of Rs. 512.67 Crores. After a forensic audit, the account of the company was declared as ‘fraud’ by the SBI in May 2019.

The FIR was registered under Section 120B read with Sections 420, 468 and 471 of the Indian Penal Code, 1860 and Section 13(2) read with Section 13(1)(d) of the Prevention of Corruption Act, 1988. The applicant Avinash Jain was arrested in November 2022. CBI filed a chargesheet in January qua him and other accused persons under Section 120B read with Sections 420 and 471 of the IPC and further said that investigation was continuing in terms of Section 173(8) of the CrPC.

Granting default bail to Jain, Justice Amit Sharma in the ruling said the fundamental right to personal life and liberty under Article 21 of the Constitution of India and its co-relation with 167(2) of the CrPC has been, over the years, clearly established by way of judicial precedents of the Supreme Court of India as well as various High Courts.

“The right of an accused to default bail under Section 167(2) of the CrPC would arise in a case where the chargesheet is not filed within the stipulated period. The other circumstance giving rise to the right to default bail would be in case where the prosecution files a preliminary or incomplete chargesheet, within the period prescribed for offences mentioned therein and in that process, defeating the right of the accused to statutory bail,” the court explained.

The court noted that before filing the chargesheet, the CBI had formed an opinion with respect to the involvement of a public servant for the purposes of offences under the PC Act and therefore, had sought an approval under Section 17A of the said Act in December 2022.

“In the present case, admittedly, the CBI, at the time of filing the chargesheet did not express any opinion with respect to offences committed under the provisions of the PC Act but it has come on record that the investigation with respect to the aforesaid offences was pending approval of the competent authority under Section 17A of the PC Act and therefore, it was continuing,” said the court.

The court said the chargesheet is silent about any further investigation with respect to Section 468 of the IPC.

“In this case, the Court of competent jurisdiction before which the chargesheet was filed did not take cognizance, as recorded in the order dated 06.01.2023 passed by the learned Principal District and Sessions Judge-cum-Special Judge (PC Act) (CBI), Rouse Avenue District Court. By filing a supplementary report under Section 173(8) of the CrPC, the CBI cannot change the nature of the first chargesheet as one which can be termed as complete. The investigation arising out of the present FIR is incomplete as only one part of the investigation, i.e, the allegation pertaining to diversion of borrowed funds, is complete and the other part pertaining to connivance/conspiracy with unknown public servants is pending,” it added.

The court said it pertinent to note that the role of public servant was being examined/inquired into during the investigation of the present FIR with respect to Jain, the applicant. Referring to Section 13 of the Act, the court said, “A bare reading of the aforesaid provisions demonstrates that the role of a public servant will be intrinsically connected to a private person. Investigation in this regard cannot be termed as ancilliary or residual, which could be submitted by way of a supplementary chargesheet.”

The court further said the CBI’s stand in the case keeps changing. From the date of arrest and throughout the period of investigation, till the filing of the chargesheet, it was the case of the CBI that investigation qua unknown public servants was being conducted and after such public servants were identified, approval under Section 17A of the PC Act was sought, the court noted.

“However, during the course of hearing of the present application, it was the case of the CBI that since approval under Section 17A was not granted, no investigation qua the offences under the PC Act had taken place. It is an admitted case of the CBI, as per the orders cited by them passed by coordinate benches of this Court, that in an FIR registered under PC Act, investigation can take place without approval under Section 17A of the PC Act, until such time that a public servant is identified,” the court added.

Justice Sharma further said supplementary report under Section 173(8) of the CrPC for closure of investigation qua the offences under the PC Act was filed after the applicant exercised his right under Section 167(2) of the CrPC by moving an application in that regard before the trial court.

“Closure of an investigation connotes a prior pendency/continuance of the same,” observed the court.

Ruling that CBI had not completed the investigation with respect to offences under Section 13(2) read with Section 13(1)(d) of the PC Act, for which the applicant was arrested, the court said:

“Permitting the CBI to pick up one aspect of the investigation and file a piece-meal chargesheet with respect to the same and consequently, defeating the right of the applicant to default bail, goes against the mandate of Article 21 of the Constitution, as held by the Hon‘ble Supreme Court…”

Title: AVINASH JAIN versus CENTRAL BUREAU OF INVESTIGATION

Citation: 2023 LiveLaw (Del) 423

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