Delhi High Court
H. B. Chaturvedi vs C.B.I. on 31 May, 2010
Author: Siddharth Mridul
Bench: Siddharth Mridul
* IN THE HIGH COURT OF DELHI AT NEW DELHI
+ BAIL APPLN. 572/2010 & CRL.M.(BAIL) 459/2010
Reserved on: 24th May, 2010
% Pronounced on: 31st May, 2010
H. B. CHATURVEDI ..... Petitioner
Through: Mr Sidharth Luthra, Sr. Adv. with
Mr Aarohi Bhalla, Adv.
versus
C.B.I. ..... Respondent
Through: Ms Sonia Mathur and Mr Sushil
Kumar Dubey, Advs. with Mr A.K.
Tripathi, Inspector, CBI.
CORAM:
HON'BLE MR JUSTICE SIDDHARTH MRIDUL
1. Whether reporters of local papers may be allowed
to see the judgment? Yes.
2. To be referred to the Reporter or not? Yes.
3. Whether the judgment should be reported
in the Digest? Yes.
SIDDHARTH MRIDUL, J
1. This is a petition under Section 439 of the Code of Criminal
Procedure (CrPC) for grant of bail in the case registered vide RC No.
BDI/2009 E 0005 under Section 120B read with Sections 420, 468 and
478 of the Indian Penal Code (IPC). The petitioner was arrested by the
Central Bureau of Investigation (CBI) on 19th February, 2010 and
remained in police custody till 27th February, 2010. The petitioner has
been in judicial custody thereafter and has been chargesheeted along
with five other co-accused in a case of defrauding the Industrial
Development Bank of India (IDBI).
Bail Appln. 572/2010 Page 1 of 12
2. Briefly stated the facts of the prosecution case are that the
petitioner along with Sanjay Chaturvedi, Sumit Chaturvedi, Amit
Chaturvedi, Praveen Juneja all of M/s Shamken Multifab Ltd (SML)
and M/s Shamken Multifab Ltd and other unknown persons are
parties to a criminal conspiracy during the year 2000-01 in the matter
of obtaining Rupee Term Loan (RTL) of Rs.15 crores from the IDBI by
submitting false information and forged documents showing
utilization of the loan proceeds of Rs.15 crores and siphoning off all
the funds, so received from the IDBI, for purposes other than the
purpose for which the loan was sanctioned and thereby cheating the
IDBI. The prosecution states that the above named accused persons in
criminal conspiracy prepared and used forged documents as genuine
i.e. Chartered Accountants Certificate, No Lien Account Statements of
the bank, invoices showing purchase of machines, while in fact no
equipment/machinery was purchased from the said loan proceeds and
the amount was diverted for purposes other than the purpose for
which the loan was sanctioned. The company had faxed forged/false
invoices of M/s Sulzer and M/s Staubli on 13th February, 2001 to the
IDBI from the Fax Number owned by H.B. Chaturvedi and as per the
vouchers the deliveries have been made before June, 2000 and all the
equipments are imported against LCs. According to the CBI these
forged invoices detail the basis on which the accused persons claimed
the disbursement of term loan from the IDBI and ultimately received
the payment. Thus the accused availed the term loan facility of Rs.15
crores from the IDBI by furnishing false and fabricated statements of
No Lien Account and thereby inducing the bank to release the loan
Bail Appln. 572/2010 Page 2 of 12
instalments. Further, the loan amount so obtained was siphoned off by
them by transferring the amount to other group accounts of the
company and to clear their other outstandings.
3. The petitioner filed an application for grant of bail which was
dismissed by the court of the Chief Metropolitan Magistrate vide
order dated 4th March, 2010 on the ground that the investigation is
still at a preliminary stage and if the accused is admitted to bail there
is every likelihood that relevant documents required for the purpose
of investigation and for unearthing the entire fraud alleged to have
been committed by the accused persons may never see the light of the
day as there is every likelihood that accused will tamper the witnesses
and destroy the evidence.
4. The petitioner thereafter filed an application for grant of bail
before the Additional Sessions Judge which application was dismissed
vide order dated 17th March, 2010.
5. The petitioner feeling aggrieved has filed the present
application seeking grant of bail to which status report has been filed
by the CBI.
6. The learned senior counsel, Mr Sidharth Luthra, appearing on
behalf of the petitioner, first submitted that the petitioner, who is 76
years of age, is a chronic heart patient and has been suffering from
coronary heart disease since 1998 with 100 per cent blockage in the
major arteries resulting in no blood supply to the specific heart areas
thereby lowering the heart efficiency. Also, that the petitioner
Bail Appln. 572/2010 Page 3 of 12
requires regular medical attention as his heart efficiency is merely 25
per cent and also that the petitioner has been advised that a device
known as "Intra Cardiac Defibrillator (ICD)" needs to be inserted into
the body of the petitioner. Furthermore, the petitioner is a high risk
patient prone to sudden cardiac death due to ventricular fibrillation
and the stress of custody is likely to impact his condition negatively.
7. Learned senior counsel appearing on behalf of the petitioner
then argued that the charge sheet has been filed and cognizance
taken on 22nd May, 2010 and that the petitioner is, therefore, not
required for any purpose. It was next argued on behalf of the
petitioner that the petitioner has been in judicial custody since 28th
February, 2010 and has not been required by the CBI for any purpose
and that the evidence has already been collected qua the petitioner. It
was lastly urged that prior to the arrest of the petitioner amount had
already been paid to the IDBI and that an scheme of arrangement
under Section 391 of the Companies Act, 1956 has been filed which is
pending before the Hon'ble Allahabad High Court.
8. Per contra, it is argued by Ms Sonia Mathur, counsel appearing
on behalf of the CBI that the trial court has ordered further
investigation and that the petitioner is the Chairman-cum-Managing
Director of the company that has defrauded the IDBI to the tune of
Rs.15 crores. The learned counsel has also contended that the present
is an economic offence which stands on a different footing and that,
therefore, bail should not be granted to the petitioner. The learned
counsel further contended that the medical condition of the petitioner
Bail Appln. 572/2010 Page 4 of 12
is being monitored by the Jail Authorities and the regular review of
the petitioner along with prescribed medication are being provided to
him. It has been furthermore contended on behalf of the learned
counsel for the CBI that by simply extending a proposal of settlement
may absolve an accused and the company from civil liability but it can
in no manner be said to absolve them from their criminal liability.
9. Before proceeding to weigh the relative contentions of the
counsel for the parties it would be necessary to extract the relevant
portions of the judgments relied upon by them:
(i) In Anil Mahajan v. Commissioner of Customs & ANR.,
84 (2000) DLT 854, this court after considering the
judgments, inter alia, in Gurcharan Singh & Others v.
State (Delhi Administration), AIR 1978 SC 179 and
Gudikanti Narasimhulu and Others v. Public Prosecutor,
Air 1978 SC 729, summarized the legal position as follows:
"14. The legal position emerging from the above
discussion can be summarised as follows :
(a) Personal liberty is too precious a value of our
Constitutional System recognised under
Article 21 that the crucial power to negate it
is a great trust exercisable not casually but
judicially, with lively concern for the cost to
the individual and the community.
Deprivation of personal freedom must be
founded on the most serious considerations
relevant to the welfare objectives of society
specified in the Constitution.
(b) As a presumably innocent person the
accused person is entitled to freedom and
every opportunity to look after his own case
and to establish his innocence. A man on bail
has a better chance to prepare and present
his case than one remanded in custody. An
accused person who enjoys freedom is in a
much better position to look after his case
Bail Appln. 572/2010 Page 5 of 12
and properly defend himself than if he were
in custody. Hence grant of bail is the rule
and refusal is the exception.
(c) The object of bail is to secure the attendance
of the accused at the trial. The principal rule
to guide release on bail should be to secure
the presence of the applicant to take
judgment and serve sentence in the event of
the Court punishing him with imprisonment.
(d) Bail is not to be withheld as a punishment.
Even assuming that the accused is prima
facie guilty of a grave offence, bail cannot be
refused in an indirect process of punishing
the accused person before he is convicted.
(e) Judges have to consider applications for bail
keeping passions and prejudices out of their
decisions.
(f) In which case bail should be granted and in
which case it should be refused is a matter of
discretion subject only to the restrictions
contained in Section 437(1) of the Criminal
Procedure Code. But the said discretion
should be exercised judiciously.
(g) The powers of the Court of Session or the
High Court to grant bail under Section
439(1) of Criminal Procedure Code are very
wide and unrestricted. The restrictions
mentioned in Section 437(1) do not apply to
the special powers of the High Court or the
Court of Session to grant bail under Section
439(1). Unlike under Section 437(1), there is
no ban imposed under Section 439(1)
against granting of bail by the High Court or
the Court of Session to persons accused of
an offence punishable with death or
imprisonment for life. However while
considering an application for bail under
Section 439(1), the High Court or the Court
of Sessions will have to exercise its judicial
discretion also bearing in mind, among other
things, the rationale behind the ban imposed
under Section 437(1) against granting bail to
persons accused of offences punishable with
death or imprisonment for life.
(h) There is no hard and fast rule and no
inflexible principle governing the exercise of
such discretion by the Courts. There cannot
be an inexorable formula in the matter of
granting bail. The facts and circumstances of
each case will govern the exercise of judicial
discretion in granting or refusing bail. The
answer to the question whether to grant bail
Bail Appln. 572/2010 Page 6 of 12
or not depends upon a variety of
circumstances, the cumulative effect of
which must enter into the judicial verdict.
Any one single circumstance cannot be
treated as of universal validity or as
necessarily justifying the grant or refusal of
bail.
(i) While exercising the discretion to grant or
refuse bail the Court will have to take into
account various considerations like the
nature and seriousness of the offence; the
circumstances in which the offence was
committed; the character of the evidence;
the circumstances which are peculiar to the
accused; a reasonable apprehension of
witnesses being influenced and evidence
being tampered with; the larger interest of
the public or the State; the position and
status of the accused with reference to the
victim and the witness; the likelihood of the
accused fleeing from justice; the likelihood
of the accused repeating the offence; the
history of the case as well as the stage of
investigation etc. In view of so many variable
factors the considerations which should
weigh with the Court cannot be Exhaustively
set out. However, the two paramount
considerations are: (i) the likelihood of the
accused fleeing from justice and (ii) the
likelihood of the accused tampering with
prosecution evidence. These two
considerations in fact relate to ensuring a
fair trial of the case in a Court of justice and
hence it is essential that due and proper
weight should be bestowed on these two
factors.
(j) While exercising the power under Section
437 of the Criminal Procedure Code in cases
involving non-bailable offences except cases
relating to offences punishable with death or
imprisonment for life, judicial discretion
would always be exercised by the Court in
favor of granting bail subject to sub-section
3 of Section 437 with regard to imposition of
conditions, if necessary. Unless exceptional
circumstances are brought to the notice of
the Court which might defeat proper
investigation and a fair trial, the Court will
not decline to grant bail to a person who is
not accused of an offence punishable with
death or imprisonment for life.
(k) If investigation has not been completed and
if the release of the accused on bail is likely
to hamper the investigation, bail can be
Bail Appln. 572/2010 Page 7 of 12
refused in order to ensure a proper and fair
investigation.
(l) If there are sufficient reasons to have a
reasonable apprehension that the accused
will flee from justice or will tamper with
prosecution evidence he can be refused bail
in order to ensure a fair trial of the case.
(m) The Court may refuse bail if there are
sufficient reasons to apprehend that the
accused will repeat a serious offence if he is
released on bail.
(n) For the purpose of granting or refusing bail
there is no classification of the offences
except the ban under Section 437(1) of the
Criminal Procedure Code against grant of
bail in the case of offences punishable with
death or life imprisonment. Hence there is
no statutory support or justification for
classifying offences into different categories
such as economic offences and for refusing
bail on the ground that the offence involved
belongs to a particular category. When the
Court has been granted discretion in the
matter of granting bail and when there is no
statute prescribing a special treatment in the
case of a particular offence the Court cannot
classify the cases and say that in particular
classes bail may be granted but not in
others. Not only in the case of economic
offences but also in the case of other
offences the Court will have to consider the
larger interest of the public or the State.
Hence only the considerations which should
normally weigh with the Court in the case of
other non-bailable offences should apply in
the case of economic offences also. It cannot
be said that bail should invariably be refused
in cases involving serious economic offences.
(o) Law does not authorise or permit any
discrimination between a foreign National
and an Indian National in the matter of
granting bail. What is permissible is that,
considering the facts and circumstances of
each case, the Court can impose different
conditions which are necessary to ensure
that the accused will be available for facing
trial. It cannot be said that an accused will
not be granted bail because he is a foreign
national."
(ii) In Bail Application No. 2179/2009 pronounced on 21 st
December, 2009 a Single Bench of this Court referring to
Bail Appln. 572/2010 Page 8 of 12
the decision in State of Gujarat v. Mohanlal Jitamalji
Porwal and Anr., AIR 1987 SC 1321, extracted the
relevant portion thus:
"The entire Community is aggrieved if the economic
offenders who ruin the economy of the State are not
brought to books. A murder may be committed in the
heat of moment upon passions being aroused. An
economic offence is committed with cool calculation
and deliberate design with an eye on personal profit
regardless of the consequence to the Community. A
disregard for the interest of the Community can be
manifested only at the cost of forfeiting the trust and
faith of the Community in the system to administer
justice in an even handed manner without fear of
criticism from the quarters which view white collar
crimes with a permissive eye unmindful of the damage
done to the National Economy and National Interest."
In the said judgment the Single Bench also noticed the
judgment of the Hon'ble Supreme Court in Suresh
Chandra Ramanlal v. State of Gujarat, 2008 (7) SCC 591,
wherein "a case involving cheating and forgery in respect
of funds of a bank, the Hon'ble Supreme Court even while
grating bail on verified medical grounds, imposed a
condition that he would deposit a sum of Rs.40 lakhs with
the bank in four monthly instalments. This was despite the
fact that in the case before the Hon'ble Supreme Court,
there were as many as 49 accused and each one of them
had already been enlarged on bail and that included the
Chairman, Vice-Chairman, Managing Director, 11 other
Directors of the bank and the case of the appellant, Ex.
Vice-Chairman of the bank, was that he had resigned in
the year 1999, whereas the FIR was registered in the year
2002."
Bail Appln. 572/2010 Page 9 of 12
10. In the instant case the FIR was registered on source information
and before registration of the present FIR preliminary enquiry was
conducted by the CBI. It has nowhere been disclosed on whose
statement the FIR was registered and no one from the bank from
which loan was availed came forward alleging that the bank has been
cheated by the accused persons. In the order passed by the ACMM at
the time of hearing submissions on the aspect of cognizance in the
case, it has been observed that the Investigating Officer (IO) has not
been able to point out even an iota of evidence in the testimony of the
bank witnesses exhibiting that they were deceived by the inducement
given by the accused persons. The IO has further not clarified, if, as
per the statements given by the bank officials, the machines were
working there then how and from where they were procured and if no
machine was procured then how the bank officials given their report.
The learned ACMM has, therefore, opined that the above instances
show that the investigation has not been conducted completely and
the matter requires further investigation on the aspect of involvement
of the bank officials. It is in this behalf that the trial court has ordered
further investigation.
11. Another aspect is that the petitioner has been in judicial
custody, after initial police custody of one week, for a period over 90
days and has already been chargesheeted. The petitioner is 76 years
of age and admittedly is a chronic heart patient suffering from
coronary heart disease since 1998. Further, the petitioner is a high
risk patient prone to sudden cardiac episode due to ventricular
fibrillation and has been recommended the insertion into his body of
Bail Appln. 572/2010 Page 10 of 12
an "Intra Cardiac Defibrillator". Also, nothing has been urged on
behalf of the CBI to raise a reasonable apprehension that the
petitioner will tamper with the prosecution evidence if he is released
on bail. Further, nothing has been urged to suggest that the CBI has a
reasonable apprehension that the petitioner will flee from justice if he
is released on bail. From the material placed on record and the
conduct of the petitioner in appearing before the CBI when
summoned before his arrest, it is clear that the petitioner is an
established businessman with roots in the Society.
12. Bail, it has been held in a catena of decisions, is not to be
withheld as a punishment. Even assuming that the accused is prima
facie guilty of a grave offence, bail cannot be refused in an indirect
process of punishing the accused person before he is convicted.
Furthermore, there is no justification for classifying offences into
different categories such as economic offences and for refusing bail
on the ground that the offence involved belongs to a particular
category. It cannot, therefore, be said that bail should invariably be
refused in cases involving serious economic offences.
13. The charge sheet in the present case has been filed and
cognizance taken on 22nd May 2010 and the petitioner is, therefore,
not required for any purpose. It is also seen that evidence has already
been collected qua the petitioner and the CBI has not thought it
appropriate to ask for custodial interrogation of the petitioner during
the long period of 90 days when the petitioner was in judicial custody.
One more consideration which weighs with the Court is that a scheme
Bail Appln. 572/2010 Page 11 of 12
of arrangement under Section 391 of the Companies Act, 1956 has
been filed by SML Company and is pending finalization before the
Hon'ble Allahabad High Court. Under the scheme of arrangement the
IDBI and the petitioner were already agreed on the terms and
conditions for the repayment of the loan extended to the company at
the instance of the petitioner and other co-accused.
14. Having regard to the entire facts and circumstances of the case,
I do not find any justification for detaining the petitioner in prison any
longer. Therefore, the petitioner who is in custody since 19th
February, 2010 should be released on bail on furnishing a personal
bond in the sum of Rs.5,00,000/- (Rupees five lakhs) with two sureties
in the like amount to the satisfaction of the trial court and subject to
the conditions that (a) he shall surrender his passport, if not already
seized; (b) he shall not leave the country without permission of the
trial court; and (c) he shall not tamper with the evidence or do any act
which will create a reasonable ground to assume that the petitioner is
trying to create hurdle in the fair investigation or trial of the case
which will entail cancellation of his bail.
15. With the above directions the bail application is allowed.
However, expression of any opinion hereinbefore may not be treated
as an expression on the merits of the case.
SIDDHARTH MRIDUL, J.
MAY 31, 2010 mk Bail Appln. 572/2010 Page 12 of 12