P. CHIDAMBARAM V. DIRECTORATE OF ENFORCEMENT

CASE COMMENT

P. CHIDAMBARAM V. DIRECTORATE OF ENFORCEMENT

Appellant- P. Chidambaram

Respondent- Directorate of Enforcement

Citation- Criminal Appeal No. 1340 of 2019 SC

Date of Judgement- September 05, 2019

Judge Bench- R. BANUMATHI, J.

 

INTRODUCTION

The case of P. Chidambaram v. Directorate of Enforcement, Criminal Appeal no. 1340 of 2019 SC, is related to the FIR filed by the CBI under Section 120B of IPC read with Section 420 of IPC, Section 8 and Section 13(2) read with Section 13(1)(d) of the Prevention of Corruption Act, 1988. A case was also registered against the accused under Section 3 and 4 of Prevention of Money Laundering Act for allegedly committing Money laundering.

The Section 120B of IPC provides for Punishment for Criminal Conspiracy, Criminal Conspiracy which is further defined in Section 120A of IPC. The Section 420 of IPC talks about the offence of Cheating and dishonestly inducing delivery of property. Section 8 of Prevention of Corruption Act 1988 is about the offence of taking gratification, in order, by corrupt or illegal means, to influence public servant. Section 13 of the same act provides for the offence of Criminal misconduct by a public servant.

The accused applied for Anticipatory Bail in the High Court regarding all the offences listed above by both the CBI and Directorate of Enforcement. The High Court rejected the plea of appellants. Appellant tried for appeal against the order of High Court but was not able to get urgent hearing and was subsequently arrested by CBI on the night of 21.08.2019.

 

FACTS OF THE CASE

On 15.05.2017, CBI registered FIR under the specified offences against  (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; (iv) Chess Management Services through its Director 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.

The prosecution’s Case was that in 2007, INX Media Pvt. Ltd. approached Foreign Investment Promotion Board (FIPB) for getting approval for FDI upto 46.216 per cent of the issued equity capital in which there will be inflow of FDI to the extent of Rs. 4,62,16,000 taking the proposed issue at its face value. The Board didn’t approve the downstream investment by INX Media in INX News and this investment could only be done by approval of Finance Minister. In violation of the conditions of the approval of the recommendation of FIPB, the INX Media made the proposed investment with approval and generated more than Rs.305 crores FDI in INX Media which is in clear violation of the approved foreign flow.

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.

According to the FIR, Sh. Karti Chidambaram helped the 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 of Rs. 10 Lakhs were received against invoices raised on INX Media by ASCPL. It is allegedthat the invoices were raised in the name of ASCPL with a view to conceal the identity of Sh. Karti Chidambaram. 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, etc. It is alleged that INX Media Group in his record has clearly mentioned the purpose of payment of Rs.10 lakhs 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.

On the basis of the said FIR registered by CBI, the Enforcement Directorate registered a caseagainst the aforesaid accused persons.

 

CONTENTIONS OF THE PARTIES

APPELLANT’S CONTENTIONS

Two counsels were appearing on behalf of the accused. Mr. Kapil Sibal and Mr. Abhishek Manu Singhvi.

Submissions of Mr Sibal:

1.  The allegation states that the appellant’s son Sh. Karti Chidambaram tried to influence the officials of FIPB for granting ex-post facto approval for downstream investment by INX Media to INX News; whereas neither the Board members of FIPB nor the officials of FIPB have stated anything about the appellant’s son Sh. Karti Chidambaram.

2. The Enforcement Directorate has falsely alleged that Sh. Karti Chidambaram has been controlling the company- ASCPL as Sh. Karti Chidambaram is neither the share-holder nor a Director of the company. So appellant has no relation with ASCPL to whom money is paid.

3. Senior counsel raised strong objections and submitted that the Enforcement Directorate cannot randomly produce the documents in the court “behind the back” of the appellant for seeking custody of the appellant. He also objected to the plea by Enforcement Directorate requesting the court to receive the sealed cover and for looking into the documents/material collected during the investigation allegedly showing the trail of money in the name of companies and the money-laundering.

4. The Delhi High Court had observed that the appellant was “evasive” during interrogation, the counsel submitted that the appellant has well cooperated with the respondent and the respondent cannot allege that the appellant was “non-cooperative”. The Counsel had also filed seeking direction for production of the transcripts of the questioning as according to him, the transcripts will show whether the appellant was “evasive” or not .

5.He asked that the provision for anticipatory bail has to be interpreted in a fair and reasonable manner which was not done by the High Court .The Counsel also submitted that co-accused Sh. Karti Chidambaram and Padma Bhaskararaman were granted bail and the other accused Indrani Mukherjea and Sh. Pratim Mukherjea @ Peter Mukherjea are on statutory bail and the appellant is entitled to bail on parity also.

Submissions of Mr. Singhvi:

1.     He reiterated the submission of Mr. Sibal he said that the Enforcement Directorate cannot say that the appellant was “non-cooperative” and “evasive”. He also urged for production of transcripts i.e. questions put to the appellant and the answers which would show whether the appellant has properly responded to the questions or not.

2.     Placing reliance upon Additional District Magistrate, Jabalpur v. Shivakant Shukla (1976) 2 SCC 521, the learned Senior counsel submitted that the respondent cannot rely upon the documents without furnishing those documents to the appellant or without questioning the appellant about the materials collected during the investigation. He contended that the High Court has denied anticipatory bail to the appellant on the basis of materials produced by the respondent in the cover before the court which were never shown to the appellant nor was the appellant confronted with the same.

3.      The learned Senior counsel submitted that the alleged occurrence was of the year 2007-08 and Sections 420 IPC and 120B IPC and Section 13 of the Prevention of Corruption Act were not part of the “scheduled offence” of Prevention of Money-Laundering Act in 2008 and were introduced by a notification dated 01.06.2009 and in view of the protection given under Article 20(1) of the Constitution of India, there can never be a retrospective operation of a criminal/penal statute. As at the time of alleged commission, the acts were not offences, hence prosecution’s case under Prevention of Money-Laundering Act, 2002 is not maintainable.

4.     He submitted that the “gravity of the offence” cannot be the perception of the individual or the court and the test for “gravity of the offence” should be the punishment prescribed by the statute for the offence committed.

5.     The finding of the High Court that “the appellant was evasive to the questions”, the learned Senior counsel submitted that the investigating agency- Enforcement Directorate cannot expect an accused to give answers in the manner they want and that the accused is entitled to protection under Article 20(3) of the Constitution of India. He relied upon Santosh s/o Dwarkadas Fafat v. State of Maharashtra (2017) 9 SCC 714.

6.     Appellant also contended that minimum threshold for the Enforcement Directorate to acquire jurisdiction at the relevant time was Rs.30 lakhs whereas, in the present case, there is no material to show any payment apart from the sum of Rs.10 lakhs (approximately) allegedly paid by INX Media to ASCPL with which the appellant is said to be having no connection whatsoever. 

RESPONDENTS’S CONTENTIONS

1.     Respondent submitted that since respondent has collected cogent materials to show that it is a case of money-laundering and the Enforcement Directorate has issued Letter Rogatory, Now if the Court intervenes by granting anticipatory bail, the authority cannot exercise the statutory right of arrest and interrogate the appellant.

 

2.     Court has power to look into the materials so collected by the Enforcement Directorate and the same cannot be shared with the appellant at this initial stage when the Court is considering the matter for grant of pre-arrest bail. Relying upon number of judgments, the learned Solicitor General has submitted that as a matter of practice,Courts have always perused the case diaries produced by the prosecution and receive and peruse the materials/documents to satisfy its judicial conscience, he put reliance on number of judgements like Romila Thapar and Others v. Union of India and Others (2018) 10 SCC 753, Jai Prakash Singh v. State of Bihar and Another (2012) 4 SCC 379, etc. and requested the Court to peruse the materials produced by the Enforcement Directorate in the sealed cover.

 

3.     Respondent said that there is cogent evidence that there is case of Money Laundering and there is need of custodial investigation. He submitted that the economic offences stand as class apart and custodial interrogation is required for the Enforcement Directorate to trace the trail of money and prayed for dismissal of the appeal.

 

 

 

ISSUES INVOLVED

Issue No.1:

Whether direction to produce the transcripts could be issued so that Court can identify whether the accused was evasive in interrogation?

Issue No. 2:

Whether the court can/cannot look into the documents/materials produced before the court unless the accused was earlier confronted with those documents/materials?

Issue No. 3

Whether the court is called upon to hold a mini inquiry during the intermediary stages of investigation by examining whether the questions put to the accused are ‘satisfactory’ or ‘evasive’, etc.?

Issue No.4:

Whether Enforcement Directorate acquires jurisdiction against appellant as minimum threshold for the Enforcement Directorate to acquire jurisdiction at the relevant time was Rs.30 lakhs and alleged payment of only Rs.10 lakhs is known.

 

JUDGEMENT OF THE SUPREME COURT

 

Judgement for Issue No.1

The Court held that Since the interrogation of the accused and the questions put to the accused and the answers given by the accused are part of the investigation which is purely within the domain of the investigation officer, unless satisfied that the police officer has improperly and illegally exercised his investigating powers in breach of any statutory provision, the court cannot interfere. In the present case, no direction could be issued to the respondent to produce the transcripts of the questions put to the appellant and answers given by the appellant.

 

 

Judgement for Issue No.2

The Court with the help of various past judgements proved and held that the court can receive the materials/documents collected during the investigation and peruse the same to satisfy its conscience that the investigation is proceeding in the right lines etc.

In the present case, the Court consciously refrained from opening the sealed cover and perusing the documents. The Court said if it peruse the materials collected by the respondent and make some observations thereon, it might cause prejudice to the appellant and the other co-accused who are not before the court when they are to pursue the appropriate relief before various forum. The court further said they are only at the stage of considering the pre-arrest bail. Since according to the respondent, they have collected documents/materials for which custodial interrogation of the appellant is necessary, the court deem it appropriate to accept the submission of the respondent for the limited purpose of refusing pre-arrest bail to the appellant.

 

Judgement for Issue No. 3

Regarding the Contention of the appellant that the Court held that it will have to scrutinise the questions put to the accused during interrogation and answers given by the appellant and satisfy itself whether the answers were “evasive or not”, it would amount to conducting “mini trial” andthis contention is far-fetched and does not merit acceptance.

 

The Court further held that if the contention of the appellant is to be accepted, the investigating agency will have to question each and every material collected during investigation and in this process, the investigating agency would be exposing the evidence collected by them and this would give a chance to the accused to tamper with the evidence and to destroy the money trail apart also it would pave the way for the accused to influence the witnesses.

 

The Court stated that Interrogation of the accused and the answers elicited from the accused and the opinion whether the answers given by the accused are “satisfactory” or “evasive”, is purely within the domain of the investigating agency and the court cannot substitute its views by conducting mini trial at various stages of the investigation and thus rejected this contention of the appellant.

 

Judgement for Issue No.4

The Court held that the merits of this contention cannot be considered by Court at this stage while this Court is considering only the prayer for anticipatory bail.

 

CONCLUSION

The Supreme Court in this case, apart from other issues refused to grant anticipatory bail. For justifying this refusal the Supreme Court referred to various judgements. The contention made by the Appellant’s Counsels that Denying Anticipatory Bail will be against the Article 21 which grant Right to Freedom was rejected as Supreme Court said that Article 21 is not an absolute right and it can be curtailed by according to procedure established by law.  The Supreme Court cited it’s judgement in State of M.P. and another v. Ram KishnaBalothia and another (1995) 3 SCC 221whereit had earlier held that Anticipatory Bail is not a part of Article 21 and is not a general rule and it has to be granted only when the court is convinced that exceptional circumstances exist to resort to that extraordinary remedy.

Also justifying respondent’s contention that Anticipatory Bail cannot be granted in a case of economic offences it cited it’s earlier judgements like that of Directorate of Enforcement v. Ashok Kumar Jain (1998) 2 SCC 105.