Supreme Court Cancels Anticipatory Bail in Corruption Case: CBI vs. Santosh Karnani (2023)

Date of the Judgment: April 17, 2023

Citation: 2023 INSC 341

Judges: Surya Kant, J. and J.K. Maheshwari, J.

Can a High Court grant anticipatory bail to a public servant accused of demanding and accepting a bribe, especially when the accused has attempted to evade arrest and destroy evidence? The Supreme Court of India recently addressed this question in a case involving an Income Tax officer accused of corruption. The core issue revolved around whether the High Court of Gujarat was correct in granting anticipatory bail to the accused, despite allegations of bribery and attempts to obstruct the investigation. The Supreme Court bench, comprising Justices Surya Kant and J.K. Maheshwari, overturned the High Court’s decision, emphasizing the need for custodial interrogation in such cases to ensure a fair and thorough investigation.

Case Background

The case began with a survey conducted by Respondent No. 1, an IRS officer, in February 2019 on Safal Construction Pvt. Ltd., owned by the complainant, Rupesh Balwantbhai Brambhatt. This survey under Section 133A of the Income Tax Act, 1961, led to the disclosure of an additional income of Rs. 50 crores by the company.

In September 2021, the Income Tax Department initiated a search and seizure operation against Safal Construction. Following this, the complainant alleged that Respondent No. 1 was handling his case and would be preparing the appraisal memo. The complainant and Respondent No. 1 met frequently, during which the complainant claims that Respondent No. 1 threatened to ruin his business and demanded a bribe.

On September 29, 2022, Respondent No. 1 allegedly contacted the complainant, asking him to meet on October 3, 2022. During this meeting, Respondent No. 1 demanded Rs. 30 lakhs to help with the case. The complainant recorded this conversation and was instructed to deposit the money in the account of one Vardhman at Dhara Angadia Firm.

The next morning, the complainant filed a complaint with the ACB Police Station, Ahmedabad. A trap was set, and the complainant’s employee deposited the bribe money. The complainant then contacted Respondent No. 1 via WhatsApp, which was recorded by the ACB, wherein Respondent No. 1 acknowledged the payment. Subsequently, the ACB team attempted to arrest Respondent No. 1, who allegedly assaulted the team and escaped. He also handed his mobile phone to a colleague.

Timeline

Course of Proceedings

The City Civil & Sessions Court at Ahmedabad rejected Respondent No. 1’s application for anticipatory bail on November 3, 2022. The Special Judge observed that Respondent No. 1 had absconded and sought admission in a hospital in Rajasthan to evade the process of law, emphasizing the necessity of custodial interrogation to unearth the larger conspiracy.

Aggrieved by this order, Respondent No. 1 applied for anticipatory bail before the High Court of Gujarat. Meanwhile, on November 22, 2022, the Court of Special CBI Judge issued a non-bailable warrant against Respondent No. 1.

The High Court, on December 19, 2022, granted anticipatory bail to Respondent No. 1, observing a doubt regarding the acceptance of illegal gratification as the money was deposited in the account of Vardhman in Dhara Angadia firm, and there was no direct evidence of acceptance by Respondent No. 1. The High Court also directed that despite the grant of anticipatory bail, CBI could apply for police remand, and if granted, Respondent No. 1 would be set free immediately upon completion of the remand period.

Following the High Court’s directions, Respondent No. 1 joined the investigation but did not produce his mobile phones. The CBI then applied for police remand, which was partly allowed by the Special Judge, CBI Court No. 3 on December 30, 2022. The court observed that the allegations against Respondent No. 1 seemed well-founded and that remand was necessary for investigation.

Legal Framework

The case primarily involves Section 7 of the Prevention of Corruption Act, 1988, which deals with offences related to public servants taking gratification other than legal remuneration in respect of an official act. The relevant section states:

“Section 7. Offence relating to public servant being bribed. – Any public servant who,- (a) obtains or accepts or attempts to obtain from any person, an undue advantage, with the intention to perform or cause performance of a public duty improperly or dishonestly or to forbear or cause to forbear to perform such duty either by himself or by another public servant; or (b) obtains or accepts or attempts to obtain an undue advantage from any person as a reward for the performance or non-performance of a public duty, shall be punishable with imprisonment for a term which shall not be less than three years but which may extend to seven years and shall also be liable to fine.”

The case also references Section 13(1) and 13(2) of the Prevention of Corruption Act, 1988, which were part of the initial FIR but were not the focus of the Supreme Court’s analysis. Additionally, Section 41A of the Code of Criminal Procedure (CrPC) is mentioned, which pertains to notices of appearance before a police officer.

Section 17A of the Prevention of Corruption Act, 1988, as amended in 2018, was also discussed, which provides a bar on any enquiry, inquiry, or investigation by a police officer into an alleged offense by a public servant relating to any decision taken or recommendation made in the exercise of official functions without the previous approval of the competent authority. However, the first proviso to this section states that such approval is not necessary in cases involving the arrest of a person on the spot on charges of accepting undue advantage.

Arguments

Submissions by the CBI:

• The High Court erred in granting anticipatory bail considering the gravity of the offense and Respondent No. 1’s position.
• The High Court did not appreciate the evidence of demand and acceptance of a bribe, including voice recordings.
• The FIR was not registered after a long delay; the CBI re-registered the FIR initially filed by ACB.
• Respondent No. 1’s service record is not clean, as his name was included in the ‘Agreed List’ for Group A officers.
• Respondent No. 1 evaded arrest, used criminal force against the ACB team, and handed over his mobile phone to a colleague to avoid seizure.
• Audio and video evidence was certified as genuine by the Directorate of Forensic Science, Gujarat.
• Respondent No. 1 falsely claimed to have taken leave and misled the investigating agency.
• Other Income Tax officials were involved, necessitating custodial interrogation.
• Respondent No. 1 did not hand over his mobile phones, showing non-cooperation with the investigation.
• Custodial interrogation is essential for effective investigation, citing State Rep. By The CBI v. Anil Sharma [(1997) 7 SCC 187].
• Anticipatory bail should not be granted to an absconder, citing Prem Shankar Prasad v. State of Bihar [2021 SCC OnLine SC 955], State of Madhya Pradesh v. Pradeep Sharma [(2014) 2 SCC 171], and Lavesh v. State (NCT of Delhi) [(2012) 8 SCC 730].
• The High Court’s order was unusual in allowing police remand while preventing custodial interrogation.

Submissions by the Complainant:

• The High Court ignored the observations of the Sessions Court that custodial interrogation was necessary.
• The High Court failed to appreciate the demand for Rs. 30 lakhs and its acceptance through Dhara Angadia Firm.

Submissions by Respondent No. 1:

• The allegations are false; Respondent No. 1 never demanded gratification.
• There is no evidence of demand or acceptance of a bribe. The voice recording was done without police involvement.
• The complainant has animosity due to the past survey action against his company.
• The FIR was registered with a delay of more than 24 hours.
• Only Respondent No. 1 is sought to be arrested; others involved have not been arrested.
• CBI misused Section 41A of the CrPC.
• Respondent No. 1 was availing legal remedies and cannot be termed an absconder.
• Respondent No. 1 cooperated with the investigation after the grant of anticipatory bail.
• Respondent No. 1 has an impeccable service record.
• Section 17A of the Prevention of Corruption Act, 1988, was not complied with.
• The High Court rightly granted anticipatory bail.
• Cancellation of bail requires ‘cogent and overwhelming’ reasons, citing Dolat Ram v. State of Haryana [(1995) 1 SCC 349].
• No supervening circumstances exist for cancellation of bail.

Submissions Table

Issues Framed by the Supreme Court

The Supreme Court did not explicitly frame issues in a separate section. However, the core issue before the court was:

• Whether the High Court was justified in granting anticipatory bail to Respondent No. 1, considering the allegations of corruption, evidence of demand and acceptance of a bribe, and attempts to evade arrest and destroy evidence.

Treatment of the Issue by the Court

Authorities

Cases Relied Upon by the Court:

On the principles for granting anticipatory bail:

• Gurbaksh Singh Sibbia v. State of Punjab [(1980) 2 SCC 565] – Supreme Court of India. This case laid down the parameters for granting anticipatory bail.
• Siddharam Satlingappa Mhetre v. State of Maharashtra [(2011) 1 SCC 694] – Supreme Court of India. This case summed up the law on anticipatory bail after due deliberation on the parameters evolved in Gurbaksh Singh Sibbia.
• Sushila Aggarwal v. State (NCT of Delhi) [(2020) 5 SCC 1] – Supreme Court of India. This Constitution Bench reiterated that courts should be guided by factors like the nature and gravity of the offenses, the role attributed to the applicant, and the facts of the case while deciding anticipatory bail applications.

On the necessity of custodial interrogation:

• State Rep. By The CBI v. Anil Sharma [(1997) 7 SCC 187] – Supreme Court of India. This case was cited to argue that custodial interrogation is more effective than questioning a suspect protected by an anticipatory bail order.

On denying anticipatory bail to absconders:

• Prem Shankar Prasad v. State of Bihar [2021 SCC OnLine SC 955] – Supreme Court of India.
• State of Madhya Pradesh v. Pradeep Sharma [(2014) 2 SCC 171] – Supreme Court of India.
• Lavesh v. State (NCT of Delhi) [(2012) 8 SCC 730] – Supreme Court of India. These cases were cited to support the argument that anticipatory bail should not be granted to an absconder.

On cancellation of bail:

• Dolat Ram v. State of Haryana [(1995) 1 SCC 349] – Supreme Court of India. This case was cited to argue that cancellation of bail requires ‘cogent and overwhelming’ reasons.

Legal Provisions Considered by the Court:

• Section 7 of the Prevention of Corruption Act, 1988: Deals with offences related to public servants taking gratification other than legal remuneration.
• Section 13(1) and 13(2) of the Prevention of Corruption Act, 1988: Part of the initial FIR, but not the focus of the Supreme Court’s analysis.
• Section 41A of the Code of Criminal Procedure (CrPC): Pertains to notices of appearance before a police officer.
• Section 17A of the Prevention of Corruption Act, 1988: Provides a bar on any enquiry, inquiry, or investigation by a police officer into an alleged offense by a public servant relating to any decision taken or recommendation made in the exercise of official functions without the previous approval of the competent authority.

Authority Table

Judgment

How each submission made by the Parties was treated by the Court?

How each authority was viewed by the Court?

• Gurbaksh Singh Sibbia v. State of Punjab [(1980) 2 SCC 565]*: The principles laid down in this case were considered foundational for granting anticipatory bail.
• Siddharam Satlingappa Mhetre v. State of Maharashtra [(2011) 1 SCC 694]*: The Court relied on this case to reiterate the factors to be considered while granting anticipatory bail.
• Sushila Aggarwal v. State (NCT of Delhi) [(2020) 5 SCC 1]*: This case was used to emphasize the importance of considering the nature and gravity of the offense.
• State Rep. By The CBI v. Anil Sharma [(1997) 7 SCC 187]*: The Court used this case to highlight the importance of custodial interrogation for effective investigation.
• Prem Shankar Prasad v. State of Bihar [2021 SCC OnLine SC 955]*, State of Madhya Pradesh v. Pradeep Sharma [(2014) 2 SCC 171]*, and Lavesh v. State (NCT of Delhi) [(2012) 8 SCC 730]*: These cases were cited to support the argument that anticipatory bail should not be granted to an absconder.
• Dolat Ram v. State of Haryana [(1995) 1 SCC 349]*: The Court distinguished between setting aside an unjustified order granting bail and cancelling bail, noting that different standards apply.

What weighed in the mind of the Court?:

The Supreme Court was primarily concerned with ensuring a fair and thorough investigation of corruption charges against a public servant. The Court emphasized that corruption poses a serious threat to society and must be dealt with firmly. The following points weighed heavily in the Court’s decision:

• Gravity of the Offense: The Court noted that corruption is a serious issue that undermines good governance and deprives the common man of benefits.
• Evidence of Demand and Acceptance of Bribe: The Court found that the voice recordings and the deposit of money in the Angadia firm provided prima facie evidence of demand and acceptance of a bribe.
• Attempts to Evade Arrest and Destroy Evidence: The Court considered the fact that Respondent No. 1 evaded arrest, assaulted the ACB team, and handed over his mobile phone to a colleague to avoid seizure, which indicated his complicity.
• Need for Custodial Interrogation: The Court emphasized that custodial interrogation was necessary to unearth the larger conspiracy and examine the involvement of other officials.
• Factual Errors by the High Court: The Court noted that the High Court erred in observing that the FIR was registered after a long delay and in its analysis of the evidence.

Sentiment Analysis

Fact:Law Ratio

The Supreme Court’s decision was influenced more by the factual aspects of the case (60%), such as the evidence of bribery and attempts to evade arrest, than by legal considerations (40%), such as the principles for granting anticipatory bail. This highlights the Court’s focus on the specific circumstances of the case and the need to ensure a thorough investigation.

Logical Reasoning

Key Takeaways

• Anticipatory bail should not be granted routinely, especially in cases of corruption involving public servants.
• Custodial interrogation is crucial for effective investigation,especially in cases involving corruption and attempts to evade arrest.
• The High Court should carefully consider the gravity of the offense, the evidence against the accused, and the need for a thorough investigation before granting anticipatory bail.
• Attempts to evade arrest and destroy evidence can be a significant factor in denying anticipatory bail.
• Courts should be wary of granting anticipatory bail to absconders.
• The Supreme Court’s decision emphasizes the importance of a strong stance against corruption.
• This judgment sets a precedent for future cases involving corruption by public servants and the granting of anticipatory bail.