Supreme Court Clarifies Default Bail Under Section 167(2) CrPC: CBI vs. Kapil Wadhawan & Anr. (24 January 2024)

Introduction

Date of the Judgment: 24 January 2024

Citation: 2024 INSC 58

Judges: Bela M. Trivedi, J., Pankaj Mithal, J.

Can an accused claim default bail if the investigating agency files a charge sheet within the stipulated time, but continues further investigation? The Supreme Court of India recently addressed this critical question in a criminal appeal, clarifying the scope and applicability of Section 167(2) of the Code of Criminal Procedure (CrPC). This judgment clarifies that the right to default bail ceases once a charge sheet is filed, even if further investigation is pending. The bench comprised Justices Bela M. Trivedi and Pankaj Mithal, with Justice Bela M. Trivedi authoring the judgment.

Case Background

The case originated from an FIR registered by the Central Bureau of Investigation (CBI) on 20 June 2022, based on a complaint by Union Bank of India. The FIR alleged that Dewan Housing Finance Corporation Ltd. (DHFL) and its then Chairman and Managing Director, Kapil Wadhawan, along with 12 other accused persons, had engaged in a criminal conspiracy to cheat a consortium of 17 banks. It was alleged that they induced the banks to sanction loans of approximately ₹42,000 crores, and then siphoned off and misappropriated a significant portion of these funds, causing a wrongful loss of ₹34,000 crores to the lenders between January 2010 and December 2019.

Kapil Wadhawan and Dheeraj Wadhawan were arrested by the CBI on 19 July 2022, and were remanded to judicial custody on 30 July 2022. After investigation, the CBI filed a charge sheet against 75 individuals and entities, including the Wadhawans, on 15 October 2022.

Timeline:

Course of Proceedings

The respondents, Kapil and Dheeraj Wadhawan, applied for default bail under Section 167(2) of the CrPC on 29 October 2022, arguing that the charge sheet filed by the CBI was incomplete. The Special Court initially rejected their plea but later, on 3 December 2022, granted them default bail, stating that the investigation was incomplete and the charge sheet was piecemeal.

The CBI challenged this order in the High Court of Delhi, which dismissed the CBI’s petition on 30 May 2023, upholding the Special Court’s decision. The High Court agreed that the charge sheet was incomplete, thus entitling the respondents to default bail.

Legal Framework

The core legal provisions at the heart of this case are Section 167(2) and Section 173 of the Code of Criminal Procedure, 1973 (CrPC).

• Section 167(2) CrPC: This provision deals with the procedure when an investigation cannot be completed within 24 hours. It allows for the detention of an accused for a specified period, and if the investigation is not completed within 60 or 90 days (depending on the nature of the offense), the accused is entitled to be released on bail if they are prepared to furnish it. The relevant part of the provision states:
  
  “Provided that—(a) the Magistrate may authorise the detention of the accused person, otherwise than in the custody of the police, beyond the period of fifteen days, if he is satisfied that adequate grounds exist for doing so, but no Magistrate shall authorise the detention of the accused person in custody under this paragraph for a total period exceeding— (i) ninety days, where the investigation relates to an offence punishable with death, imprisonment for life or imprisonment for a term of not less than ten years; (ii) sixty days, where the investigation relates to any other offence, and, on the expiry of the said period of ninety days, or sixty days, as the case may be, the accused person shall be released on bail if he is prepared to and does furnish bail…”
• Section 173 CrPC: This section outlines the procedure for the police report upon completion of the investigation. Sub-section (2) requires the officer in charge of the police station to forward a report to a Magistrate, stating details such as the names of the parties, the nature of the information, and whether an offense appears to have been committed. The relevant part of the provision states:
  
  “(2) (i) As soon as it is completed, the officer in charge of the police station shall forward to a Magistrate empowered to take cognizance of the offence on a police report, a report in the form prescribed by the State Government, stating— (a) the names of the parties; (b) the nature of the information; (c) the names of the persons who appear to be acquainted with the circumstances of the case; (d) whether any offence appears to have been committed and, if so, by whom; (e) whether the accused has been arrested; (f) whether he has been released on his bond and, if so, whether with or without sureties; (g) whether he has been forwarded in custody under section 170.”

Arguments

The arguments presented by both sides are as follows:

Appellant (CBI) Arguments:

• The charge sheet was complete, containing all necessary details as required by law.
• Further investigation pending against some other accused does not render the charge sheet incomplete against the present respondents.
• The right to default bail under Section 167(2) CrPC ceases once a charge sheet is filed, and does not revive due to further investigation under Section 173(8) CrPC.
• The Special Court had already taken cognizance of the offenses before granting default bail, which is against the statutory scheme of the CrPC.
• Relied on the judgment in Dinesh Dalmia vs. CBI [(2007) 8 SCC 770] to argue that once a charge sheet is filed, the right to default bail is extinguished.
• Relied on M. Ravindran v. Intelligence Officer, Directorate of Revenue Intelligence [(2021) 2 SCC 485], to submit that where the accused fails to apply for default bail when his right accrues, and subsequently a charge sheet is filed, the right to default bail would be extinguished.

Respondent (Kapil and Dheeraj Wadhawan) Arguments:

• The issue of cognizance is irrelevant to default bail. The right under Section 167(2) CrPC is a statutory right if a complete charge sheet is not filed within the prescribed time limit.
• The charge sheet filed by the CBI was incomplete, entitling the respondents to default bail.
• Relied on Suresh Kumar Bhikamchand Jain Vs. State of Maharashtra & Anr. [(2013) 3 SCC 77], to argue that cognizance is not relevant for determining whether the investigation is complete for default bail under Section 167(2) CrPC.
• Relied on Rakesh Kumar Paul vs. State of Assam [(2017) 15 SCC 67], to submit that if the right for default bail has ripened, it cannot be frustrated by the prosecution.
• Distinguished the Dalmia’s case (supra), arguing that in that case, the accused was absconding, whereas in the present case, the charge sheet was incomplete.
• The concurrent findings of the lower courts should not be interfered with unless perverse.
• Filing of the charge sheet was a subterfuge to defeat the indefeasible right of the respondents under Section 167(2) CrPC.

Issues Framed by the Supreme Court

The Supreme Court framed the following issue for consideration:

1. Whether the respondents were entitled to default bail under Section 167(2) CrPC on the ground that the investigation qua some of the accused named in the FIR was pending, even though the charge sheet against the respondents and other accused was filed within the prescribed time limit and cognizance of the offense was taken by the Special Court before the consideration of the application of the respondents seeking default bail?

Treatment of the Issue by the Court

The following table demonstrates how the Court decided the issue:

Authorities

The Supreme Court considered the following authorities:

Cases:

Legal Provisions:

• Section 167 of the Code of Criminal Procedure, 1973 (CrPC): Procedure when investigation cannot be completed in twenty-four hours.
• Section 173 of the Code of Criminal Procedure, 1973 (CrPC): Report of police officer on completion of investigation.

Judgment

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

How each authority was viewed by the Court?

• The Supreme Court followed Sanjay Dutt vs. State through CBI, Bombay (II) [(1994) 5 SCC 410]* to reiterate that the right to default bail is enforceable only before the filing of the charge sheet and does not survive once the charge sheet is filed.
• The Supreme Court followed Suresh Kumar Bhikamchand Jain Vs. State of Maharashtra & Anr. [(2013) 3 SCC 77]* to emphasize that the filing of a charge sheet is sufficient compliance with Section 167(2) CrPC, and the question of cognizance is not material for default bail.
• The Supreme Court followed Serious Fraud Investigation Office vs. Rahul Modi & Ors. [2022 SCC OnLine SC 153]* which reiterated that an accused cannot demand default bail on the ground that cognizance has not been taken before the expiry of the statutory period.
• The Supreme Court followed K. Veeraswami vs. Union of India and Others [(1991) 3 SCC 655]* to explain the scope of Section 173(2) CrPC and what constitutes a complete charge sheet.
• The Supreme Court followed Dinesh Dalmia vs. CBI [(2007) 8 SCC 770]* to explain the scope of Section 167(2) vis-à-vis Section 173(8) CrPC, emphasizing that further investigation does not revive the right to default bail once a charge sheet is filed.
• The Supreme Court followed M. Ravindran v. Intelligence Officer, Directorate of Revenue Intelligence [(2021) 2 SCC 485]* to state that where the accused fails to apply for default bail when his right accrues, and subsequently a charge sheet is filed, the right to default bail would be extinguished.
• The Supreme Court distinguished Rakesh Kumar Paul vs. State of Assam [(2017) 15 SCC 67]*, stating that it does not apply to the present facts.

What weighed in the mind of the Court?

The Supreme Court’s decision was primarily influenced by the interpretation of statutory provisions and established legal precedents. The Court emphasized that once a charge sheet is filed, the right to default bail under Section 167(2) CrPC ceases, regardless of whether further investigation is pending. The Court also reiterated that cognizance of the offense is a significant factor. The Court was also influenced by the fact that the Special Court had already taken cognizance of the offenses before granting default bail.

The Court also noted that the statutory requirement of a report under Section 173(2) CrPC is met when the report contains the prescribed details and that it is not necessary to state all the details of the offense in the report.

Fact:Law Ratio

The Court’s reasoning was heavily based on legal interpretation and precedent analysis, with a lesser emphasis on the factual matrix.

Logical Reasoning

Judgment

The Supreme Court held that the respondents were not entitled to default bail under Section 167(2) of the CrPC. The Court emphasized that the right to default bail is extinguished once a charge sheet is filed within the prescribed time, even if further investigation is pending against other accused. The Court found that both the Special Court and the High Court had committed a serious error in disregarding the settled legal position.

The Court observed that the statutory requirement of the report under Section 173 (2) would be complied with if the various details prescribed therein are included in the report. The report under Section 173 is an intimation to the court that upon investigation into the cognizable offence, the investigating officer has been able to procure sufficient evidence for the court to inquire into the offence and the necessary information is being sent to the court.

The Court stated that “The benefit of proviso appended to sub-section (2) of Section 167 of the Code would be available to the offender only when a chargesheet is not filed and the investigation is kept pending against him. Once however, a chargesheet is filed, the said right ceases.”

The Court also stated that “It is also well settled that the court takes cognizance of the offence and not the offender. Once from the material produced along with the chargesheet, the court is satisfied about the commission of an offence and takes cognizance of the offence allegedly committed by the accused, it is immaterial whether the further investigation in terms of Section 173(8) is pending or not.”

The Court further stated that “The pendency of the further investigation qua the other accused or for production of some documents not available at the time of filing of chargesheet would neither vitiate the chargesheet, nor would it entitle the accused to claim right to get default bail on the ground that the chargesheet was an incomplete chargesheet or that the chargesheet was not filed in terms of Section 173(2) of Cr.P.C.”

The Supreme Court set aside the orders of the Special Court and the High Court, directing that the respondents be taken into custody if they had been released on default bail.

The Court clarified that its observations should not influence the Special Court or the High Court in other proceedings, if any, pending before them.

Key Takeaways

• The right to default bail under Section 167(2) CrPC is extinguished once a charge sheet is filed within the prescribed time, regardless of whether further investigation is pending.
• The filing of a charge sheet is sufficient compliance with Section 167(2) CrPC, and the issue of cognizance is not material for default bail.
• Further investigation under Section 173(8) CrPC does not revive the right to default bail once a charge sheet has been filed.
• The court takes cognizance of the offense and not the offender, and the pendency of further investigation does not invalidate the charge sheet.

Directions

The Supreme Court directed that the respondents-accused shall be taken into custody in this case if released on default bail pursuant to the impugned orders.

Specific Amendments Analysis

There was no discussion about any specific amendments in the judgment.

Development of Law

The ratio decidendi of this case is that the right to default bail under Section 167(2) CrPC is extinguished once a charge sheet is filed within the prescribed time, regardless of whether further investigation is pending. This judgment reinforces the settled legal position on default bail and clarifies that the filing of a charge sheet is sufficient compliance with Section 167(2) CrPC. There is no change in the previous position of law, but this judgment reiterates and clarifies the existing legal principles.

Conclusion

The Supreme Court’s judgment in CBI vs. Kapil Wadhawan & Anr. clarifies the scope of default bail under Section 167(2) CrPC. The Court held that once a charge sheet is filed within the stipulated time, the right to default bail ceases, irrespective of any further investigation. This decision reinforces the importance of timely filing of charge sheets and provides clarity on the interpretation of Section 167(2) CrPC.