Supreme Court Clarifies Statutory Bail Under Section 167 CrPC: SFIO vs. Rahul Modi (2022)

Introduction

Date of the Judgment: 07 February 2022
Citation: (2022) INSC 123
Judges: L. Nageswara Rao, J. and B.R. Gavai, J.
Can an accused person claim statutory bail simply because the court hasn’t formally taken cognizance of a case within the stipulated time, even if the charge sheet has been filed? The Supreme Court of India recently addressed this critical question in a case involving the Serious Fraud Investigation Office (SFIO) and directors of the Adarsh Group of Companies. The court clarified that the right to statutory bail arises only if the charge sheet is not filed within the statutory period of 60 or 90 days, and not on the ground that cognizance has not been taken by the court. The judgment was delivered by a two-judge bench comprising Justice L. Nageswara Rao and Justice B.R. Gavai.

Case Background

The Serious Fraud Investigation Office (SFIO) initiated an investigation into the Adarsh Group of Companies and LLPs, acting on the Central Government’s directives under Section 212(1)(c) of the Companies Act, 2013, and Section 43 of the Limited Liability Partnership Act, 2008. Inspectors were appointed by the Director, SFIO, to conduct this investigation. Rahul Modi and another director (Respondent Nos. 1 and 2) were arrested on 10.12.2018 following approval from the Director, SFIO. The High Court of Delhi initially ordered their interim release on 20.12.2018, but this was overturned by the Supreme Court on 27.03.2019. Consequently, the respondents surrendered on 01.04.2019 and were remanded to judicial custody on 05.04.2019. The judicial custody was extended by the Special Court, Gurugram, until 16.05.2019, and then again until 30.05.2019, as the investigation continued. On 03.05.2019, the respondents filed regular bail applications before the High Court, which were listed for hearing on 21.05.2019. The High Court directed the trial court to consider any applications for statutory bail under Section 167 of the CrPC filed by the respondents. A criminal complaint was filed before the Special Court, Gurugram, on 18.05.2019. The respondents filed applications for statutory bail under Section 167(2) of the CrPC on 20.05.2019, which were dismissed on 22.05.2019 by the Sessions Judge, Gurugram, because the complaint had been filed within the statutory 60-day period. The High Court, however, granted bail on 31.05.2019, stating that the trial court had not taken cognizance of the complaint before the expiry of the 60-day period, entitling the respondents to statutory bail.

Timeline

Course of Proceedings

The Special Court, Gurugram, extended the judicial custody of Respondent Nos. 1 and 2 until 16.05.2019 and then to 30.05.2019 due to the ongoing investigation. The respondents filed regular bail applications before the High Court on 03.05.2019, which were scheduled for hearing on 21.05.2019. The High Court directed the trial court to consider any applications for statutory bail under Section 167 of the CrPC. A criminal complaint under Section 439(2) of the Companies Act, 2013, was filed before the Special Court, Gurugram, on 18.05.2019. The respondents then filed applications for statutory bail under Section 167(2) of the CrPC on 20.05.2019. The Sessions Judge, Gurugram, dismissed these applications on 22.05.2019, noting that the complaint had been filed before the expiry of the 60-day period. However, the High Court, in its order dated 31.05.2019, granted bail to the respondents, stating that the trial court’s failure to take cognizance of the complaint before the expiry of the 60-day period entitled them to statutory bail.

Legal Framework

The core of this case revolves around Section 167(2) of the Code of Criminal Procedure, 1973 (CrPC), which deals with the procedure when an investigation cannot be completed within 24 hours. The relevant portion of Section 167(2) CrPC states:

“The Magistrate to whom an accused person is forwarded under this section may, whether he has or has not jurisdiction to try the case, from time to time, authorise the detention of the accused in such custody as such Magistrate thinks fit, for a term not exceeding fifteen days in the whole; and if he has no jurisdiction to try the case or commit it for trial, and considers further detention unnecessary, he may order the accused to be forwarded to a Magistrate having such jurisdiction: Provided that — (a) the Magistrate may authorise the detention of the accused person, otherwise than in 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, and every person released on bail under this sub-section shall be deemed to be so released under the provisions of Chapter XXXIII for the purposes of that Chapter;”

This section provides that if the investigation is not completed within 60 days (for offenses not punishable with death, life imprisonment, or imprisonment for not less than 10 years) or 90 days (for more serious offenses), the accused is entitled to be released on bail if they are prepared to furnish it. This is commonly known as ‘statutory bail’ or ‘default bail’.

Arguments

Appellant (SFIO) Arguments:

• The Additional Solicitor General (ASG) argued that the High Court erred in granting statutory bail to Respondent Nos. 1 and 2 because the complaint was filed before the expiry of 60 days from the date of remand.
• The ASG contended that the High Court incorrectly held that cognizance must also be taken within the 60-day period for the accused to not be entitled to statutory bail under Section 167(2) of the CrPC.
• The ASG stated that the purpose of Section 167(2) is to address the failure to complete the investigation within the prescribed period.
• The ASG submitted that according to the CrPC, the final report/complaint is filed under Section 173(2) upon the completion of the investigation, and statutory bail is only applicable if the investigation is not completed within the prescribed time.
• The ASG argued that the High Court’s judgment is contrary to the Supreme Court’s ruling in Suresh Kumar Bhikamchand Jain v. State of Maharashtra & Anr. [ (2013) 3 SCC 77 ].

Respondent Nos. 1 and 2 Arguments:

• The respondents argued that the High Court was correct in granting statutory bail because cognizance was not taken before the expiry of the 60-day period.
• Relying on Sanjay Dutt v. State [(1994) 5 SCC 410], they argued that the maximum period of detention under Section 167 of the CrPC is 60 days, and any extension beyond that is only permissible if the accused is unable to furnish bail.
• They cited Mohamed Iqbal Madar Sheikh & Ors. v. State of Maharashtra [(1996) 1 SCC 722] to support their argument that the right under Section 167(2) of the CrPC can be exercised until the court takes cognizance.
• They further contended that an accused has a right to seek statutory bail even after the charge-sheet is filed, until the court takes cognizance.

Intervenor (Rahul Kothari) Arguments:

• The Intervenor argued that there is a conflict of opinion regarding the interpretation of Section 167(2) of the CrPC.
• He submitted that the Supreme Court in Madar Sheikh (supra) held that an accused can invoke the right to statutory bail if the court has not taken cognizance of the complaint before the expiry of the statutory period.
• He contended that the Supreme Court in Bhikamchand Jain (supra) took a different view without referring to Madar Sheikh (supra).
• He also submitted that the Supreme Court in M. Ravindran v. Intelligence Officer, Directorate of Revenue Intelligence [(2021) 2 SCC 485] took the same view as in Madar Sheikh (supra) without reference to Bhikamchand Jain (supra).
• He pointed out that a similar issue has been referred to a larger bench by the Supreme Court in Criminal Appeal Nos. 701-702 of 2020.
• He argued that the present matter should also be referred to a larger bench to settle the conflicting opinions.

Submissions Table

Issues Framed by the Supreme Court

The Supreme Court framed the following issue for consideration:

1. Whether an accused is entitled to statutory bail under Section 167(2) of the CrPC on the ground that cognizance has not been taken before the expiry of 60 days or 90 days, as the case may be, from the date of remand.

Treatment of the Issue by the Court

The following table demonstrates as to how the Court decided the issues

Authorities

On the point of statutory bail under Section 167(2) of the CrPC

• Suresh Kumar Bhikamchand Jain v. State of Maharashtra & Anr. [(2013) 3 SCC 77] – Supreme Court of India: The court held that filing of the charge-sheet is sufficient compliance with Section 167, CrPC and taking of cognizance is not material. The accused’s right to statutory bail ends once the charge-sheet is filed within the stipulated period.
• Sanjay Dutt v. State [(1994) 5 SCC 410] – Supreme Court of India: The court held that the indefeasible right to statutory bail is enforceable only before the filing of the challan and does not survive after the challan is filed.
• Mohamed Iqbal Madar Sheikh & Ors. v. State of Maharashtra [(1996) 1 SCC 722] – Supreme Court of India: The court held that the right under Section 167(2), CrPC, cannot be exercised after the charge-sheet has been submitted and cognizance has been taken.
• M. Ravindran v. Intelligence Officer, Directorate of Revenue Intelligence [(2021) 2 SCC 485] – Supreme Court of India: The court held that the accused is deemed to have “availed of” or enforced his right to be released on default bail, once application for bail has been filed under Section 167(2) on expiry of the stipulated time period.

Legal Provisions Considered:

• Section 167(2) of the Code of Criminal Procedure, 1973 (CrPC): This provision deals with the procedure when investigation cannot be completed within 24 hours and specifies the conditions for statutory bail.
• Section 439(2) of the Companies Act, 2013: This provision relates to the filing of a complaint by the Serious Fraud Investigation Office (SFIO).
• Section 212(1)(c) of the Companies Act, 2013: This provision empowers the Central Government to direct an investigation into the affairs of a company.
• Section 43 of the Limited Liability Partnership Act, 2008: This provision empowers the Central Government to direct an investigation into the affairs of a Limited Liability Partnership.
• Section 173(2) of the Code of Criminal Procedure, 1973 (CrPC): This provision deals with the filing of a police report after the completion of an investigation.

Authority Analysis Table

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 Suresh Kumar Bhikamchand Jain v. State of Maharashtra & Anr. [(2013) 3 SCC 77], stating that the filing of a charge-sheet is sufficient compliance with the provisions of Section 167, CrPC, and that taking of cognizance is not material to Section 167.
• The Supreme Court explained Sanjay Dutt v. State [(1994) 5 SCC 410], clarifying that the right to statutory bail is enforceable only before the filing of the challan.
• The Supreme Court explained Mohamed Iqbal Madar Sheikh & Ors. v. State of Maharashtra [(1996) 1 SCC 722], stating that the reference to cognizance was in the context of the facts of that case, where the charge-sheet was submitted and cognizance was taken.
• The Supreme Court explained M. Ravindran v. Intelligence Officer, Directorate of Revenue Intelligence [(2021) 2 SCC 485], clarifying that the judgment was about the filing of an additional complaint after the accused had already applied for default bail.

What weighed in the mind of the Court?

The Supreme Court’s decision was primarily influenced by the interpretation of Section 167(2) of the CrPC and the need to maintain a consistent legal position. The court emphasized that the primary purpose of Section 167(2) is to ensure that investigations are completed within a reasonable time. The court was of the view that once the charge sheet is filed, the purpose of Section 167(2) is fulfilled and the accused cannot claim default bail on the ground that cognizance has not been taken. The court also highlighted the importance of maintaining continuity of custody of the accused with a court, first with the Magistrate during investigation and then with the court trying the offence after cognizance is taken. The court also clarified that there was no conflict of opinion between its previous judgments and that the reference to cognizance in Madar Sheikh (supra) was only in the context of the facts of that case.

Fact:Law Ratio

The Supreme Court’s reasoning was heavily based on legal interpretation and application of the law. The factual aspects of the case were considered to a lesser extent.

Logical Reasoning

Judgment (Continued)

The Supreme Court held that the High Court’s decision to grant bail was incorrect and set aside the order. The court stated:

“It is clear from the judgment of this Court in Bhikamchand Jain (supra) that filing of a charge-sheet is sufficient compliance with the provisions of Section 167, CrPC and that an accused cannot demand release on default bail under Section 167(2) on the ground that cognizance has not been taken before the expiry of 60 days.”

The court further clarified:

“The accused continues to be in the custody of the Magistrate till such time cognizance is taken by the court trying the offence, which assumes custody of the accused for the purpose of remand after cognizance is taken.”

The court also addressed the argument that there was a conflict of opinion in previous judgments:

“A close scrutiny of the judgments in Sanjay Dutt (supra), Madar Sheikh (supra) and M. Ravindran (supra) would show that there is nothing contrary to what has been decided in Bhikamchand Jain (supra).”

The Court emphasized that the right to default bail arises only if the charge sheet is not filed within the statutory period, and not on the ground that cognizance has not been taken.

Key Takeaways

• Filing of the charge sheet within the statutory period is sufficient compliance with Section 167(2) of the CrPC.
• Accused persons cannot claim statutory bail merely on the ground that the court has not taken cognizance of the case within the stipulated time, if the charge sheet has been filed.
• The right to statutory bail arises only if the charge sheet is not filed within the statutory period of 60 or 90 days.
• The accused remains in the custody of the Magistrate until cognizance is taken by the court trying the offense.
• The judgment clarifies that there is no conflict of opinion in the Supreme Court’s previous judgments on this issue.

Directions

The Supreme Court set aside the order of the High Court dated 31.05.2019, which had granted bail to the respondents.

Development of Law

The ratio decidendi of this case is that the filing of a charge-sheet within the statutory period is sufficient compliance with Section 167(2) of the CrPC and that an accused cannot demand release on default bail on the ground that cognizance has not been taken before the expiry of 60 days. This judgment reinforces the position of law as laid down in Suresh Kumar Bhikamchand Jain v. State of Maharashtra & Anr. [(2013) 3 SCC 77] and clarifies that there is no conflict of opinion with the judgments in Sanjay Dutt v. State [(1994) 5 SCC 410], Mohamed Iqbal Madar Sheikh & Ors. v. State of Maharashtra [(1996) 1 SCC 722], and M. Ravindran v. Intelligence Officer, Directorate of Revenue Intelligence [(2021) 2 SCC 485]. The judgment clarifies that the right to statutory bail is based on the non-filing of the charge sheet and not on the non-taking of cognizance.

Conclusion

The Supreme Court’s judgment in SFIO vs. Rahul Modi (2022) provides a clear interpretation of Section 167(2) of the CrPC regarding statutory bail. The court unequivocally held that the filing of a charge-sheet within the statutory period is sufficient compliance with Section 167(2) CrPC, and the accused cannot claim statutory bail on the ground that cognizance has not been taken within the same period. This judgment reaffirms the legal position established in previous cases and clarifies any perceived ambiguity. It underscores that the right to statutory bail is contingent upon the failure to file a charge sheet within the stipulated time, not on the court’s failure to take cognizance. This decision has significant implications for the criminal justice system, ensuring that investigations are completed efficiently and that the custody of the accused is maintained through the judicial process.