Supreme Court Grants Bail in Gujarat Maritime Board Case: Jinofer Kawasji Bhujwala vs. State of Gujarat (2020)

Date of the Judgment: 19 June 2020

Citation: (2020) INSC 460

Judges: Ashok Bhushan J., M.R. Shah J., V. Ramasubramanian J.

Can a person accused of financial irregularities be kept in custody indefinitely if the trial has not commenced? The Supreme Court addressed this critical question in a recent case involving the Gujarat Maritime Board. The Court considered whether the continued incarceration of the accused was justified, given the delay in the commencement of the trial and the nature of the allegations. The Supreme Court bench comprised Justices Ashok Bhushan, M.R. Shah, and V. Ramasubramanian, with the judgment authored by Justice V. Ramasubramanian.

Case Background

The case revolves around a concession agreement between the Gujarat Maritime Board and Aatash Norcontrol Limited (ANL) for the development of a Vessels Traffic and Port Management System (VTPMS) in the Gulf of Khambhat. The project became operational in August 2010. However, disputes arose in 2018 regarding the capital costs incurred by ANL. The Gujarat Maritime Board alleged that ANL had made an extra income of Rs. 134.38 crores and lodged a complaint alleging financial irregularities, leading to a First Information Report (FIR) against ANL and its directors, including the appellant, Jinofer Kawasji Bhujwala.

The complaint alleged that ANL was guilty of inflating costs, not executing certain works, creating shell companies, siphoning funds, raising false bills and invoices, and managing the issue of completion certificates through the then Superintending Engineer and Chief Nautical Officer of the board. The appellant, along with his son and daughter, were named as accused in the FIR, leading to their arrest. The appellant was placed in judicial custody on 2 July 2019 and has remained in custody since then.

Timeline:

Course of Proceedings

Initially, the Sessions Court rejected the appellant’s bail application on 6 July 2019. The appellant then approached the High Court, but withdrew the application on 6 August 2019, with liberty to file a fresh application after the charge sheet was filed. The High Court granted bail to two officers of the Maritime Board who were also implicated in the case. A charge sheet was filed on 21 September 2019 against the appellant and others, but not against the officers of the Maritime Board, as sanction from the government was awaited. The Sessions Court rejected the appellant’s bail application again on 3 October 2019. The High Court of Gujarat dismissed the appellant’s bail application on 9 December 2019, but granted liberty to file a fresh application before the Trial Court if the trial did not commence within six months. The trial has not commenced as of the date of the Supreme Court’s judgment.

Legal Framework

The case involves allegations of offences under the following sections:

• Section 406 of the Indian Penal Code (IPC), which deals with criminal breach of trust.
• Section 409 of the IPC, which deals with criminal breach of trust by a public servant, banker, merchant, or agent.
• Section 420 of the IPC, which deals with cheating and dishonestly inducing delivery of property.
• Section 465 of the IPC, which deals with forgery.
• Section 468 of the IPC, which deals with forgery for the purpose of cheating.
• Section 471 of the IPC, which deals with using as genuine a forged document or electronic record.
• Section 120B of the IPC, which deals with criminal conspiracy.
• Section 13(1)(d) of the Prevention of Corruption Act, 1988, which deals with criminal misconduct by a public servant.

The case also involves the Arbitration and Conciliation Act, 1996. Specifically, Section 9, which allows for interim measures by a court, and Section 17, which allows for interim measures by the Arbitral Tribunal.

Arguments

Appellant’s Arguments:

• The dispute is essentially civil in nature, and a criminal cloak has been given to it.
• The economic interests of the Gujarat Maritime Board are protected by the interim measures granted by the Arbitral Tribunal.
• The appellant is a senior citizen with medical complications.
• The charge sheet has been filed, and the trial has not commenced, making the continued incarceration unjustified.

State and Maritime Board’s Arguments:

• The matter involves national security, as the VTPMS project is crucial for monitoring and identifying infiltration by non-state vessels.
• It is not just a civil dispute but a huge financial scam involving round tripping of funds through shell companies.
• The appellant is the mastermind behind the scam.
• The appellant has been influencing witnesses, including sending gifts to senior officers of the Maritime Board.
• Two Chartered Accountants have retracted their earlier statements under pressure from the appellant.
• The appellant had prior knowledge of the Forensic Science Laboratory report even before it reached the Investigating Officer.
• One of the co-accused is absconding.
• Many prosecution witnesses are vulnerable as they are either former or present employees of the appellant or retired government officials.

Issues Framed by the Supreme Court

The Supreme Court did not explicitly frame issues in a separate section, but the core issue addressed was:

1. Whether the appellant should be granted bail given the delay in the commencement of the trial, the nature of allegations, and the fact that the economic interests of the Maritime Board were protected by the interim orders of the Arbitral Tribunal.

Treatment of the Issue by the Court

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

Authorities

The Supreme Court did not cite any specific cases or books in this judgment. However, the court did consider the following legal provisions:

• Sections 406, 409, 420, 465, 468, 471, and 120B of the Indian Penal Code (IPC), which define the offences of criminal breach of trust, cheating, forgery, and criminal conspiracy.
• Section 13(1)(d) of the Prevention of Corruption Act, 1988, which deals with criminal misconduct by a public servant.
• Sections 9 and 17 of the Arbitration and Conciliation Act, 1996, which deal with interim measures by court and arbitral tribunal respectively.

Judgment

Authorities Viewed by the Court:

The Court did not specifically cite any authorities in its reasoning. However, it considered the legal provisions related to the alleged offences and the provisions of the Arbitration and Conciliation Act, 1996.

What weighed in the mind of the Court?

The Supreme Court’s decision to grant bail to the appellant was influenced by several factors. The Court emphasized the delay in the commencement of the trial, the fact that the appellant had been in custody for nearly a year, and the interim measures taken by the Arbitral Tribunal to protect the economic interests of the Gujarat Maritime Board. The Court also noted that the prosecution’s case was primarily based on documents, reducing the risk of witness tampering. The Court was not convinced by the arguments of the State and the Maritime Board regarding national security and witness tampering. The Court’s decision reflects a balancing of the rights of the accused with the interests of justice.

The Court reasoned that the appellant’s continued detention was not justified given the long period of custody without trial, and the fact that the economic interests of the Maritime Board were protected by the Arbitral Tribunal. The Court also noted that the prosecution’s case was primarily based on documents, reducing the risk of witness tampering. The Court also rejected the argument that national security was at stake, as the project was operational since 2010 and the disputes arose only in 2018.

The Court stated, “Obviously, the period of six months within which the High Court hoped the trial to commence, has expired as on date. The appellant, who is admittedly 62 years of age has already spent nearly a year in judicial custody. A period of nine months has passed from the date of filing of the charge sheet.”

The Court also noted, “The arguments revolving around the potential threat to national security, cannot be sustained, for two reasons. The first reason is that the project became operational in August-2010 and the disputes between the parties started only in 2018 and that too with regard to financial matters.”

The Court further stated, “Therefore, we are of the view that the appellant is entitled to bail.”

Key Takeaways

• Bail can be granted if the trial is significantly delayed, especially when the accused has been in custody for a long time.
• The economic interests of the parties can be protected by interim measures ordered by an Arbitral Tribunal.
• The prosecution’s case being primarily based on documents can be a factor in granting bail.
• Arguments regarding national security must be substantiated and cannot be a blanket reason to deny bail.

Directions

The Supreme Court directed that the appellant be released on bail, subject to terms and conditions as the Sessions Court may deem fit, including the surrender of the passport, which shall be subject to orders passed by the Trial Court from time to time.

Development of Law

The ratio decidendi of this case is that prolonged pre-trial detention, especially when the trial is delayed and the economic interests of the complainant are secured, is a valid ground for granting bail. This case reinforces the importance of timely trials and the protection of individual liberty. There is no change in the previous position of law, but rather a reinforcement of existing principles on bail.

Conclusion

The Supreme Court granted bail to the appellant, Jinofer Kawasji Bhujwala, emphasizing the delay in the commencement of the trial, the length of his custody, and the protection of the economic interests of the Gujarat Maritime Board through interim orders of the Arbitral Tribunal. The Court’s decision highlights the importance of balancing the interests of justice with the rights of the accused, particularly the right to a speedy trial.