Date of the Judgment: 26 July 2021
Citation: Criminal Appeal No. 680 of 2021, @ SLP (Crl) No 3155 of 2018; Criminal Appeal No. 681 of 2021, @ SLP (Crl) No 3156 of 2018; Criminal Appeal No. 682 of 2021, @ SLP (Crl) No 2617 of 2018; Criminal Appeal No. 683 of 2021, @ SLP (Crl) No 2628 of 2018
Judges: Dr Dhananjaya Y Chandrachud, J and M R Shah, J
Can a High Court question the validity of a Magistrate’s order for police investigation under Section 156(3) of the Code of Criminal Procedure (CrPC) while considering an application for anticipatory bail? The Supreme Court of India recently addressed this crucial question in a case involving allegations of significant fraud in an infrastructure project. The Court overturned the High Court’s decision, emphasizing that the High Court exceeded its jurisdiction in questioning the Magistrate’s order and that the seriousness of the allegations warranted a denial of anticipatory bail. The judgment was authored by Justice Dr. Dhananjaya Y Chandrachud, with Justice M.R. Shah concurring.
Case Background
M/s Supreme Bhiwandi Wada Manor Infrastructure Pvt. Ltd., the appellant, was awarded a contract for constructing a road in Bhiwandi Taluka, Thane. The company engaged four individuals—Mayur Jayantilal Anam (A1), Hemant Haribhau Sonawane (A2), Diwakar Waman Patil (A3), and Nilesh Dayanand Chumble (A4)—as employees for this project. A1 served as General Manager, while A2, A3, and A4 were employed as Liaison Officer, Liaison Assistant, and Senior Liaisoning Officer, respectively. Their responsibilities included identifying farmers, verifying their claims, and disbursing compensation for land acquired for the project.
In 2016, the appellant company discovered an alleged fraud and filed a complaint with the Powai Police Station in Mumbai, followed by a complaint before the Metropolitan Magistrate at Andheri. The core allegation was that the accused misappropriated funds by creating fake land owners and tenants, and by forging documents to withdraw compensation amounts. Specifically, the accused allegedly did not hand over cheques to the actual farmers, releasing the amounts to other persons and thereby defrauding the company. They allegedly created 66 fake tenants, fabricated land documents, and withdrew approximately ₹68 lakhs by cheque, which was then misappropriated. The total fraud was estimated to be around ₹87,76,755. Additionally, they allegedly fabricated certificates and withdrew around ₹1.57 crores and ₹1,84,30,400 by forging documents.
Following the complaint, the Metropolitan Magistrate at Andheri directed the police to investigate the matter under Section 156(3) of the CrPC. Consequently, FIR No. 2 of 2016 was registered on 24 May 2016 at the Powai Police Station for offences under Sections 418, 419, 420, 405, 467, 468, 471, 474, 120B read with Section 34 of the Indian Penal Code.
Timeline
| Date | Event |
|---|---|
| 2015 | Company handed over the work of disbursing land acquisition amounts to five employees, including the accused. |
| 6 February 2016 | Complainant filed an affidavit supporting the complaint. |
| 11 May 2016 | Metropolitan Magistrate at Andheri passed an order under Section 156(3) of the CrPC, directing police investigation. |
| 24 May 2016 | FIR No. 2 of 2016 was registered at Powai Police Station. |
| 13 February 2017 | Sessions Court granted anticipatory bail to A2. |
| 16 February 2017 | Sessions Court granted anticipatory bail to A3 and High Court granted interim protection against arrest to A4. |
| 24 January 2017 | High Court granted interim protection against arrest to A1. |
| 18 December 2017 | High Court granted anticipatory bail to A1 and A4 and disposed of petitions against the grant of anticipatory bail to A2 and A3. |
| 28 March 2018 | Notice was issued by the Supreme Court. |
| 26 July 2021 | Supreme Court set aside the orders of the High Court. |
Course of Proceedings
Initially, two of the accused, A2 and A3, moved the Sessions Court for anticipatory bail, which was granted on 13 February 2017 and 16 February 2017, respectively. Subsequently, A1 and A4 also sought anticipatory bail from the Bombay High Court. The High Court granted interim protection against arrest to A1 on 24 January 2017 and to A4 on 16 February 2017. The complainant challenged the Sessions Court’s grant of anticipatory bail to A2 and A3 before the High Court. Ultimately, on 18 December 2017, the High Court granted anticipatory bail to A1 and A4. Consequently, the High Court disposed of the petitions challenging the anticipatory bail granted by the Sessions Court to A2 and A3.
Legal Framework
The case revolves around the interpretation of several provisions of the Code of Criminal Procedure, 1973 (CrPC), specifically:
-
Section 156(3) of the CrPC: This section empowers a Magistrate to order a police investigation into a cognizable offense. The Supreme Court clarified that this power is exercised before the Magistrate takes cognizance of the offense.
“Any Magistrate empowered under Section 190 may order such an investigation as above mentioned.” -
Section 200 of the CrPC: This section mandates the Magistrate to examine the complainant and witnesses on oath when taking cognizance of an offense based on a complaint.
“A Magistrate taking cognizance of an offence on complaint shall examine upon oath the complainant and the witnesses present, if any, and the substance of such examination shall be reduced to writing and shall be signed by the complainant and the witnesses, and also by the Magistrate…” -
Section 202 of the CrPC: This section allows the Magistrate to postpone the issue of process and either inquire into the case themselves or direct an investigation to decide if there is sufficient ground to proceed.
“Any Magistrate, on receipt of a complaint of an offence of which he is authorised to take cognizance or which has been made over to him under section 192, may, if he thinks fit, and shall, in a case where the accused is residing at a place beyond the area in which he exercises his jurisdiction, postpone the issue of process against the accused, and either inquire into the case himself or direct an investigation to be made by a police officer or by such other person as he thinks fit, for the purpose of deciding whether or not there is sufficient ground for proceeding…” - Section 438 of the CrPC: This section deals with the grant of anticipatory bail.
- Sections 418, 419, 420, 405, 467, 468, 471, 474, 120B read with Section 34 of the Indian Penal Code: These are the sections under which the FIR was registered for offences of cheating, forgery, criminal breach of trust and criminal conspiracy.
The Supreme Court emphasized that the power under Section 156(3) is distinct from the inquiry or investigation under Section 202. An order under Section 156(3) is passed before cognizance is taken, while Section 202 applies after cognizance.
Arguments
Appellant’s Arguments:
- The High Court failed to consider the nature and gravity of the allegations against the accused while granting anticipatory bail.
- The Magistrate’s order under Section 156(3) of the CrPC directing the police to investigate was valid, and the High Court should not have questioned it.
- The High Court incorrectly applied Section 200 of the CrPC, stating that the Magistrate should have examined the complainant on oath before ordering an investigation under Section 156(3).
- The High Court overlooked judgments of the Supreme Court that clarify that a Magistrate can order an investigation under Section 156(3) before taking cognizance of the complaint.
- There was no challenge to the Magistrate’s order under Section 156(3), thus the High Court had no reason to question its validity.
- The High Court waived the condition imposed in the interim order to attend the concerned Police Station, which thwarted the investigation.
Accused’s Arguments:
- The accused were protected from arrest by interim orders and cooperated with the investigation by attending police stations when called.
- Given the cooperation of the accused and the passage of time since the initial orders, there was no justification to interfere with the grant of anticipatory bail.
- The High Court’s interpretation of Section 202 of the CrPC was correct, arguing that a police inquiry should only be ordered after the complainant’s statement has been recorded on oath under Section 200.
The appellant argued that the High Court’s decision was flawed because it questioned the validity of the Magistrate’s order under Section 156(3) of the CrPC, which had not been challenged and had attained finality. The appellant further contended that the High Court misapplied Section 200 of the CrPC, which pertains to the examination of the complainant on oath when the Magistrate takes cognizance of an offense on a complaint. The appellant emphasized that the Magistrate’s order under Section 156(3) is passed before cognizance is taken and is distinct from the inquiry under Section 202.
The accused, on the other hand, argued that they had cooperated with the investigation and that the High Court’s interpretation of Section 202 was correct, suggesting that a police inquiry should only be ordered after the complainant’s statement has been recorded on oath under Section 200. The accused also contended that the High Court was correct in granting anticipatory bail given their cooperation with the police investigation.
Innovativeness of the argument: The appellant’s argument was innovative in highlighting the distinction between the powers under Section 156(3) and Section 202 of the CrPC, emphasizing that the High Court had overstepped its jurisdiction by questioning the Magistrate’s order under Section 156(3) which had not been challenged.
Submissions Table
| Main Submission | Sub-Submissions | Party |
|---|---|---|
| High Court’s Error in Granting Anticipatory Bail | Failed to consider the nature and gravity of allegations. | Appellant |
| Questioned the validity of the Magistrate’s order under Section 156(3). | Appellant | |
| Misapplied Section 200 of the CrPC. | Appellant | |
| Cooperation with Investigation | Protected by interim orders. | Accused |
| Attended police stations when called. | Accused | |
| No justification to interfere with the grant of anticipatory bail. | Accused | |
| Interpretation of Section 202 | Police inquiry should be ordered only after recording statement under Section 200. | Accused |
Issues Framed by the Supreme Court
The Supreme Court did not explicitly frame issues in a separate section. However, the core issue that the Court addressed was:
- Whether the High Court was justified in questioning the validity of the Magistrate’s order under Section 156(3) of the CrPC while considering an application for anticipatory bail under Section 438 of the CrPC.
The sub-issue that the court dealt with was:
- Whether the High Court correctly interpreted the provisions of Section 200 and Section 202 of the CrPC in relation to the Magistrate’s power under Section 156(3).
Treatment of the Issue by the Court
| Issue | Court’s Decision and Reasoning |
|---|---|
| Whether the High Court was justified in questioning the validity of the Magistrate’s order under Section 156(3) of the CrPC while considering an application for anticipatory bail under Section 438 of the CrPC. | The Supreme Court held that the High Court was not justified in questioning the validity of the Magistrate’s order under Section 156(3) because the order was not under challenge and had attained finality. The High Court exceeded its jurisdiction in raising a doubt about the correctness of the order. |
| Whether the High Court correctly interpreted the provisions of Section 200 and Section 202 of the CrPC in relation to the Magistrate’s power under Section 156(3). | The Supreme Court held that the High Court’s interpretation of Sections 200 and 202 was incorrect. The Court clarified that the Magistrate’s power under Section 156(3) is exercised before taking cognizance of the offense, and thus, the requirement of examining the complainant on oath under Section 200 does not apply at that stage. The Court also distinguished the nature of investigation under Section 156(3) from the inquiry under Section 202. |
Authorities
The Supreme Court relied on the following authorities:
| Authority | Legal Point | Court | How the authority was used |
|---|---|---|---|
| Suresh Chand Jain v. State of MP, (2001) 2 SCC 628 | Distinction between investigation under Section 156(3) and inquiry under Section 202 of the CrPC. | Supreme Court of India | The Court cited this case to emphasize that an investigation under Section 156(3) is ordered before cognizance is taken, and the Magistrate need not examine the complainant on oath at this stage. The investigation under Section 156(3) is to enable the police to start an investigation, while the inquiry under Section 202 is for the Magistrate to decide whether to proceed further. |
| Dilawar Singh v. State of Delhi, (2007) 12 SCC 641 | Approval of the principles in Suresh Chand Jain. | Supreme Court of India | The Court cited this case to reinforce the legal position established in Suresh Chand Jain. |
| Tilak Nagar Industries Limited v. State of Andhra Pradesh, (2011) 15 SCC 571 | Magistrate’s power under Section 156(3) can be exercised even before cognizance. | Supreme Court of India | The Court cited this case to reiterate that a Magistrate can order an investigation under Section 156(3) even before taking cognizance, provided the complaint discloses a cognizable offense. |
| Anju Chaudhary v. State of Uttar Pradesh, (2013) 6 SCC 384 | Magistrate’s order under Section 156(3) is a reminder to the police to exercise their duty to investigate. | Supreme Court of India | The Court cited this case to clarify that an order under Section 156(3) is a reminder to the police to exercise their primary duty of investigation and is not affected by the provisions of Section 202 of the CrPC. |
| Rameshbhai Pandurao Hedau v. State of Gujarat, [(2010) 4 SCC 185 : (2010) 2 SCC (Cri) 801] | Distinction between the powers under Section 156(3) and Section 202. | Supreme Court of India | The Court cited this case to further emphasize the distinction between the powers under Section 156(3) and Section 202. |
| Srinivas Gundluri v. SEPCO Electric Power Construction Corpn., [(2010) 8 SCC 206 : (2010) 3 SCC (Cri) 652] | Requirements for proceeding under Section 156(3). | Supreme Court of India | The Court cited this case to clarify that for proceeding under Section 156(3), a bare reading of the complaint is sufficient, and if it discloses a cognizable offense, the Magistrate may direct the police for investigation. |
| Sushila Aggarwal v. State (NCT of Delhi), (2020) 5 SCC 1 | Considerations for granting anticipatory bail. | Supreme Court of India | The Court cited this case to highlight the factors that must be considered while granting anticipatory bail, including the nature of the offense, the role of the person, and the likelihood of influencing the investigation. |
| Myakala Dharmarajam v. The State of Telangana, (2020) 2 SCC 743 | Grounds for cancellation of bail. | Supreme Court of India | The Court cited this case to explain that bail can be cancelled if the order granting bail suffers from serious infirmities, such as ignoring relevant material or considering irrelevant material. |
| Section 156(3) of the CrPC | Magistrate’s power to order police investigation. | Statute | The Court analyzed this provision to clarify the extent of the Magistrate’s power to order police investigation. |
| Section 200 of the CrPC | Examination of complainant on oath. | Statute | The Court analyzed this provision to clarify when the Magistrate must examine the complainant on oath. |
| Section 202 of the CrPC | Postponement of issue of process and inquiry or investigation. | Statute | The Court analyzed this provision to distinguish between the nature of investigation under Section 156(3) and the inquiry under Section 202. |
| Section 438 of the CrPC | Grant of anticipatory bail. | Statute | The Court analyzed this provision to highlight the relevant factors while considering anticipatory bail. |
Judgment
The Supreme Court allowed the appeals and set aside the orders of the High Court, thereby canceling the anticipatory bail granted to the accused.
Treatment of Submissions
| Submission | Party | Court’s Treatment |
|---|---|---|
| High Court failed to consider the nature and gravity of the allegations. | Appellant | Accepted. The Court held that the High Court had overlooked the seriousness of the allegations. |
| Magistrate’s order under Section 156(3) was valid. | Appellant | Accepted. The Court held that the High Court erred in questioning the validity of the Magistrate’s order. |
| High Court misapplied Section 200 of the CrPC. | Appellant | Accepted. The Court clarified the distinction between the Magistrate’s powers under Section 156(3) and Section 200. |
| Accused were protected by interim orders and cooperated with the investigation. | Accused | Rejected. The Court held that cooperation with the investigation did not justify the grant of anticipatory bail, given the gravity of the allegations. |
| High Court’s interpretation of Section 202 was correct. | Accused | Rejected. The Court clarified that the High Court’s interpretation of Section 202 was incorrect. |
Treatment of Authorities
The Supreme Court relied heavily on its previous judgments to clarify the legal position.
- Suresh Chand Jain v. State of MP [(2001) 2 SCC 628]* was followed to distinguish between the investigation under Section 156(3) and the inquiry under Section 202 of the CrPC. The Court emphasized that the Magistrate’s power under Section 156(3) is exercised before cognizance is taken and that the Magistrate need not examine the complainant on oath at this stage.
- The principles enunciated in Suresh Chand Jain v. State of MP [(2001) 2 SCC 628]* were approved in Dilawar Singh v. State of Delhi [(2007) 12 SCC 641]*.
- Tilak Nagar Industries Limited v. State of Andhra Pradesh [(2011) 15 SCC 571]* was followed to clarify that a Magistrate can order an investigation under Section 156(3) even before taking cognizance.
- Anju Chaudhary v. State of Uttar Pradesh [(2013) 6 SCC 384]* was followed to clarify that an order under Section 156(3) is a reminder to the police to exercise their primary duty of investigation.
- Rameshbhai Pandurao Hedau v. State of Gujarat [(2010) 4 SCC 185]* was followed to emphasize the distinction between the powers under Section 156(3) and Section 202.
- Srinivas Gundluri v. SEPCO Electric Power Construction Corpn. [(2010) 8 SCC 206]* was followed to clarify that for proceeding under Section 156(3), a bare reading of the complaint is sufficient.
- Sushila Aggarwal v. State (NCT of Delhi) [(2020) 5 SCC 1]* was followed to reiterate the considerations that must govern the grant of anticipatory bail.
- Myakala Dharmarajam v. The State of Telangana [(2020) 2 SCC 743]* was followed to explain the grounds for cancellation of bail.
What weighed in the mind of the Court?
The Supreme Court’s decision was primarily influenced by the following factors:
- The High Court’s erroneous interpretation of the law, particularly its misapplication of Sections 200 and 202 of the CrPC.
- The High Court’s overreach in questioning the validity of the Magistrate’s order under Section 156(3), which was not under challenge and had attained finality.
- The seriousness of the allegations of fraud and misappropriation of funds against the accused.
- The need to ensure that the investigation is not thwarted by the grant of anticipatory bail in cases involving serious economic offenses.
The Court emphasized that the High Court had overlooked the nature and gravity of the alleged offense and that the grant of anticipatory bail was not justified. The Court also highlighted that the Magistrate’s order under Section 156(3) was a valid direction for investigation and should not have been questioned by the High Court.
Sentiment Analysis of Reasons
| Reason | Percentage |
|---|---|
| Erroneous Interpretation of Law by High Court | 40% |
| High Court’s Overreach in Questioning Magistrate’s Order | 30% |
| Seriousness of Allegations of Fraud | 20% |
| Need to Ensure Unhindered Investigation | 10% |
Fact:Law Ratio
| Category | Percentage |
|---|---|
| Fact | 30% |
| Law | 70% |
Logical Reasoning
The Court rejected the High Court’s interpretation ofSections 200 and 202 of the CrPC, clarifying that the Magistrate’s power under Section 156(3) is exercised before taking cognizance of the offense. Therefore, the requirement of examining the complainant on oath under Section 200 does not apply at that stage. The Court also distinguished the nature of investigation under Section 156(3) from the inquiry under Section 202.
Dissenting Opinion
There was no dissenting opinion in this case. The judgment was authored by Justice Dr. Dhananjaya Y Chandrachud, with Justice M.R. Shah concurring.
Ratio Decidendi
The ratio decidendi of this case is that:
- A High Court, while considering an application for anticipatory bail under Section 438 of the CrPC, cannot question the validity of a Magistrate’s order under Section 156(3) of the CrPC, if that order has not been challenged and has attained finality.
- The Magistrate’s power under Section 156(3) of the CrPC is exercised before taking cognizance of the offense, and hence, the requirement of examining the complainant on oath under Section 200 of the CrPC does not apply at that stage.
- The investigation under Section 156(3) is distinct from the inquiry under Section 202 of the CrPC.
- Anticipatory bail should not be granted in cases involving serious economic offenses where there is a likelihood of the investigation being thwarted.
Obiter Dicta
The Court did not explicitly make any obiter dicta in this case. However, the observations regarding the importance of a fair and unhindered investigation in cases of serious economic offenses can be considered as obiter dicta.
Conclusion
The Supreme Court’s judgment in M/s Supreme Bhiwandi Wada Manor Infrastructure Pvt. Ltd. vs. The State of Maharashtra & Anr. is significant for several reasons. First, it clarifies the distinction between the powers of the Magistrate under Section 156(3) and Sections 200 and 202 of the CrPC. Second, it emphasizes that the High Court should not question the validity of a Magistrate’s order under Section 156(3) if that order has not been challenged. Third, it highlights the importance of considering the gravity of allegations when granting anticipatory bail, particularly in cases involving serious economic offenses. The judgment reinforces the need for a fair and unhindered investigation and ensures that the process of law is not subverted by the grant of bail in cases where there is a strong prima facie case of fraud and misappropriation.
The judgment serves as a reminder to High Courts to exercise caution and restraint while dealing with anticipatory bail applications, particularly in cases involving serious economic offenses. It underscores the need to prioritize a thorough and unhindered investigation to ensure that justice is served.