Supreme Court Upholds Denial of Bail in Terror Funding Case: National Investigation Agency vs. Zahoor Ahmad Shah Watali (2 April 2019)

Introduction

Date of the Judgment: 2 April 2019
Citation: 2019 INSC 311
Judges: A.M. Khanwilkar, J., Ajay Rastogi, J.

Can a High Court overturn a trial court’s decision on bail in a case involving serious charges under the Unlawful Activities (Prevention) Act, 1967 (UAPA), by re-evaluating the evidence? The Supreme Court of India addressed this critical question in the case of National Investigation Agency vs. Zahoor Ahmad Shah Watali. This case revolves around allegations of terror funding and the interpretation of stringent bail provisions under the UAPA.

The Supreme Court, in this judgment, examined whether the High Court was correct in granting bail to the respondent, who was accused of terror financing. The core issue was whether the High Court appropriately assessed the evidence and the special provisions governing bail under the UAPA.

The bench comprised Justices A.M. Khanwilkar and Ajay Rastogi, with the judgment authored by Justice Khanwilkar. This was a unanimous decision, with no dissenting opinions.

Case Background

The case began with a First Information Report (FIR) dated 30th May 2017, filed by the National Investigation Agency (NIA), Delhi, against several individuals, including Zahoor Ahmad Shah Watali (Accused No. 10). The charges included offenses under Sections 120B, 121, and 121A of the Indian Penal Code (IPC) and Sections 13, 16, 17, 18, 20, 38, 39, and 40 of the UAPA, 1967.

Watali was accused of being a key figure in a conspiracy to fund terrorist activities and wage war against the Government of India. The allegations included acting as a conduit for transferring funds from terrorist organizations and other sources to Hurriyat leaders and secessionists. He was arrested on 17th August 2017 and had been in judicial custody since then.

The District and Sessions Judge, Special Court (NIA), New Delhi, rejected Watali’s bail application on 8th June 2018. However, the High Court of Delhi at New Delhi reversed this order on 13th September 2018, granting him bail subject to certain conditions. The NIA then appealed to the Supreme Court against this decision.

Timeline

Course of Proceedings

The Special Court (NIA) initially rejected Watali’s bail application, citing serious allegations of involvement in unlawful acts and terror funding. The court noted that Watali allegedly acted as a conduit for transferring funds from terrorist sources to Hurriyat leaders, aiding them in waging war against the Government of India. The Special Court relied on witness statements and documents to conclude that the accusations against Watali were prima facie true.

The High Court, however, reversed this decision, noting that after the charge sheet was filed, other accused persons had been granted bail, while some were not even arrested. The High Court also considered Watali’s age (70 years) and the fact that he had been in judicial custody for over a year. The High Court analyzed the charges against Watali, particularly those related to “Hawala” transactions, and concluded that the material presented by the NIA did not establish a prima facie case against him. The High Court also raised concerns about the admissibility of certain evidence and statements.

Legal Framework

The case involves several key legal provisions:

• Sections 120B, 121, and 121A of the Indian Penal Code (IPC): These sections deal with criminal conspiracy, waging war against the Government of India, and conspiracy to commit offenses against the state.
• Sections 13, 16, 17, 18, 20, 38, 39, and 40 of the Unlawful Activities (Prevention) Act, 1967 (UAPA): These sections pertain to various aspects of unlawful activities, including funding, terrorist acts, and being a member of a terrorist organization.
• Section 43D of the UAPA: This section modifies the application of certain provisions of the Code of Criminal Procedure (CrPC) and imposes restrictions on granting bail to persons accused of offenses under Chapters IV and VI of the UAPA. Specifically, Section 43D(5) states that an accused shall not be released on bail if there are reasonable grounds for believing that the accusation against such person is prima facie true.

The UAPA is a special law enacted to prevent unlawful activities and terrorism. Its provisions are designed to be stringent, reflecting the gravity of the offenses it seeks to address. The Act’s special provisions, particularly those related to bail, are intended to ensure that individuals accused of serious offenses under the Act are not released unless the court is convinced that there are no reasonable grounds to believe that the accusations against them are true.

Arguments

Arguments by the National Investigation Agency (NIA)

• The NIA argued that the High Court had conducted a “mini-trial” by questioning the genuineness of documents and disregarding statements of witnesses recorded under Section 161 of the Code of Criminal Procedure (CrPC), which are admissible as per Salim Khan vs. Sanjai Singh and Anr. [2002 (9) SCC 670].
• The NIA contended that the High Court erred in discarding statements recorded under Section 164 of the CrPC, which were produced in a sealed cover, as these statements reinforce the accusations against Watali.
• The NIA submitted that the High Court should have considered the totality of the evidence, including documentary evidence, witness statements, and other material, to determine if the accusations against Watali were prima facie true.
• The NIA highlighted that the High Court overlooked the fact that officials of the High Commission of Pakistan have diplomatic immunity and cannot be named as accused or witnesses.
• The NIA emphasized that Watali was a key figure in a larger conspiracy to fund terrorist activities and wage war against the Government of India.

Arguments by Zahoor Ahmad Shah Watali

• Watali’s counsel argued that the High Court was justified in analyzing the materials on record to determine if the accusations were prima facie true.
• The counsel contended that the documents relied upon by the NIA were insufficient to establish Watali’s involvement in the alleged offenses.
• It was argued that document D-132(a), a loose sheet of paper, was not admissible as evidence under Section 34 of the Evidence Act and could not be used to establish criminal liability. Reliance was placed on Central Bureau of Investigation vs. V.C. Shukla and Ors. [1998 (3) SCC 410].
• The counsel submitted that the statements of witnesses recorded under Sections 161 and 164 of the CrPC did not implicate Watali in the commission of the alleged offenses.
• Watali’s counsel argued that there was no independent corroboration of the allegations and that the accusations did not fall under Chapters IV and VI of the UAPA.
• The counsel stated that there was no evidence to indicate Watali’s involvement in the larger conspiracy or terrorist activities.

Submissions

Issues Framed by the Supreme Court

The Supreme Court framed the following key issues for consideration:

1. Whether the High Court was right in granting bail by re-appreciating the evidence in a case involving offences under the Unlawful Activities (Prevention) Act, 1967.
2. Whether the High Court was correct in discarding the statements of protected witnesses recorded under Section 164 of the CrPC.
3. Whether the High Court should have considered the totality of the evidence and material presented by the NIA.

Treatment of the Issue by the Court

The following table demonstrates how the Court decided the issues:

Authorities

The Supreme Court considered the following authorities:

Cases

• Hitendra Vishnu Thakur and Ors. Vs. State of Maharashtra and Ors. [(1994) 4 SCC 602] – Regarding the interpretation of special provisions in TADA and MCOCA.
• Niranjan Singh Karam Singh Punjabi, Advocate Vs. Jitendra Bhimraj Bijjaya and Ors. [(1990) 4 SCC 76] – Regarding the scope of inquiry at the stage of discharge.
• Manohar Lal Sharma Vs. Union of India [(2017) 11 SCC 783] – Regarding the analysis of evidence at the stage of forming a prima facie opinion.
• Jayanta Kumar Ghosh and Ors. Vs. State of Assam and Anr. [(2010) 6 Gauhati Law Reports 727] – Regarding the analysis of evidence at the stage of forming a prima facie opinion.
• K. Veeraswami Vs. Union of India and Ors. [(1991) 3 SCC 655] – Regarding the requirement of detailed analysis of evidence in the charge sheet.
• Salim Khan Vs. Sanjai Singh and Anr. [(2002) 9 SCC 670] – Regarding the admissibility of statements under Section 161 of the CrPC.
• Central Bureau of Investigation Vs. V.C. Shukla and Ors. [(1998) 3 SCC 410] – Regarding the admissibility of entries in books of account.
• Ranjitsing Brahmajeetsing Sharma Vs. State of Maharashtra and Anr. [(2005) 5 SCC 294] – Regarding the scope of power of the Court to grant bail under MCOCA.
• Chenna Boyanna Krishna Yadav Vs. State of Maharashtra and Anr. [(2007) 1 SCC 242] – Regarding the conditions for granting bail in MCOCA cases.
• State of U.P. through CBI Vs. Amarmani Tripathi [(2005) 8 SCC 21] – Regarding factors to be considered for deciding a bail application.
• Davender Gupta Vs. National Investigating Agency [(2014) SCC Online AP 192] – Regarding the parameters of granting bail.
• Sanjay Chandra Vs. CBI [AIR 2012 SC 830] – Regarding the parameters of granting bail.
• Kalyan Chandra Sarkar v. Rajesh Ranjan [(2004) 7 SCC 528] – Regarding the need to give reasons for granting bail.
• Puran v. Rambilas [(2001) 6 SCC 338] – Regarding the need to give reasons for granting bail.
• Jayendra Saraswathi Swamigal v. State of T.N. [(2005) 2 SCC 13] – Regarding the factors to be considered for granting bail.
• State v. Capt. Jagjit Singh [(1962) 3 SCR 622] – Regarding the factors to be considered for granting bail.
• Gurcharan Singh v. State (Delhi Admn.) [(1978) 1 SCC 118] – Regarding the factors to be considered for granting bail.
• Ramchandra Keshav Adke (dead) by LRs. and Ors. Vs. Govind Joti Chavare and Ors. [(1975) 1 SCC 559] – Regarding the requirements of Section 164(4) of CrPC.
• Khoday Distilleries Ltd. and Ors. Vs. State of Karnataka and Ors. [(1995) 1 SCC 574] – Regarding the application of Section 34 of the Evidence Act in illegal businesses.
• Kartar Singh case [(1994) 3 SCC 569] – Regarding the ambit and scope of Section 20(8) and (9) of TADA.
• Usmanbhai case [(1988) 2 SCC 271] – Regarding the ambit and scope of Section 20(8) and (9) of TADA.

Treatment of Authorities

Judgment

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

How each authority was viewed by the Court?

• The Court followed the principles laid down in Hitendra Vishnu Thakur, regarding special enactments.
• The Court distinguished Niranjan Singh Karam Singh Punjabi, as it related to discharge and not bail.
• The Court followed K. Veeraswami, stating that a charge-sheet need not contain detailed analysis.
• The Court followed Salim Khan, regarding the admissibility of Section 161 statements.
• The Court distinguished Central Bureau of Investigation Vs. V.C. Shukla and Ors., as it related to admissibility of books of accounts.
• The Court followed Ranjitsing Brahmajeetsing Sharma, regarding the scope of power of the Court to grant bail.
• The Court followed Chenna Boyanna Krishna Yadav, regarding the twin conditions to be considered for grant of bail.
• The Court followed State of U.P. through CBI Vs. Amarmani Tripathi, regarding factors to be considered for deciding a bail application.
• The Court followed Davender Gupta Vs. National Investigating Agency, Sanjay Chandra Vs. CBI, Kalyan Chandra Sarkar v. Rajesh Ranjan, Puran v. Rambilas, Jayendra Saraswathi Swamigal v. State of T.N., State v. Capt. Jagjit Singh and Gurcharan Singh v. State (Delhi Admn.) regarding the parameters of granting bail.
• The Court distinguished Ramchandra Keshav Adke (dead) by LRs. and Ors. Vs. Govind Joti Chavare and Ors., as it related to admissibility of evidence under Section 164(4) of CrPC.
• The Court followed Khoday Distilleries Ltd. and Ors. Vs. State of Karnataka and Ors., for the principle that there can be no business in crime.
• The Court followed Kartar Singh case and Usmanbhai case, regarding the ambit and scope of Section 20(8) and (9) of TADA.

What weighed in the mind of the Court?

The Supreme Court’s decision was primarily influenced by the following:

• Prima Facie Evidence: The Court emphasized that the materials presented by the NIA, including documents, witness statements, and the charge sheet, indicated that the accusations against Watali were prima facie true. The Court was of the view that the High Court had incorrectly discarded crucial evidence.
• Special Provisions of UAPA: The Court highlighted the stringent bail provisions under Section 43D(5) of the UAPA, which require the court to be satisfied that there are no reasonable grounds to believe that the accusations against the accused are prima facie true. The Court noted that the High Court did not give due consideration to these special provisions.
• Totality of Evidence: The Court stressed that the High Court should have considered the totality of the evidence, rather than evaluating individual pieces of evidence in isolation. The Court noted that the High Court had incorrectly discarded crucial evidence, including statements under Section 164.
• Nature of Offenses: The Court considered the seriousness of the offenses, which involved terror financing and waging war against the Government of India. The Court noted that these offenses warranted a strict interpretation of bail provisions.
• Linkages of the Accused: The Court took note of the linkages of the respondent with other accused persons and the evidence of his involvement in the larger conspiracy.

Ranking of Sentiment Analysis

Fact:Law Ratio

Logical Reasoning

The Court rejected the High Court’s approach of discarding evidence and re-appreciating it. The Supreme Court emphasized that the High Court should have considered the totality of evidence and the special provisions of the UAPA.

The Court quoted from the judgment:

• “By its very nature, the expression ‘prima facie true’ would mean that the materials/evidence collated by the Investigating Agency, in reference to the accusation against the accused, must prevail until contradicted by other materials/evidence on record. In other words, it must be good and sufficient on its face to establish a given fact or the chain of facts constituting the stated offence, unless rebutted by other evidence.”

Final Decision

The Supreme Court, after analyzing the case, set aside the order of the High Court dated 13th September 2018. The Court upheld the order of the District and Sessions Judge, Special Court (NIA), New Delhi, dated 8th June 2018, which had rejected the bail application of Zahoor Ahmad Shah Watali. The Court held that the High Court had erred in re-appreciating the evidence and in discarding the statements of protected witnesses recorded under Section 164 of the CrPC. The Supreme Court concluded that there were reasonable grounds to believe that the accusations against Watali were prima facie true, and thus, bail could not be granted.

Conclusion

The Supreme Court’s judgment in National Investigation Agency vs. Zahoor Ahmad Shah Watali is a significant ruling that clarifies the approach to be adopted by courts when considering bail applications in cases involving offenses under the Unlawful Activities (Prevention) Act, 1967. The judgment underscores the stringent nature of the bail provisions under the UAPA and emphasizes that courts should not conduct a mini-trial or re-appreciate the evidence at the stage of considering bail. The Court has emphasized that the focus should be on whether there are reasonable grounds to believe that the accusations against the accused are prima facie true, and that the totality of the evidence must be taken into account.

This judgment serves as a reminder that the UAPA is a special law designed to deal with serious offenses relating to terrorism and unlawful activities, and its provisions must be interpreted and applied strictly. The Court’s ruling reaffirms the importance of the special provisions of the UAPA and the need for a cautious approach when dealing with bail applications in such cases. The case also highlights the importance of witness protection and the admissibility of statements recorded under Section 164 of the CrPC.