CENTRAL BUREAU OF INVESTIGATION vs. KAPIL WADHAWAN & ANR.

A) ABSTRACT / HEADNOTE

This case involves a dispute over the statutory right to “default bail” under the proviso to Section 167(2) of the Code of Criminal Procedure (Cr.P.C.). The Central Bureau of Investigation (CBI) filed charges against Kapil Wadhawan and other accused for alleged offenses under Sections 120-B, 409, 420, and 477A of the Indian Penal Code (IPC) and Section 13(2) read with Section 13(1)(d) of the Prevention of Corruption (PC) Act, 1988. Although the CBI filed a chargesheet within the statutory time limit, the respondents claimed it was incomplete as the investigation regarding certain accused individuals was still pending. The High Court upheld the Special Court’s decision to grant the respondents statutory bail, reasoning that the pending investigation rendered the chargesheet incomplete under Section 173 Cr.P.C. The Supreme Court ultimately overturned the lower courts’ decision, holding that a filed chargesheet satisfied Section 167(2) requirements, allowing the court to deny default bail despite ongoing investigations against others. This decision clarifies the scope of Section 167(2), reinforcing that the right to default bail is extinguished once a chargesheet is filed.

Keywords: Default Bail, Section 167(2), Statutory Right, Incomplete Chargesheet, Criminal Procedure Code

B) CASE DETAILS

  • i) Judgement Cause Title: Central Bureau of Investigation v. Kapil Wadhawan & Anr.
  • ii) Case Number: Criminal Appeal No. 391 of 2024
  • iii) Judgement Date: 24 January 2024
  • iv) Court: Supreme Court of India
  • v) Quorum: Hon’ble Justices Bela M. Trivedi and Pankaj Mithal
  • vi) Author: Justice Bela M. Trivedi
  • vii) Citation: [2024] 1 S.C.R. 677
  • viii) Legal Provisions Involved:
    • Section 167(2), Cr.P.C. (Code of Criminal Procedure, 1973)
    • Section 173(2), Cr.P.C.
    • Sections 120-B, 409, 420, 477A, IPC (Indian Penal Code, 1860)
    • Section 13(2) read with Section 13(1)(d), PC Act, 1988 (Prevention of Corruption Act, 1988)
  • ix) Judgments Overruled by the Case: None
  • x) Case is Related to which Law Subjects: Criminal Law, Procedural Law

C) INTRODUCTION AND BACKGROUND OF JUDGEMENT

The appeal before the Supreme Court addresses the legal ambiguity surrounding the right to default bail under Section 167(2) of the Cr.P.C., a statutory right providing for the release of an accused if the investigation is not completed within a prescribed timeframe. The CBI filed a chargesheet against Kapil Wadhawan and others within the required period, but investigations against some co-accused continued. The respondents contended that this pending investigation rendered the chargesheet incomplete, entitling them to default bail, a stance accepted by the Special Court and upheld by the High Court. The Supreme Court examined the interplay between Section 167(2) and Section 173(2), analyzing whether the chargesheet’s filing within the statutory period extinguishes the accused’s right to default bail.

D) FACTS OF THE CASE

  1. The CBI registered an FIR against Dewan Housing Finance Corporation Ltd. (DHFL) and others, including Kapil Wadhawan, for conspiracy, cheating, and forgery, leading to significant financial loss for a banking consortium. The alleged financial misconduct totaled approximately Rs. 42,000 crores.

  2. Kapil Wadhawan and co-accused Dheeraj Wadhawan were arrested by the CBI on 19 July 2022, with an eventual remand to judicial custody starting on 30 July 2022.

  3. On 15 October 2022, the CBI submitted a chargesheet under Sections 120B, 206, 409, 411, 420, 424, 465, 468, and 477A of the IPC and Section 13(2) read with Section 13(1)(d) of the PC Act, implicating 75 individuals and entities, including the respondents.

  4. The respondents filed for statutory bail under Section 167(2) on 29 October 2022, arguing that the CBI’s chargesheet was incomplete due to ongoing investigations regarding other accused, invoking Section 173(8) for further investigation.

  5. The Special Court granted bail under Section 167(2), holding that the CBI’s filing was piecemeal. The High Court upheld this order, concluding that the incomplete investigation justified default bail, despite the chargesheet’s timely filing.

  6. The CBI appealed to the Supreme Court, arguing that Section 167(2) benefits apply only when no chargesheet is filed, asserting that a filed chargesheet nullifies any default bail claim.

E) LEGAL ISSUES RAISED

i. Whether the respondents were entitled to default bail under Section 167(2) Cr.P.C., despite the chargesheet’s timely filing, due to ongoing investigations for certain co-accused.

F) PETITIONER/ APPELLANT’S ARGUMENTS

i. The CBI’s counsel argued that Section 167(2) grants default bail only if no chargesheet is filed within the statutory period. Once filed, Section 167(2) ceases to apply, extinguishing any accrued right to default bail. They cited Dinesh Dalmia v. CBI and M. Ravindran v. Intelligence Officer, Directorate of Revenue Intelligence to reinforce this interpretation.

ii. The appellant further contended that a chargesheet under Section 173(2) remains valid and enforceable even if further investigation continues under Section 173(8), arguing that ongoing investigation does not imply an incomplete chargesheet.

iii. The chargesheet’s sufficiency for cognizance does not rely on completeness; the court can assess charges based on available evidence. The Suresh Kumar Bhikamchand Jain v. State of Maharashtra & Anr. case was cited to support that cognizance timing does not impact Section 167(2) bail claims.

G) RESPONDENT’S ARGUMENTS

i. The respondents argued that default bail under Section 167(2) remains enforceable until a complete chargesheet is filed. The chargesheet’s piecemeal nature, as per the Special Court and High Court, made the respondents eligible for bail.

ii. Relying on Rakesh Kumar Paul v. State of Assam and Suresh Kumar Bhikamchand Jain, the respondents maintained that an incomplete chargesheet does not preclude the Section 167(2) right.

iii. Senior Counsel further contended that the prosecution’s filing of a chargesheet was a deliberate attempt to deny default bail and subvert the respondents’ rights under Article 21 of the Constitution, which grants the right to liberty.

H) JUDGEMENT

a. RATIO DECIDENDI

i. The Supreme Court ruled that once a chargesheet is filed, the right to default bail under Section 167(2) terminates, regardless of ongoing investigations or additional evidence collection under Section 173(8). The Court emphasized that Section 167(2) provisions are procedural and confer a conditional right, which does not survive after a chargesheet’s filing.

ii. The Court reiterated that cognizance is taken of the offense, not the offender; thus, pending investigations against certain individuals do not invalidate the chargesheet against the primary accused.

iii. It held that the High Court and Special Court erred in granting default bail based on an ongoing investigation, clarifying that Section 173(2) requires only sufficient evidence for the court to proceed, not comprehensive finality.

b. OBITER DICTA

i. The Supreme Court observed that statutory rights under procedural law must be balanced against the practical needs of an evolving investigation, underscoring that Section 167(2) aims to prevent prolonged detention without charges, not to complicate ongoing legal processes.

I) CONCLUSION & COMMENTS

The Supreme Court’s ruling in this case delineates the conditional nature of the default bail right under Section 167(2). The Court’s clarification that a filed chargesheet meets Section 167(2) requirements, irrespective of further investigation under Section 173(8), is crucial for future cases involving complex, multistage investigations. This decision underscores a vital balance between procedural rights and investigatory efficiency, supporting judicial cognizance based on available evidence. The Court’s ruling also strengthens prosecutorial efforts in large-scale financial crimes, limiting accused individuals’ ability to leverage procedural delays for bail.

J) REFERENCES

a. Important Cases Referred

  • Dinesh Dalmia v. CBI, (2007) 8 SCC 770
  • M. Ravindran v. Intelligence Officer, Directorate of Revenue Intelligence, (2021) 2 SCC 485
  • Sanjay Dutt v. State through CBI, Bombay (II), (1994) 5 SCC 410
  • Suresh Kumar Bhikamchand Jain v. State of Maharashtra & Anr., (2013) 3 SCC 77
  • Serious Fraud Investigation Office v. Rahul Modi & Ors., 2022 SCC OnLine SC 153
  • K. Veeraswami v. Union of India and Others, (1991) 3 SCC 655

b. Important Statutes Referred

  • Code of Criminal Procedure, 1973
    • Section 167(2)
    • Section 173(2), (8)
  • Indian Penal Code, 1860
    • Section 120-B, 409, 420, 477A
  • Prevention of Corruption Act, 1988
    • Section 13(2) r/w Section 13(1)(d)
  • Constitution of India
    • Article 21
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