Y.S Jagan Mohan Reddy v. Central Bureau Of Investigation .

P. Sathasivam, J.— Leave granted. This appeal is directed against the final judgment and order dated 24-1-2013 passed by the High Court of Judicature of Andhra Pradesh at Hyderabad in Y.S Jagan Mohan Reddy v. State of A.P Criminal Petition No. 8750 of 2012 in RC No. 19(A) of 2011-CBI-Hyderabad, whereby the High Court dismissed the petition filed by the appellant herein for grant of bail.

2. The only question posed for consideration is whether the appellant herein has made out a case for bail.

Brief facts

3. On the orders of the High Court of Andhra Pradesh in P. Shankar Rao v. Govt. of A.P WP No. 794 of 2011 dated 10-8-2011, the Central Bureau of Investigation (in short “CBI”), Hyderabad, registered a case being RC No. 19(A) of 2011-CBI-Hyderabad dated 17-8-2011 under Section 120-B read with Sections 420, 409 and 477-A of the Penal Code, 1860 (for short “IPC”) and Section 13(2) read with Sections 13(1)(c) and (d) of the Prevention of Corruption Act, 1988 (in short “the PC Act”) against Y.S Jagan Mohan Reddy (A-1), Member of Parliament and 73 others. The appellant Y.S Jagan Mohan Reddy was named as an accused at Serial No. 1 in the FIR dated 17-8-2011 (after the charge-sheet was framed, he was arrayed as A-1 and hereinafter, he will be referred to as “A-1”).

4. During investigation, it was revealed that Y.S Jagan Mohan Reddy (A-1), son of late Dr Y.S Rajasekhara Reddy, the then Chief Minister of Andhra Pradesh, has adopted several ingenious ways to amass illegal wealth which resulted in great public injury. The then Chief Minister of the State abused his public office to the benefit of his son Y.S Jagan Mohan Reddy (A-1). Since May 2004, A-1 started floating a number of companies including M/s Jagathi Publications (P) Ltd., which was originally incorporated as a private limited company on 14-11-2006 and later converted into a public limited company on 12-1-2009. At the relevant time, Y.S Jagan Mohan Reddy (A-1) was designated as the authorised signatory to operate the bank accounts of the said Company. He was appointed as a Director and Chairman with effect from 21-6-2007.

5. It is alleged that A-1 floated M/s Jagathi Publications (P) Ltd. with an objective of conducting media business with the ill-gotten wealth. Most of the shareholders were alleged to be the benamis of Y.S Jagan Mohan Reddy (A-1). Further, as a quid pro quo to these investments, the benefits were received by various investors including the companies/individuals from the decisions of the State Government in allotment of lands for special economic zones (SEZs), contracts for irrigation projects, special relaxations/permissions for real estate ventures, mines, etc. It is further revealed that Y.S Jagan Mohan Reddy (A-1) laundered the bribe money by routing it through various individuals and companies and getting investments made by them in his companies at a high premium.

6. On 31-3-2012, 23-4-2012 and 7-5-2012, CBI filed first, second and third charge-sheet(s) respectively before the Special Judge for CBI Cases, Hyderabad and the appellant was arrayed as A-1 in all the charge-sheets. The Principal Special Judge for CBI Cases took cognizance of the charge-sheet dated 31-3-2012 which was numbered as CC No. 8 of 2012. The appellant was arrested on 27-5-2012 for his involvement and complicity in the case and presently, he is in judicial custody. On 29-5-2012 and 30-5-2012, the Principal Special Judge for CBI Cases took cognizance of the second and third charge-sheet(s) which were numbered as CCs Nos. 9 and 10 of 2012 respectively.

7. On 29-5-2012 the appellant filed Crl. MP No. 1055 of 2012 in CC No. 8 of 2012 before the Court of the Special Judge for CBI Cases at Hyderabad for grant of regular bail under Section 437 of the Code of Criminal Procedure, 1973 (in short “the Code”). The Special Judge, by order dated 1-6-2012, dismissed his application for bail.

8. CBI filed Criminal Petitions Nos. 4743 and 4744 of 2012 before the High Court for the remand of A-1 for a period of 5 days. The High Court, by order dated 2-6-2012 Criminal Petition No. 4743 of 2012, allowed the petitions and remanded A-1 to the custody of CBI from 3-6-2012 to 7-6-2012. By further orders dated 8-6-2012 in Crl. MP No. 4785 of 2012 in Criminal Petition No. 4743 of 2012, the custody was extended to a further period of 2 days.

9. Being aggrieved, the appellant moved the High Court for enlarging him on bail in Criminal Petition No. 5211 of 2012. The High Court, taking note of serious nature of the offence and having regard to personal and financial clout of the appellant (A-1) and finding that it cannot be ruled out that witnesses can be influenced by him in case he is released on bail at this stage, by the impugned order dated 4-7-2012 Criminal Petition No. 5211 of 2012, dismissed his bail application.

10. Being aggrieved by the orders dated 2-6-2012 Criminal Petition No. 4743 of 2012 and 4-7-2012 Criminal Petition No. 5211 of 2012, the appellant preferred two special leave petitions being Nos. 5901 and 5902 of 2012 before this Court. This Court, by order dated 9-8-2012 SLP (Cri) No. 5901 of 2012, issued notice in SLP (Crl.) No. 5902 of 2012 and dismissed SLP (Crl.) No. 5901 of 2012.

11. On 13-8-2012 CBI filed fourth charge-sheet in the Court of the Principal Special Judge for CBI Cases, Hyderabad which was numbered as CC No. 14 of 2012. This Court, on coming to know that the investigation is continuing in connection with 7 matters, dismissed the special leave petition being SLP (Crl.) No. 5902 of 2012 by order dated 5-10-2012 with a direction to CBI to complete the investigation as early as possible and to file a consolidated charge-sheet on the remaining 7 issues. This Court also directed the appellant to renew his prayer for bail before the trial court on completion of the investigation by CBI.

12. On 16-11-2012 the appellant filed Crl. MP No. 1938 of 2012 before the Special Judge for CBI Cases, Hyderabad, seeking default/statutory bail. On the same day, the appellant filed Crl. MP No. 1939 of 2012 in CC No. 8 of 2012 before the Special Judge for CBI Cases, Hyderabad, seeking regular bail. By orders dated 28-11-2012 and 4-12-2012, the Special Judge rejected the bail applications filed by the appellant herein in Crl. MP No. 1938 of 2012 and Crl. MP No. 1939 of 2012 respectively.

13. The appellant preferred Criminal Petition No. 8576 of 2012 before the High Court for grant of bail which came to be dismissed on 24-12-2012 Criminal Petition No. 8576 of 2012. Being aggrieved, the appellant preferred Criminal Petition No. 8750 of 2012 before the High Court. The High Court, by order dated 24-1-2013 Criminal Petition No. 8750 of 2012, dismissed the petition filed by the appellant herein. Being aggrieved by the order of the High Court, the appellant herein has preferred this appeal by way of special leave.

14. Heard Mr Harish N. Salve, Mr Mukul Rohatgi and Mr K.V Viswanathan, learned Senior Counsel for the appellant-accused and Mr Ashok Bhan and Mr Mukul Gupta, learned Senior Counsel for the respondent CBI.

15. CBI has filed a counter-affidavit dated 6-5-2013, sworn by a senior officer, namely, Deputy Inspector General of Police and Chief Investigating Officer in RC No. 19(A) of 2011-CBI-HYD and has furnished various information such as allegations against the appellant, companies/persons involved, investigation conducted so far and progress of the investigation with regard to certain companies/persons. During the course of hearing, CBI also circulated the status report in respect of the FIR being No. 19(A) of 2011-CBI-HYD regarding 7 issues mentioned in the order of this Court dated 5-10-2012.

16. The learned Senior Counsel appearing for the appellant, by drawing our attention to various materials/details including the fact that the appellant is in custody nearly for a period of 1 year and many persons alleged to have been involved in those transactions are not in custody and no steps have been taken by CBI for their arrest, submitted that the appellant may be enlarged on bail after imposing appropriate conditions.

17. In order to appreciate the rival contentions, particularly the stand of CBI, it is useful to refer the earlier order passed by this Court on 5-10-2012 which reads as under:

“SLP (Crl.) No. 5902 of 2012

1. Heard Mr Gopal Subramanium, learned Senior Advocate appearing for the petitioner at some length.

2. Mr Mohan Parasaran, learned ASG appearing on behalf of CBI, submitted before us a report from which it appears that the investigation is still going on in connection with seven matters. In Para 9 of the report it is stated as under:

‘… The matters which are pending investigation also involved investigation into various serious economic offences involving hundreds of crores of rupees. The major matters which are now under investigation relating to conspiracies distinctly involving the following entities which by themselves are independent of each other and are therefore distinct conspiracies:

(i) Sandur Power Co. Ltd.

(ii) Grant of mining lease to Bharti Cements/Raghuram Cements which are companies none other than the own companies of A-1, Mr JMR.

(iii) Penna Cements and Group Companies.

(iv) Dalmia Cements.

(v) India Cements.

(vi) Investment through paper companies based in Kolkata and Mumbai, popularly known as suitcase companies.

(vii) Indu Projects

(viii) Lepakshi knowledge Hub.

The amounts involved and which is subject-matter of investigation in the above cases as per estimates exceed Rs 3000 crores.’

(emphasis in original)

3. Mr Parasaran stated that CBI is making investigation without wasting any time and he assured the Court that the investigation will be completed as early as possible and on completion of the investigation CBI shall submit one final charge-sheet.

4. On hearing the counsel for the parties and on going through the report submitted by CBI, we are not inclined to interfere in the matter at this stage. The special leave petition is, accordingly, dismissed.

5. It will be, however, open to the petitioner to renew his prayer for bail before the trial court on completion of the investigation by CBI on the issues as indicated above and submission of the final charge-sheet. In case, such a prayer is made, the court shall consider the prayer for bail independently, on its own merits, without being influenced by the dismissal of the special leave petition.

SLP (Crl.) No. 5946 of 2012

6. Put up after two weeks.”

18. Mr Ashok Bhan, learned Senior Counsel for CBI, by pointing out the penultimate paragraph in the order dated 5-10-2012 i.e “It will be, however, open to the petitioner to renew his prayer for bail before the trial court on completion of the investigation by CBI on the issues as indicated above and submission of the final charge-sheet”, submitted that in view of the fact that the investigation is still continuing in respect of the transaction(s) with certain companies/persons, the present application for bail is not maintainable.

19. It is relevant to note that in the order dated 5-10-2012, this Court noted the statement made by the learned ASG, who appeared for CBI, that the investigation relating to conspiracies distinctly involving 7 entities which by themselves are independent of each other requires further time. According to the learned Senior Counsel for CBI, they require 4-6 months' time to complete the investigation in respect of the 7 entities as mentioned in the order dated 5-10-2012 and to file a charge-sheet. In support of the above claim, CBI pointed out various instances from the counter-affidavit as well as from the status report justifying their stand for the dismissal of the bail application.

20. In the status report, CBI has assured that the investigation is being carried out expeditiously as directed by this Court. It is stated that among 7 issues, CBI has completed the investigation with respect to M/s Dalmia Cements and consequently filed the charge-sheet in the Court of the Special Judge for CBI Cases, Hyderabad on 8-4-2013. According to CBI, presently, the investigation is progressing with regard to other 6 issues also and CBI is in the final stages of investigation with respect to the following viz. M/s India Cements, Penna Cements and Investments through Kolkata companies. It is also assured to this Court that CBI is likely to file charge-sheet/final reports in the abovesaid three issues shortly.

21. CBI in its status report has elaborated the progress with regard to the investigation in the remaining issues which are as under.

M/s Dalmia Cements (Bharat) Ltd.

22. The investigation has revealed that M/s Dalmia Cements (Bharat) Ltd. invested an amount of Rs 95 crores in M/s Raghuram Cements Ltd. represented by Y.S Jagan Mohan Reddy. In quid pro quo to the investments, A-1, through his influence over his father late Dr Y.S Rajasekhara Reddy facilitated the grant and transfer of mining lease to the extent of 407 ha in Kadapa District of Andhra Pradesh to M/s Dalmia Cements. CBI has highlighted the amount involved and the facilities provided by the father of the appellant. It is further highlighted in the status report that the searches were conducted by the Income Tax Department, New Delhi at the offices of M/s Dalmia Cements (Bharat) Ltd. and the residential premises of their employees.

23. It is also highlighted by CBI that as per the prearranged agreement between Y.S Jagan Mohan Reddy (A-1), V. Vijay Sai Reddy (A-2) and Puneet Dalmia, M/s Dalmia Cements (Bharat) Ltd. sold off their stake in M/s Raghuram Cements Ltd. to M/s Parficim, France, for a total consideration of Rs 135 crores out of which, an amount of Rs 55 crores was paid to Y.S Jagan Mohan Reddy (A-1) between 16-5-2010 and 13-6-2011, in cash through hawala channels, and the details of the said payments were found in the material seized by the Income Tax Department, New Delhi. CBI has further alleged that M/s Dalmia Cements (Bharat) Ltd. have returned the alleged sale proceeds to Y.S Jagan Mohan Reddy (A-1) in cash through hawala channels which clearly establishes that the initial payment of Rs 95 crores was only illegal gratification for the undue benefits received by them from the Government of Andhra Pradesh and was not genuine investments. It is further submitted that the charge-sheet has already been filed with regard to the same on 8-4-2013 against A-1 and 12 others under various sections of IPC and the PC Act.

M/s Sandur Power Company Ltd.

24. Regarding the investigation relating to M/s Sandur Power Company Ltd., it is stated by CBI that Y.S Jagan Mohan Reddy (A-1) was the Director of this Company from 16-6-2001 to 11-1-2010. M/s Sandur Power Company Ltd. was incorporated on 23-10-1998 by M.B Ghorpade and subsequently, Y.S Jagan Mohan Reddy (A-1) joined the Company during June 2001 along with the Board of Directors viz. Harish C. Kamarthy and J.J Reddy. It is alleged by CBI that the Company is closely held by Y.S Jagan Mohan Reddy (A-1).

25. CBI also highlighted various share transactions amounting to Rs 124.60 crores with two Mauritius based companies viz. M/s 2i Capital and M/s Pluri Emerging Company by M/s Sandur Power Company Ltd. It is projected by CBI that the abovesaid amount is of A-1 which was routed through the Mauritius based companies. It is also highlighted that the role of Nimmagadda Prasad (A-3), who is currently under judicial custody is also being investigated for the same. Vijay Sai Reddy (A-2), along with Y.S Jagan Mohan Reddy (A-1), was the brain behind this conspiracy inasmuch as A-2 had floated fictitious companies in Chennai so as to enable round tripping or routing monies into M/s Sandur Power Company Ltd. from India and foreign countries through companies falsely created in Chennai as well as in certain foreign countries.

26. It is also pointed out by CBI that notice has also been issued to one Maiank Mehta, who is suspected to be the person who handled the routing of money of Y.S Jagan Mohan Reddy (A-1) and notice has been issued for his presence in India for examination and interrogation. The said person is presently based in Hong Kong and is refusing to come to India citing frivolous reasons. It is suspected that he is being influenced by Y.S Jagan Mohan Reddy (A-1) and Vijay Sai Reddy (A-2) which amply proves that the witnesses are being influenced by these persons in this case.

Grant of mining lease to Bharti Cements/Raghuram Cements

27. It is pointed out by CBI that investigation is under progress regarding grant of mining lease of limestone to Bharti Cements/Raghuram Cements which are the companies owned by Y.S Jagan Mohan Reddy (A-1). It is claimed by CBI that during the period under review, they have collected nearly 400 documents running into thousands of pages from various departments/banks including Oriental Bank of Commerce, Jubilee Hills, Hyderabad, Koramangala, Bangalore, Head Office, Gurgaon, etc. for disbursement of loan of Rs 200 crores violating the bank guidelines and rules. It is also stated that the investigation disclosed the payment of illegal gratification of Rs 30 crores to Y.S Jagan Mohan Reddy (A-1) by Nimmagadda Prasad (A-3) for the wrongful gain obtained by A-3 from the Government of Andhra Pradesh in connection with awarding a project consisting of development of two sea ports and an industrial corridor as Vanpic Project and falsification of documents to cover up the said payment, etc.

M/s Indu Projects Ltd. [M/s Lepakshi Knowledge Hub (P) Ltd. and M/s Indus Tech Zone (P) Ltd.]

28. CBI has pointed out that the investigation is in progress in respect of the abovesaid group of companies. In the status report, CBI has highlighted a number of details about the nexus of the appellant along with those companies. Since the investigation is still under progress in respect of those companies, we are not highlighting all those details furnished by CBI in the status report.

M/s India Cements Ltd.

29. CBI has highlighted the investigation relating to M/s India Cements Ltd. and the various amounts exchanged between the parties. In respect of the above, according to CBI, they had made illegal quid pro quo investments to the tune of Rs 140 crores in the group of companies of Y.S Jagan Mohan Reddy (A-1) and had received several benefits in the form of permissions granted for utilisation/additional quantity of water from Kagna and Krishna Rivers and lease of land. It is also pointed out that the investigation in the case is almost complete except that a few more crucial witnesses have to be examined. CBI also pointed out the details of investigation relating to investment through paper companies based in Kolkata and Mumbai, popularly known as suitcase companies. Since investigation is half-way, we are not referring to all those details mentioned in the status report.

30. It is further pointed out that during investigation, a total number of 140 witnesses including IAS officers and Ministers concerned have been examined and 352 documents were collected. According to CBI, out of these, some more crucial witnesses have to be examined.

31. The learned Senior Counsel appearing for the appellant pointed out that after the order dated 5-10-2012, CBI is not justified in prolonging the same just to continue the custody of the appellant. It was also highlighted that even according to CBI, several Ministers and IAS officers are involved, but no one has been arrested so far. As far as those allegations are concerned, it is the claim of CBI that considering the huge magnitude of transactions, various beneficiaries, companies/persons involved with A-1 and his associates, CBI is taking effective steps for early completion of the same.

32. Though the learned Senior Counsel for the appellant submitted that in view of the non-compliance with Section 167 of the Code the appellant is entitled to statutory bail, in view of enormous materials placed in respect of distinct entities, various transactions, etc. and in the light of the permission granted by this Court in the order dated 5-10-2012, we are unable to accept the argument of the learned Senior Counsel for the appellant.

33. On going into all the details furnished by CBI in the form of status report and the counter-affidavit dated 6-5-2013 sworn by the Deputy Inspector General of Police and Chief Investigating Officer, Hyderabad, without expressing any opinion on the merits, we feel that at this stage, the release of the appellant (A-1) would hamper the investigation as it may influence the witnesses and tamper with the material evidence. Though it is pointed out by the learned Senior Counsel for the appellant that the appellant is in no way connected with the persons in power, we are of the view that the apprehension raised by CBI cannot be lightly ignored considering the claim that the appellant is the ultimate beneficiary and the prime conspirator in huge monetary transactions.

34. Economic offences constitute a class apart and need to be visited with a different approach in the matter of bail. The economic offences having deep-rooted conspiracies and involving huge loss of public funds need to be viewed seriously and considered as grave offences affecting the economy of the country as a whole and thereby posing serious threat to the financial health of the country.

35. While granting bail, the court has to keep in mind the nature of accusations, the nature of evidence in support thereof, the severity of the punishment which conviction will entail, the character of the accused, circumstances which are peculiar to the accused, reasonable possibility of securing the presence of the accused at the trial, reasonable apprehension of the witnesses being tampered with, the larger interests of the public/State and other similar considerations.

36. Taking note of all these facts and the huge magnitude of the case and also the request of CBI asking for further time for completion of the investigation in filing the charge-sheet(s), without expressing any opinion on the merits, we are of the opinion that the release of the appellant at this stage may hamper the investigation. However, we direct CBI to complete the investigation and file the charge-sheet(s) within a period of 4 months from today. Thereafter, as observed in the earlier order dated 5-10-2012, the appellant is free to renew his prayer for bail before the trial court and if any such petition is filed, the trial court is free to consider the prayer for bail independently on its own merits without being influenced by dismissal of the present appeal.

37. With the above observation, the appeal is dismissed.