compounding of offence under Section 211(7) of the Companies Act.= Now the question is whether in the aforesaid circumstances the Company Law Board can compound offence punishable with fine or imprisonment or both without permission of the court. It is pointed out that when the prosecution has been laid, it is the criminal court which is in seisin of the matter and it is only the magistrate or the court in seisin of the matter who can accord permission to compound the offence.= “621A. Composition of certain offences.- (1) Notwithstanding anything contained in the Code of Criminal Procedure, 1973 (2 of 1974), any offence punishable under this Act whether committed by a company or any officer thereof, not being an offence punishable with imprisonment only, or with imprisonment and also with fine, may, either before or after the institution of any prosecution, be compounded by- (a) the Company Law Board; or (b) where the maximum amount of fine which may be imposed for such offence does not exceed five thousand rupees, by the Regional Director, on payment or credit, by the company or the officer, as the case may be, to the Central Government of such sum as that Board or the Regional Director, as the case may be, may specify: Provided that the sum so specified shall not, in any case, exceed the maximum amount of the fine which may be imposed for the offence so compounded: Provided further that in specifying the sum required to be paid or credited for the compounding of an offence under this sub-section, the sum, if any, paid by way of additional fee under Sub-section (2) of Section 611 shall be taken into account. xx xx xx (4)(a) Every application for the compounding of an offence shall be made to the Registrar who shall forward the same, together with his comments thereon, to the Company Law Board or the Regional Director, as the case may be. (b) Where any offence is compounded under this section, whether before or after the institution of any prosecution, an intimation thereof shall be given by the company to the Registrar within seven days from the date on which the offence is so compounded. (c) Where any offence is compounded before the institution of any prosecution, no prosecution shall be instituted in relation to such offence, either by the Registrar or by any shareholder of the company or by any person authorised by the Central Government against the offender in relation to whom the offence is so compounded. (d) Where the composition of any offence is made after the institution of any prosecution, such composition shall be brought by the Registrar in writing, to the notice of the Court in which the prosecution is pending and on such notice of the composition of the offence being given, the company or its officer in relation to whom the offence is so compounded shall be discharged. xx xx xx (7) Notwithstanding anything contained in the Code of Criminal Procedure, 1973,- (a) any offence which is punishable under this Act with imprisonment or with fine, or with both, shall be compoundable with the permission of the Court, in accordance with the procedure laid down in that Act for compounding of offences; (b) any offence which is punishable under this Act with imprisonment only or with imprisonment and also with fine shall not be compoundable. (8) No offence specified in this section shall be compounded except under and in accordance with the provisions of this section.”= The legislature in its wisdom has not put the rider of prior permission of the court before compounding the offence by the Company Law Board and in case the contention of the appellant is accepted, same would amount to addition of the words “with the prior permission of the court” in the Act, which is not permissible. As is well settled, while interpreting the provisions of a statute, the court avoids rejection or addition of words and resort to that only in exceptional circumstances to achieve the purpose of Act or give purposeful meaning. It is also a cardinal rule of interpretation that words, phrases and sentences are to be given their natural, plain and clear meaning. When the language is clear and unambiguous, it must be interpreted in an ordinary sense and no addition or alteration of the words or expressions used is permissible. As observed earlier, the aforesaid enactment was brought in view of the need of leniency in the administration of the Act because a large number of defaults are of technical nature and many defaults occurred because of the complex nature of the provision. From what we have observed above, we are of the opinion that the power under sub-section (1) and sub-section (7) of Section 621A are parallel powers to be exercised by the Company Law Board or the authorities mentioned therein and prior permission of Court is not necessary for compounding the offence, when power of compounding is exercised by the Company Law Board. In view of what we have observed above, the order impugned does not require any interference by this Court. In the result, we do not find any merit in the appeal and it is dismissed accordingly but without any order as to costs.

Page 1
REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO. 2102 OF 2004
V.L.S. FINANCE LTD. …APPELLANT
VERSUS
UNION OF INDIA & ORS. …RESPONDENTS
JUDGMENT
CHANDRAMAULI KR. PRASAD,J.
This appeal by special leave arises out of an
order dated 5th of November, 2003 passed by the
Company Judge, Delhi High Court in Company Appeal
(B) No. 1 of 2001 whereby it has dismissed the
appeal assailing the order of the Company Law Board
allowing the compounding of offence under Section
211(7) of the Companies Act.
Page 2
Short facts giving rise to the present appeal
are that 
the Registrar of Companies, NCT of Delhi
and Haryana laid complaint in the Court of Chief
Metropolitan Magistrate, Tis Hazari, inter alia
alleging that during the course of inspection it
was noticed in the balance sheet of 1995-96
Schedule of the fixed assets included land worth
Rs. 21 crores. 
According to the complaint,
M/s. Sunair Hotels Ltd., for short ‘the Company”,
had taken this land from New Delhi Municipal
Corporation on licence and the Company only pays
the yearly licence fee thereof.
Thus, according to
the complainant, without any right land has been
shown as land in the Schedule of fixed assets,
which is not a true and fair view and punishable
under Section 211(7) of the Companies Act,
hereinafter referred to as “the Act”.
The Company
and its Chairman-cum-Managing Director, S.P. Gupta
were arrayed as accused.
However, before the court in seisin of the case
could proceed with the complaint, the Company and
2Page 3
its Managing Director jointly filed an application
before the Company Law Board for compounding the
offence. 
The Northern Region Bench of the Company
Law Board, by its order dated 9th of August, 2000
acceded to the prayer and compounded the offence
against the Managing Director on payment of
Rs. 1000/- for each offence each year.
While doing
so, the Company Law Board has held as follows:
“…The exercise of powers by the
Company Law Board under 621A(1) is
independent of exercise of powers by
the court under sub-section (7) and
all offences other than those which
are punishable with imprisonment only
or with imprisonment and also fine,
can be compounded by Company Law Board
without any reference to sub-section
(7), even in cases where prosecution
is pending in a criminal court. Thus,
it is clear that Company Law Board if
so approached can compound offences
and in such case no prior permission
of the Court is necessary.”
Aggrieved by the same, appellant preferred
Company Appeal before the High Court, inter alia,
contending that the power of compounding could be
exercised by the criminal court and not by the
3Page 4
Company Law Board. Said submission has not found
favour and the Company Judge, in this connection,
observed as follows:
“18. In the light of the aforesaid
discussions, it is held that the
person seeking compounding of an
offence in accordance with the
procedure laid down in the Criminal
Procedure Code can do so before the
criminal Court with the permission of
the Court under sub-section (7) of
Section 621A of the Act, which
normally cannot be done under the
provisions of the Criminal Procedure
Code. Such compounding of offence
would always be relatable to the
offence punishable with imprisonment
or with fine or with both as is made
clear under clauses (a) and (b) of
sub-section (7). Under the aforesaid
sub-section the offence punishable
with imprisonment or with fine or both
shall be compoundable with the
permission of the Court and for such
compounding the procedure laid down
under the Criminal Procedure Code is
to be followed in that regard provided
the prosecution is pending in that
Court. I also hold the Company Law
Board can compound an offence of the
nature prescribed under sub-section
(1) either before the institution of
the criminal proceeding or even after
institution of the criminal proceeding
and the said power is not subject to
the provisions of sub-section (7).
Both are parallel powers to be
exercised by the prescribed
4Page 5
authorities who have been empowered
under the statute and one power is not
dependent on the other……”
Accordingly, the Company Judge dismissed the
appeal. 
That is how the appellant is before us.
We have heard Mr. R. Shankaranarayanan, for the
appellant, Ms. Binu Tamta, for the respondent-Union
of India and Mr. Jayant Bhushan, Senior Advocate
for the Company and its Managing Director.
It is an admitted position that the allegations
made exposed the accused to an offence punishable
under Section 211(7) of the Act. The same reads as
under:
“211. Form and contents of balancesheet and profit and loss account.—
xxx xxx xxx
(7) If any such person as is referred
to in sub-section (6) of section 209
fails to take all reasonable steps to
secure compliance by the company, as
respects any accounts laid before the
company in general meeting, with the
5Page 6
provisions of this section and with
the other requirements of this Act as
to the matters to be stated in the
accounts, he shall, in respect of each
offence, be punishable with
imprisonment for a term which may
extend to six months, or with fine
which may extend to ten thousand
rupees, or with both:
Provided that in any proceedings
against a person in respect of an
offence under this section, it shall
be a defence to prove that a competent
and reliable person was charged with
the duty of seeing that the provisions
of this section and the other
requirements aforesaid were complied
with and was in a position to
discharge that duty:
Provided further that no person
shall be sentenced to imprisonment for
any such offence unless it was
committed wilfully.
xxx xxx xxx”
Thus, the offence alleged is punishable with
imprisonment for a term which may extend to six
months or with fine which may extend to
Rs. 10,000/- or with both. 
Mr. Shankaranarayanan has taken an extreme
stand before this Court and contends that the
6Page 7
Company Law Board has no jurisdiction to compound
an offence punishable under Section 211(7) of the
Act as the punishment provided is imprisonment
also. Mr. Bhushan, however, submits that
imprisonment is not mandatory punishment under
Section 211(7) of the Act and, hence, the Company
Law Board has the authority to compound the same.
He also points out that this submission was not at
all advanced before the Company Law Board and,
therefore, the appellant cannot be permitted to
raise this question for the first time before this
Court. We are not in agreement with Mr. Bhushan in
regard to his plea that this question cannot be
gone into by this Court at the first instance. In
our opinion, in a case in which the facts pleaded
give rise to a pure question of law going to the
root of the matter, this Court possesses discretion
to go into that. The position would have been
different had the appellant for the first time
prayed before this Court for adjudication on an
issue of fact and then to apply the law and hold
7Page 8
that Company Law Board had no jurisdiction to
compound the offence.
Here, it is an admitted position that the
allegation made exposed the Company and its
Managing Director for punishment under Section
211(7) of the Act which provides for imprisonment
or fine or with both. In the face of the same, no
fact needs to be adjudicated and the point being a
pure question of law going to the root of the
matter, same can be permitted to be raised before
this Court for the first time. But that does not
help the appellant as we are inclined to accept the
submission of Mr. Bhushan on merit. Section 621A
was inserted by the Companies Amendment Act, 1988
on the recommendation of the Sachar Committee. It
was felt that leniency is required in the
administration of the provisions of the Act
particularly penalty provisions because a large
number of defaults are of technical nature and
arise out of ignorance on account of bewildering
complexity of the provisions.
Section 621A of the
8Page 9
Act; as stood at the relevant time and relevant for
our purpose reads as follows:
“621A. Composition of certain
offences.- (1) Notwithstanding anything
contained in the Code of Criminal
Procedure, 1973 (2 of 1974), any
offence punishable under this Act
whether committed by a company or any
officer thereof, not being an offence
punishable with imprisonment only, or
with imprisonment and also with fine,
may, either before or after the
institution of any prosecution, be
compounded by-
(a) the Company Law Board; or
(b) where the maximum amount of
fine which may be imposed for such
offence does not exceed five
thousand rupees, by the Regional
Director, on payment or credit, by
the company or the officer, as the
case may be, to the Central
Government of such sum as that
Board or the Regional Director, as
the case may be, may specify:
Provided that the sum so
specified shall not, in any case,
exceed the maximum amount of the
fine which may be imposed for the
offence so compounded:
Provided further that in
specifying the sum required to be
paid or credited for the
compounding of an offence under
this sub-section, the sum, if any,
9Page 10
paid by way of additional fee under
Sub-section (2) of Section 611
shall be taken into account.
xx xx xx
(4)(a) Every application for the
compounding of an offence shall be
made to the Registrar who shall
forward the same, together with his
comments thereon, to the Company
Law Board or the Regional Director,
as the case may be.
(b) Where any offence is compounded
under this section, whether before
or after the institution of any
prosecution, an intimation thereof
shall be given by the company to
the Registrar within seven days
from the date on which the offence
is so compounded.
(c) Where any offence is compounded
before the institution of any
prosecution, no prosecution shall
be instituted in relation to such
offence, either by the Registrar or
by any shareholder of the company
or by any person authorised by the
Central Government against the
offender in relation to whom the
offence is so compounded.
(d) Where the composition of any
offence is made after the
institution of any prosecution,
such composition shall be brought
by the Registrar in writing, to the
notice of the Court in which the
prosecution is pending and on such
10Page 11
notice of the composition of the
offence being given, the company or
its officer in relation to whom the
offence is so compounded shall be
discharged.
xx xx xx
(7) Notwithstanding anything contained
in the Code of Criminal Procedure,
1973,-
(a) any offence which is punishable
under this Act with imprisonment or
with fine, or with both, shall be
compoundable with the permission of
the Court, in accordance with the
procedure laid down in that Act for
compounding of offences;
(b) any offence which is punishable
under this Act with imprisonment
only or with imprisonment and also
with fine shall not be
compoundable.
(8) No offence specified in this
section shall be compounded except
under and in accordance with the
provisions of this section.”
From a plain reading of Section 621A(1) it is
evident that any offence punishable under the Act,
not being an offence punishable with imprisonment
only or with imprisonment and also with fine, may
be compounded either before or after the
institution of the prosecution by the Company Law
11Page 12
Board and in case, the minimum amount of fine which
may be imposed for such offence does not exceed
Rs. 5000/-, by the Regional Director on payment of
certain fine. The penal provisions of the Act
provide for different kinds of punishments for
variety of offences and can be categorised as
follows:
(i) offences punishable with fine only,
(ii) offences punishable with imprisonment
only,
(ii) offences punishable with fine and
imprisonment,
(iv) offences punishable with fine or
imprisonment,
(v) offences punishable with fine or
imprisonment or both.
Section 211(7) of the Act provides for
punishment with imprisonment for a term which may
extend to six months or with fine or with both.
Therefore, an accused charged with the offence
under Section 211(7) of the Act has not necessarily
to be visited with imprisonment or imprisonment and
12Page 13
also fine but can be let off by imposition of fine
only. Therefore, the punishment provided under
Section 211(7) of the Act comes under category (v)
aforesaid. Section 621A(1) excludes such offences
which are punishable with imprisonment only or with
imprisonment and also with fine. As we have
observed above, the nature of offence for which the
accused has been charged necessarily does not
invite imprisonment or imprisonment and also fine.
Hence, we are of the opinion that the nature of the
offence is such that it was possible to be
compounded by the Company Law Board.
Mr. Shankaranarayanan, then submits that subsection (7) of Section 621A confers jurisdiction on
the court to accord permission for compounding of
the offence punishable with imprisonment or with
fine or with both, the jurisdiction of the Company
Law Board is excluded and, therefore, the Company
Law Board erred in acceding to the request of the
accused for compounding of the offence.
Sub-section (1) of Section 621A and sub-section (7)
13Page 14
thereof are differently worded but on their close
reading it is evident that both cover such offences
depending upon the nature of punishment.
Sub-section (1) of Section 621A excludes offence
punishable with imprisonment only or with
imprisonment and also fine and includes the residue
offences which will obviously include offence
punishable with imprisonment or with fine or with
both whereas sub-section (7) specifically include
those and excludes, like sub-section (1), offences
punishable with imprisonment only or with
imprisonment and also fine. Therefore, both cover
similar nature of offences. Hence, the power for
compounding can be exercised in relation to the
same nature of offences by the Company Law Board or
the court in seisin of the matter with the
difference that the Company Law Board can proceed
to compound such offence either before or after the
institution of any prosecution. In this
connection, it shall be relevant to refer to
Section 621A(4)b) of the Act, which provides that
where any offence is compounded under this section,
14Page 15
whether before or after the institution of any
prosecution, an intimation thereof shall be given
by the Company to the Registrar within 7 days from
the date on which the offence is compounded.
Section 621A(4)d) mandates that where the
composition of any offence is made after the
institution of any prosecution, such composition
would be brought by the Registrar in writing to the
notice of the court in which the prosecution is
pending and on such notice of the composition of
the offence being given, the accused in relation to
whom the offence is so compounded shall be
discharged.
From the conspectus of what we have observed
above, it is more than clear that an offence
committed by an accused under the Act, not being an
offence punishable with imprisonment only or
imprisonment and also with fine, is permissible to
be compounded by the Company Law Board either
before or after the institution of any prosecution.
In view of sub-section (7) of Section 621A, the
15Page 16
criminal court also possesses similar power to
compound an offence after institution of the
prosecution.
Now the question is whether in the aforesaid
circumstances the Company Law Board can compound
offence punishable with fine or imprisonment or
both without permission of the court. It is
pointed out that when the prosecution has been
laid, it is the criminal court which is in seisin
of the matter and it is only the magistrate or the
court in seisin of the matter who can accord
permission to compound the offence.
In any view of
the matter, according to the learned counsel, the
Company Law Board has to seek permission of the
court and it cannot compound the offence without
such permission. This line of reasoning does not
commend us. Both sub-section (1) and sub-section
(7) of Section 621A of the Act start with a
non-obstante clause. As is well known, a
non-obstante clause is used as a legislative device
to give the enacting part of the section, in case
16Page 17
of conflict, an overriding effect over the
provisions of the Act mentioned in the non-obstante
clause.
Ordinarily, the offence is compounded under the
provisions of the Code of Criminal Procedure and
the power to accord permission is conferred on the
court excepting those offences for which the
permission is not required. However, in view of
the non-obstante clause, the power of composition
can be exercised by the court or the Company Law
Board. The legislature has conferred the same
power to the Company Law Board which can exercise
its power either before or after the institution of
any prosecution whereas the criminal court has no
power to accord permission for composition of an
offence before the institution of the proceeding.
The legislature in its wisdom has not put the rider
of prior permission of the court before compounding
the offence by the Company Law Board and in case
the contention of the appellant is accepted, same
would amount to addition of the words “with the
17Page 18
prior permission of the court” in the Act, which is
not permissible. 
As is well settled, while interpreting the
provisions of a statute, the court avoids rejection
or addition of words and resort to that only in
exceptional circumstances to achieve the purpose of
Act or give purposeful meaning. 
It is also a
cardinal rule of interpretation that words, phrases
and sentences are to be given their natural, plain
and clear meaning. 
When the language is clear and
unambiguous, it must be interpreted in an ordinary
sense and no addition or alteration of the words or
expressions used is permissible. 
As observed
earlier, the aforesaid enactment was brought in
view of the need of leniency in the administration
of the Act because a large number of defaults are
of technical nature and many defaults occurred
because of the complex nature of the provision.
From what we have observed above, we are of the
opinion that the power under sub-section (1) and
18Page 19
sub-section (7) of Section 621A are parallel powers
to be exercised by the Company Law Board or the
authorities mentioned therein and prior permission
of Court is not necessary for compounding the
offence, when power of compounding is exercised by
the Company Law Board.
 In view of what we have
observed above, the order impugned does not require
any interference by this Court.
In the result, we do not find any merit in the
appeal and it is dismissed accordingly but without
any order as to costs.
………………………………………………………………J
(CHANDRAMAULI KR. PRASAD)
………..……….………………………………..J
(V.GOPALA GOWDA)
NEW DELHI,
MAY 10, 2013.
19

Nimmagadda Prasad .... bail whether the appellant-herein has made out a case for bail. - Unfortunately, in the last few years, the country has been seeing an alarming rise in white-collar crimes, which has affected the fiber of the country’s economic structure. Incontrovertibly, economic offences have serious repercussions on the development of the country as a whole= It has also to be kept in mind that for the purpose of granting bail, the Legislature has used the words "reasonable grounds for believing" instead of "the evidence" which means the Court dealing with the grant of bail can only satisfy it as to whether there is a genuine case against the accused and that the prosecution will be able to produce prima facie evidence in support of the charge. It is not expected, at this stage, to have the evidence establishing the guilt of the accused beyond reasonable doubt. Economic offences constitute a class apart and need to be visited with a different approach in the matter of bail. The economic offence having deep rooted conspiracies and involving huge loss of public funds needs 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. Taking note of all these aspects, without expressing any opinion on the merits of the case and also with regard to the claim of the CBI and the defence, we are of the opinion that the appellant cannot be released at this stage, however, we direct the CBI to complete the investigation and file charge sheet(s) as early as possible preferably within a period of four months from today. Thereafter, 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. 30) With the above direction, the appeal is dismissed.

Page 1
REPORTABLE
IN THE SUPREME COURT OF INDIA
CRIMINAL APPELLATE JURISDICTION
CRIMINAL APPEAL NO. 728 OF 2013
(Arising out of S.L.P. (Crl.) No. 9706 of 2012)
Nimmagadda Prasad ....
Appellant(s)
Versus
Central Bureau of Investigation ....
Respondent(s)
J U D G M E N T
P.Sathasivam, J.
1) Leave granted.
2) This appeal is directed against the final judgment and
order dated 08.10.2012 passed by the High Court of
Judicature of Andhra Pradesh at Hyderabad in Criminal
Petition No. 6732 of 2012 in R.C. 19(A)/2011-CBI-Hyderabad,
whereby the High Court dismissed the petition filed by the
appellant herein for grant of bail.
1Page 2
3) The only question posed for consideration is
  whether
the appellant-herein has made out a case for bail. 
Brief facts:
4) On the orders of the High Court of Andhra Pradesh in
Writ Petition Nos. 794, 6604 and 6979 of 2011 dated
10.08.2011, the Central Bureau of Investigation (in short
“the CBI”), Hyderabad, registered a case being R.C. No.
19(A)/2011-CBI-Hyderabad dated 17.08.2011 under Section
120B read with Sections 420, 409 and 477-A of the Indian
Penal Code, 1860 (for short ‘IPC’) and Section 13(2) read
with Section 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.
5) The appellant-Nimmagadda Prasad was named as an
accused at Sl. No. 12 in the FIR dated 17.08.2011 (after the
chargesheet was framed, he was arrayed as A-3 and
hereinafter, he will be referred to as A-3). It is further seen
that during the course of investigation, the appellant was
arrested on 15.05.2012 for his involvement and complicity in
the case and presently, he is in judicial custody.
2Page 3
6) After filing two successive bail applications before the
trial Court which ended in dismissal, the appellant moved
the High Court for enlarging him on bail on 06.09.2012 by
filing Criminal Petition No. 6732 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-3)
and finding that it cannot be ruled out that witnesses cannot
be influenced by A-3 in case he is released on bail at this
stage and also taking note of the submission of the Special
Public Prosecutor that the investigation of the case is still
continuing even after filing of the charge sheet(s), by
impugned order dated 08.10.2012, dismissed his bail
application.
7) Heard Mr. Harish N. Salve, learned senior counsel for
the appellant and Mr. Ashok Bhan, learned senior counsel for
the respondent-CBI.
Contentions:
8) After taking us through the entire materials
commencing from the filing of FIR dated 17.08.2011,
contents of charge sheet dated 13.08.2012, orders of the
3Page 4
trial Court rejecting the bail applications twice, the stand
taken by the CBI before the trial Court and the High Court,
Mr. Salve, learned senior counsel, vehemently contended
that the appellant is entitled to an order of bail from this
Court. He also submitted that in view of the inconsistent
stand taken by the CBI at every stage and taking note of the
fact that the appellant is in jail since 15.05.2012, by
imposing appropriate conditions, the appellant may be
released on bail.
9) Mr. Ashok Bhan, learned senior counsel for the CBI, by
placing reliance on all the materials filed by the prosecution
pointed out that the appellant, along with others, is involved
in a serious economic offence. He also submitted that the
appellant (A-3) himself is a beneficiary of land worth several
crores of rupees and properties in association with Jagan
Mohan Reddy (A-1), who enriched himself for more than
40,000 crores by the influence of his father who was the
then Chief Minister of Andhra Pradesh. He also submitted
that even after filing of the charge sheet on 13.08.2012, in
view of further investigation under Section 173(8) of the
4Page 5
Code of Criminal Procedure, 1973 (in short “the Code”), the
CBI is looking into all the aspects of investment of the
appellant in M/s Indus Projects and its group of companies,
has collected a number of files from different departments of
the Government of Andhra Pradesh, Banks/NBFCs and other
private companies/individuals. He finally concluded that in
view of the Status Report dated 30.04.2013 filed by the DIG
of Police, CBI, Hyderabad, stating that a further period of 4-6
months is required for completing the investigation under
Section 173(8) of the Code, it would not be proper to release
him on bail at this juncture.
10) We have carefully considered the rival submissions and
perused all the relevant materials relied on by both the
sides.
Discussion:
11) In the Status Report dated 30.04.2013, it is stated that
the allegations in the FIR against the appellant is that the
Government of Andhra Pradesh awarded VANPIC (Vodarevu
and Nizampatnam Port Industrial Corridor) Project to the
present appellant (A-3) and allotted more than 15,000 acres
5Page 6
of land in Prakasam and Guntur Districts to the companies
promoted by the appellant in violation of all the laws, rules
and norms and granted several concessions. As a quid pro
quo, the appellant invested in the following companies, viz.,
M/s Carmel Asia Holdings Pvt. Ltd., M/s Bharathi Cements,
M/s Jagathi Publications Pvt. Ltd., M/s Silicon Builders, M/s
Sandur Power Company etc. belonging to Y.S. Jagan Mohan
Reddy, s/o the then Chief Minister, late Dr. Y.S. Rajasekhara
Reddy.
12) It is also brought to our notice that the investigation
into the above said allegations revealed that during the
period between 2006 and 2009, the Government of Andhra
Pradesh, led by the then Chief Minister late Dr. Y.S.
Rajasekhara Reddy extended many undue favours to the
appellant by abusing his official position and thereby, an
extent of 18878 acres was allotted in his favour, in return, A-
3 paid illegal gratifications amounting to Rs. 854.50 crores to
Y.S. Jagan Mohan Reddy (A-1) and his group of companies for
exercising personal influence over his father, the then Chief
Minister of Andhra Pradesh. It is the claim of the CBI that
6Page 7
illegal gratifications were paid in the guise of
investments/share application money to give them corporate
colour in order to escape the criminal liability.
13) It is also the claim of the prosecution that the appellant
acted as a conduit to Y.S. Jagan Mohan Reddy (A-1) to
channelize the bribe amounts paid by other
individuals/companies as a quid pro quo for the undue
benefits received by him from the Government of Andhra
Pradesh led by late Dr. Y.S. Rajasekhara Reddy.
14) It is also pointed out that based on the available oral
and documentary evidence, a charge sheet was filed against
the appellant and other accused (A-1 to A-14) on 13.08.2012
before the Court of Principal Special Judge for CBI cases,
Hyderabad which was numbered as CC No. 14 of 2012.
Thereafter, according to the CBI, based on various materials,
further investigation under Section 173(8) of the Code is still
continuing in respect of other aspects of the case.
15) It is highlighted by the CBI that during further
investigation in CC No. 14 of 2012, the role of A.J.
Jagannathan and Dr. Khater Massaad, who represented on
7Page 8
behalf of the Government of Ras Al Khaima (RAK) – UAE has
to be ascertained in view of various dubious transactions
revealed. It is the stand of the CBI that A.J. Jagannathan,
alleged Advisor to the Government of RAK-UAE had been a
Director on the Board of Directors of M/s Indus Projects Ltd.,
along with the present appellant. According to the CBI, the
further investigation has revealed that Rs. 140 crores, out of
Rs. 525 crores, the money of the appellant flown from
Mauritius based companies into India under Automatic Route
have been diverted and invested in M/s Jagathi Publications
Pvt. Ltd. and M/s Bharathi Cements Corporation Pvt. Ltd.,
hence, the source of this money ought to be ascertained and
investigated which is likely to take some time.
16) According to the CBI, the appellant (A-3) had been a
Director in M/s Indus Projects Ltd., which was awarded many
projects/contracts by the Government of Andhra Pradesh
during the period between 2004 and 2009.
17) The CBI has also projected the order dated 05.10.2012
passed by this Court in Special Leave Petition (Criminal) No.
5902 of 2012 filed by Y.S. Jagan Mohan Reddy (A-1),
8Page 9
directing A-1 to apply for bail only after completion of the
investigation in seven issues including Indus Projects Ltd.
and Lepakshi Knowledge Hub Private Ltd. Mr. Ashok Bhan,
by drawing our attention to the said order submitted that
those directions are also applicable to Nimmagadda Prasad
(A-3) - appellant herein, who was also a Director in M/s Indus
Projects Ltd. which is under active investigation.
18) From the status report, it is also brought to our notice
that during the year 2008-09, the Government of Andhra
Pradesh alienated 8,844 acres of land in Ananthapur District
in favour of M/s Lepakshi Knowledge Hub Private Limited, a
newly incorporated company, with more
exemptions/subsidies at a cost ranging between Rs. 50,000
to Rs. 1,75,000 per acre. It is also highlighted that files were
processed despite serious objections by the Finance
Department about (i) the financial implications of the
proposed concessions proposed on the State exchequer, (ii)
company’s financial standing; lack of credibility in terms of
their past experience of the fledging company incorporated
in July, 2008; and (iii) absence of safety clauses in the
9Page 10
proposed Memorandum of Agreement (MoA) to resume land
in case of violation/failure to implement the project.
However, the Government of Andhra Pradesh led by late Dr.
Y.S. Rajasekhara Reddy went ahead and entered into the
MoA and alienated the said land by passing various
Government Orders between 22.09.2008 and 21.02.2009.
19) In the status report, it is also mentioned that M/s Indus
Projects Limited suddenly came into picture claiming to be
the holding company of M/s Lepakshi Knowledge Hub Private
Limited and availed loans amounting to Rs. 790 crores from
different banks/NBFCs by mortgaging about 4,397 acres of
land. It is the assertion of the prosecution that all the funds
were misappropriated by M/s Indus Projects Ltd. for their real
estate activities and other business needs. According to the
CBI, so far, the investigation has revealed that at least Rs. 88
crores out of the above funds have come back to M/s Indus
Projects Ltd. through hawala channels/fake work
orders/forged RA bills. It is the grievance of the CBI that the
investigation so far has revealed that after more than four
and a half years, the project has failed to take off and no job
10Page 11
has been generated so far. It is also the allegation of the CBI
that the Banks/NBFCs adopted an average market value of
Rs. 20 lakh per acre while disbursing loans to M/s Indus
Projects Ltd. which were given to the company at a price
ranging between Rs. 50,000 to Rs. 1,75,000 lakh per acre.
According to the CBI, the value of 8,844 acres of land
dishonestly alienated to a private company would be around
Rs. 1,768 crores approx. Though they secured loan
documents from various banks, yet they are awaiting similar
documents from Punjab National Bank, Bank of India, UCO
Bank, Kotak Mahindra Bank and State Bank of India.
20) In the status report, it is also claimed that the CBI has
to examine various persons from different Government
Departments, Banks/NBFCs, private companies/individuals
involved in diversion/misappropriation of funds, employees
of M/s Indus Projects Ltd., M/s Lepakshi Knowledge Hub Pvt.
Ltd., and their group companies to ascertain the facts
related to the case.
21) In addition to the same, it is also highlighted that M/s
Indus Projects Ltd., who did not fulfil the technical and
11Page 12
financial criteria, submitted an application stating that they
would develop the project through a consortium consisting of
IDFC (Financial Member) and M/s Embassy Group (Technical
Member) and would form a Special Purpose Vehicle (SPV). In
this regard, it is pointed out that M/s Indus Techzone Pvt.
Ltd., projected as SPV, is fully owned by M/s Indus Projects
Ltd. While allotting 250 acres of prime land at Shamshabad,
near new International Airport of Hyderabad, several
exemptions such as stamp-duty and registration expenses,
subsidized power, all external infrastructures up to the
boundary of SEZ, tax exemptions/holiday were provided
under ICT Policy and SEZ Act, 2005 justifying that the project
would create 45,000 new jobs. In addition, land worth about
Rs. 1 crore per acre was given at a price of Rs. 20 lakh per
acre. It is further pointed out that the said project has to be
completed within five years of allotment of land which ended
in the year 2011-2012, however, except developing a
skeleton structure of about 7.50 lakh SFT against 45 lakh
SFT, M/s Indus Techzone Pvt. Ltd. has failed to develop the
project and has not created any new employment so far.
12Page 13
22) It is also pointed out that M/s Indus Techzone Pvt. Ltd.,
availed Rs. 175 crores of loans by mortgaging about 75
acres of land which is shown to have been spent for the
development of project. The investigating agency is of the
opinion that a major chunk of the funds was
diverted/misappropriated by way of fake work orders/RA
bills.
23) No doubt, Mr. Salve, learned senior counsel for the
appellant pointed out the different stand of the CBI from
court to court, he also commented upon the reasoning and
the ultimate conclusion of the trial Judge, namely, the
Principal Special Judge for CBI Cases, Hyderabad for
rejecting the bail application of the appellant. It is true that
after highlighting the stand taken by the prosecution as well
as the right of the accused and taking note of the various
aspects, the trial Judge was of the view that if the appellant
is enlarged on bail, he will influence the witnesses, since
some of them are on his pay rolls, and thereby investigation
will suffer a set back. Even if it is accepted that the
statements have been recorded from those employees, as
13Page 14
rightly pointed out by the counsel for the CBI, the matter is
not going to end with their statements.
24) Mr. Salve, after taking us through various
documents/correspondences from the Government of Ras Al
Khaima submitted that in view of the contents of the same
and the specific stand of the Government of Andhra Pradesh,
there is no basis for the claim made by the CBI. Though we
were taken through all those details, it is not proper for this
Court to make a comment about the acceptability or
otherwise at this juncture and those materials ought to be
considered only at the trial.
25) As pointed out by Mr. Ashok Bhan, learned senior
counsel for the CBI, after filing of the charge sheet on
13.08.2012, in view of further materials, the CBI started
investigation which is permissible under Section 173(8) of
the Code to look into the aspects of the involvement of the
appellant in M/s Indus Projects Ltd. and its group companies,
viz., M/s Lepakshi Knowledge Hub Private Ltd. as well as M/s
Indus Techzone Private Limtied. In view of the same,
undoubtedly, the investigating agency may require further
14Page 15
time to collect all the materials, particularly, the nexus of the
appellant with those concerns and the appellant being the
beneficiary of the quantum of the amount secured. In the
course of the arguments, it is also brought to our notice by
learned senior counsel for the CBI that a sitting Minister incharge of the Ports had nexus with those transactions.
Considering all these developments, taking note of various
details furnished in the Status Report dated 30.04.2013, we
are of the view that though the appellant is in custody for
nearly 11 months, at the same time, the claim of the premier
investigating agency cannot be underestimated. As pointed
out by the CBI, if ultimately it is established, it is a grave
economic offence of alienating prime lands to selected
private companies/individuals under the garb of
development using deceptive means resulting in wrongful
ownership and control of material resources detrimental to
the common good. Further, in order to establish all those
events, it is the claim of the CBI that documents have to be
obtained from different banks, other private
companies/individuals, who facilitated the said diversion of
15Page 16
funds. In addition to the same, public servants involved in
processing of government files have to be examined apart
from private persons/companies. A higher officer of the
investigating agency, namely, DIG of Police, CBI assured this
Court that further investigation is being carried out at a
faster pace and is expected to be completed within six
months.
26) Unfortunately, in the last few years, the country has
been seeing an alarming rise in white-collar crimes, which
has affected the fiber of the country’s economic structure.
Incontrovertibly, economic offences have serious
repercussions on the development of the country as a whole.
In State of Gujarat vs. Mohanlal Jitamalji Porwal and
Anr. (1987) 2 SCC 364 this Court, while considering a
request of the prosecution for adducing additional evidence,
inter alia, observed as under:-
“5.....The entire Community is aggrieved if the economic
offenders who ruin the economy of the State are not
brought to book. A murder may be committed in the heat of
moment upon passions being aroused. An economic offence
is committed with cool calculation and deliberate design
with an eye on personal profit regardless of the
consequence to the Community. A disregard for the interest
16Page 17
of the Community can be manifested only at the cost of
forfeiting the trust and faith of the Community in the system
to administer justice in an even handed manner without fear
of criticism from the quarters which view white collar crimes
with a permissive eye unmindful of the damage done to the
national economy and national interest….”
27) 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.
  It has also to be kept in mind that for the
purpose of granting bail, the Legislature has used the words
"reasonable grounds for believing" instead of "the evidence"
which means the Court dealing with the grant of bail can
only satisfy it as to whether there is a genuine case against
the accused and that the prosecution will be able to produce
prima facie evidence in support of the charge. It is not
17Page 18
expected, at this stage, to have the evidence establishing
the guilt of the accused beyond reasonable doubt. 
28) Economic offences constitute a class apart and need to
be visited with a different approach in the matter of bail. The
economic offence having deep rooted conspiracies and
involving huge loss of public funds needs 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. 
29) Taking note of all these aspects, without expressing any
opinion on the merits of the case and also with regard to the
claim of the CBI and the defence, we are of the opinion that
the appellant cannot be released at this stage, however, we
direct the CBI to complete the investigation and file charge
sheet(s) as early as possible preferably within a period of
four months from today. Thereafter, 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
18Page 19
prayer for bail independently on its own merits without being
influenced by dismissal of the present appeal.
30) With the above direction, the appeal is dismissed.
………….…………………………J.
(P. SATHASIVAM)
 ………….…………………………J.
(M.Y. EQBAL)
NEW DELHI;
MAY 9, 2013.
19

V. Vijay Sai Reddy- cancellation of bail granted to the respondent herein.= It is true that the Special Judge while granting bail imposed certain conditions and the High Court has also added some more additional conditions, however, taking note of few instances in which how the respondent has acted, it cannot be possible for the investigating agency to collect the remaining materials for the remaining three charge sheets to be filed. In such circumstances, we are satisfied firstly the Special Court took irrelevant materials for consideration for grant of bail and secondly, the High Court having arrived definite conclusion that several findings of Special court are unacceptable or irrelevant but ultimately affirmed the very same order of the special Judge granting bail. = 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.= It has also to be kept in mind that for the purpose of granting bail, the Legislature has used the words "reasonable grounds for believing" instead of "the evidence"= whether there is a genuine case against the accused and that the prosecution will be able to produce prima facie evidence in support of the charge. Taking note of all the aspects discussed above, without expressing any opinion on the merits, we set aside both the orders of the Special Judge and the High Court granting bail to A-2 and allow the appeal filed by the CBI with a direction to complete all the investigation relating to the remaining three charge sheets and file appropriate report before the trial Court within a period of four months from today. Thereafter, the respondent herein 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 the present appeal. During the course of hearing, it is brought to our notice that the marriage of the daughter of the respondent has been fixed for 26.05.2013. Taking note of the said aspect, we direct the respondent herein to surrender on or before 5-6-2013 before the Special Court for being sent to the custody. 33) The appeal is allowed.

Page 1
REPORTABLE
IN THE SUPREME COURT OF INDIA
CRIMINAL APPELLATE JURISDICTION
CRIMINAL APPEAL NO. 729 OF 2013
(Arising out of SLP (Crl.) No. 5946 of 2012
Central Bureau of Investigation ....
Appellant(s)
Versus
V. Vijay Sai Reddy ....
Respondent(s)
J U D G M E N T
P. Sathasivam, J.
1) Leave granted.
2) This appeal is directed against the final judgment and
order dated 13.06.2012 passed by the High Court of
Judicature of Andhra Pradesh at Hyderabad in Criminal
Petition No. 4387 of 2012, whereby the High Court dismissed
the petition filed by the Central Bureau of Investigation
(CBI)-the appellant herein seeking cancellation of bail
granted to the respondent herein.
1Page 2
Brief facts:
3) On the orders of the High Court of Andhra Pradesh in
Writ Petition Nos. 794, 6604 and 6979 of 2011 dated
10.08.2011, the CBI, Hyderabad, on 17.08.2011, registered a
case being R.C. No. 19(A)/2011-CBI-Hyderabad dated
17.05.2011 under Sections 120-B read with Sections 409,
420 and 477-A of the Indian Penal Code, 1860 (in short ‘IPC’)
and Section 13(2) read with Section 13(1)(c) and (d) of the
Prevention of Corruption Act, 1988 (in short “the PC Act”)
against Y.S. Jaganmohan Reddy (A-1), Member of Parliament
and 73 others.
(b) V. Vijay Sai Reddy-the respondent herein was named as
an accused at Sl. No. 2 in the FIR dated 17.08.2011 (after
the chargesheet was framed, he was arrayed as A-2 and
hereinafter, he will be referred to as A-2). The respondent
herein was the founder Director of M/s Jagathi Publications
and was the Financial Advisor for the group of companies of
Y.S. Jagan Mohan Reddy (A-1).
2Page 3
(c) He was arrested on 02.01.2012 and was in police
custody from 04.01.2012 to 09.01.2012 and again from
11.01.2012 to 17.01.2012. On 27.01.2012, he filed an
application for grant of regular bail under Section 437 of the
Code of Criminal Procedure, 1973 (in short ‘the Code’) before
the Court of the Special Judge for CBI Cases at Hyderabad.
The Special Judge, by order dated 21.03.2012, dismissed his
application for bail.
(d) During investigation, it was revealed that M/s Jagathi
Publications Pvt. Ltd. was originally incorporated as a
private limited company on 14.11.2006 and later converted
into a public limited company on 12.01.2009. At the
relevant time, the respondent herein was the founder
Director of the Company and Y.S. Jagan Mohan Reddy (A-1)
was designated as the Authorised Signatory to operate the
Bank accounts of the Company. He was appointed as a
Director and Chairman with effect from 21.06.2007. It is
alleged that A-1 floated M/s Jagathi Publications Pvt. Ltd.
with an objective of conducting media business with the illgotten wealth. Most of the shareholders were alleged to be
3Page 4
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. Jaganmohan 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.
(e) After investigation, on 31.03.2012, the CBI filed first
charge sheet against A-1 to A-13 including the respondent
herein under Section 120-B read with Sections 409, 420 and
477-A of the IPC and Sections 13(2) read with Section 13(1)
(c) and (d) of the PC Act in the Court of Special Judge for CBI
Cases, Hyderabad. On 02.04.2012, A-2 filed another
application for grant of bail before the Special Judge. By
order dated 13.04.2012, the Special Judge granted bail to A-
2.
4Page 5
(f) Being aggrieved by the order dated 13.04.2012, the CBI
filed Criminal Petition No. 3712 of 2012 before the High
Court. The High Court, by order dated 20.04.2012, set aside
the order dated 13.04.2012 and remanded the matter to the
Court of Special Judge to consider the case of A-2 afresh. In
the meantime, the Principal Special Judge for CBI Cases,
Hyderabad took cognizance of the charge sheet dated
31.03.2012 against A-1 to A-13 which was numbered as CC
No. 8 of 2012. On 30.04.2012, after hearing both the sides
afresh in Criminal Misc. Petition No. 715 of 2012 for grant of
bail, the very same Special Judge, who passed the earlier
order dated 13.04.2012, granted bail to A-2.
(g) Aggrieved by the order dated 30.04.2012, the CBI filed
Criminal Petition No. 4387 of 2012 before the High Court for
cancellation of bail granted to A-2. In the meantime, the CBI
filed third chargesheet with respect to the investment made
by M/s Ramky Group of Companies. On 29.05.2012 and
30.05.2012, the Principal Special Judge for CBI Cases took
cognizance of second and third chargesheet(s) which were
numbered as CC Nos. 9 and 10 of 2012 respectively.
5Page 6
(h) The High Court, by order dated 13.06.2012, dismissed
the petition filed by the CBI.
(i) Being aggrieved by the order of the High Court, the CBIthe appellant herein has preferred this appeal by way of
special leave.
4) Heard Mr. Ashok Bhan, learned senior counsel for the
appellant herein and Mr. Raju Ramachandran, learned senior
counsel for the respondent herein.
5) It is useful to refer the order dated 10.08.2011 passed
by the High Court ordering for CBI investigation wherein, in
para 51, it is stated thus:
“51. Prima facie, it emerges from the record forming part
of the writ petitions including pleadings of the parties that
from May, 2004 onwards, respondent No. 52 floated
number of companies wherein quid pro quo investments
have been made out of the benefits received by the
investors/beneficiaries from the decisions of the State
Government in various forms like SEZs, irrigation contracts,
relaxation/permission for real estate ventures, mines etc.
besides payment of huge premium amounts paid in the
shares and invested in the companies by such beneficiaries
and the money so paid is nothing but corrupt money
attracting Section 3 of the Prevention of Money Laundering
Act, 2002. The investigation by the Income Tax authorities
with respect to assessment orders of M/s Jagathi
Publications for the year 2008-09 shows huge unexplained
cash credit. Similarly, huge escalated face value of shares
to the extent of 35 times also was not accepted by the
Income Tax authorities and respondent No. 52 is directly or
indirectly connected with some of the companies which are
showing phenomenal growth and these facts make it
6Page 7
necessary to ascertain the role of individuals/firms/public
servants in the group companies of respondent No. 52.”
6) Based on the above directions, the CBI filed a charge
sheet on 17.08.2011, initiated investigation and filed several
charge-sheets and, according to learned senior counsel for
the CBI, three more charge-sheets are yet to be filed. It is
highlighted by learned senior counsel for the CBI that the
present appellant (A-2) participated in the conspiracy and
according to him, he is a key conspirator. He also
highlighted that by threatening many businessmen, he made
them close associates of Y.S. Jagan Mohan Reddy (A-1). He
also highlighted that the present appellant intimidated many
persons for investments in the concerns belonging to A-1.
Finally, he submitted that by branding him as Y.S. Jagan
Mohan Reddy’s (A-1) man, he collected huge money by way
of getting shares in the companies flouted by A-1. In
addition to the same, Mr. Ashok Bhan submitted that out of
eight charge-sheets, three charge-sheets are yet to be filed
for which the CBI requires interrogation and collection of
materials through him for which his bail has to be cancelled.
7Page 8
By taking us through the reasoning of the Special Court for
grant of bail and the affirmation order of the High Court,
learned senior counsel for the CBI submitted that both the
courts took note of irrelevant considerations, hence, both the
orders are liable to be set aside.
7) As against the above contentions, Mr. Raju
Ramachandran, learned senior counsel for the respondent,
after taking us through the averments in the FIR, allegations
in the charge-sheet(s) filed so far submitted that there is no
material to show that the appellant has gained anything
financially in the alleged transactions. He also pointed out
that no investments were made in Jagathi Publications
during the period when he was the Director. He further
submitted that the State Government itself had passed
various Government Orders to protect the Ministers and
Secretaries who alleged to have been involved on the
ground that everything was done in the course of normal
business of the Government. When such is the position,
according to him, the appellant being a Chartered
Accountant, without any financial gain, the Special Judge
8Page 9
was justified in granting him the bail. He also pointed out
that even when the appellant was out, five charge-sheets
have been filed and there is no impediment in finalizing the
remaining three charge-sheets and he is willing to cooperate
with the Agency by fulfilling all the conditions imposed by
the Special Court and the High Court.
8) We have considered the rival contentions and perused
all the relevant materials relied on by both the sides.
9) Let us consider the contentions put-forth by learned
senior counsel for the CBI. It is settled by a series of
decisions that if irrelevant materials have been taken into
account or relevant materials have been kept out of
consideration, the order granting bail to the accused cannot
be sustained. In the same way, if there is specific allegation
by the prosecution that the accused in question was a party
to the criminal conspiracy, neither the Special Court nor the
High Court is justified in granting bail to the said person.
These principles have been reiterated vide State of U.P.
through CBI vs. Amarmani Tripathi, (2005) 8 SCC 21,
para 31, Dinesh M.N. (S.P.) vs. State of Gujarat, (2008) 5
9Page 10
SCC 66, para 27, Narendra K. Amin (Dr.) vs. State of
Gujarat and Another, (2008) 13 SCC 584 para 27, State
of Maharashtra and Others vs. Dhanendra Shriram
Bhurle and Others, (2009) 11 SCC 541, para 8, Central
Bureau of Investigation, Hyderabad vs. Subramani
Gopalakrishnan and Another, (2011) 5 SCC 296, para 25.
10) Keeping those principles in mind, let us consider the
role played by the present respondent – V. Vijay Sai Reddy
(A-2) as projected by the CBI. In the first charge-sheet, it is
alleged as under:
i) V. Vijay Sai Reddy (A-2) was the founder Director of M/s
Jagathi Publications Pvt. Ltd. (A-12) and is the Financial
Advisor for Group Companies of Y.S. Jagan Mohan
Reddy (A-1).
ii) V. Vijay Sai Reddy (A-2) in conspiracy with Y.S. Jagan
Mohan Reddy (A-1) to fix the premium of M/s Jagathi
Publications Pvt. Ltd. at a high rate, provided false and
exaggerated information to M/s Deloitte Touche
Tohmatsu India Pvt. Ltd. and M/s Jagadisan & Co. and
got evaluated M/s Jagathi Publications Pvt. Ltd.. In
10Page 11
furtherance of the said conspiracy, V. Vijay Sai Reddy
(A-2) unilaterally fixed the premium of M/s Jagathi
Publications at Rs. 350/- per share for the sole purpose
of soliciting huge amounts as investments.
iii) V. Vijay Sai Reddy (A-2) and Y.S. Jagan Mohan Reddy
(A-1) were fully aware of their factual financial position
before starting the media company which takes 5 to 6
years for break even to claim profits. In spite of this
fact, V. Vijay Sai Reddy (A-2) prevailed over M/s Deloitte
Touche Tohmatsu India Pvt. Ltd. by providing false
inputs to exaggeratedly evaluate the fiscal status of M/s
Jagathi Publications Pvt. Ltd. and also to ante-date the
valuation report to suit the stealthy requirements of the
company. Thus, Vijaya Sai Reddy (A-2) was
instrumental in soliciting the premium @ Rs. 350/- of
M/s Jagathi Publications Pvt. Ltd. without any basis.
iv) V. Vijay Sai Reddy (A-2) in furtherance of the criminal
conspiracy, played a vital role in soliciting investments
in the form of bribes as a quid pro quo from the
individuals related to the MD of M/s Aurobindo Pharma
11Page 12
Ltd. and the companies M/s Hetero Group Companies
(A-4) and M/s Trident Life Sciences Ltd. (A-5).
v) By the above mentioned overt acts V. Vijay Sai Reddy
(A-2) in furtherance of criminal conspiracy with
remaining accused, has committed the offences under
Section 120-B read with Sections 409, 420 and 468 IPC
and thereby facilitated Y.S. Jagan Mohan Reddy (A-1) to
reap undue benefit in the form of investments in his
company from the beneficiaries mentioned above as a
quid pro quo.
11) It is brought to our notice that M/s Jagathi Publications
Private Limited was incorporated on 14.11.2006 as a Private
Limited Company and was converted into a Public Limited
Company on 12.01.2009. M/s Jagathi Publications Private
Limited represented by its the then Directors, Y.S. Jagan
Mohan Reddy (A-1) and V. Vijay Sai Reddy (A-2) solicited
investments from the general public although it was a
private limited company in violation of the provisions of the
Companies Act, 1956. It is contended by the CBI that the
main intention of M/s Jagathi Publications Private Limited
12Page 13
represented by the then Diectors A-1 and A-2 was to woo
innocent investors to buy shares at high premiums by
concealing the material facts. They cited several instances
in the charge sheet.
12) In the second charge-sheet dated 23.04.2012, Y.S.
Jagan Mohan Reddy (A-1), V. Vijay Sai Reddy (A-2) and M/s
Jagathi Publications Private Limited are the main accused for
the offences under Section 120-B read with Sections 420,
468 and 471 IPC and Section 9 of the PC Act. The third
charge sheet was filed on 07.05.2012 regarding the
investigation conducted in connection with the investments
made by M/s Ramky Pharma City (I) Ltd. in M/s Jagathi
Publications Private Limited. According to the CBI,
investigation revealed that Y.S. Jagan Mohan Reddy (A-1) in
conspiracy with V. Vijay Sai Reddy (A-2) ensured causing of
wrongful gain to M/s RPCIL represented by Ayodhya Rami
Reddy (A-4) in the matter of reducing the green belt area
from 250 mtrs. to 50 mtrs. by prevailing upon his father late
Dr. Y.S. Rajasekhara Reddy, the then Chief Minister to take
a decision to that effect during the meeting held on
13Page 14
23.11.2005. Based on the said decision, G. Venkat Ram
Reddy (A-5), the then Vice Chairman, VUDA accorded
approval to the layout plan of M/s RPCIL (A-6) with reduced
green belt area confining it to 50 mtrs. in contravention to
the decision dated 20.06.2005 and the G.O. No. 345 dated
30.06.2006 notifying the VUDA Master Plan 2021. In this
way, A-6 obtained wrongful gain of 914 acres of land inside
the Pharma City and by selling the land after dividing it into
plots, A-6 obtained a wrongful gain of Rs. 133.74 crores. It is
further pointed out that as a Financial Advisor and Founder
Director of M/s Jagathi Publications Private Limited, the
respondent herein played a very active role and as such he
cannot be absolved himself from the conspiratorial role
played by him in the affairs of M/s Jagathi Publications
Private Limited and is liable for all the irregularities.
13) It is pointed out by the CBI that investigation is under
progress regarding the transactions relating to Sandur Power
Company which involved many foreign transactions and the
present respondent V.Vijay Sai Reddy (A-2) was the main
person who dealt with all the foreign transactions for which
14Page 15
evidence is available. It is also highlighted that V.Vijay Sai
Reddy (A-2) has played a main role in pumping crores of
money to M/s Jagathi Publications Private Limited through
several companies like Artillegence Bio-Innovations Ltd., Bay
Inland Finance Pvt. Ltd., Bhaskar Fund Management Pvt.
Ltd., and other individuals based in Kolkata and Mumbai.
Likewise, VANPIC’s grant of mining lease and permits to
several group of companies, the investigation is under
progress and custodial interrogation from the appellant is
required.
14) Mr. Ashok Bhan, learned senior counsel has pointed out
that the Special Judge erroneously observed that the
investigation has reached to a conclusion and based on such
a wrong assumption enlarged him on bail.
15) According to the CBI, the investigation is still in
progress in other separate and distinct offences. He also
pointed out that the said conclusion is totally contrary to the
record. By pointing out various facts and figures, he
asserted that A-2 is an active member of the criminal
conspiracy and releasing him at the stage of investigation
15Page 16
would result in miscarriage of justice as the role played by
him in the conspiracy is serious and grave in nature. The
main grievance of the CBI is that when there was sufficient
evidence on record and investigation is yet to be completed
in many matters, grant of bail would defeat the proper
investigation in the case.
16) Though we are not expressing any definite opinion
about those allegations and it is for the trial Court to find out
the acceptability or otherwise in the full fledged trial, we are
of the view that in order to complete the investigation in
respect of three more charge sheets, the presence of
respondent (A-2) is required and cannot be ignored by
treating him as Chartered Accountant only.
17) As mentioned earlier, five charge sheets have been
filed so far and three more charge sheets are in the final
stages and are yet to be filed. At the time of arguments,
learned senior counsel for the CBI has brought to our notice
that the last of the charge has been filed in the Dalmia
Cements Ltd. issue on 08.04.2013 which is on the file of the
Special Judge for the CBI Cases for taking cognizance. We
16Page 17
have already noted the stand of the CBI insofar as the
respondent herein is concerned, his relationship with the
main accused Y.S. Jagan Mohan Reddy (A-1) his interest in
M/s Jagathi Publications Private Limited etc. It is also seen
and highlighted that respondent A-2 was engaged in
Financial Consultant Company, namely M/s Deloitte Touche
Tehmatsu India Private Limited and according to the CBI, he
directed this Company to fudge and exaggerate fiscal status
of M/s Jagathi Publications Private Limited. It is their claim
that it is A-2 who was instrumental in soliciting the premium
at Rs. 350 per share of M/s Jagathi publications Private
Limited without any basis for actual share of Rs. 10 per
share. It is pointed out that on the basis of this false rating
of Jagathi Publications Private Limited of which A-2 was the
Director, many more companies and individuals were made
to invest their money by threat, intimidation, cheating and
inducement. It is the specific stand of the CBI that these
ratings were falsely projected by A-2.
18) It is also brought to our notice that investigation
relating to M/s Sandur Power Company is in progress which
17Page 18
involves investigation in foreign countries in which Y.S.
Jaganmohan Reddy (A-1) was the Director. As per the
investigation, respondent herein (A-2) was the main person,
who facilitated formation of M/s Sandur Power Company Ltd..
There is also allegation that Sandur Power Company
received huge amounts from two Mauritius based Companies
and the source of those monies is being investigated
speedily and efforts to trace the source are being done
expeditiously. It is also brought to our notice that Letter of
Rogatories have been sent to six foreign countries and they
have furnished the status of LRs.
19) It is also the claim of the CBI that investigation is under
progress regarding granting of mining lease of limestone to
the extent of 2037.52 acres by the Government of Andhra
Pradesh to Raghuram Cements. It is highlighted that during
the period under review, the CBI has collected 400
documents running into thousands of pages from various
departments/banks and so far about 40 persons have been
examined.
18Page 19
20) It is also highlighted that the investigation disclosed
that respondent A-2 was nominated as a part time nonexecutive Director of Oriental Bank of Commerce by the
Ministry of Finance vide notification dated 14.12.2006 based
on the recommendation of late Dr. Y.S. Rajasekhara Reddy,
the then Chief Minister of Andhra Pradesh and father of A-1.
It is the assertion of the CBI that respondent A-2 was not
only the direct beneficiary of the post of Director in a
Nationalised Bank but was also a key conspirator and
facilitated for fiddling with public money of the said bank. As
the Director of the bank, he also facilitated a loan of Rs. 200
crores to A-1 without any security and was also appointed as
a Member of Tirumala Tirupati Devasthanams.
21) It is pointed out that so far 110 witnesses have been
examined and as many as 1382 documents running into
several thousands of pages have been collected in respect of
investment through paper companies based in Kolkata and
Mumbai, popularly known as suit case companies. Even in
the case of Indus Projects and Lepakshi Knowledge Hub Pvt.
19Page 20
Ltd., according to the CBI, the role of respondent A-2 is being
ascertained.
22) Finally, it is pointed out that the role of respondent (A-
2) in matters of Raghuram Cements and Sandur Power are
yet to be completed, hence, the presence of respondent
herein (A-2), who is outside the judicial custody would
definitely hamper the smooth investigation and blunt the
due process of law through his deceptive and subtle
manipulations to influence, intimidate and threaten the
witnesses.
23) Though the CBI has annexed certain documents in
support of the above claim, we are not looking into the same
at this stage and if the charge sheet(s) is filed with reference
to the same, it is for the Special Court to consider merit and
demerits of the claim of the prosecution.
24) As pointed out by learned senior counsel for the CBI in
para 25 of the impugned judgment, the High Court did not
agree with the observation of the Special Judge that the
investigation has reached to a conclusion. In fact, the High
Court has concluded that the above finding is incorrect. In
20Page 21
para 26 also, the High Court appreciated and accepted the
stand of the CBI that it has been making investigation with
regard to other distinct offences that are alleged in the FIR.
Interestingly, the High Court has also not accepted the
another reasoning of the Special Court for granting bail,
namely, that the main accused A-1 and other beneficiaries
have not been arrested by the investigating agency. In other
words, the High Court has rightly concluded that the
circumstance of not arresting the other accused itself cannot
be a ground to grant bail. However, after finding fault with
certain reasoning and conclusion of the Special Court in
granting bail, the High Court has observed that the CBI has
not placed any material before the Special Court to
substantiate their stand. The Special Judge has also noted
that when respondent herein (A-2) was released on bail on
13.04.2012 and again surrendered before the Court on
23.04.2012, there is no allegation against him that during
this period, he tried to run away from the investigating
agency or made any attempt to influence the witnesses. In
this regard, learned senior counsel for the CBI has brought to
21Page 22
our notice the statement of one Gopalakrishnan Murali dated
20.06.2012. In his statement, in the penultimate paragraph,
it is noted that on receipt of notice under Section 91 of the
Code from CBI on 13.06.2012 the said deponent immediately
contacted V. Vijay Sai Reddy (A-2) for his instructions.
According to him, A-2 directed him not to part with any
document/information to CBI and directed to approach the
High Court of Andhra Pradesh through their legal advisors.
Admittedly, he had not brought any information as required
under the notice dated 13.06.2012 on the advise of the
respondent herein (A-2). As rightly pointed out, there is no
need to go to High Court to get specific direction for each
and every thing. When the Investigating Officer is in need
of certain documents/information for verification with
reference to the investigation it is but proper to place all the
materials under Section 91 of the Code. Likewise, further
statement of one Shri Sanjay S. Mitra dated 07.12.2012 was
pressed into service. When the attention was drawn to the
said person pointing out that his replies are intended to
protect directly the people involved in the above
22Page 23
transactions including his Managing Director Puneet Dalmia
and Vijay Sai Reddy (A-2), his answer was that he is an
employee working with Dalmia for salary and he has
indications from his management and indirectly from Vijay
Sai Reddy (A-2) about not revealing the above transactions
and he also informed the things having reservation about his
future. These are a few samples pointed out by the counsel
for the CBI.
25) Another relevant aspect as pointed out by learned
senior counsel for the CBI that bail can be cancelled when
lower court granted bail on irrelevant considerations. The
High Court accepted the said proposition and observed that
“though there appears to be some force in the contention of
Shri Kesava Rao, learned standing counsel for the CBI that
the Special Judge has taken into consideration certain factors
which appear to be not relevant such as not arresting A-1
and certain other observations of learned Special Judge,
such as investigation has been completed appear to be
incorrect.” Unfortunately, after arriving such conclusion,
particularly, criticizing the Special Judge, the High Court on
23Page 24
an erroneous ground concluded that “it cannot be said that
they are totally irrelevant circumstances, therefore, on that
ground, I feel that the bail granted to the respondent cannot
be cancelled”.
26) Finally, though it is claimed that respondent herein (A-
2) being only a C.A. had rendered his professional advise, in
the light of the various serious allegations against him, his
nexus with the main accused A-1, contacts with many
investors all over India prima facie it cannot be claimed that
he acted only as a C.A. and nothing more. It is the assertion
of the CBI that the respondent herein (A-2) is the brain
behind the alleged economic offence of huge magnitude.
The said assertion, in the light of the materials relied on
before the Special Court and the High Court and placed in
the course of argument before this Court, cannot be ignored
lightly.
27) It is true that the Special Judge while granting bail
imposed certain conditions and the High Court has also
added some more additional conditions, however, taking
note of few instances in which how the respondent has
24Page 25
acted, it cannot be possible for the investigating agency to
collect the remaining materials for the remaining three
charge sheets to be filed.
 In such circumstances, we are
satisfied firstly the Special Court took irrelevant materials for
consideration for grant of bail and secondly, the High Court
having arrived definite conclusion that several findings of
Special court are unacceptable or irrelevant but ultimately
affirmed the very same order of the special Judge granting
bail. 
28) 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.
 It has also to be kept in mind that for the
purpose of granting bail, the Legislature has used the words
"reasonable grounds for believing" instead of "the evidence"
25Page 26
which means the Court dealing with the grant of bail can
only satisfy it as to
whether there is a genuine case against
the accused and that the prosecution will be able to produce
prima facie evidence in support of the charge.
 It is not
expected, at this stage, to have the evidence establishing
the guilt of the accused beyond reasonable doubt.
29) We have highlighted the above aspects to show that
the High Court has mistakenly taken into account the
irrelevant materials and kept out the relevant materials,
which had to be considered for the grant of bail.
30) Taking note of the fact that cancellation of bail
necessarily involves the review of a decision already made,
it should always be exercised very sparingly by the court of
law. 
31) In the light of the above discussion, we are of the
view that the special Judge committed an error in granting
bail and the same was erroneously affirmed by the High
Court. 
32) Taking note of all the aspects discussed above, without
expressing any opinion on the merits, we set aside both the
orders of the Special Judge and the High Court granting bail
26Page 27
to A-2 and allow the appeal filed by the CBI with a direction
to complete all the investigation relating to the remaining
three charge sheets and file appropriate report before the
trial Court within a period of four months from today.

Thereafter, the respondent herein 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
the present appeal. 
During the course of hearing, it is
brought to our notice that the marriage of the daughter of
the respondent has been fixed for 26.05.2013. 
Taking note
of the said aspect, we direct the respondent herein to
surrender on or before 5-6-2013 before the Special Court for
being sent to the custody. 
33) The appeal is allowed. 
...…………….…………………………J.
(P. SATHASIVAM)
.…....…………………………………J.
(M. YUSUF EQBAL )
NEW DELHI;
MAY 09, 2013.
27

Y.S. Jagan Mohan Reddy - whether the appellant-herein has made out a case for bail. = Though it is pointed out by learned senior counsel for the appellant that since the appellant is in no way connected with the persons in power, we are of the view that the apprehension raised by the CBI cannot be lightly ignored considering the claim that the appellant is the ultimate beneficiary and the prime conspirator in huge monetary transactions. = Economic offences constitute a class apart and need to be visited with a different approach in the matter of bail. The economic offence having deep rooted conspiracies and involving huge loss of public funds needs 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.= Taking note of all these facts and the huge magnitude of the case and also the request of the 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 the 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 05.10.2012, 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. 18) With the above observation, the appeal is dismissed.

Page 1
REPORTABLE
IN THE SUPREME COURT OF INDIA
CRIMINAL APPELLATE JURISDICTION
CRIMINAL APPEAL NO. 730 OF 2013
(Arising out of S.L.P. (Crl.) No. 3404 of 2013)
Y.S. Jagan Mohan Reddy .... Appellant(s)
Versus
Central Bureau of Investigation ....
Respondent(s)
J U D G M E N T
P.Sathasivam, J.
1) Leave granted.
2) This appeal is directed against the final judgment and
order dated 24.01.2013 passed by the High Court of
Judicature of Andhra Pradesh at Hyderabad in Criminal
Petition No. 8750 of 2012 in R.C. 19(A)/2011-CBI-Hyderabad,
whereby the High Court dismissed the petition filed by the
appellant herein for grant of bail.
1Page 2
3) The only question posed for consideration is
whether
the appellant-herein has made out a case for bail. 
Brief facts:
4) (a) On the orders of the High Court of Andhra Pradesh
in Writ Petition Nos. 794, 6604 and 6979 of 2011 dated
10.08.2011, the Central Bureau of Investigation (in short
“the CBI”), Hyderabad, registered a case being R.C. No.
19(A)/2011-CBI-Hyderabad dated 17.08.2011 under Section
120B read with Sections 420, 409 and 477-A of the Indian
Penal Code, 1860 (for short ‘IPC’) and Section 13(2) read
with Section 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.
(b) The appellant-Y.S. Jagan Mohan Reddy was named as
an accused at Sl. No. 1 in the FIR dated 17.08.2011 (after
the chargesheet was framed, he was arrayed as A-1 and
hereinafter, he will be referred to as A-1).
(c) 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
2Page 3
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 Pvt. Ltd., which was originally incorporated as a
private limited company on 14.11.2006 and later converted
into a public limited company on 12.01.2009. 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 21.06.2007. It is alleged that A-1
floated M/s Jagathi Publications Pvt. 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
3Page 4
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.
(d) On 31.03.2012, 23.04.2012 and 07.05.2012, the 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 31.03.2012 which was numbered as CC
No. 8 of 2012. The appellant was arrested on 27.05.2012 for
his involvement and complicity in the case and presently, he
is in judicial custody. On 29.05.2012 and 30.05.2012, the
Principal Special Judge for CBI Cases took cognizance of
second and third charge sheet(s) which were numbered as
CC Nos. 9 and 10 of 2012 respectively.
(e) On 29.05.2012, the appellant filed Crl. M.P. No.
1055/2012 in CC No. 8 of 2012 before the Court of the
4Page 5
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
01.06.2012, dismissed his application for bail.
(f) The CBI filed Criminal Petition 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
02.06.2012, allowed the petitions and remanded A-1 to the
custody of the CBI from 03.06.2012 to 07.06.2012. By
further orders dated 08.06.2012 in Crl. M.P. No. 4785 of
2012 in Criminal Petition No. 4743 of 2012, the custody was
extended to a further period of 2 days.
(g) 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 cannot be influenced by him in case he is
released on bail at this stage, by impugned order dated
04.07.2012, dismissed his bail application.
5Page 6
(h) Being aggrieved by the orders dated 02.06.2012 and
04.07.2012, the appellant preferred two special leave
petitions being Nos. 5901 and 5902 of 2012 before this
Court. This Court, by order dated 09.08.2012, issued notice
in SLP (Crl.) No. 5902 of 2012 and dismissed SLP (Crl.) No.
5901 of 2012.
(i) On 13.08.2012, the CBI filed fourth charge sheet in the
Court of Principal Special Judge for CBI Cases, Hyderabad
which was numbered as CC No. 14 of 2012.
(j) This Court, on coming to know that the investigation is
continuing in connection with 7 matters, dismissed the
special leave petition being SLP (Crl.) 5902 of 2012 by order
dated 05.10.2012 with a direction to the 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 the CBI.
(k) On 16.11.2012, the appellant filed Crl. M.P. No. 1938 of
2012 before the Special Judge for CBI Cases, Hyderabad,
seeking default/statutory bail. On the same day, the
6Page 7
appellant filed Crl. M.P. 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 04.12.2012,
the Special Judge rejected the bail applications filed by the
appellant herein in Crl. M.P. No. 1938 of 2012 and Crl. M.P.
No. 1939 of 2012 respectively.
(l) 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. Being aggrieved, the appellant
preferred Criminal Petition No. 8750 of 2012 before the High
Court. The High Court, by order dated 24.01.2013,
dismissed the petition filed by the appellant herein.
(m) Being aggrieved by the order of the High Court, the
appellant herein has preferred this appeal by way of special
leave.
5) Heard Mr. Harish N. Salve, Mr. Mukul Rohatgi and Mr.
K.V. Vishwanathan, learned senior counsel for the appellantaccused and Mr. Ashok Bhan and Mr. Mukul Gupta, learned
senior counsel for the respondent-CBI.
7Page 8
6) The CBI has filed a counter affidavit dated 06.05.2013,
sworn by a senior officer, namely, Deputy Inspector General
of Police and Chief Investigating Officer in RC No.
19(A)/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, the CBI
also circulated the Status Report in respect of the FIR being
No. 19(A)/2011-CBI-HYD regarding 7 issues mentioned in the
order of this Court dated 05.10.2012. 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 the CBI for their arrest, submitted that the
appellant may be enlarged on bail after imposing
appropriate conditions.
8Page 9
7) In order to appreciate the rival contentions,
particularly, the stand of the CBI, it is useful to refer the
earlier order passed by this Court on 05.10.2012 which reads
as under:
“SLP (Crl.)No. 5902 of 2012
Heard Mr. Gopal Subramaniam, learned senior
advocate appearing for the petitioner at some length.
Mr. Mohan Parasaran, learned ASG appearing on
behalf of the CBI, submitted before us a report from which
it appears that the investigation is still going on in
connection with seven matters. In paragraph 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 to 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 own
companies of A1, 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 suit case
companies.
(vii) Indu Projects, 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 the original)
Mr. Parasaran stated that the CBI is making
investigation without wasting any time and he assured the
9Page 10
Court that the investigation will be completed as early as
possible and on completion of the investigation the CBI
shall submit one final charge-sheet.
On hearing counsel for the parties and on going
through the report submitted by the CBI, we are not
inclined to interfere in the matter at this stage.
The special leave petition is, accordingly, dismissed.
It will be, however, open to the petitioner to renew
his prayer for bail before the trial court on completion of
the investigation by the 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
Put up after two weeks.”
8) Mr. Ashok Bhan, learned senior counsel for the CBI, by
pointing out the penultimate paragraph in the order dated
05.10.2012, 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 the 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
10Page 11
companies/persons, the present application for bail is not
maintainable.
9) It is relevant to note that in the order dated 05.10.2012,
this Court noted the statement made by learned ASG, who
appeared for the CBI, that the investigation relating to
conspiracies distinctly involving 7 entities which by
themselves are independent to each other requires further
time. According to learned senior counsel for the CBI, they
require 4-6 months’ time to complete the investigation in
respect of the 7 entities as mentioned in the order dated
05.12.2012 and to file a charge sheet. In support of the
above claim, the 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.
10) In the Status Report, the CBI has assured that the
investigation is being carried out expeditiously as directed
by this Court. It is stated that among 7 issues, the CBI has
completed the investigation with respect to M/s Dalmia
Cements and consequently filed the charge sheet in the
Court of Special Judge for CBI Cases, Hyderabad on
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08.04.2013. According to the CBI, presently, the
investigation is progressing with regard to other 6 issues
also and the 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 the CBI is likely to file charge
sheet/final reports in the above said three issues shortly.
11) The 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.
(a) The investigation has revealed that M/s Dalmia
Cements (Bharat) Ltd. invested an amount of Rs. 95 crores
into 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 hectares in Kadapa District
of Andhra Pradesh to M/s Dalmia Cements. The CBI has
highlighted the amount involved and the facilities provided
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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.
(b) It is also highlighted that as per the pre-arranged
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 of 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 16.05.2010 and
13.06.2011, 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.
(c) The 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 establish that the initial payment of Rs. 95
crores was only illegal gratification for the undue benefits
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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 08.04.2013 against A-1 and 12 others under
various sections of the IPC and the PC Act.
M/s Sandur Power Company Ltd.
(a) Regarding the investigation relating to M/s Sandur
Power Company Ltd., it is stated by the CBI that Y.S. Jagan
Mohan Reddy (A-1) was the Director of this Company from
16.06.2001 to 11.01.2010. 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 JJ. Reddy. It is alleged by the
CBI that the Company is closely held by Y.S. Jagan Mohan
Reddy (A-1). The 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 the CBI that the above said amount is of A-1
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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.
(b) It is also pointed out by the 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 prove that the witnesses
are being influenced by these persons in this case.
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Grant of Mining Lease to Bharti Cements/Raghuram
Cements:
It is pointed out by the 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 the 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.
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M/s Indu Projects Ltd. (M/s Lepakshi Knowledge Hub
Pvt. Ltd. and M/s Indus Tech Zone Pvt. Ltd.)
The CBI has pointed out that the investigation is in progress
in respect of the above said group of companies. In the
Status Report, the 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 the CBI in the Status Report.
M/s India Cements Ltd.
The 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
the CBI, they had made illegal quid pro quo investments to
the tune of Rs.140 crores into the group companies of Y.S.
Jagan Mohan Reddy (A-1) and had received several benefits
in the form of permissions granted for utilization/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 few more crucial witnesses
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have to be examined. The CBI also pointed out the details of
investigation relating to investment through paper
companies based in Kolkata and Mumbai, popularly known
as suit case companies. Since investigation is on a half way,
we are not referring all those details mentioned in the Status
Report.
12) It is further pointed out that during investigation, a total
number of 140 witnesses including IAS officers and
concerned Ministers have been examined and 352
documents were collected. According to the CBI, out of
these, some more crucial witnesses have to be examined. 
13) Learned senior counsel appearing for the appellant
pointed out that after the order dated 05.10.2012, the CBI is
not justified in prolonging the same just to continue the
custody of the appellant. It was also highlighted that even
according to the 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 the CBI
that considering the huge magnitude of transactions, various
beneficiaries, companies/persons involved with A-1 and his
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associates, the CBI is taking effective steps for early
completion of the same. Though learned senior counsel for
the appellant submitted that in view of non-compliance of
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
05.10.2012, we are unable to accept the argument of
learned senior counsel for the appellant.
14) On going into all the details furnished by the CBI in the
form of Status Report and the counter affidavit dated
06.05.2013 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
learned senior counsel for the appellant that since the
appellant is in no way connected with the persons in power,
we are of the view that the apprehension raised by the CBI
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cannot be lightly ignored considering the claim that the
appellant is the ultimate beneficiary and the prime
conspirator in huge monetary transactions. 
15) Economic offences constitute a class apart and need to
be visited with a different approach in the matter of bail. The
economic offence having deep rooted conspiracies and
involving huge loss of public funds needs 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.
16) 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.
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17) Taking note of all these facts and the huge magnitude
of the case and also the request of the 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 the
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 05.10.2012, 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.
18) With the above observation, the appeal is dismissed.
………….…………………………J.
(P. SATHASIVAM)
 ………….…………………………J.
(M.Y. EQBAL)
NEW DELHI;
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MAY 9, 2013.
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