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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.
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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.
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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
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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
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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
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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
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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
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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),
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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
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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
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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
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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.
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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
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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
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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
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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
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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
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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
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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.
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