In a recent case, the Telangana High Court ruled that accused under the Prevention of Money Laundering Act, 2002 is entitled to statutory bail under Section 167(2) of CrPC if the charge sheet is not submitted in terms of Section 173(2) of the Cr.P.C without completion of investigation. Justice K. Lakshman held that:
"At the cost of repetition, this Court holds that the complaint dated 19.03.2022 was not a final complaint based on which cognizance could have been taken. A complaint/report cannot be treated as final report unless the investigation is completed, In the present case, the investigation is admittedly not completed and the statutory period of sixty days expired on 21.03.2022. Therefore, in the absence of complete investigation and absence of filing a final complaint, the Petitioner is entitled for statutory bail under Section 167(2) of the Cr.P.C."
Brief Facts of the Case
The Petitioner is the Chairman and Managing Director of M/s Karvy Stock Broking Ltd. (KSBL) The Respondent authority had registered the offence of money laundering under the Prevention of Money Laundering Act, 2002 (PMLA) against KSBL. The allegations against KSBL and the Petitioner included diversion of large-scale clients' funds through shell companies which resulted in huge losses to the investors.
Various FIRs were registered against the Petitioner and he was arrested and produced before the Metropolitan Sessions Judge cum Special Court (Designated Court) on 20.01.2022 and on the same day the Petitioner was remanded to judicial custody. The Petitioner had been in jail since 20.01.2022. According to the Petitioner, the offences alleged against him are not punishable for a term not less than 10 years, death, life imprisonment. Therefore, he was entitled for statutory bail under Section 167(2) of CrPC as the investigation was not completed within 60 days.
According to the Petitioner, the period of 60 days expired on 21.03.2022. Therefore, he filed an application for default bail. But the said application was dismissed as the complaint/charge sheet was filed by the Respondent on 19.03.2022.
However, on 31.03.2022, another application under Section 167 was filed by the Respondent seeking extension of remand. The application was filed seeking further custody of the Petitioner to complete the investigation. The said application was allowed and the custody of the Petitioner was extended till 13.04.2022.
Subsequently, another application on 13.04.2022 was filed by Respondent seeking extension of remand. The remand was extended till 27.04.2022.
Contention of Petitioner
Mr. T. Niranjan Reddy, Semior counsel representing Mr. Avinash Desai on behalf of the Petitioner contended that a complaint in the nature of interim report was only filed on 19.03.2022 and no complaint/charge sheet was filed in terms of Section 173(2) of CrPC as the investigation was admittedly not completed. Therefore, in the absence of completion of investigation, the petitioner was entitled for statutory bail under Section 167(2) of CrPC.
Contention of Respondent
Mr. Anil Prasad Tiwari, Special Public Prosecutor for Directorate of Enforcement for the Respondent was that a complaint/charge sheet was already filed on 19.03.2022. Therefore, the statutory bail under Section 167(2) of CrPC cannot be claimed once the charge sheet was filed. The remand was extended under Section 309 of CrPC and the Respondent can seek custody of the petitioner to complete further investigation under Section 44(2) of the PMLA.
The issue was whether the Petitioner is entitled for statutory bail under Section 167(2) of the Cr.P.C.
Findings of the Court
Justice K. Lakshman relied on many decisions to observe that Section 167(2) of the Cr.P.C. obligates the investigative agencies to complete the investigation in a time bound manner.
In M. Ravindran v. Intelligence Officer, Directorate of Revenue Intelligence (2021), it was made clear by the Supreme Court that a time limit for completing investigation was incorporated in order to ensure that the accused did not languish in jail for the investigative authority's failure to complete the investigation.
"It was in this backdrop that Section 167(2) was enacted within the present day CrPC, providing for time-limits on the period of remand of the accused, proportionate to the seriousness of the offence committed, failing which the accused acquires the indefeasible right to bail. As is evident from the recommendations of the Law Commission mentioned supra, the intent of the legislature was to balance the need for sufficient time-limits to complete the investigation with the need to protect the civil liberties of the accused. Section 167(2) provides for a clear mandate that the investigative agency must collect the required evidence within the prescribed time period, failing which the accused can no longer be detained. This ensures that the investigating officers are compelled to act swiftly and efficiently without misusing the prospect of further remand. This also ensures that the court takes cognizance of the case without any undue delay from the date of giving information of the offence, so that society at large does not lose faith and develop cynicism towards the criminal justice system."
The Court relied on the Supreme Court decision in Satya NarainMusadi v. State of Bihar (1980) which discussed Section 173(2) of the Cr.P.C. to hold that a charge sheet can be filed only after the completion of investigation.
Thus, it was clear that a charge sheet can be filed only after the completion of investigation. Investigation is said to be completed if sufficient material is collected by the Investigating Officer based on which cognizance can be taken under Section 167 of the Cr.P.C.
In this case, if complaint dated 19.03.2022 was filed after completion of investigation, the Designated Court would have taken cognizance of the offence. Not taking cognizance of the offence when complaint dated 19.03.2022 was already filed indicates that investigation is incomplete. Therefore, complaint dated 19.03.2022 cannot be treated as a complaint/charge sheet under Section 173(2) of the Cr.P.C.
Furthermore, in a Bombay High Court decision in Sharadchandra Vinayak Dongre v. State of Maharashtra, 1991 it was held that a complaint/charge sheet filed without completing the investigation cannot be used to circumvent the right of statutory bail under Section 167(2) of the Cr.P.C.
As has already been pointed out, a police report as defined in section 2(r) of the Code can only be filed "as soon as the investigation is completed". If it is not complete; no such report can be filed. When no report is forwarded as required by the Code, the Magistrate cannot take cognizance…The question thus emerges naturally is, whether the Magistrate can take cognizance on the admittedly "incomplete charge-sheet" forwarded by the police. The answer stubbornly and admittedly must be in the negative, because the investigation is yet incomplete and the "police report" yet remains to be filed. Thus, the filing of the incomplete charge-sheet cannot circumvent the provisions of sub-section (2) of section 173 of the Code and incomplete report or an incomplete charge-sheet with whatsoever expression it may be called does not meet the obligatory requirements of law.
Justice K. Lakshman reiterated that the complaint dated 19.03.2022 was not a final complaint. Therefore, the Petitioner was entitled to statutory bail under Section 167(2). The Petitioner cannot be remanded under Section 309 of CrPC as it comes into operation only after cognizance of the offence was taken. Thus, the Criminal petition was allowed and it was held that the Petitioner was entitled for statutory bail under Section 167(2) of CrPC.
Case Title: C. Parthasarthy v. Director of Enforcement
Citation: 2022 LiveLaw (Tel) 46