CBI, HYDERABADversusSUBRAMANI GOPALAKRISHNAN & ANR.

                          [2011) 5 S.C.R. 824


A                         CBI, HYDERABAD
                                    v.
              SUBRAMANI GOPALAKRISHNAN & ANR.
               (Criminal Appeal Nos. 985-86 of 2011)
                            APRIL 21, 2011
·B
         [P. SATHASIVAM AND DR. B.S. CHAUHAN, JJ.]

          Bail- Grant of - Challenge to - Corporate scam -
     Fudging of the Company accounts and manipulation of
C    records by Chairman, M.D. and other Directors of a Company
     which were certified by the auditors - Huge financial loss to
     shareholders - Complaint against Chairman, Directors and
     Auditors of the Company- Entrustment of investigation to CBI
     - Grant of bail to two co-accused-A4 and A 10, external and
D    internal auditors of the Company by the High Court -
     Justification of - Held: Not justified - A4 and A 10 being
     external and internal auditors of the company respectively,
     played a paramount role in inflating processing assets and
     bank balances of the Company - High Court erred in granting
E    bail to A4 and A 10, by placing reliance on the bail order
     granted in favour of A5 since the roles ascribed to A4 and A5
     were not identical - Also, the bail granted in favour of all the
     main accused had been cancelled by Supreme Court and
     directions were issued, on basis of which the trial has to be
F    concluded within the schedule time - In the facts and
     circumstances of the case and in view of the magnitude of the
     scam, the High Court erred in granting bail to A4 and A 10 -
     Order of the High Court granting bail in favour of A4 and A 10
     set aside.

G        Several frauds and cooking books of accounts took
     place in Mis SCSL Company. Many investors suffered
     loss. One of the investor filed a complaint against the then
     Chairman, Directors and Auditors of Mis SCSL and others
     under Section 120-B read with Sections 409, 420, 467, 468,
H                                  824
   '   l.·. ·;CBI; 'HYDERABAD v. SUBRAMANI             825
               GOPALAKRISHNAN & ANR.
471"and: 477A IPC. The investigation was entrusted to         A
CBI. The High Court enlarged the respondents be A4 and
A10 external and internal auditors of the Company on bail
by imposing certain conditions.· Therefore, ·the appellant-
CBI filed the instant appeals.
                                                              B
       Allowing the appeals, the Court
           '      .

    HELD: .1, 1 As per the complaint and investigation, A4
and A1O.along with .the other ac~used were involved in
one of the greatest corporate scams of the commercial
world. It has caused a financial storm not only               C
throughout the country but also worldwide and by their
action and conduct, lakhs of shareholders and others
have been duped and the corporate credibility of the
nation has received a serious setback. Nobody can
underestimate the sufferings of the shareholders and          D
others due to the scam. (Para 11t {834-G-H; 83S~A]
                                             ~


     1.2 The High Court, while ordering bail for A4 and
A10, heavily relied on the order of this Court dated
04.02.2010 made in the appeal which relates to AS, who        E
is a Chartered Accountant and working as a partner with
Mis Price Waterhouse which is the statutory authorized
auditors of Mis SCSL. The allegation against AS is that
while submitting the audit report for the year 2007-08,
some inflated figures were incorporated in the said report
and thereby he committed serious breach of faith as a         F
Member of the professional body of auditors/
accountants. Considering certain factual details for
releasing AS on bail that it could be easily assumed that
the trial of this case would take a long time even to start
without expressing any opinion on the merits of the case      G
regarding the nature of offence or gravity thereof
allegedly committed by AS and having regard to the fact
that he had been in custody for more than a year released
him on bail on 04.02.2010 by imposing certain conditions.
[Para 13) [835-D-F; 836-B]                                    H
    826    SUPREME COURT REPORTS               [2011] 5 S.C.R.

A      1.3 In view of the appeal filed by A5 against the
  dismissal of his bail application by the High Court, this
  Court considering certain facts released AS' on bail
  subject to certain conditions. There is no similarity in
  respect of the role assigned to A4 and A5. After going
B through the materials, prima facie, the assumption that
  the role assigned to A-4 and A-5 is identical is incorrect.
  Though both A4 and A5 were Auditors of M/s SCSL at the
  relevant time, admittedly, A5 had worked only for a period
  of one year whereas A4 was in-charge of auditing the
c accounts of M/s SCSL for a period of seven years, i.e.,
  from 2000 to 2007. Three charge-sheets and the
  imputations made against both these accused persons
  have been verified. In these factual details available, prima
  facie, A4 and A5 cannot be put on the same footing in
0 respect of erroneous auditing resulting in inflated cash
  and bank balances of Mis SCSL. (Para 15] (836-C-G]
      1.4 This Court by order dated 26.10.2010 in a Criminal
  Appeal' cancelled the bail granted by the High Court in
  respect of A1, A2, A3, A7; AB and A9. After passing such
E order, this Court after recording the fact that the charges
  have been framed on 25.10.2010 and trial is scheduled to
  commence w.e.f. 02.11.2010 issued several directions.
  [Para 16] [836-H; 837-A]
                                                       t
F      1.5 In view of the specific directions of this Court in
  the order dated 26.10.2010, the trial is proceeding on day-
  to-day basis and is likely to be concluded by 31.07.2011.
  Out of 697 witnesses, the prosecution has dropped 470
  witnesses and only 227 witnesses are to be examined.
G Out of this, 193 witnesses have already been examined
  and some of them are to be cross-examined. According
  to ASG only 30 more witnesses have to be produced and
  examined. Thus, the reasons stated while granting bail
  for AS by this Court on 04.02.2010 are not applicable to
H
          CBI, HYDERABAD v. SUBRAMANI                      827
             GOPALAKRISHNAN & ANR.
 the respondents. The reliance on the basis of the bail           A
 order g~~.nted in favour of AS cannot be applied to these
 respondents. [Paras 17 and 18] (837-F-H; 838-B]
       1.6 The High Court'granted bail to A4 and A10 on
  25.06.2010 and the CBI challenging the said order filed         B
. two special leave petitions before this Court on
  06.10.2010. Though the appellant-CBI was not so diligent
  to bring the special leave petitions for orders immediately
  after filing of the same due to various reasons and
  compliance of the office report had taken some time,
  however, on this ground their challenge with regard to          C
  the order of the High Court granting bail cannot be
  rejected without going into the merits. [Para 19] [838-D-
 G]
       1.7 Though the counsel for A-10, submitted that he         D
 being the internal auditor, employee of M/s SCSL, there
 is no statutory function and his name does not find in the
 first charge-sheet al')d he was named only in the second
'charge-sheet, considering the materials available, it is not
'desirable to go into the correctness or otherwise at this        E
 juncture and at the same time in view of the magnitude
 of the scam and without the assistance and connivance
 of persons in-charge of auditing, the stand of the counsel
 can no~) be accep~ed and the High C~~rt wa~ not justified
  in granting bail to A-10. [Para 20] [838-H; 839~A-B] ,,,.       F

      1.8 There is difference between yardsticks for
 cancellation of bail and appeal against the order granting
 bail. Very cogent and overwhelming circumstances are
 necessary for an order directing the cancellation of bail
 already granted. Generally speaking, the grounds for             G
 cancellation of bail are, interference or attempt to interfere
'with the due course of administration of justice or
 evasion or attempt to evade the due course of justice or
 abuse of the concessions granted to the accused in any
 manner. The satisfaction of the court on the basis of the        H
    828    SUPREME COURT REPORTS              [2011] 5 S.C.R.


A materials placed on record of the possibility of the
  accused absconding is another reason justifying the
  cancellation of bail. Thus, the bail once granted should
  not be cancelled in a mechanical manner without
  considering whether any supervening circumstances
B have rendered it no longer conducive to a fair trial to
  allow the accused to retain his freedom by enjoying the
  concession of bail during the trial. In the facts and
  circumstances of the magnitude of the scam, the bail
  granted in favour of all the main accused have been
c cancelled and respondent Nos. A4 and A10 being
  external and internal auditors respectively, their role
  being paramount in inflating processing assets and bank
  balances of M/s SCSL, the High Court was not justified
  in granting bail. [Para 21) (839-C-H]

D     1.9 In view of the specific allegation by the
  prosecution that A4 and A10 were party to the criminal
  conspiracy showing inflated (non-existent) cash and
  bank balances reflected in the books, inflated proceeds
  over a period of last several years, frauds and cooking
E books of accounts, the High Court ought not to have'
  granted bail to these respondents. Considering the
  subsequent order of this Court cancelling the bail in
  respect of other accused and issuing directions based
  on which the trial has to be concluded within the
F schedule time, the High Court committed an error in
  granting bail to A4 and A10. [Para 22) (840-A-C]

       1.10 The impugned order of the High Court granting
  bail in favour of the respondents- A4 and A10 is set aside.
  They are directed tc surrender on or before 30.04.2011
G otherwise the appellant would take appropriate steps in
  accordance with law. All the observations and directions,
  as stated in the earlier order dated 26.10.2010, are also
  applicable to the respondents A4 and A10. [Para 23) (840·
H D·E]
           CBI, HYDERABAD v. SUBRAMANI                       829
              GOPALAKRISHNAN & ANR.
    CRIMINAL APPELLATE JURISDICTION: Criminal Appeal                 A
No. 985-986 of 2011.

     From the Judgment & Order 25.06.2010 of the High Court
of Andhra Pradesh at Hyderabad in Criminal Petition No. 4972 .
and 4913 of 2011.                                              B.

     P.P. Malhotra, Vivek Tankha, ASG, Mukul Rohatgi,
Siddharth Luthra, Shweta Verma, Pratul Sandilya, Rishabh
Sancheti, Sumeer Sodhi, Vabhav Shrivastava, D. Kurnnan,
Madhurima Mridul, Arvind Kumar Sharma, R.N. Karanjawala,
Majil Karanjawala, Ruby Singh Ahuja, Abeer Kumar, Pragya             C
Ohri, Karanjawala & Co., D. Rama Krishna Reddy, D. Bharathi
Reddy for the appearing parties.

    The Judgment of the Court was delivered by

     P. SATHASIVAM, J. 1. Leave granted. These appeals, at
                                                                     D
the instance of the Central Bureau of Investigation (in short "the
CBI"), Hyderabad are directed against the order dated
25.06.2010 passed by the High Court of Andhra Pradesh at
Hyderabad in Criminal Petition Nos. 4972 and 4913 of 2010,
in and by which, the High Court enlarged the respondents             E
herein, namely, S. Gopalakrishnan (A4) and V.S. Prabhakara
Gupta (A 10) on bail by imposing certain conditions.

     2. Since the CBI has challenged the order of the High Court
granting bail in respect of the two accused, namely, A4 and          F
A 10, we are constrained to refer only the facts which are
necessary for the disposal of these appeals.

     3. Brief Facts:

    (a) On 07 .01.2009, B. Ramalinga Raju (A 1), the then G
Chairman of Mis Satyam Computer Services Limited (in short
"M/s SCSL") addressed a confessional letter to the Board of
Directors revealing certain financial irregularities in Mis SCSL. .
As per this letter, the balance-sheet as on 30.09.2008 showed
                                                                     H
    830     SUPREME COURT REPORTS                  [2011) 5 S.C.R.


A inflated (non-existent) cash and bank balances of Rs. 5,040/-
  crores, an accrued interest of Rs. 376/- crores which ,is non-
  existent and an understated liability of Rs.1,230/- crores on
  account of funds arranged by him and an overstated debtors
  position of Rs. 490/- crores (as against Rs. 2,651/- crores
B reflected in the books). He also revealed several other factual
  details which resulted an increase in artificial cash and bank
  balances.

        (b) He also revealed several frauds and cooking books of
C accounts ever happened in India's corporate history. Due to the
   fraud on the part of the persons in Management including the
   Financial Advisors, Auditors, etc., many investors suffered loss
   and on the complaint of one of such investors, a First Information
   Report (in short "FIR") was registered on 09.01.2009 by the
   Andhra Pradesh State Crime Investigation Department against
D the then Chairman, Directors and Auditors of M/s SCS.L and
   others under·Section 120-B read with Sections 409, 420, 467,
 - 468, 471 and 477A of the Indian Penal Code (in short 'IPC').
   Considering the magnitude of the offence, investigation was
   entrusted to the CBI and a regular case being RC.No.4(8)/2009
E was registered by the CBI, Anti-Corruption Branch, Hyderabad,
   on 20.02.2009.

       (c) Due to fudging of the company accounts and
  manipulation of records by showing incorrect and inflated
F figures in the balance-sheets by the Chairman, M.D. and 'c3ther
  Directors of the Company which were certified by the Auditors,
  the value of the shares of the Company suddenly dropped
  causing huge financial loss to the shareholders. The drop in the
  value of the shares was due to dishonest and fraudulent acts
G committed by the aforesaid functionaries, who were managing
  the affairs of the Company and were associated with its
  functioning and day-to-day affairs.

       4. With the above brief facts, let us consider the
  allegations leveled against the Respondents herein (A4 and
H A10) and the role played by them.
       CBI, HYDERABAD V. SUBRAMANI                          831
  GOPALAKRISHNAN & ANR. [P. SATHASIVAM, J.]

    The role of S. Gopalakrishnan (A4). Partner and In-charge      A
of Mis Price Waterhouse in CC 1/2010:

     (a) He affixed his signature on the financial statements as
partner of M/s Price Waterhouse, the Statutory Auditors for M/
s SCSL from the financial year 2001 till 2007.
                                                                   B
    (b) He was a partner in the firm 'M/s Price Waterhouse,
Bangalore and not in 'M/s Price Waterhouse'.

    (c) In the agreement entered into between M/s SCSL and
M/s Price Waterhouse, instead of affixing his signature, he        c
signed as 'M/s Price Waterhouse' which is contrary to the
established practice and procedure.

      (d) By virtue of his status as a Statutory Auditor, it is
incumbent on his part to verify the bank balances and FDRs
claimed to be held by Mis SCSL besides other investments,          D
liabilities and sales of the Company before certifying the
statutory Audit Report which forms the basis of Annual Financial
Statement of the Company

    (e) The presentations made by him to the Audit Committee       E
about the health of the Company were misleading.

     (f) As a consideration for his acts in accommodating the
accused persons, he received an exorbitant audit fee from M/
s SCSL over and above the market rate which reflects a quid
                                                                   F
pro quo arrangement.

     (g) Letters generated on the letter-heads of M/s Price
Waterhouse were recovered from the computer systems of M/
s SCSL. These letters were supposed to be written by the
Auditors addressed to the banks seeking confirmations about        G
the balances.

    (h) Though deficiencies were found in Information
Technology General Check, no substantial and elaborate
examination of the financial accounts was conducted by him.        H
    832       SUPREME COURT REPORTS                [2011] 5 S.C.R.


A       (i) Control deficiencies identified in the integrated audit
    were not brought to the notice of the Audit committee.

       (j) The above overt acts of A4 reveal the offences
  punishable under Section 120-B read with Sections 420, 419,
B 467, 471 and 477A of IPC.

          5. The role of Sri S. Gopalakrishnan (A4). in CC 3/2010:

      (a) He failed to comply with the Audit & Assurance
  Standards while conducting Statutory Audit in case of M/s
C SCSL.

         (b) He failed to point out the existence of forged and
    fabricated invoices in the Invoice Samples.

      (c) As a quid pro quo for his role he received very high
D remuneration.                                       ~

        '(d) The above overt acts of A4 reveal the offences
    punishable under Section 120-B r/w 420, 471 & 477A IPC.

      The role of Sri V.S. Prabhakara Gupta (A10), Head Internal
E Audit, Mis SCSL in the Supplementary Charge-sheet:

         (a) He was the Associate In-charge - Internal Audit and
    was the Global Head of Internal Audit of Mis SCSL during the
    relevant period of time.
F
        (b) He had intentionally not included auditing of Oracle
    Financials (OF) in the Internal Audit Plan of Mis SCSL till 2007
    even though the system was operational since 2002.

       (c) He intentionally submitted a prioritization plan to the
G Audit Committee for postponing the audit of many items
  including Oracle Financials citing several irrelevant reasons.

         (d) With regard to anomalies pertaining to the invoices no
    correctional measures or follow up action was taken.
H
       CBI, HYDERABAD v. SUBRAMANI          · 833
  GOPALAKRISHNAN & ANR. [P. SATHASIVAM, J.]
  '· (e) He did not properly follow up for the restoration of the      A
access to the offshore books of accounts for the Internal Audit
team;

    (f) He intentionally flouted the laid down procedures
mentioned in the Internal Audit Manual.                                B
    (g) The above overt acts of A 10 reveal the offences
punishable under Section 120-B r/w Section 420 IPC.

     6. Apart from the above details, Mr. P.P. Malhotra, learned
ASG has also brought to our notice that prior to the grant of          C
bail by the High Court A4 had filed seven bail applications and
the High Court passed the impugned order only in the eighth
bail application. He also pointed out that in the same way, A10
had filed six bail applications and the High Court passed the
impugned order enlarging him on bail only in the sixth bail            D
application.

      7. By pointing out all these details, learned ASG submitted
that at this stage, release of the accused-respondents from
judicial custody will jeopardize the trial, particularly, when these
two. respondents, A4 and A10 who were the external and                 E
 internal auditors of the Company, will influence. the witnesses
 and it would be difficult for the employees to come and depose
 against them. He also submitted that considering the
 seriousness of the offence, impact on the society as a w~ole
 and magnitude of the offence, the respondents are not entitled        F'
 for bail and the High Court has committed an error in granting
 the bail to them. He also submitted that the reliance on the
 orders of this Court.insofar as Talluri Srinivas (AS) is not
 comparable because after the order of this Court granting him
 bail on 04.02.2010 in Criminal Appeal No. 2S7 of 2010, the            G
 entire scenario in the trial has changed, hence the said order
 cannot be cited as a precedent. He also submitted that though
 A4 and AS were Auditors of M/s SCSL, AS was there only for
 a limited period of one year whereas A4 worked for a period
ofseven years i.e. from 2000-07. He also relied on the order           ti
    S34     SUPREME COURT REPORTS                  [2011] S S.C.R.

A of this Court in Criminal Appeal No. 206S-2072 of 2010 dated
  26.10.2010 wherein this Court cancelled the bail granted by the
  High Court insofar as A 1, A2, A3, A 7, AS and A9 are
  concerned.

       S. On the other hand, Mr. Mukul Rohatgi, learned senior
8
  counsel appearing for A4 highlighted the alleged role between
  those accused, i.e. A 1, A2, A3, A7, AS and A9 whose bail has
  been cancelled by this Court and that of A4. According to him,
  the order of this Court dated 26.10.201 O in Criminal Appeal
  No. 206S-2072 of 2010 is not applicable. A4 had been in
C custody for one year and five months before he was enlarged
  on bail. He also demonstrated that even according to the
  prosecution the role assigned to A4 and AS is identical and
  when AS was ordered to be released by this Court even as
  early as on 04.02.2010, the High Court rightly applied parity
D between them and granted bail. He also contended that A4 was
  not an employee of Mis SCSL but was p~rtner in M/s Pri~
  Waterhouse and has nothing to do with the alleged claim in Mi
  s SCSL.

E      9. Shri D. Rama Krishna Reddy, learned counsel
  appearing for A 10 submitted that though he was an internal
  auditor of M/s SCSL, no statutory function was assigned to him.
  He also pointed out that only in the second charge-sheet, his
  name was included as an accused. He further pointed out that
F before granting·bail by the High Court, he was put in jail for 222
  days.

        10. We have perused the impugned order of the High
    Court, various details furnished by both the sides and
    considered the rival contentions.
G
       11. As per the complaint and investigation, A4 and A 10
  along with the other accused are involved in one of the greatest
  corporate scams of the commercial world. It has caused a
  financial storm not only throughout the country but also
H worldwide and by their action and conduct, lakhs of
       CBI, HYDERABAD v. SUBRAMANI                           835
  GOPALAKRISHNAN & ANR. [P. SATHASIVAM, J.]
shareholders and others have been duped and the corporate           A
credibili~pfthe nation has received a serious setback. It is not
in dispute that nobody can underestimate the sufferings of the
shareholders and others due to the scam in question.

     12. Though it was argued that the Management of M/s            8
SCSL has been shifted to other corporate entity, it is
demonstrated before us that the employees who were working
in the erstwhile M/s SCSL are now working under the present
management. In view of the same, at least persons working in
the accounts section/financial management will not come             C
forward to depose against the Respondents herein (A4 and
A 10) who were the external and internal auditors of the
Company a·nd who had influence in the Company.

      13. The High Court, while ordering bail for A4 and A10,
heavily relied on the order of this Court dated 04.02.2010 made D
in Crimiral Appeal Nci. 2·57 of 2010. The said appeal relates
to one - Talluri Srini~as·(A5), who is a Chartered Accountant,
registered with the Institute of Chartered Accountants of India
(ICAI). He was working as a partner with Mis Price
Waterhouse, Bangalore registered with the ICAI. M/s Price E
Waterhouse is the statutory authorized auditors of M/s SCSL
and allegation against AS is that while submitting the audit
 report for the year 2007-08, some inflated figures were
 incorpqrated in th~ said report and thereby he. committed '
serious breach of faith as a Member of.the professional body F          ·~
 of auditors/accountants. After noting several details and hearing
the learned counsel on either side, this Court noted the following
circumstances for releasing AS on bail:           ·              ·

     "i) the charge-sheet is running into several thousand pages;
                                                                    G
     ii) The CBI proposes to examine 470 witnesses;

     iii) a very large volume of records have been produced in
     this case;
                                                                    H
    836       SUPREME COURT REPORTS                    [2011) 5 S.C.R.


A         iv) therefore, it can be easily assumed that the trial of this
          case will take a long time even to start."

    Considering these factual details without expressing any
    opinion on the merits of the case regarding the nature of offence
    or gravity thereof allegedly committed by A5 and having regard
8
    to the fact that he had been in custody for more than a year
    released him on bail on 04.02.2010 by imposing certain
    conditions.

       14. Now the question is whether the same reasonings are
C applicable to the respondents herein, i.e. Mand A10?

        1S. We have already pointed out that in view of the appeal
  filed by Talluri Srinivas (A5) against the dismissal of his bail
  application by the High Court, this Court considering the facts
0 stated  in the earlier paragraph passed an order on 04.02.2010
  releasing AS on bail subject to certain conditions. First of all,
  there is no similarity in respect of the role assigned to A4 and
  A5. Mr. Mukul Rohtagi, learned senior counsel, after taking us
  through several materials, submitted that even as per the
E prosecution, the role assigned to A4 and A5 is identical. After
  going through the same, prima facie, we are satisfied that the
  said assumption is incorrect. It is pointed out that though both
  A4 and AS were Auditors of Mis SCSL at the relevant time,
  admittedly, AS had worked only for a period of one year
  whereas A4 was in-charge of auditing the accounts of M/s
F SCSL for a period of seven years, i.e., from 2000·to 2007. In
  addition to the same, we have also verified three charge-sheets
  and the imputations made against both these accused persons.
  In these factual details available, prima facie, we are satisfied
  that A4 and A5 cannot be put on the same footing in respect
G of erroneous auditing resulting in inflated cash and bank
  balances of M/s SCSL.

      16. It is relevant to point out the recent order of this Court
  dated 26.10.2010 in Criminal Appeal No. 2068-2072 of 2010
H wherein this Court cancelled the bail granted by the High Court
       CBI, HYDERABAD v. SUBRAMANI                              837
  GOPALAKRISHNAN & ANR [P. SATHASIVAM, J.]
in respect of A1, A2, A3, A7, AB and A9. After passing such             A
order, this Court after recording the fact that the charges have
been framed on 25.10.2010 and trial is scheduled to
commence w.e.f. 02.11.2010 issued several directions, namely,

      (i)      the trial Court to take up the case on day-to-day        B
              ·basis and conclude the trial as expeditiously as
               possible in any event on or before 31.07.2011;

      (ii)    the trial Court would avoid granting undue
                                                            .
              adjournments, unless it becomes absolutely
              imperative;                                               C

      (iii)   the parties are directed to examine only material
              and most essential witnesses and fully cooperate
              with the trial Court;

      (iv)      the accused shall be produced before the trial Court    D
              · on time, on every date of hearing, unless exempted
                by orders of the Court;

      (v)     the trial Court is free to decide the case without
              being influenced by any of the observations made          E
              by the High Court or by this Court;

      (vi)    for any reason, trial is not concluded before
              31.07.2011, the accused would be at liberty to
              approach the trial Court for grant of bail.               F

      17. The recent order dated 26.10.2010 of this Court
referred to above makes it clear that this Court cancelled the
bail in respect of prime accused, namely, A1, A2, A3, A7, AS
and A9. It is also brought to our notice that in view of the specific
directions of this Court in the said order, the trial has started       G
and according to the learned ASG, it is likely to be concluded
by the cut off date, i.e. 31.07.2011. It is also brought to our
notice that out of 697 witnesses, the prosecution has dropped
470 witnesses and only 227 witnesses are to be examined. Out
of this, 193 witnesses have already been examined and some              H
    838      SUPREME COURT REPORTS                   [2011] S S.C.R.

A   of them are to be cross-examined. According to the him, only
    30 more witnesses have to be produced and examined.

       18. In view of the directions of this Court in the subsequent
  order dated 26.10.201.0, the trial is proceeding on day-to-day
B basis and likely to be concluded by 31.07.2011. We are
  satisfied that the reasons stated while granting bail for Talluri
  Srinivas (AS) by this Court on 04.02.2010 are not applicable
  to the respondents herein. Accordingly reliance on the basis
  of the bail order granted in favour of AS cannot be applied to
C these respondents.

          19. Mr. Mukul Rohatgi, learned senior counsel, appearing
    for A4 and Mr. D. Rama Krishna Reddy, learned counsel
    appearing for A 10 strongly commented the conduct of the CBI
    in not challenging the order of the High Court granting bail to
D   these persons and failure on their part to place these matters
    before the Court at the appropriate time. It is not in dispute that
    the High Court granted bail to these respondents on 2S.06.2010
    and the CBI challenging the said order filed two special leave
    petitions before this Court on 06.10.2010. No doubt, the matter
E   was listed before the Court only on 01.04.2011 on which date,
    this Court issued notice to the respondents and on the same
    day the notice was accepted by the respective counsel for the
    respondents and they were permitted to file their reply. After
    filing reply, when the matter again came up for hearing on
F   04.04.2011 at the request of both sides, the matter was posted
    for final hearing on 1S.04.2011 and was argued at length on
    the same day. Though the appellant-CBI was not so diligent to
    bring the special leave petitions for orders immediately after
    filing of the same due to various reasons and compliance of
G   the office report had taken some time, however, on this ground
    their challenge with regard to the order of the High Court
    granting bail cannot be rejected without going into the merits.

         20. Though Mr. D. Rama K~ishna Reddy, learned counsel
    for A-10, submitted that he being the internal auditor, employee
H
       CBI, HYDERABAD v. SUBRAMANI                             839
  GOPALAKRISHNAN & ANR. [P. SATHASIVAM, J.]
of Mis SCSL, there is no statutory function and his name does         A
not find place. in the first charge-sheet and he was named only
in the second charge-sheet, considering the materials available,
it is not desirable to go into the correctness or otherwise at this
juncture and at the same time in view of the magnitude of the
scam and without the assistance and connivance of persons             B
in-charge of auditing, we are unable to accept the stand of the
learned counsel and hold that the High Court is not justified in
granting bail for him.

      21. It is also relevant to note that there .is difference
between yardsticks for cancellation of bail and appeal against C
the order granting bail. Very cogent and overwhelming
circumstances are necessary for an order directing the
cancellation of bail already granted. Generally speaking, the
grounds for cancellation of bail are, interference or attempt to
interfere with the due course of administration of justice or D
evasion or attempt to evade the due course of justice or abuse
of the concessions granted to the accused in any manner.
These are all only few illustrative materials. The satisfaction of
the Court on the basis of the materials placed on record of the
possibility of the accused absconding is another reason E
justifying the cancellation of bail. In other words, bail once
granted should not be cancelled in a· mechanical manner
without considering whether any supervening circumstances
have rendered it no longer conducive to a fair trial to allow the
accused to retain his freedom by enjoying the concession of F
bail during the trial. We have already pointed out that the issue
before us is not for cancellation of bail granted earlier, the
question is whether in the facts and circumstances of the
magnitude of the scam, the bail granted in favour of all the main
accused have been cancelled and the Respondent Nos. A4 G
and A10 being external and internal auditors respectively, their
role being paramount in inflating processing assets and bank
balances of M/s SCSL, we are of the view that the High Court
is not justified in granting bail.
                                                                      H
    840      SUPREME COURT REPORTS                   [2011) 5 S.C.R.


A       22. In view of the specific allegation by the prosecution that
  A4 and A 10 were party to the criminal conspiracy showing
  inflated (non-existent) cash and bank balances reflected in the
  books, inflated proceeds over a period of last several years ,
  frauds and cooking books of accounts, we are satisfied that
B the High Court ought not to have granted bail to these
  respondents. Considering the subsequent order of this Court
  dated 26.10.2010 cancelling the bail in respect of other
  accused and issuing directions based on which the trial has to
  be concluded within the schedule time, viz. 31.07.2011, we hold
c that the High Court committed an error in granting bail to these
  respondents A4 and A 1O.

        23. In the light of the above discussion, the impugned order
   of the High Court dated 25.06.2010 in Crl. Petition Nos. 4913
   and 4972 of 2010 granting bail in favour of the respondents i.e.,
D A4 and A 10 is set aside. They are directed to surrender on or
   before 30.04.2011 otherwise the appellant shall take
   appropriate steps in accordance with law. All the observations
   and directions, as stated in the earlier order dated 26.10.2010,
  ·are also applicable to the respondents (A4 and A10). We also
E make it clear that the above said conclusion is for considering
   the grant of bail by the High Court and the trial Court is free to
   decide the case without being influenced by any of the
   observations made by the High court and by this Court in this
   order.                        ·
F
        24. The appeals are allowed.

    N.J.                                          Appeals allowed.