CENTRAL BUREAU OF INVESTIGATIONversusSANTOSH KARNANI & ANR

476                      [2023]REPORTS
               SUPREME COURT    3 S.C.R. 476                [2023] 3 S.C.R.


A                CENTRAL BUREAU OF INVESTIGATION
                                        v.
                        SANTOSH KARNANI & ANR.
                       (Criminal Appeal No. 1148 of 2023)
B                               APRIL 17, 2023
              [SURYA KANT AND J. K. MAHESHWARI, JJ.]
             Prevention of Corruption Act, 1988 – ss. 7, 13(1), 13(2) –
      Code of Criminal Procedure, 1973 – s. 41A, 438 – Constitution of
C     India – Art. 21 – Tax Department initiated search and seizure action
      against the complainant’s company – Respondent- Additional
      Commissioner of Income Tax was handling the case of the
      complainant – Allegation against the respondent that he made a
      demand of illegal gratification to help the complainant with his case
      – The said conversation of demand between the complainant and
D     the respondent was recorded in a digital voice recorder – A trap
      was then laid – Respondent had asked to deposit an amount in a
      firm’s account – Complainant’s employee was sent to the firm with
      the bribe amount along with personnel from the ACB trap team and
      the bribe amount was deposited with the firm and it was
E     acknowledged by the respondent to the complainant over a call –
      Thereafter, when an ACB team went to arrest the respondent, he
      along with the staff members physically assaulted the ACB team
      and escaped the office – FIR was registered u/ss. 7, 13(1) and 13(2)
      of the Prevention of Corruption Act, 1988 – Respondent preferred
      an application for grant of anticipatory bail before the Special
F
      Judge, which was rejected – However, the same was allowed by the
      High Court with a direction that despite anticipatory bail, the CBI
      could apply for police remand of the respondent and that upon the
      completion of the police remand, the respondent would be set free
      immediately – On appeal, held: The purported recording of
G     conversation between the complainant and respondent wherein he
      thanked the complainant, after the deposit of amount in the firm’s
      account, is a reasonable link to connect respondent with the deposit
      of illegal gratification in firm, thereby prima facie showing
      acceptance thereof – The manner in which respondent forcefully
      evaded his arrest with the help of his colleagues and got the evidence
H
                                       476
    CENTRAL BUREAU OF INVESTIGATION v. SANTOSH                            477
                 KARNANI & ANR.

destroyed, is a strong circumstance to indicate his complicity at this    A
stage – There appears to be a well-organised syndicate comprising
officers and officials of the Income Tax Department, businessmen
and Hawala traders, who are in tandem – Such a nexus needs to be
unearthed through investigation – Therefore, the impugned judgment
and order of the High Court set aside and the anticipatory bail
                                                                          B
application of respondent dismissed.
       Bail – Anticipatory bail – Relevant factors for grant or refusal
of anticipatory bail – The judicial discretion of the Court shall be
guided by various relevant factors and largely it will depend upon
the facts and circumstances of each case – The Court must draw a
delicate balance between liberty of an individual as guaranteed           C
under Article 21 of the Constitution and the need for a fair and free
investigation, which must be taken to its logical conclusion.
       Prevention of Corruption Act, 1988 – s. 17A – Prior Approval
of Investigation – Requirement of – The First Proviso to S. 17A
states that such approval is not necessary in cases involving arrest      D
of the person on the spot on the charges of accepting undue
advantage – Also, a prior approval or sanction to investigate such
an officer in a trap case is likely to defeat the very purpose of trap
and the investigation, which is not the underlying intention of the
legislature.                                                              E
      Code of Criminal Procedure, 1973 – s. 438 – Cancellation of
Bail – Cancellation of bail must be done only for cogent and
overwhelming reasons – All that to be ensured is that the High Court
exercises its discretion judiciously, cautiously and strictly in
conformity with the basic principles laid down by the Supreme Court       F
from time to time in series of decisions.
      Disposing of the appeals, the Court
     HELD: 1. The manner in which Respondent No. 1 forcefully
evaded his arrest with the help of his colleagues and got the
evidence destroyed, is a strong circumstance to indicate his              G
complicity at this stage though a clear picture would emerge only
on completion of investigation. [Para 30][494-H; 495-A]
     2. The nature and gravity of the alleged offence should have
been kept in mind by the High Court. Corruption poses a serious
                                                                          H
478            SUPREME COURT REPORTS                      [2023] 3 S.C.R.


A     threat to our society and must be dealt with iron hands. It not
      only leads to abysmal loss to the public exchequer but also
      tramples good governance. The common man stands deprived
      of the benefits percolating under social welfare schemes and is
      the worst hit. [Para 31][495-B-C]
B            3. From the material placed on record, it seems that prima
      facie, the allegations against Respondent No. 1 cannot be brushed
      aside lightly at this stage. There appears to be a well-organised
      syndicate comprising officers and officials of the Income Tax
      Department, businessmen and Hawala traders, who are in tandem.
      Such a nexus needs to be unearthed through an unimpaired and
C     unobstructed investigation. [Para 32][495-C-D]
             3. Section 17A merely contemplates that police officers shall
      not conduct any enquiry, inquiry or investigation into any offence
      alleged to have been committed by a public servant where the
      alleged offence is relatable to any recommendation made or
D     decision taken in discharge of official functions or duties, without
      the previous approval of the competent authority. The first proviso
      to the section states that such approval is not necessary in cases
      involving arrest of the person on the spot on the charges of
      accepting undue advantage. As may be seen, the first proviso to
E     Section 17A refers to cases wherein a public servant is charged
      with acceptance of an undue advantage or attempt thereof. A prior
      approval or sanction to investigate such an officer in a trap case
      is likely to defeat the very purpose of trap and the investigation,
      which is not the underlying intention of the legislature. The
      investigation against Respondent No. 1, being an accused of
F     demanding a bribe, did not require any previous approval of the
      Central Government. That apart, the accusation against
      Respondent No. 1 does not revolve around any recommendations
      made or decisions taken by him in his quasi -judicial or
      administrative capacity. [Paras 33, 34][495-E-H]
G            4. It is true that cancellation of bail must be done only for
      cogent and overwhelming reasons. Nevertheless, setting aside
      an unjustified order granting bail is distinct from cancellation of
      bail. This Court would not, invariably intervene into the judicial

H
    CENTRAL BUREAU OF INVESTIGATION v. SANTOSH                           479
                 KARNANI & ANR.

discretion exercised by the High Court while granting bail to an         A
accused. All that to be ensured is that the High Court exercises
its discretion judiciously, cautiously and strictly in conformity with
the basic principles laid down by this Court from time to time in
a series of decisions. [Para 35][496-A-B]
      Sushila Aggarwal v. State (NCT of Delhi) (2020) 5 SCC              B
      1 : [2020] 2 SCR 1 - followed.
      Siddharam Satlingappa Mhetre v. State of Maharashtra
      (2011) 1 SCC 694 : [2010] 15 SCR 201; Gurbaksh
      Singh Sibbia v. State of Punjab (1980) 2 SCC 565 :
      [1980] 3 SCR 383 – relied on.                                      C
      State Rep. By The CBI v. Anil Sharma (1997) 7 SCC
      187 : [1997] 3 Suppl. SCR 737; Prem Shankar Prasad
      v. State of Bihar (2021) SCC OnLine SC 955; State of
      Madhya Pradesh v. Pradeep Sharma (2014) 2 SCC 171
      : [2013] 12 SCR 772; Lavesh v. State (NCT of Delhi)                D
      (2012) 8 SCC 730 : [2012] 7 SCR 469; Arnesh Kumar
      v. State of Bihar (2014) 8 SCC 273 : [2014] 8 SCR 128
      Dolat Ram v. State of Haryana (1995)1 SCC 349 :
      [1994] 5 Suppl. SCR 278 – referred to.
                       Case Law Reference                                E
[1997] 3 Suppl. SCR 737          referred to             Para 19
[2013] 12 SCR 772                referred to             Para 19
[2012] 7 SCR 469                 referred to             Para 19
[2014] 8 SCR 128                 referred to             Para 21         F
[1994] 5 Suppl. SCR 278          referred to             Para 21
[2010] 15 SCR 201                relied on               Para 22
[1980] 3 SCR 383                 relied on               Para 22
[2020] 2 SCR 1                   followed                Para 23         G
      CRIMINAL APPELLATE JURISDICTION: Criminal Appeal No.
1148 of 2023.
      From the Judgment and Order dated 19.12.2022 of the High Court
of Gujarat at Ahmedabad in CRLMA No. 20871 of 2022.
                                                                         H
480            SUPREME COURT REPORTS                         [2023] 3 S.C.R.


A           WITH
            Criminal Appeal No. 1149 of 2023.
             Tushar Mehta, SG, Maninder Singh, Sr. Adv., Rajat Nair, Amit
      Sharma B, A K Kaul, Madhav Sinhal, Pratyush Shrivastava, Anandh
      Venkataramani, Mrs. Vijayalakshmi Venkataramani, Vinayak Mehrotra,
B     Siddharth Dharmadhikari, Abhikalp Pratap Singh, Prabhas Bajaj, Ms.
      Shreya Saxena, Ms. Mansi Sood, Chitvan Singhal, Ms. Sonali Jain,
      Abhishek Kumar Pandey, Raman Yadav, Arvind Kumar Sharma, Advs.
      for the Appellant.
           Mukul Rohatgi, Narender Hooda, Shyam Divan, Sr. Advs., Ms.
C     Diksha Rai, Bhadrish S. Raju, Alok Sangwan, Sumit Kumar Sharma,
      Shaurya Lamba, Uday Aditya Banerjee, Ankit Agarwal, Prateek
      Dhankhar, Advs. for the Respondents.
            The Judgment of the Court was delivered by

D           SURYA KANT, J.
            1. Leave granted.
             2. The Appellants in the two Criminal Appeals, the Central Bureau
      of Investigation & Rupesh Balwantbhai Brambhatt (hereinafter,
      “complainant”) respectively, are aggrieved by the order dated 19th
E     December, 2022 passed by the High Court of Gujarat at Ahmedabad
      allowing the anticipatory bail application filed by Respondent No. 1 in
      connection with FIR registered as C.R. No. RC0292022A0011 of 2022
      before CBI/ACB/Gandhinagar Police Station, District Gandhinagar for
      the offence under Section 7 of the Prevention of Corruption Act, 1988
      as amended in 2018.
F
            BACKGROUND
             3. The complainant is a businessman engaged in the construction
      business that goes by the name: Safal Construction Pvt. Ltd. In February
      2019, Respondent No. 1, an IRS Officer, posted as Additional
G     Commissioner of Income Tax, Ahmedabad, conducted a survey for the
      financial year 2018-19 under Section 133A of the Income Tax Act, 1961
      against Safal Construction Pvt. Ltd. whereunder the group disclosed an
      additional income of Rs. 50 crores.


H
    CENTRAL BUREAU OF INVESTIGATION v. SANTOSH                                 481
          KARNANI & ANR. [SURYA KANT, J.]

       4. Thereafter, in September 2021, search and seizure action was         A
initiated by the Investigation Wing of Income Tax Department,
Ahmedabad against Safal Construction Pvt. Ltd. Following these
searches, some papers related to the complainant’s business were seized
and the Central Circle, Range-1 Division initiated the procedure for raising
a demand notice. It is the complainant’s case that he found out that
                                                                               B
Respondent No. 1 was handling his case and would be preparing the
appraisal memo. Subsequently, the complainant and Respondent No. 1
met frequently in connection with the case and it is alleged that during
these interactions, Respondent No. 1 threatened to ruin the complainant’s
business and demanded illegal gratification.
      5. On 29th September, 2022, Respondent No. 1 allegedly contacted         C
the complainant and told him to meet him on 3 rd October, 2022.
Accordingly, the complainant met Respondent No. 1 at the Income Tax
Office where Respondent No. 1 demanded illegal gratification of Rs. 30
lakhs to help the complainant with his case. This conversation was
recorded by the complainant on a Digital Voice Recorder which has              D
been handed over to the investigating authorities and a transcript of the
same has also been provided to this Court. The complainant was directed
to deposit the amount in the account of one Vardhman in the Dhara
Angadia Firm.
       6. The complainant lodged a complaint the next morning with ACB         E
Police Station, Ahmedabad city at 07:15 hours and a trap was then laid.
The complainant’s employee was sent to the Angadia firm with the bribe
money amounting to Rs. 30 lakhs along with personnel from the ACB
trap team. Upon depositing Rs. 30 lakhs with Dhara Angadia firm, the
complainant contacted Respondent No. 1 through WhatsApp call which
was recorded by the ACB team wherein Respondent No. 1 acknowledged             F
payment of the amount. Immediately thereafter, one ACB team went to
detain and arrest Respondent No. 1, who along with some staff members,
is alleged to have physically assaulted the ACB team and escaped from
the office due to the ensuing chaos. It is also claimed that Respondent
No. 1, while escaping from the office, handed over his mobile phone to         G
a colleague. Simultaneously, another ACB team recovered the bribe
amount deposited with Dhara Angadia.
      7. FIR No. 12/2022 was thus, registered against Respondent No.
1 under Sections 7, 13(1) and 13(2) of the Prevention of Corruption Act,
1988 on 4th October, 2022.                                                     H
482             SUPREME COURT REPORTS                           [2023] 3 S.C.R.


A            8. Owing to the gravity of the case, on 12th October, 2022, the
      case was transferred to the Central Bureau of Investigation (hereinafter,
      “CBI”) and FIR No. 12/2022 was re-registered as C.R. No.
      RC0292022A0011 of 2022 under Section 7 of the Prevention of
      Corruption Act, 1988. The FIR records that Respondent No. 1 evaded
      arrest by the ACB team and was still at large at the time of re-registration
B
      of the FIR.
             9. Thereafter, a notice under Section 41A, Code of Criminal
      Procedure (hereinafter, “CrPC”) was issued to Respondent No. 1 calling
      upon him to appear before the CBI but Respondent No. 1 failed to respond.
C     On 17 th October, 2022, Respondent No. 1 wrote a letter to the
      Investigating Officer that he had suffered severe anxiety & depression
      due to the allegations levelled against him and had, thus, gone to his
      home state of Rajasthan for medical treatment. He sought four days’
      time to join the investigation.

D            10. During investigation Smit Thakkar, owner of Dhara Angadia
      firm, informed the authorities that the illegal gratification was deposited
      in the account of one Malav Ajitbhai Mehta. It is also claimed that prior
      to the deposit of the amount, Malav Mehta informed Smit Thakkar that
      Rs. 30 lakhs would be deposited in the account and would have to be
      transferred to another person on the same day.
E
             11. Another notice under Section 41A was issued to Respondent
      No. 1 and again, he failed to appear before the CBI. On 26 th October,
      2022, Respondent No. 1 again sought one week’s time to appear before
      the Investigating Officer vide a communication sent from the email ID
      of Blue Heaven Hotel, Jaipur. Subsequently, some more Section 41A
F
      notices were issued to Respondent No. 1, to which he sought more time
      to join the investigation on various grounds. He simultaneously preferred
      an application for grant of anticipatory bail.
             12. By an order dated 3rd November, 2022, the City Civil & Sessions
G     Court at Ahmedabad rejected Respondent No. 1’s application for
      anticipatory bail. The Special Judge - CBI Court No. 3 observed that
      Respondent No. 1 instead of cooperating with the investigating agency,
      had absconded and got himself admitted in a hospital in Rajasthan to
      evade the process of law. Some of the observations made by the Special
      Judge, CBI Court, are to the following effect:
H
    CENTRAL BUREAU OF INVESTIGATION v. SANTOSH                                 483
          KARNANI & ANR. [SURYA KANT, J.]

      “Thus, the ground of ill health pleaded by the Learned Advocate          A
      for the applicant would hold no ground as this Court is of a candid
      opinion that the applicant instead of cooperating with the
      Investigating Agency had absconded and had got himself admitted
      in hospital at his native in Rajasthan with a view to evade the
      process of law.
                                                                               B
                                 … … …
      In view of the aforesaid facts and circumstances, this Court is of
      a candid opinion that custodial interrogation of the present applicant
      is a must to reach to unearth the larger conspiracy. It is necessary
      to unveil the modus operandi adopted by the applicant in                 C
      committing the larger conspiracy and without interrogation, it would
      be impossible to collect the relevant evidence resulting into
      incomplete investigation. It is also crystal clear that the applicant
      with a view to avoid arrest has filed the present application and
      therefore, instead of cooperating in the investigation have tried to
      thwart the ·same and thus, it can be said that the applicant is not      D
      cooperating in the investigation.
                                  … … …
      This Court also cannot lose sight of the fact that investigation in
      the matter is still under progress and releasing the applicant at this
      premature stage would pave way for the applicant to influence            E
      the investigation, hamper the witnesses and tamper the evidence.”
     13. The Court eventually held that custodial interrogation of
Respondent No. 1 was necessary to reach the root of the matter.
      14. Aggrieved by the order of the Special Judge, CBI Court,              F
Respondent No. 1 applied for anticipatory bail before the High Court of
Gujarat. Meanwhile, on 22nd November, 2022, the Court of Special CBI
Judge issued a non-bailable warrant against Respondent No. 1.
       15. The High Court, vide impugned order dated 19th December,
2022, granted anticipatory bail to Respondent No. 1. The High Court
                                                                               G
observed that there is a doubt regarding the acceptance of illegal
gratification, as it was deposited in the account of Vardhman in Dhara
Angadia firm and there is no evidence with respect to acceptance of the
amount by Respondent No. 1. The reasons on the basis of which the
High Court proceeded to grant anticipatory bail are recorded in paragraph
12 of its order, which states as follows:                                      H
484            SUPREME COURT REPORTS                          [2023] 3 S.C.R.


A           “12. This Court has considered following aspects;
               (i) The FIR is registered on 12.10.2022 for the offence which
               is alleged to have taken place on 04.10.2022.
               (ii) Learned APP under instructions of IO is unable to bring on
               record any special circumstances against the applicant.
B
               (iii) The role attributed to the applicant- accused;
               (iv) That the applicant is a Additional Income Tax Commissioner
               and no any other criminal antecedents against him;
               (v) There is creating serious doubt about demand and
C              acceptance of the amount;
               (vi) There is no discovery or recovery from the applicant;”
             16. The High Court further directed that despite grant of
      anticipatory bail, CBI could apply for police remand of Respondent No.
D     1 and that if the same was granted by the competent Magistrate,
      Respondent No. 1 would be set free immediately upon completion of the
      police remand. The relevant part of the impugned order to this effect
      reads as under:
            “16. Despite this order, it would be open for the Investigating
E           Agency to apply to the competent Magistrate, for police remand
            of the applicant. The applicant shall remain present before the
            learned Magistrate on the first date of hearing of such application
            and on all subsequent occasions, as may be directed by the learned
            Magistrate. This would be sufficient to treat the accused in the
            judicial custody for the purpose of entertaining application of the
F
            prosecution for police remand. This is, however, without prejudice
            to the right of the accused to seek stay against an order of remand,
            if, ultimately, granted and the power of the learned Magistrate to
            consider such a request in accordance with law. It is clarified that
            the applicant even if, remanded to the police custody, upon
G           completion of such period of police remand, shall be set free
            immediately, subject to other conditions of this anticipatory bail
            order. At the trial, the Trial Court shall not be influenced by the
            prima facie observations made by this Court while enlarging the
            applicant on bail. Rule is made absolute. Direct service is
H           permitted.”
    CENTRAL BUREAU OF INVESTIGATION v. SANTOSH                                485
          KARNANI & ANR. [SURYA KANT, J.]

       17. Following the High Court’s directions, Respondent No. 1 joined     A
the investigation and appeared on three days but is stated to have not
produced his mobile phone(s) though he was asked to do so repeatedly.
The CBI, then, applied for police remand of Respondent No. 1 and, on
30th December, 2022, the Special Judge, CBI Court No. 3 partly allowed
the said application. The Court, upon perusal of the case diary, observed
                                                                              B
that the allegations against Respondent No. 1 seem well-founded and
that remand is necessary for the purpose of investigation to collect the
missing link of evidence and to unearth the larger conspiracy. The
application was allowed in the following terms:
      “The Accused Mr. Santosh Kumar Karnani is directed to appear            C
      and surrender himself to the custody of Investigating Officer, CBI
      /ACB/ Gandhinagar from 10.00 am to 7.00 pm on dated 31/12/
      2022, 01/01/2023, 02/01/2023 and on 03/01/2023, in connection
      with RC-0292022A0011 GNR. It is further directed that accused
      shall be set free at 7.00 pm on respective dates.
                                                                              D
      Further as per the direction of Honourable Gujarat High Court,
      upon completion of aforesaid period of remand, the accused be
      set free upon expiry of remand period and report be submitted to
      this Court along with copies of medical examination paper/
      Certificate. The case diary be handed back to the Investigating
      Officer.                                                                E

      The accused is hereby directed to give full cooperation to
      Investigating officer to carry out proper investigation of this case.
      The Investigating Officer is hereby directed to strictly adhere to
      the guidelines laid down by the Hon’ble Supreme Court of India          F
      in case of D.K. Basu vs. State of W.B. reported in AIR 1997
      SC 610 and Honourable Gujarat High Court, while the accused
      is in custody and refrain from any custodial ill-treatment or
      torture”
       18. CBI, thereafter, preferred an application for suspension of the    G
aforesaid order before Special CBI Court on the ground that they wish
to challenge it before the High Court of Gujarat. Hence, Special Judge,
CBI Court No. 3 stayed operation of its order till 7th January, 2023. This
was later extended by the Court till the final disposal of the Special
Leave Petition (Crl.) No. 295 of 2023.
                                                                              H
486                SUPREME COURT REPORTS                         [2023] 3 S.C.R.


A           SUBMISSIONS
            19. Assailing the impugned order granting anticipatory bail to
      Respondent No. 1, Mr. Tushar Mehta, learned Solicitor General of India
      on behalf of the CBI made the following submissions:
            i.       Considering the gravity and seriousness of the offence and
B                    the position held by Respondent No. 1, the High Court erred
                     in exercising its discretionary jurisdiction under Section 438
                     of the CrPC;
            ii.      The High Court did not appreciate the material collected
                     against Respondent No. 1 which establishes a clear demand
C                    & acceptance of bribe by him in view of his voice recordings
                     seeking an amount of Rs. 30 lakhs from the complainant
                     and acknowledging payment thereof. The relevant voice
                     recordings have been analysed and the voices have been
                     identified to be those of Respondent No. 1 and the
D                    complainant;
            iii.     The High Court grossly erred in observing that the FIR
                     was registered after a long delay on 12th October, 2022.
                     On that day, the CBI had only re-registered FIR No. 12/
                     2022 which was initially registered by ACB Police Station
                     on 4th October, 2022.
E
            iv.      Respondent No. 1’s name was included in the ‘Agreed List’
                     in respect of Group A officers of the Income Tax
                     Department for the year 2015 and thus, his service record
                     is not clean;
F           v.       Respondent No. 1 evaded arrest when the ACB team raided
                     his office after he had acknowledged the payment of the
                     bribe money over a WhatsApp call. Respondent No. 1 &
                     his colleagues used criminal force to deter the ACB team
                     from effecting arrest and collecting material evidence. While
                     doing so, Respondent No. 1 handed over his mobile phone,
G                    which is a crucial piece of evidence, to his colleague to
                     ensure that the same was not seized by the investigating
                     agency. This has been recorded in the CCTV cameras of
                     the office;
            vi.      The audio recordings and video footage have been examined
H                    by the Directorate of Forensic Science, Gujarat certifying
       CENTRAL BUREAU OF INVESTIGATION v. SANTOSH                                 487
             KARNANI & ANR. [SURYA KANT, J.]

                their genuineness. The report concludes that there are no         A
                signs of alteration in the same;
         vii.   Respondent No. 1 falsely pleaded that he had taken casual
                leave from the competent authority and misled the
                investigating agency by sending a reply to the notice issued
                under Section 41A, CrPC through the email ID of Blue              B
                Heaven Hotel, Jaipur. Upon investigation, it was found that
                Respondent No. 1 had never stayed at that hotel;
         viii. During investigation, reliable evidence has come on record
               to show that other Income Tax officials were hands in glove
               with Respondent No. 1, which is also evident from the active       C
               role played by some officials in helping Respondent No.1
               to avoid arrest by the ACB on 4th October, 2022. Custodial
               interrogation is highly necessary to ascertain the deeper
               plot at play and to examine the involvement of other Income
               Tax officials;
                                                                                  D
         ix.    Respondent No. 1 appeared before the CBI after the
                protection granted by the High Court but did not handover
                his mobile handsets which are a crucial piece of evidence
                and is, thus, not cooperating with the investigation. Custodial
                interrogation is necessary in this case to take the
                investigation to its logical conclusion;                          E

         x.     Reliance has been placed on the judgment of this Court in
                State Rep. By The CBI v. Anil Sharma1 to argue that
                “custodial interrogation is qualitatively more elicitation-
                oriented than questioning a suspect who is well ensconced
                with a favourable order under Section 438 of the Code. In         F
                a case like this, effective interrogation of a suspected person
                is of tremendous advantage in disinterring many useful
                information and also materials which would have been
                concealed. Success in such interrogation would elude if the
                suspected person knows that he is well protected and              G
                insulated by a pre-arrest bail order during the time he is
                interrogated. Very often interrogation in such a condition
                would reduce to a mere ritual.”;

1
    (1997) 7 SCC 187.                                                             H
488               SUPREME COURT REPORTS                          [2023] 3 S.C.R.


A           xi.     Reliance has also been placed on the decisions in Prem
                    Shankar Prasad v. State of Bihar2, State of Madhya
                    Pradesh v. Pradeep Sharma3 and Lavesh v. State (NCT
                    of Delhi)4 to urge that anticipatory bail should not be granted
                    to an absconder;
B           xii.    The High Court passed an unusual order directing that the
                    investigating agency would be at liberty to apply to the
                    competent Magistrate for police remand of Respondent No.
                    1 and in the same breath, prevented custodial interrogation
                    of the main suspect.
C           20. Supporting the above submissions on behalf of the CBI, Mr.
      Maninder Singh, learned Senior Counsel appearing for the complainant,
      made following additions:
            i.      The High Court ignored the observations & findings of the
                    learned Sessions Court recorded while rejecting
D                   Respondent No. 1’s application for anticipatory bail. The
                    said Court had gone through the material on record, including
                    the case papers, and then only observed that custodial
                    interrogation was necessary to enable the investigation
                    agency to reach the core of the matter.

E           ii.     The High Court failed to appreciate the unequivocal demand
                    of Rs. 30 lakhs made by Respondent No. 1, which was
                    recorded by the complainant on a Digital Voice Recorder
                    and acceptance of that bribe money through Dhara Angadia
                    Firm.

F            21. On the other hand, Mr. Mukul Rohatgi and Mr. Shyam Divan,
      learned Senior Counsels strongly refuted the insinuations made against
      Respondent No. 1 and defended the High Court order granting pre-
      arrest bail with the following submissions:
            i.      The allegations levelled against Respondent No. 1 are false
                    and concocted. Respondent No. 1 never raised any demand
G
                    for gratification as alleged by the complainant. Respondent
                    No. 1 had no connection with the search and seizure action

      2
        2021 SCC OnLine SC 955.
      3
        (2014) 2 SCC 171.
      4
H       (2012) 8 SCC 730.
CENTRAL BUREAU OF INVESTIGATION v. SANTOSH                                489
      KARNANI & ANR. [SURYA KANT, J.]

        taken against the complainant’s company in September 2021         A
        or with the preparation of the appraisal report. Respondent
        No. 1 is not the Assessing Officer of the complainant’s
        case and the matter is entrusted to some other officer;
 ii.    There is no evidence of demand or acceptance of bribe
        which are sine qua non for establishing the offence. In           B
        trap cases under Section 7 of Prevention of Corruption Act,
        the conversation of demand is to be recorded by the
        complainant in the presence of independent panchas and
        the trap laying Officer has to ensure that there is no
        possibility of any tampering. In the present case, the voice
        recording of the alleged demand has been done without             C
        any police involvement and thus, holds no evidentiary value.
        The alleged deposit of the amount was made in an Angadia
        firm which is unknown to Respondent No. 1 and cannot be
        termed as acceptance of bribe. Respondent No. 1 has no
        connection with Malav Ajitbhai Mehta, who is stated to be         D
        the owner of the account wherein the amount was deposited
        and Respondent No. 1 was not present at the site of the
        Angadia firm;
 iii.   The complainant has animosity with Respondent No. 1
        due to the past survey action taken for the financial year        E
        2018-19 against his company which led to disclosure of
        additional income of Rs. 50 crores. This fact has not been
        disclosed in the FIR. The complainant has falsely
        implicated Respondent No. 1 due to his apprehensions that
        Respondent No. 1 will impose huge tax liability on him &
        his company;                                                      F

 iv.    A perusal of FIR No. 12/2022 shows that it was registered
        on 4th October, 2022 at 9:30 pm while the acts of the alleged
        demand, laying down of the trap, deposit of money at Dhara
        Angadia and the raid at Respondent No. 1’s office occurred
        on 3rd October, 2022 and during the daytime on 4th October,       G
        2022. Additionally, there is no record of the complainant
        meeting police officials prior to the registration of FIR. The
        delay in registration of FIR which is more than 24 hours
        after the alleged demand of illegal gratification, has not been
        explained;                                                        H
490                   SUPREME COURT REPORTS                          [2023] 3 S.C.R.


A              v.       Only Respondent No. 1 is sought to be arrested by the CBI.
                        The owner or employees of Dhara Angadia firm have not
                        been arrested and the High Court order granting anticipatory
                        bail to Malav Mehta has not been challenged by the CBI
                        before this Court;
B              vi.      CBI has misused the provisions of Section 41A of the CrPC
                        to arrest Respondent No. 1. A bare perusal of the provision
                        and the guidelines laid down by this Court in Arnesh Kumar
                        v. State of Bihar5 suggest that a notice under Section 41A
                        would be issued only when the investigating agency does
                        not require the custody of a person. In the present case,
C                       notices under Section 41A were issued post the raid
                        conducted by ACB team at Respondent No. 1’s office by
                        which time they had decided to arrest him;
               vii.     As per settled law of this Court, Respondent No. 1 cannot
                        be termed as an absconder as he was availing his legal
D                       remedies. However, despite this, the investigating agency
                        published notices in the media and pasted ‘Wanted’ posters
                        with Respondent No. 1’s name, photo and designation at
                        various places, which indicates mala fides of the
                        investigation agency;
E              viii.    The bona fides of Respondent No. 1 are evident from his
                        conduct post the grant of anticipatory bail. As directed by
                        the High Court, Respondent No. 1 appeared before the CBI
                        on at least four occasions, as and when called. Respondent
                        No. 1 has also voluntarily given his voice samples. Given
F                       the fact that Respondent No. 1 is cooperating with the
                        investigation, custodial interrogation is not required. The High
                        Court erred in directing that, despite the grant of anticipatory
                        bail, the investigating agency would be at liberty to apply to
                        the competent Magistrate for police remand. This part of
                        the order was to the disadvantage of Respondent No. 1 but
G                       he abided by the same and appeared before the Court when
                        the CBI applied for police remand;
               ix.      Respondent No. 1 has an impeccable service record as is
                        evident from his posting to one of the most sensitive

H     5
          (2014) 8 SCC 273.
       CENTRAL BUREAU OF INVESTIGATION v. SANTOSH                                 491
             KARNANI & ANR. [SURYA KANT, J.]

                assignments in the department. Such postings are only given       A
                to senior officers with clean images. His integrity is beyond
                doubt and he has an unblemished past record. There is no
                case of disproportionate assets against Respondent No. 1;
         x.     Section 17A of the Prevention of Corruption Act, 1988 as
                amended in 2018, provides for a bar on any enquiry, inquiry       B
                or investigation by a police officer into an alleged offence
                by a public servant, where the alleged offence relates to
                any decision taken or recommendation made in exercise of
                official functions or duties, without the previous approval
                of the competent authority. In this case, the investigating
                agency has not complied with the mandatory procedure of           C
                Section 17A and has initiated investigation on the complaint
                without any prior approval of the Competent Authority. The
                breach of these mandatory conditions vitiates the
                proceedings initiated against Respondent No. 1;
         xi.    In these circumstances, the High Court has rightly granted        D
                anticipatory bail to Respondent No. 1 and has provided
                adequate reasoning for the same in paragraph 12 of the
                impugned order;
         xii.   Cancellation of bail has to be dealt with on a completely
                different footing in comparison to refusal of bail and ‘cogent    E
                and overwhelming’ reasons are necessary to cancel bail
                once granted. Reliance has been placed in this regard on
                Dolat Ram v. State of Haryana6 wherein a two-judge
                Bench of this Court held that:
                    “4. Rejection of bail in a non-bailable case at the initial   F
                    stage and the cancellation of bail so granted, have to be
                    considered and dealt with on different basis. Very cogent
                    and overwhelming circumstances are necessary for an
                    order directing the cancellation of the bail, already
                    granted. Generally speaking, the grounds for cancellation     G
                    of bail, broadly (illustrative and not exhaustive) 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 concession
6
    (1995) 1 SCC 349.                                                             H
492                SUPREME COURT REPORTS                           [2023] 3 S.C.R.


A                         granted to the accused in any manner. The satisfaction
                          of the court, on the basis of material placed on the record
                          of the possibility of the accused absconding is yet another
                          reason justifying the cancellation of bail. However, bail
                          once granted should not be cancelled in a mechanical
                          manner without considering whether any supervening
B
                          circumstances 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.”
               xiii.   No supervening circumstances for cancellation of bail have
                       been pointed out by the CBI or the complainant.
C
               ANALYSIS
             22. The law on grant of anticipatory bail has been summed-up by
      this Court in Siddharam Satlingappa Mhetre v. State of Maharashtra7,
      after due deliberation on the parameters evolved by the Constitution Bench
D     in Gurbaksh Singh Sibbia v. State of Punjab8. This Court held thus:
               “112. The following factors and parameters can be taken into
               consideration while dealing with anticipatory bail:
               (i) The nature and gravity of the accusation and the exact role of
               the accused must be properly comprehended before arrest is made;
E
               (ii) The antecedents of the applicant including the fact as to
               whether the accused has previously undergone imprisonment on
               conviction by a court in respect of any cognizable offence;
               (iii) The possibility of the applicant to flee from justice;
F              (iv) The possibility of the accused’s likelihood to repeat similar or
               other offences;
               (v) Where the accusations have been made only with the object
               of injuring or humiliating the applicant by arresting him or her;
               (vi) Impact of grant of anticipatory bail particularly in cases of
G              large magnitude affecting a very large number of people;
               (vii) The courts must evaluate the entire available material against
               the accused very carefully. The court must also clearly comprehend
      7
          (2011) 1 SCC 694.
      8
H         (1980) 2 SCC 565.
       CENTRAL BUREAU OF INVESTIGATION v. SANTOSH                                 493
             KARNANI & ANR. [SURYA KANT, J.]

          the exact role of the accused in the case. The cases in which the       A
          accused is implicated with the help of Sections 34 and 149 of the
          Penal Code, 1860 the court should consider with even greater care
          and caution because over-implication in the cases is a matter of
          common knowledge and concern;
          (viii) While considering the prayer for grant of anticipatory bail, a   B
          balance has to be struck between two factors, namely, no prejudice
          should be caused to the free, fair and full investigation and there
          should be prevention of harassment, humiliation and unjustified
          detention of the accused;
          (ix) The court to consider reasonable apprehension of tampering         C
          of the witness or apprehension of threat to the complainant;
          (x) Frivolity in prosecution should always be considered and it is
          only the element of genuineness that shall have to be considered
          in the matter of grant of bail and in the event of there being some
          doubt as to the genuineness of the prosecution, in the normal course    D
          of events, the accused is entitled to an order of bail.”
       23. In Sushila Aggarwal v. State (NCT of Delhi) 9, the
Constitution Bench reiterated that while deciding applications for
anticipatory bail, courts should be guided by factors like the nature and
gravity of the offences, the role attributed to the applicant, and the facts      E
of the case.
       24. The time-tested principles are that no straitjacket formula can
be applied for grant or refusal of anticipatory bail. The judicial discretion
of the Court shall be guided by various relevant factors and largely it will
depend upon the facts and circumstances of each case. The Court must              F
draw a delicate balance between liberty of an individual as guaranteed
under Article 21 of the Constitution and the need for a fair and free
investigation, which must be taken to its logical conclusion. Arrest has
devastating and irreversible social stigma, humiliation, insult, mental pain
and other fearful consequences. Regardless thereto, when the Court, on
consideration of material information gathered by the Investigating               G
Agency, is prima facie satisfied that there is something more than a
mere needle of suspicion against the accused, it cannot jeopardise the
investigation, more so when the allegations are grave in nature.

9
    (2020) 5 SCC 1.                                                               H
494             SUPREME COURT REPORTS                           [2023] 3 S.C.R.


A            25. Keeping these principles in mind, we proceed to evaluate the
      rival submissions. At the outset, it is to be noted that the High Court fell
      in a factual error in observing that FIR was registered on 12th October,
      2022 for the offence alleged to have taken place on 3rd and 4th October,
      2022. The FIR was registered by the ACB against Respondent No. 1 on
      4th October, 2022 under Sections 7, 13(1) and 13(2) of the Prevention of
B
      Corruption Act, 1988 and was re-registered by CBI on 12th October,
      2022.
             26. Further, the primary ground assigned by the High Court to
      grant anticipatory bail to Respondent No. 1 is that there was doubt as to
      the acceptance of the bribe amount since records of Dhara Angadia
C     firm had not been produced establishing any link between Respondent
      No. 1 & the firm.
             27. The CBI has produced the case diary which contains the
      statement made by Smit Thakkar, who handles Dhara Angadia firm. He
      has clearly stated that Malav Mehta was the owner of Vardhman account
D     and had informed him that 30 lakhs rupees would be deposited in his
      account on 4th October, 2022, which in turn had to be sent to someone
      else. The purported recording of conversation between the complainant
      and Respondent No. 1 wherein Respondent No. 1 thanked the
      complainant, after the deposit of amount in the Vardhman account, is a
E     reasonable link to connect Respondent No. 1 with the deposit of illegal
      gratification in Dhara Angadia firm, thereby prima facie showing
      acceptance thereof.
             28. Regarding the alleged discrepancy of delay of more than 24
      hours in the registration of FIR, we find from the material produced
F     before us that the complainant started narrating the complaint at 07:15
      hours and it ended at 08:00 hours on 4th October, 2022. The panchnama,
      annexed in the case diary, provides details of the trap laid by the ACB
      and lists all the activities of the ACB team on that day, thereby dispelling
      any doubts of mala fides on the part of the investigating agencies.

G           29. We have also gone through the statement of Mr. Vivek Johri,
      Assistant Commissioner of Income Tax who has stated that Respondent
      No. 1 handed over his mobile phone to him before leaving the office,
      which Mr. Johri later threw away.
             30. The manner in which Respondent No. 1 forcefully evaded his
      arrest with the help of his colleagues and got the evidence destroyed, is
H
    CENTRAL BUREAU OF INVESTIGATION v. SANTOSH                                 495
          KARNANI & ANR. [SURYA KANT, J.]

a strong circumstance to indicate his complicity at this stage though a        A
clear picture would emerge only on completion of investigation.
       31. The nature and gravity of the alleged offence should have
been kept in mind by the High Court. Corruption poses a serious threat
to our society and must be dealt with iron hands. It not only leads to
abysmal loss to the public exchequer but also tramples good governance.        B
The common man stands deprived of the benefits percolating under social
welfare schemes and is the worst hit. It is aptly said, “Corruption is a
tree whose branches are of an unmeasurable length; they spread
everywhere; and the dew that drops from thence, Hath infected some
chairs and stools of authority.” Hence, the need to be extra conscious.
                                                                               C
        32. From the material placed on record, it seems that prima facie,
the allegations against Respondent No. 1 cannot be brushed aside lightly
at this stage. There appears to be a well-organised syndicate comprising
officers and officials of the Income Tax Department, businessmen and
Hawala traders, who are in tandem. Such a nexus needs to be unearthed
through an unimpaired and unobstructed investigation.                          D

       33. The contention that prior approval of investigation, as mandated
under Section 17A of Prevention of Corruption Act, has not been obtained
and thus, the proceedings initiated against Respondent No. 1 stand vitiated,
has no legal or factual basis. Section 17A merely contemplates that police
officers shall not conduct any enquiry, inquiry or investigation into any      E
offence alleged to have been committed by a public servant where the
alleged offence is relatable to any recommendation made or decision
taken in discharge of official functions or duties, without the previous
approval of the competent authority. The first proviso to the section
states that such approval is not necessary in cases involving arrest of        F
the person on the spot on the charges of accepting undue advantage.
       34. As may be seen, the first proviso to Section 17A refers to
cases wherein a public servant is charged with acceptance of an undue
advantage or attempt thereof. A prior approval or sanction to investigate
such an officer in a trap case is likely to defeat the very purpose of trap    G
and the investigation, which is not the underlying intention of the
legislature. The investigation against Respondent No. 1, being an accused
of demanding a bribe, did not require any previous approval of the Central
Government. That apart, the accusation against Respondent No. 1 does
not revolve around any recommendations made or decisions taken by
him in his quasi-judicial or administrative capacity.                          H
496             SUPREME COURT REPORTS                            [2023] 3 S.C.R.


A            35. It is true that cancellation of bail must be done only for cogent
      and overwhelming reasons. Nevertheless, setting aside an unjustified
      order granting bail is distinct from cancellation of bail. This Court would
      not, invariably intervene into the judicial discretion exercised by the High
      Court while granting bail to an accused. All that to be ensured is that the
      High Court exercises its discretion judiciously, cautiously and strictly in
B
      conformity with the basic principles laid down by this Court from time to
      time in a series of decisions.
            36. The Constitution Bench in Sushila Aggarwal (supra)
      observed that:
C           “92.11. The correctness of an order granting bail, can be considered
            by the appellate or superior court at the behest of the State or
            investigating agency, and set aside on the ground that the court
            granting it did not consider material facts or crucial circumstances.”
            SUMMATION
D
            37. Having considered the nature of allegations, material on record
      and the settled legal principles on grant of anticipatory bail, we are of the
      view that, howsoever hard or harsh it may be, the High Court ought to
      have refrained itself from extending protection against arrest to
E     Respondent No. 1 in exercise of its discretionary jurisdiction under Section
      438 of the CrPC.
             38. Assuming Respondent No. 1 had some valid apprehensions
      that the actions of ACB (State Police) were actuated with extraneous
      reasons, he can no longer say so once the investigation has been
F     transferred to CBI. We do not find any allegation of personal vendetta,
      victimisation, bias or ulterior motive against the Central Agency. In any
      case, CBI is expected to carry out a free, fair and dispassionate
      investigation with faithful observance to the rights of an accused, who is
      subjected to custodial interrogation.
G            39. The appeals are, accordingly, allowed. The impugned judgment
      and order of the High Court dated 19th December, 2022 is set aside and
      the anticipatory bail application of Respondent No. 1 is dismissed. As a
      consequence thereto, the order dated 30th December, 2022 passed by
      the Special Judge, CBI Court No. 3 partly allowing CBI’s application for
      remand is also set aside.
H
     CENTRAL BUREAU OF INVESTIGATION v. SANTOSH                                497
           KARNANI & ANR. [SURYA KANT, J.]

      40. We clarify that this Court has expressed only prima facie            A
opinion on the merits of the allegations for the limited purpose to refuse
or grant pre-arrest bail. If Respondent No. 1 moves an application for
grant of regular bail before an appropriate Court, the same shall be
considered on its own merits and in accordance with law, uninfluenced
by the observations made hereinabove.
                                                                               B
       41. The appeals are disposed of in the above terms.
       42. Pending application(s), if any, stand disposed of as well.


Ankit Gyan                                              Appeals disposed of.   C
(Assisted by : Mahendra Yadav, LCRA)




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