Holding

The Supreme Court held that the court may receive and peruse investigation material to satisfy its conscience for bail decisions but must not open a sealed cover at the pre‑arrest stage, and anticipatory bail is not warranted in this economic offence.

Summary

The appellant, former Finance Minister P. Chidambaram, was charged with alleged irregularities in a foreign investment clearance and money‑laundering offences under the Prevention of Corruption Act and the Prevention of Money‑Laundering Act (PMLA). The Enforcement Directorate (ED) produced a sealed cover containing documents collected for his custodial interrogation and sought to rely on them to deny anticipatory bail. The appellant argued that he must be shown the materials and be given a chance to contest them, contending that the court’s perusal of such documents amounted to a "mini‑trial" and violated his rights. The Supreme Court held that while the court may receive and peruse investigation material to satisfy its conscience for bail decisions, it must not open the sealed cover at the pre‑arrest stage to avoid prejudice, and the interrogation process remains the exclusive domain of the investigating agency. Consequently, the Court affirmed the High Court’s refusal to grant anticipatory bail, emphasizing that such relief is an extraordinary remedy, especially in economic offences, and should be granted only in exceptional circumstances. The appeal was dismissed, leaving the appellant to seek regular bail later.

Issues considered

The court may peruse investigation material in a sealed cover for the purpose of deciding anticipatory bail.
Whether the appellant must be confronted with the sealed documents before the court can rely on them.
Whether the court can assess the appellant's alleged evasiveness during custodial interrogation.
Whether anticipatory bail can be granted in cases involving economic offences under PMLA.

Legislation cited

Code of Criminal Procedure, 1973s. 161, s. 172, s. 173, s. 438
Constitution of Indias. Art.20(1), s. Art.20(3), s. Art.21
Indian Evidence Act, 1872s. 145
Indian Penal Code, 1860s. 120, s. 120B, s. 420
Prevention of Corruption Act, 1988s. 13(1)(d), s. 13(2), s. 8
Prevention of Money Laundering Act, 2002s. 17, s. 19, s. 3, s. 4, s. 45, s. 5, s. 71

Subjects

anticipatory bailpre‑arrest bailmoney launderingPMLAsealed covercase diaryinvestigationeconomic offencesSection 438 CrPCinterrogationcourt's conscience

Judgment

172 [2019]REPORTS
SUPREME COURT 12 S.C.R. 172 [2019] 12 S.C.R.

A P. CHIDAMBARAM
v.
DIRECTORATE OF ENFORCEMENT
(Criminal Appeal No. 1340 of 2019)
B SEPTEMBER 05, 2019
[R. BANUMATHI AND A. S. BOPANNA, JJ.]
Prevention of Money Laundering Act, 2002 – ss.3 and 4 –
Production of Documents in a sealed cover for custodial
interrogation – Prosecution alleged irregularities in Foreign
C
Investment Promotion Board (FIPB) clearance given to a company
for receiving foreign investment to the tune of Rs.305 crores against
approved inflow of Rs.4.62 crores – Appellant was the then finance
minister – CBI registered FIR against the appellant and other
accused persons u/s.120 IPC r/w. s.420 IPC, s.8 and s.13(2) r/w.
D s.13(1)(d) of the Prevention of Corruption Act, 1988 – Enforcement
Directorate also registered a case u/ss.3 and 4 of PMLA against the
accused persons – High Court dismissed the application for the
grant of anticipatory bail filed by the appellant and held it to be a
classic case of money-laundering – On appeal, before the Supreme
Court, respondent sought to produce the materials so collected in a
E
sealed cover and requested the Court to peruse the documents and
materials to satisfy the conscience of the Court as to the necessity
for the custodial interrogation – Respondent contended that the
materials so collected cannot be shared with appellant at the initial
stage when the Court was considering the matter for grant of pre-
F arrest bail – Appellant contended that respondent cannot rely upon
the documents without furnishing those documents to the appellant
or without questioning the appellant about the materials – Held:
The Court can receive the materials/documents collected during the
investigation and peruse the same to satisfy its conscience that the
investigation is proceeding in the right lines and for the purpose of
G
consideration of grant of bail/anticipatory bail etc. - In the instant
case, sealed cover was received by the Court, however, the Court
refrained from opening the sealed cover and perusing the documents
because if Court had made observations after perusal of the
materials, it might have caused prejudice to the appellant and other
H
172
P. CHIDAMBARAM v. DIRECTORATE OF ENFORCEMENT 173

co-accused who were not before the Court – Suffice to note that it A
was the stage of considering the pre-arrest bail – In the initial stages
of investigation where the Court is considering the question of grant
of regular bail or pre-arrest bail, it is not for the Court to enter into
the demarcated function of the investigation and collection of
evidence/materials for establishing the offence and interrogation
B
of the accused and the witnesses – Since, the respondent had
collected documents/materials for custodial interrogation of the
appellant, the submission of the respondent was accepted for the
limited purpose of refusing pre-arrest bail to the appellant – Penal
Code, 1860 – s.120B r/w. s.13(1)(d).
Prevention of Money Laundering Act, 2002 – ss.3 and 4 – C
Prevention of Corruption Act, 1988 – s.8 and 13(2) – r/w. s.13(1)(d)
– Interrogation of the accused – Interferences of Judiciary in –
Held: Interrogation of the accused and the answers elicited from
the accused and the opinion whether the answers given by the
accused are ‘satisfactory’ or ‘evasive’, is purely within the domain D
of the investigating agency and the Court cannot substitute its views
by conducting mini trial at various stages of investigation.
Prevention of Money Laundering Act, 2002 – ss.3 and 4 –
Code of Criminal Procedure, 1973 – s.438 – Grant of anticipatory
bail – Prosecution alleged irregularities in Foreign Investment E
Promotion Board (FIPB) clearance given to a company for receiving
foreign investment to the tune of Rs.305 crores against approved
inflow of Rs.4.62 crores – Appellant was the then finance minister –
FIR was registered – Enforcement Directorate also registered a case
u/ss. 3 and 4 of PMLA against the accused persons – High Court
F
dismissed the application for grant of anticipatory bail filed by the
appellant – On appeal, held: Power u/s.438 Cr.P.C. is an
extraordinary power and the same has to be exercised sparingly
more so, in cases of economic offences – Economic offences stand
as a different class as they effect the economic fabric of the society
– Grant of anticipatory bail at the stage of investigation may frustrate G
the investigating agency in interrogating the accused and in
collecting the useful information and also the materials which might
have been concealed – Success is such interrogation would elude
if the accused knows that he is protected by the order of the Court
– In the instant case, having regard to the materials collected by the H
174 SUPREME COURT REPORTS [2019] 12 S.C.R.

A respondent- Enforcement Directorate and considering the stage of
investigation, it was not a fit case to grant anticipatory bail.
Code of Criminal Procedure, 1973 – s.438 – Constitution of
India – Art. 21 – Right of anticipatory bail, a part of Art.21 of the
Constitution of India or not – Held: The legislative intent behind
B the introduction of s.438 Cr.P.C. is to safeguard the individual’s
personal liberty and to protect him from the possibility of being
humiliated and from being subjected to unnecessary police custody.
However, the court must also keep in view that a criminal offence is
not just an offence against an individual, rather the larger societal
C interest is at stake – Therefore, a delicate balance is required to be
established between the two rights-safeguarding the personal liberty
of an individual and the societal interest – It cannot be said that
refusal to grant anticipatory bail would amount to denial of the
rights conferred upon the appellant u/Art. 21 of the Constitution of
India.
D
Words and Phrases – ‘reason to believe’ – Held: As per
definition in s.26 IPC, a person is said to be have ‘reason to believe’
a thing, if he has sufficient cause to believe that thing but not
otherwise – The specified officer must have ‘reason to believe’ on
the basis of material in his possession that the property sought to
E be attached is likely to be concealed, transferred on dealt with in a
manner which may result in frustrating any proceedings for
confiscation of their property under the Prevention of Money -
Laundering Act, 2002.
Words and Phrases – Economic offence – discussed.
F
Dismissing the appeal, the Court
HELD: Whether Court can look into the documents/
materials collected during investigation.
1. It is well-settled that the court can peruse the case diary/
G materials collected during investigation by the prosecution even
before the commencement of the trial inter-alia in circumstances
like:- (i) to satisfy its conscience as to whether the investigation
is proceeding in the right direction; (ii) to satisfy itself that the
investigation has been conducted in the right lines and that there
H
P. CHIDAMBARAM v. DIRECTORATE OF ENFORCEMENT 175

is no misuse or abuse of process in the investigation; (iii) whether A
regular or anticipatory bail is to be granted to the accused or not;
(iv) whether any further custody of the accused is required for
the prosecution; (v) to satisfy itself as to the correctness of the
decision of the High Court/trial court which is under challenge.
The above instances are only illustrative and not exhaustive. B
Where the interest of justice requires, the court has the powers,
to receive the case diary/materials collected during the
investigation. As held in Mukund Lal v. Union of India and Another,
ultimately there can be no better custodian or guardian of the
interest of justice than the court trying the case. Needless to
point out that when the Court has received and perused the C
documents/materials, it is only for the purpose of satisfaction of
court’s conscience. In the initial stages of investigation, the Court
may not extract or verbatim refer to the materials which the Court
has perused (as has been done in this case by the Single Judge)
and make observations which might cause serious prejudice to D
the accused in trial and other proceedings resulting in miscarriage
of justice. [Para 53][206-D-G]
Naresh Kumar Yadav v. Ravindra Kumar and others
(2008) 1 SCC 632 : [2007] 11 SCR 615; Malkiat Singh
and others v. State of Punjab (1991) 4 SCC 341 : [1991] E
2 SCR 256; R.K. Krishna Kumar v. State of Assam and
others (1998) 1 SCC 474 : [1997] 6 Suppl. SCR 153;
Mukund Lal v. Union of India and another 1989 Supp.
(1) SCC 622 : [1988] 3 Suppl. SCR 524; Sidharth and
others v. State of Bihar (2005) 12 SCC 545 : [2005] 3
F
Suppl. SCR 800 – relied on.
Romila Thapar and Others v. Union of India and Others
(2018) 10 SCC 753 : [2018] 11 SCR 951; Directorate
of Enforcement and Another v. P.V. Prabhakar Rao
(1997) 6 SCC 647 : [1997] 3 Suppl. SCR 247; Balakram
G
v. State of Uttarakhand and others (2017) 7 SCC 668 :
[2017] 5 SCR 367– referred to.
2. The Enforcement Directorate has produced the sealed
cover before this Court containing the materials collected during
H
176 SUPREME COURT REPORTS [2019] 12 S.C.R.

A investigation and the same was received. Vide order dated
29.08.2019, this Court has stated that the receipt of the sealed
cover would be subject to our finding whether the court can
peruse the materials or not. As discussed earlier, this Court has
held that the court can receive the materials/documents collected
B during the investigation and peruse the same to satisfy its
conscience that the investigation is proceeding in the right lines
and for the purpose of consideration of grant of bail/anticipatory
bail etc. In the present case, though sealed cover was received,
this Court has consciously refrained from opening the sealed
cover and perusing the documents. Lest, if this Court peruses
C the materials collected by the respondent and make some
observations thereon, it might cause prejudice to the appellant
and the other co-accused who are not before this court when
they are to pursue the appropriate relief before various forum.
Suffice to note that at present, this Court is only at the stage of
D considering the pre-arrest bail. Since according to the respondent,
they have collected documents/materials for which custodial
interrogation of the appellant is necessary, which this Court deem
appropriate to accept the submission of the respondent for the
limited purpose of refusing pre-arrest bail to the appellant. [Para
54][206-H; 207-A-D]
E
3. As rightly submitted by Solicitor General that if the
accused are to be confronted with the materials which were
collected by the prosecution/Enforcement Directorate with huge
efforts, it would lead to devastating consequences and would
defeat the very purpose of the investigation into crimes, in
F
particular, white collar offences. If the contention of the appellant
is to be accepted, the investigating agency will have to question
each and every accused such materials collected during
investigation and in this process, the investigating agency would
be exposing the evidence collected by them with huge efforts
G using their men and resources and this would give a chance to
the accused to tamper with the evidence and to destroy the money
trail apart from paving the way for the accused to influence the
witnesses. If the contention of the appellant is to be accepted
that the accused will have to be questioned with the materials
H
P. CHIDAMBARAM v. DIRECTORATE OF ENFORCEMENT 177

and the investigating agency has to satisfy the court that the A
accused was “evasive” during interrogation, the court will have
to undertake a “mini trial” of scrutinizing the matter at
intermediary stages of investigation like interrogation of the
accused and the answers elicited from the accused and to find
out whether the answers given by the accused are ‘evasive’ or B
whether they are ‘satisfactory’ or not. This could have never been
the intention of the legislature either under PMLA or any other
statute. [Para 58][208-D-G]
4. Interrogation of the accused and the answers elicited
from the accused and the opinion whether the answers given by C
the accused are “satisfactory” or “evasive”, is purely within the
domain of the investigating agency and the court cannot substitute
its views by conducting mini trial at various stages of the
investigation. [Para 59][209-G-H]
5. The investigation of a cognizable offence and the various D
stages thereon including the interrogation of the accused is
exclusively reserved for the investigating agency whose powers
are unfettered so long as the investigating officer exercises his
investigating powers well within the provisions of the law and
the legal bounds. In exercise of its inherent power under Section
482 Cr.P.C., the court can interfere and issue appropriate direction E
only when the court is convinced that the power of the
investigating officer is exercised mala fide or where there is abuse
of power and non-compliance of the provisions of Code of Criminal
Procedure. However, this power of invoking inherent jurisdiction
to issue direction and interfering with the investigation is F
exercised only in rare cases where there is abuse of process or
non-compliance of the provisions of Criminal Procedure Code.
[Para 60][209-A-C]
King-Emperor v. Khwaja Nazir Ahmad AIR 1945 PC
18 : [1944] SCC Online PC 29; Abhinandan Jha and G
others v. Dinesh Mishra AIR 1968 SC 117 : [1967]
SCR 668; State of Bihar and another v. J.A.C. Saldanha
and others (1980) 1 SCC 554 : [1980] 2 SCR 16 –
relied on.
H
178 SUPREME COURT REPORTS [2019] 12 S.C.R.

A Dukhishyam Benupani, Asstt. Director, Enforcement
Directorate (FERA) v. Arun Kumar Bajoria (1998) 1
SCC 52 : [1997] 5 Suppl. SCR 566; M.C. Abraham
and Another v. State of Maharashtra and Others (2003)
2 SCC 649 : [2002] 5 Suppl. SCR 677; Subramanian
B Swamy v. Director, Central Bureau of Investigation and
another (2014) 8 SCC 682 : [2014] 6 SCR 873; Divine
Retreat Centre v. State of Kerala and Others (2008) 3
SCC 542 : [2008] 4 SCR 701; State of Bihar and
another v. P.P. Sharma, IAS and another 1992 Supp.
(1) 222 : [1991] 2 SCR 1 – referred to.
C
6. As held by the Supreme Court in a catena of judgments
that there is a well-defined and demarcated function in the field
of investigation and its subsequent adjudication. It is not the
function of the court to monitor the investigation process so long
as the investigation does not violate any provision of law. It must
D be left to the discretion of the investigating agency to decide the
course of investigation. If the court is to interfere in each and
every stage of the investigation and the interrogation of the
accused, it would affect the normal course of investigation. It
must be left to the investigating agency to proceed in its own
E manner in interrogation of the accused, nature of questions put
to him and the manner of interrogation of the accused.
[Para 64][211-C-E]
7. It is one thing to say that if the power of investigation
has been exercised by an investigating officer mala fide or non-
F compliance of the provisions of the Criminal Procedure Code in
the conduct of the investigation, it is open to the court to quash
the proceedings where there is a clear case of abuse of power. It
is a different matter that the High Court in exercise of its inherent
power under Section 482 Cr.P.C., the court can always issue
appropriate direction at the instance of an aggrieved person if
G
the High Court is convinced that the power of investigation has
been exercised by the investigating officer mala fide and not in
accordance with the provisions of the Criminal Procedure Code.
However, as pointed out earlier that power is to be exercised in
rare cases where there is a clear abuse of power and non-
H
P. CHIDAMBARAM v. DIRECTORATE OF ENFORCEMENT 179

compliance of the provisions falling under Chapter-XII of the A
Code of Criminal Procedure requiring the interference of the
High Court. In the initial stages of investigation where the court
is considering the question of grant of regular bail or pre-arrest
bail, it is not for the court to enter into the demarcated function
of the investigation and collection of evidence/materials for B
establishing the offence and interrogation of the accused and the
witnesses. [Para 65][211-E-H; 212-A]
Whether direction to produce the transcripts could be
issued:-
7A. Since the interrogation of the accused and the questions C
put to the accused and the answers given by the accused are part
of the investigation which is purely within the domain of the
investigation officer, unless satisfied that the police officer has
improperly and illegally exercised his investigating powers in
breach of any statutory provision, the court cannot interfere. In D
the present case, no direction could be issued to the respondent
to produce the transcripts of the questions put to the appellant
and answers given by the appellant. [Para 66][212-C-D]
Grant of Anticipatory bail in exceptional cases:-
8. Ordinarily, arrest is a part of procedure of the E
investigation to secure not only the presence of the accused but
several other purposes. Power under Section 438 Cr.P.C. is an
extraordinary power and the same has to be exercised sparingly.
The privilege of the pre-arrest bail should be granted only in
exceptional cases. The judicial discretion conferred upon the F
court has to be properly exercised after application of mind as to
the nature and gravity of the accusation; possibility of applicant
fleeing justice and other factors to decide whether it is a fit case
for grant of anticipatory bail. Grant of anticipatory bail to some
extent interferes in the sphere of investigation of an offence and
hence, the court must be circumspect while exercising such power G
for grant of anticipatory bail. Anticipatory bail is not to be granted
as a matter of rule and it has to be granted only when the court is
convinced that exceptional circumstances exist to resort to that
extraordinary remedy. [Para 67][212-E-G]
H
180 SUPREME COURT REPORTS [2019] 12 S.C.R.

A State of M.P. and another v. Ram Kishna Balothia and
another (1995) 3 SCC 221 : [1995] 1 SCR 897; State
Rep. By The CBI v. Anil Sharma (1997) 7 SCC 187 :
[1997] 3 Suppl. SCR 737 ; Sudhir v. State of
Maharashtra and Another (2016) 1 SCC 146 : [2015]
B 12 SCR 387; Assistant Director, Directorate of
Enforcement v. Hassan Ali Khan (2011) 12 SCC 684;
Adri Dharan Das v. State of W.B. (2005) 4 SCC 303 :
[2005] 2 SCR 188; Siddharam Satlingappa Mhetre v.
State of Maharashtra and Others (2011) 1 SCC 694 :
[2010] 15 SCR 201; Jai Prakash Singh v. State of Bihar
C and another (2012) 4 SCC 379 : [2012] 5 SCR 1 75 –
relied on.
9. Ordinarily, arrest is a part of the process of the
investigation intended to secure several purposes. There may
be circumstances in which the accused may provide information
D leading to discovery of material facts and relevant information.
Grant of anticipatory bail may hamper the investigation. Pre-arrest
bail is to strike a balance between the individual’s right to
personal freedom and the right of the investigating agency to
interrogate the accused as to the material so far collected and to
E collect more information which may lead to recovery of relevant
information. [Para 72][214-E-F]
Directorate of Enforcement v. Ashok Kumar Jain (1998)
2 SCC 105 : [1998] 1 SCR 57 ; State of Gujarat v.
Mohanlal Jitamalji Porwal and others (1987) 2 SCC
F 364 : [1987] (2) SCR 677 ; Y.S. Jagan Mohan Reddy v.
CBI (2013) 7 SCC 439 : [2013] SCR 547 – relied on.
Enforcement Officer, Ted, Bombay v. Bher Chand Tikaji
Bora and others (1999) 5 SCC 720 – referred to.
10. Power under Section 438 Cr.P.C. being an extraordinary
G remedy, has to be exercised sparingly; more so, in cases of
economic offences. Economic offences stand as a different class
as they affect the economic fabric of the society. In Directorate of
Enforcement v. Ashok Kumar Jain, it was held that in economic
offences, the accused is not entitled to anticipatory bail. The
H
P. CHIDAMBARAM v. DIRECTORATE OF ENFORCEMENT 181

Solicitor General submitted that the “Scheduled offence” and A
“offence of money laundering” are independent of each other
and PMLA being a special enactment applicable to the offence of
money laundering is not a fit case for grant of anticipatory bail.
The Solicitor General submitted that money laundering being an
economic offence committed with much planning and deliberate B
design poses a serious threat to the nation’s economy and
financial integrity and in order to unearth the laundering and trail
of money, custodial interrogation of the appellant is necessary.
Grant of anticipatory bail at the stage of investigation may frustrate
the investigating agency in interrogating the accused and in
collecting the useful information and also the materials which C
might have been concealed. Success in such interrogation would
elude if the accused knows that he is protected by the order of
the court. Grant of anticipatory bail, particularly in economic
offences would definitely hamper the effective investigation.
Having regard to the materials said to have been collected by D
the respondent-Enforcement Directorate and considering the
stage of the investigation, this Court is of the view that it is not a
fit case to grant anticipatory bail. [Paras 76, 77 and 81][216-E-G;
218-B-C]
Shri Gurbaksh Singh Sibbia and others v. State of E
Punjab (1980) 2 SCC 565 : [1980] 3 SCR 383;
Additional District Magistrate, Jabalpur v. Shivakant
Shukla (1976) 2 SCC 521 : [1976] Suppl. SCR 172 ;
Rao Shiv Bahadur Singh and another v. State of Vindhya
Pradesh AIR 1953 SC 394 : [1953] SCR 1188; Santosh
F
s/o Dwarkadas Fafat v. State of Maharashtra (2017) 9
SCC 714 : [2017] 10 SCR 129; Jai Prakash Singh v.
State of Bihar and Another (2012) 4 SCC 379 : [2012]
5 SCR 1; Nikesh Tarachand Shah v. Union of India
and another (2018) 11 SCC 1 : [2017] 12 SCR 358 –
referred to. G
Case Law Reference
[1980] 3 SCR 383 referred to Para 3
[1976] Suppl. SCR 172 referred to Para 16
H
182 SUPREME COURT REPORTS [2019] 12 S.C.R.

A [1953] SCR 1188 referred to Para 16
[2017] 10 SCR 129 referred to Para 17
[2018] 11 SCR 951 referred to Para 51
[2012] 5 SCR 1 referred to Para 20
B [1997] 3 Suppl. SCR 247 referred to Para 20
[2017] 12 SCR 358 referred to Para 37
[2017] 5 SCR 367 referred to Para 49
[2005] 3 Suppl. SCR 800 relied on Para 50
C
[2007] 11 SCR 615 referred to Para 50
[1991] 2 SCR 256 referred to Para 50
[1997] 6 Suppl. SCR 153 referred to Para 51
[1988] 3 Suppl. SCR 524 relied on Para 51
D
[1967] SCR 668 relied on Para 62
[1980] 2 SCR 16 relied on Para 62
[1997] 5 Suppl. SCR 566 referred to Para 62
[2002] 5 Suppl. SCR 677 referred to Para 62
E
[2014] 6 SCR 873 referred to Para 62
[2008] 4 SCR 701 referred to Para 62
[1991] 2 SCR 1 referred to Para 63

F [1995] 1 SCR 897 relied on Para 69
[1997] 3 Suppl. SCR 737 referred to Para 71
[2015] 12 SCR 387 referred to Para 71
(2011) 12 SCC 684 referred to Para 71
G [2005] 2 SCR 188 relied on Para 73
[2010] 15 SCR 201 referred to Para 74
[2012] 5 SCR 1 relied on Para 75
[1998] 1 SCR 57 relied on Para 76
H
P. CHIDAMBARAM v. DIRECTORATE OF ENFORCEMENT 183

[1987] 2 SCR 677 relied on Para 78 A
[2013] SCR 547 relied on Para 79
(1999) 5 SCC 720 referred to Para 80
CRIMINAL APPELLATE JURISDICTION: Criminal Appeal No.
1340 of 2019 B
From the Judgment and Order dated 20.08.2019 of the High Court
of Delhi at New Delhi in Bail Application No. 1713 of 2018.
Kapil Sibal, Dr. Abhishek Manu Singhvi, Sr. Advs., Kunal Vajani,
Arshdeep Singh Khurana, Amit Bhandari, Adit Pujari, Hitesh Rai, Akshat
Gupta, Ayush Agarwal, Karan Gogna, Aamir Khan, Aman Singh Brar, C
Akshay Sahni, Avishkar Singhavi, Mrs. Shally Bhasin, Advs. for the
Appellant.
Tushar Mehta, SG, K. M. Natraj, ASG, Ms. Sonia Mathur, Sr.
Adv., Zoheb Hossain, Rajat Nair, Ms. Kanu Aggarwal, A.K. Sharma,
Rajeev Ranjan, Bhuvan Kapoor, Varun Chugh, B. Krishna Prasad, Advs. D
for the Respondent.
The Judgment of the Court was delivered by
R. BANUMATHI, J.
1. Leave granted. E
2. This appeal relates to the alleged irregularities in Foreign
Investment Promotion Board (FIPB) clearance given to the INX Media
for receiving foreign investment to the tune of Rs.305 crores against
approved inflow of Rs.4.62 crores. The High Court of Delhi rejected
the appellant’s plea for anticipatory bail in the case registered by Central F
Bureau of Investigation (CBI) being RC No.220/2017-E-0011 under
Section 120B IPC read with Section 420 IPC, Section 8 and Section
13(2) read with Section 13(1)(d) of the Prevention of Corruption Act,
1988. By the impugned order dated 20.08.2019, the High Court also
refused to grant anticipatory bail in the case registered by the
Enforcement Directorate in ECIR No.07/HIU/2017 punishable under G
Sections 3 and 4 of the Prevention of Money-Laundering Act, 2002.
3. Grievance of the appellant is that against the impugned order
of the High Court, the appellant tried to get the matter listed in the Supreme
Court on 21.08.2019; but the appellant could not get an urgent hearing in
H
184 SUPREME COURT REPORTS [2019] 12 S.C.R.

A the Supreme Court seeking stay of the impugned order of the High Court.
The appellant was arrested by the CBI on the night of 21.08.2019. Since
the appellant was arrested and remanded to custody in CBI case, in
view of the judgment of the Constitution Bench in Shri Gurbaksh Singh
Sibbia and others v. State of Punjab (1980) 2 SCC 565, the appellant
cannot seek anticipatory bail after he is arrested. Accordingly, SLP(Crl.)
B
No.7525 of 2019 preferred by the appellant qua the CBI case was
dismissed as infructuous vide order dated 26.08.2019 on the ground that
the appellant has already been arrested and remanded to custody. This
Court granted liberty to the appellant to work out his remedy in accordance
with law.
C 4. On 15.05.2017, CBI registered FIR in RC No.220/2017-E-0011
under Section 120B IPC read with Section 420 IPC, Section 8 and Section
13(2) read with Section 13(1)(d) of the Prevention of Corruption Act,
1988 against the accused viz. (i) INX Media through its Director Indrani
Mukherjea; (ii) INX News through its Director Sh. Pratim Mukherjea
D @ Peter Mukherjea and others; (iii) Sh. Karti P. Chidambaram; (iv)
Chess Management Services through its Director Sh. Karti P.
Chidambaram and others; (v) Advantage Strategic Consulting through
its Director Ms. Padma Vishwanathan @ Padma Bhaskararaman and
others; (vi) unknown officers/officials of Ministry of Finance, Govt. of
India; and (vii) other unknown persons for the alleged irregularities in
E giving FIPB’s clearance to INX Media to receive overseas funds of
Rs.305 crores against approved Foreign Direct Investment (FDI) of
Rs.4.62 crores.
5. Case of the prosecution in the predicate offence is that in 2007,
INX Media Pvt. Ltd. approached Foreign Investment Promotion Board
F (FIPB) seeking approval for FDI upto 46.216 per cent of the issued
equity capital. While sending the proposal by INX Media to be placed
before the FIPB, INX Media had clearly mentioned in it the inflow of
FDI to the extent of Rs.4,62,16,000/- taking the proposed issue at its
face value. The FIPB in its meeting held on 18.05.2007 recommended
G the proposal of INX Media subject to the approval of the Finance Minister-
the appellant. In the meeting, the Board did not approve the downstream
investment by INX Media in INX News. In violation of the conditions of
the approval, the recommendation of FIPB:- (i) INX Media deliberately
made a downstream investment to the extent of 26% in the capital of
INX News Ltd. without specific approval of FIPB which included indirect
H
P. CHIDAMBARAM v. DIRECTORATE OF ENFORCEMENT 185
[R. BANUMATHI, J.]

foreign investment by the same Foreign Investors; (ii) generated more A
than Rs.305 crores FDI in INX Media which is in clear violation of the
approved foreign flow of Rs.4.62 crores by issuing shares to the foreign
investors at a premium of more than Rs.800/- per share.
6. Upon receipt of a complaint on the basis of a cheque for an
amount of Rs.10,00,000/- made in favour of M/s Advantage Strategic B
Consulting Private Limited (ASCPL) by INX Media, the investigation
wing of the Income Tax Department proceeded to investigate the matter
and the relevant information was sought from the FIPB, which in turn,
vide its letter dated 26.05.2008 sought clarification from the INX Media
which justified its action saying that the downstream investment has
been authorised and that the same was made in accordance with the C
approval of FIPB. It is alleged by the prosecution that in order to get out
of the situation without any penal provision, INX Media entered into a
criminal conspiracy with Sh. Karti Chidambaram, Promoter Director,
Chess Management Services Pvt. Ltd. and the appellant-the then Finance
Minister of India. INX Media through the letter dated 26.06.2008 tried D
to justify their action stating that the downstream investment has been
approved and the same was made in accordance with approval.
7. The FIR further alleges that for the services rendered by Sh.
Karti Chidambaram to INX Media through Chess Management Services
in getting the issues scuttled by influencing the public servants of FIPB E
unit of the Ministry of Finance, consideration in the form of payments
were received against invoices raised on INX Media by ASCPL. It is
alleged in the FIR that the very reason for getting the invoices raised in
the name of ASCPL for the services rendered by Chess Management
Services was with a view to conceal the identity of Sh. Karti
Chidambaram inasmuch as on the day when the invoices were raised F
and payment was received. It is stated that Sh. Karti Chidambaram was
the Promoter, Director of Chess Management Services whereas ASCPL
was being controlled by him indirectly. It is alleged that the invoices
approximately for an amount of Rs.3.50 crores were falsely got raised
in favour of INX Media in the name of other companies in which Sh. G
Karti Chidambaram was having sustainable interest either directly or
indirectly. It is alleged that such invoices were falsely got raised for
creation of acquisition of media content, consultancy in respect of market
research, acquisition of content of various genre of Audio-Video etc. It
is alleged that INX Media Group in his record has clearly mentioned the
H
186 SUPREME COURT REPORTS [2019] 12 S.C.R.

A purpose of payment of Rs.10,00,000/- to ASCPL as towards
“management consultancy charges towards FIPB notification and
clarification”. Alleging that the above acts of omission and commission
prima facie disclose commission of offence, CBI has registered FIR in
RC No.220/2017-E-0011 on 15.05.2017 under Section 120B read with
Section 420 IPC, Section 8 and Section 13(2) read with Section 13(1)(d)
B
of the Prevention of Corruption Act, 1988 against the aforesaid accused.
8. On the basis of the said FIR registered by CBI, the Enforcement
Directorate registered a case in ECIR No.07/HIU/2017 against the
aforesaid accused persons for allegedly committing the offence
punishable under Sections 3 and 4 of the Prevention of Money-Laundering
C Act, 2002 (PMLA). Ever since the registration of the cases in 2017,
there were various proceedings seeking bail and number of other
proceedings pending filed by Sh. Karti Chidambaram and other accused.
Finally, the Delhi High Court granted bail to Sh. Karti Chidambaram in
INX Media case filed by CBI on 23.03.2018. Thereafter, the appellant
D moved Delhi High Court seeking anticipatory bail both in CBI case and
also in money-laundering case filed by Enforcement Directorate. On
25.07.2018, the Delhi High Court granted the appellant interim protection
from arrest in both the cases and the same was extended till 20.08.2019
– the date on which the High Court dismissed the appellant’s petition
refusing to grant anticipatory bail.
E
9. The High Court dismissed the application refusing to grant
anticipatory bail to the appellant by holding that “it is a classic case of
money-laundering”. The High Court observed that “it is a clear case
of money-laundering”. The learned Single Judge dismissed the
application for anticipatory bail by holding “that the alleged irregularities
F committed by the appellant makes out a prima facie case for refusing
pre-arrest bail to the appellant”. The learned Single Judge also held
that “considering the gravity of the offence and the evasive reply
given by the appellant to the questions put to him while he was
under the protective cover extended to him by the court are the twin
G factors which weigh to deny the pre-arrest bail to the appellant”.
Being aggrieved, the appellant has preferred this appeal.
10. Lengthy arguments were heard on number of hearings
stretched over for long time. Learned Senior counsel appearing for the
appellant Mr. Kapil Sibal and Mr. Abhishek Manu Singhvi made
H meticulous submissions on the concept of life and liberty enshrined in
P. CHIDAMBARAM v. DIRECTORATE OF ENFORCEMENT 187
[R. BANUMATHI, J.]

Article 21 of the Constitution of India to urge that the appellant is entitled A
to the privilege of anticipatory bail. Arguments were also advanced on
various aspects – whether the court can look into the materials produced
by the respondent-Enforcement Directorate to seek custody of the
appellant when the appellant was not confronted with those documents
on the three dates of interrogation of the appellant conducted on
B
19.12.2018, 01.01.2019 and 21.01.2019. Interlocutory application was
filed by the appellant to produce the transcripts of the questions put to
the appellant and the answers given by the appellant, recorded by
Enforcement Directorate. Countering the above submissions, Mr. Tushar
Mehta, learned Solicitor General made the submissions that grant of
anticipatory bail is not part of Article 21 of the Constitution of India. Mr. C
Tushar Mehta urged that having regard to the materials collected by the
respondent-Enforcement Directorate and the specific inputs and in view
of the provisions of the special enactment-PMLA, custodial interrogation
of the appellant is required and the appellant is not entitled to the privilege
of anticipatory bail.
D
Contention of Mr. Kapil Sibal, learned Senior counsel:-
11. Mr. Kapil Sibal, learned Senior counsel appearing on behalf of
the appellant submitted that the clearance for INX FDI was approved
by Foreign Investment Promotion Board (FIPB) consisting of six
Secretaries and the appellant as the then Finance Minister granted E
approval in the normal course of official business. The learned Senior
counsel submitted that the crux of the allegation is that the appellant’s
son Sh. Karti Chidambaram tried to influence the officials of FIPB for
granting ex-post facto approval for downstream investment by INX
Media to INX News; whereas neither the Board members of FIPB nor
the officials of FIPB have stated anything about the appellant’s son Sh. F
Karti Chidambaram that he approached and influenced them for ex-
post facto approval. The learned Senior counsel contended that the
entire case alleges about money paid to ASCPL and Sh. Karti
Chidambaram is neither the share-holder nor a Director in the said
ASCPL; but the Enforcement Directorate has falsely alleged that Sh. G
Karti Chidambaram has been controlling the company-ASCPL. It was
submitted that the appellant has nothing to do with the said ASCPL to
whom money has been paid by INX Media.
12. Taking us through the impugned judgment and the note said to
have been submitted by the Enforcement Directorate before the High H
188 SUPREME COURT REPORTS [2019] 12 S.C.R.

A Court, the learned Senior counsel submitted that the learned Single Judge
has “copied and pasted” paragraphs after paragraphs of the note given
by the respondent in the court. It was urged that there was no basis for
the allegations contained in the said note to substantiate the alleged
transactions/transfer of money as stated in the tabular column given in
the impugned order.
B
13. So far as the sealed cover containing the materials sought to
be handed over by the Enforcement Directorate, the learned Senior
counsel raised strong objections and submitted that the Enforcement
Directorate cannot randomly produce the documents in the court “behind
the back” of the appellant for seeking custody of the appellant. Strong
C objections were raised for the plea of Enforcement Directorate requesting
the court to receive the sealed cover and for looking into the documents/
material collected during the investigation allegedly showing the trail of
money in the name of companies and the money-laundering.
14. The appellant was interrogated by the respondent on three
D dates viz. 19.12.2018, 01.01.2019 and 21.01.2019. So far as the
observation of the High Court that the appellant was “evasive” during
interrogation, the learned Senior counsel submitted that the appellant
has well cooperated with the respondent and the respondent cannot allege
that the appellant was “non-cooperative”. On behalf of the appellant, an
E application has also been filed seeking direction to the respondent to
produce the transcripts of the questioning conducted on 19.12.2018,
01.01.2019 and 21.01.2019. The learned Senior counsel submitted that
the transcripts will show whether the appellant was “evasive” or not
during his questioning as alleged by the respondent.

F 15. Learned Senior counsel submitted that the provision for
anticipatory bail i.e. Section 438 Cr.P.C. has to be interpreted in a fair
and reasonable manner and while so, the High Court has mechanically
rejected the anticipatory bail. It was further submitted that in case of
offences of the nature alleged, everything is borne out by the records
and there is no question of the appellant being “evasive”. The learned
G Senior counsel also submitted that co-accused Sh. Karti Chidambaram
and Padma Bhaskararaman were granted bail and the other accused
Indrani Mukherjea and Sh. Pratim Mukherjea @ Peter Mukherjea are
on statutory bail and the appellant is entitled to bail on parity also.
Contention of Mr. Abhishek Manu Singhvi, learned Senior
H counsel:-
P. CHIDAMBARAM v. DIRECTORATE OF ENFORCEMENT 189
[R. BANUMATHI, J.]

16. Reiterating the submission of Mr. Kapil Sibal, Mr. Abhishek A
Manu Singhvi, learned Senior counsel submitted that the Enforcement
Directorate cannot say that the appellant was “non-cooperative” and
“evasive”. Mr. Singhvi also urged for production of transcripts i.e.
questions put to the appellant and the answers which would show whether
the appellant has properly responded to the questions or not. Placing
B
reliance upon Additional District Magistrate, Jabalpur v. Shivakant
Shukla (1976) 2 SCC 521, the learned Senior counsel submitted that
the respondent cannot rely upon the documents without furnishing those
documents to the appellant or without questioning the appellant about
the materials collected during the investigation. Reiterating the submission
of Mr. Sibal, Mr. Singhvi contended that the High Court has denied C
anticipatory bail to the appellant on the basis of materials produced by
the respondent in the cover before the court which were never shown to
the appellant nor was the appellant confronted with the same. The learned
Senior counsel submitted that the alleged occurrence was of the year
2007-08 and Sections 420 IPC and 120B IPC and Section 13 of the
D
Prevention of Corruption Act were not part of the “scheduled offence”
of Prevention of Money-Laundering Act in 2008 and were introduced
by a notification dated 01.06.2009 and in view of the protection given
under Article 20(1) of the Constitution of India, there can never be a
retrospective operation of a criminal/penal statute. Placing reliance upon
Rao Shiv Bahadur Singh and another v. State of Vindhya Pradesh E
AIR 1953 SC 394, it was contended that the appellant has to substantiate
the contention that the acts charged as offences were offences “at the
time of commission of the offence”. The learned Senior counsel urged
that in 2007-2008 when the alleged acts of commission and omission
were committed, they were not “scheduled offences” and hence
F
prosecution under Prevention of Money-Laundering Act, 2002 is not
maintainable.
17. The learned Senior counsel has taken strong exception to the
two factors stated by the High Court in the impugned order for denying
pre-arrest bail i.e. (i) gravity of the offence; and (ii) the appellant was
“evasive” to deny the anticipatory bail. The learned Senior counsel G
submitted that the “gravity of the offence” cannot be the perception of
the individual or the court and the test for “gravity of the offence” should
be the punishment prescribed by the statute for the offence committed.
Insofar as the finding of the High Court that “the appellant was evasive
to the questions”, the learned Senior counsel submitted that the H
190 SUPREME COURT REPORTS [2019] 12 S.C.R.

A investigating agency-Enforcement Directorate cannot expect an accused
to give answers in the manner they want and that the accused is entitled
to protection under Article 20(3) of the Constitution of India. Reliance
was placed upon Santosh s/o Dwarkadas Fafat v. State of
Maharashtra (2017) 9 SCC 714.
B Contention of Mr. Tushar Mehta, learned Solicitor
General:-
18. Taking us through the Statement of Objects and Reasons
and salient features of the PMLA, the learned Solicitor General submitted
that India is a part of the global community having responsibility to
C crackdown on money-laundering with an effective legislation and PMLA
is a result of the joint initiatives taken by several nations. Taking us
through the various provisions of the PMLA, the learned Solicitor General
submitted that money-laundering poses a serious threat to the financial
system and financial integrity of the nation and has to be sternly dealt
with. It was submitted that PMLA offence has two dimensions –
D predicate offence and money-laundering. Money-laundering is a separate
and independent offence punishable under Section 4 read with Section 3
of the PMLA.
19. Learned Solicitor General submitted that under Section 19 of
PMLA, specified officers, on the basis of material in possession, having
E reason to believe which is to be recorded in writing that the person has
been guilty of the offence under the Act, have power to arrest. It was
urged that the power to arrest and necessary safeguards are enshrined
under Section 19 of the Act. It was submitted that since respondent has
collected cogent materials to show that it is a case of money-laundering
F and the Enforcement Directorate has issued Letter rogatory and if the
Court intervenes by granting anticipatory bail, the authority cannot
exercise the statutory right of arrest and interrogate the appellant.
20. The learned Solicitor General submitted that they have obtained
specific inputs from overseas banks and also about the companies and
G properties and it is a clear case of money-laundering. The learned Solicitor
General submitted that the Court has power to look into the materials so
collected by the Enforcement Directorate and the same cannot be shared
with the appellant at this initial stage when the Court is considering the
matter for grant of pre-arrest bail. Relying upon number of judgments,
the learned Solicitor General has submitted that as a matter of practice,
H
P. CHIDAMBARAM v. DIRECTORATE OF ENFORCEMENT 191
[R. BANUMATHI, J.]

Courts have always perused the case diaries produced by the prosecution A
and receive and peruse the materials/documents to satisfy its judicial
conscience. In support of his contention, learned Solicitor General placed
reliance upon Romila Thapar and Others v. Union of India and Others
(2018) 10 SCC 753, Jai Prakash Singh v. State of Bihar and Another
(2012) 4 SCC 379 and Directorate of Enforcement and Another v.
B
P.V. Prabhakar Rao (1997) 6 SCC 647 and other judgments and
requested the Court to peruse the materials produced by the Enforcement
Directorate in the sealed cover.
21. Opposing the grant of anticipatory bail, the learned Solicitor
General submitted that the Enforcement Directorate has cogent evidence
to prove that it is a case of money-laundering and there is a need of C
custodial interrogation of the appellant. The learned Solicitor General
submitted that the economic offences stand as a class apart and custodial
interrogation is required for the Enforcement Directorate to trace the
trail of money and prayed for dismissal of the appeal.
22. As noted earlier, the predicate offences are under Sections D
120B IPC and 420 IPC, Section 8 and Section 13(2) read with Section
13(1)(d) of Prevention of Corruption Act. Case is registered against the
appellant and others under Sections 3 and 4 of PMLA. The main point
falling for consideration is whether the appellant is entitled to the privilege
of anticipatory bail. In order to consider whether the appellant is to be E
granted the privilege of anticipatory bail, it is necessary to consider the
salient features of the special enactment – Prevention of Money-
Laundering Act, 2002.
23. Prevention of Money-laundering Act, 2002 – Special
Enactment:- Money-laundering is the process of concealing illicit F
sources of money and the launderer transforming the money proceeds
derived from criminal activity into funds and moved to other institution
or transformed into legitimate asset. It is realised world around that money
laundering poses a serious threat not only to the financial systems of the
countries but also to their integrity and sovereignty. The Prevention of
Money-laundering Act, 2002 was enacted in pursuance of the Political G
Declaration adopted by the Special Session of the United Nations General
Assembly held in June 1998, calling upon the Member States to adopt
national money-laundering legislation and programme, primarily with a
view to meet out the serious threat posed by money laundering to the
financial system of the countries and to their integrity and sovereignty. H
192 SUPREME COURT REPORTS [2019] 12 S.C.R.

A 24. Statement of Objects and Reasons to the Prevention of
Money-laundering Act, 2002 recognises that money laundering poses a
serious threat not only to the financial systems of the countries but also
to their integrity and sovereignty. PMLA is a special enactment containing
the provisions with adequate safeguards with a view to prevent money-
laundering. The Preamble to the Prevention of Money-Laundering Act,
B
2002 states that “An Act to prevent money-laundering and to provide
for confiscation of property derived from, or involved in, money-
laundering and for matters connected therewith or incidental
thereto.”
25. Chapter II of PMLA contains provisions relating to the
C offences of money-laundering. Section 2(1)(p) of PMLA defines “money-
laundering” that it has the same meaning assigned to it in Section 3.
Section 2(1)(ra) of PMLA defines “offence of cross border implications”.
To prevent offences of “cross border implications”, PMLA contains
Sections 55 to 61 dealing with reciprocal arrangement for assistance in
D certain matters and procedure for attachment and confiscation of property
between the contracting States with regard to the offences of money-
laundering and predicate offences. Section 2(1)(y) of PMLA defines
“scheduled offence” which reads as under:-
“2. Definitions –
E (1)……
(y) “scheduled offence” means –
(i) the offences specified under Part A of the Scheduled; or
(ii) the offences specified under Part B of the Schedule if
F the total value involved in such offences is one crore
rupees or more; or
(iii) the offences specified under Part C of the Schedule.”
“Scheduled Offence” is a sine qua non for the offence of money-
laundering which would generate the money that is being laundered.
G PMLA contains Schedules which originally contained three parts namely
Part A, Part B and Part C. Part A contains various paragraphs which
enumerate offences under the Indian Penal Code, Narcotic Drugs and
Psychotropic Substances Act, 1985, offences under the Explosives
Substances Act, 1908 and the offences under the Prevention of Corruption
H Act, 1988 (paragraph 8) etc. The Schedule was amended by Act 21 of
P. CHIDAMBARAM v. DIRECTORATE OF ENFORCEMENT 193
[R. BANUMATHI, J.]

2009 (w.e.f. 01.06.2009). Section 13 of Prevention of Corruption Act A
was inserted in the Part A of the Schedule to PMLA by the Amendment
Act, 16 of 2018 (w.e.f. 26.07.2018).
26. Section 3 of PMLA stipulates “money-laundering” to be an
offence. Section 3 of PMLA states that whosoever directly or indirectly
attempts to indulge or knowingly assists or knowingly is a party or is B
actually involved in any process or activity connected with the proceeds
of the crime and projecting it as untainted property shall be guilty of the
offences of money laundering. The provisions of the PMLA including
Section 3 have undergone various amendments. The words in Section 3
“with the proceeds of crime and projecting” has been amended as
“proceeds of crime including its concealment, possession, acquisition C
or use and projecting or claiming” by the Amendment Act 2 of 2013
(w.e.f. 15.02.2013).
27. Section 4 of PMLA deals with punishment for money
laundering. Prior to Amendment Act 2 of 2013, Section 4 provided
punishment with rigorous imprisonment for a term which shall not be D
less than three years but which may extend to seven years and the fine
which may extend to Rs.5,00,000/-. By Amendment Act 2 of 2013,
Section 4 is amended w.e.f. 15.02.2013 vide S.O. 343(E) dated
08.02.2013. Now, the punishment prescribed under Section 4 of PMLA
to the offender is rigorous imprisonment for a term which shall not be E
less than three years but which may extend to seven years and the
offender is also liable to pay fine. The limit of fine has been done away
with and now after the amendment, appropriate fine even above
Rs.5,00,000/- can be imposed against the offender.
28. Section 5 of PMLA which provides for attachment of property F
involved in money laundering, states that where the Director or any
other officer not below the rank of Deputy Director authorised by the
Director for the purposes of this Section, has “reason to believe” (the
reason for such belief to be recorded in writing), on the basis of
material in his possession, that (a) any person is in possession of any
proceeds of crime; and (b) such proceeds of crime are likely to be G
concealed, transferred or dealt with in any manner which may result in
frustrating any proceedings relating to confiscation of such proceeds of
crime under Chapter III, he may, by order in writing, provisionally attach
such property for a period not exceeding one hundred and fifty days
from the date of the order, in such manner as may be prescribed. Section H
194 SUPREME COURT REPORTS [2019] 12 S.C.R.

A 5 provides that no such order of attachment shall be made unless, in
relation to the scheduled offence, a report has been forwarded to a
Magistrate under Section 173 of the Code of Criminal Procedure, 1973
(2 of 1974), or a complaint has been filed by a person authorised to
investigate the offence mentioned in that Schedule, before a Magistrate
or court for taking cognizance of the scheduled offence, as the case
B
may be.
29. The term “reason to believe” is not defined in PMLA. The
expression “reason to believe” has been defined in Section 26 of IPC.
As per the definition in Section 26 IPC, a person is said to have “reason
to believe” a thing, if he has sufficient cause to believe that thing but
C not otherwise. The specified officer must have “reason to believe” on
the basis of material in his possession that the property sought to be
attached is likely to be concealed, transferred or dealt with in a manner
which may result in frustrating any proceedings for confiscation of their
property under the Act. It is stated that in the present case, exercising
D power under Section 5 of the PMLA, the Adjudicating Authority had
attached some of the properties of the appellant. Challenging the
attachment, the appellant and others are said to have preferred appeal
before the Appellate Tribunal and stay has been granted by the Appellate
Authority and the said appeal is stated to be pending.
E 30. As rightly submitted by the learned Solicitor General, sufficient
safeguards are provided under the provisions of PMLA. Under Section
5 of PMLA, the Director or any other officer not below the rank of
Deputy Director authorised by the Director for the purposes of Section
5 who passed the impugned order is required to have “reason to
believe” that the properties sought to be attached would be transferred
F or dealt with in a manner which would frustrate the proceedings relating
to confiscation of such properties. Further, the officer who passed the
order of attachment is required to record the reasons for such belief.
The provisions of the PMLA and the Rules also provide for manner of
forwarding a copy of the order of provisional attachment of property
G along with material under sub-section (2) of Section 5 of PMLA to the
Adjudicating Authority.
31. In order to ensure the safeguards, in exercise of power under
Section 73 of PMLA, the Central Government has framed “The
Prevention of Money-Laundering (The Manner of Forwarding a
H Copy of the Order of Provisional Attachment of Property along with
P. CHIDAMBARAM v. DIRECTORATE OF ENFORCEMENT 195
[R. BANUMATHI, J.]

the Material, and Copy of the Reasons along with the Material in A
respect of Survey, to the Adjudicating Authority and its period of
Retention) Rules, 2005”. Rule 3 of the said Rules provides for manner
of forwarding a copy of the order of provisional attachment of property
along with the material under sub-section (2) of Section 5 of the Act to
the Adjudicating Authority. Rule 3 stipulates various safeguards as to
B
the confidentiality of the sealed envelope sent to the Adjudicating
Authority.
32. Section 17 of PMLA deals with the search and seizure. Section
17 which deals with search and seizure states that where the Director
or any other officer not below the rank of Deputy Director authorised
by him for the purposes of this section on the basis of the information in C
his possession has “reason to believe” (reason for such belief to be
recorded in writing) that any person has committed an offence which
constitutes the money laundering or is in possession of any proceeds of
crime involved in money laundering etc. may search building, place and
seize any record or property found as a result of such search. Section 17 D
of PMLA also uses the expression “reason to believe” and “reason
for such belief to be recorded in writing”. Here again, the authorised
officer shall immediately on search and seizure or upon issuance of
freezing order forward a copy of the reasons so recorded along with the
material in his possession to the Adjudicating Authority in a “sealed
envelope” in the manner as may be prescribed and such Adjudicating E
Authority shall keep such reasons and material for such period as may
be prescribed. In order to ensure the sanctity of the search and seizure
and to ensure the safeguards, in exercise of power under Section 73 of
PMLA, the Central Government has framed “The Prevention of
Money-Laundering (Forms, Search and Seizure or Freezing and F
the Manner of Forwarding the Reasons and Material to the
Adjudicating Authority, Impounding and Custody of Records and
the period of Retention) Rules, 2005”.
33. Section 19 of PMLA deals with the power of the specified
officer to arrest. Under sub-section (1) of Section 19 of PMLA, the G
specified officer viz. the Director, the Deputy Director, Assistant Director
or any other officer authorised in this behalf by the Central Government
by general or special order, on the basis of the material in possession,
having “reason to believe” and “reasons for such belief be recorded
in writing” that the person has been guilty of offence punishable under
H
196 SUPREME COURT REPORTS [2019] 12 S.C.R.

A the PMLA, has power to arrest such person. The authorised officer is
required to inform the accused the grounds for such arrest at the earliest
and in terms of sub-section (3) of Section 19 of the Act, the arrested
person is required to be produced to the jurisdictional Judicial Magistrate
or Metropolitan Magistrate within 24 hours excluding the journey time
from the place of arrest to the Magistrate’s Court. In order to ensure the
B
safeguards, in exercise of power under Section 73 of the Act, the Central
Government has framed “The Prevention of Money-Laundering (The
Forms and the Manner of Forwarding a Copy of Order of Arrest of
a Person along with the Material to the Adjudicating Authority and
its Period of Retention) Rules, 2005”. Rule 3 of the said Rules requires
C the arresting officer to forward a copy of order of arrest and the material
to the Adjudicating Authority in a sealed cover marked “confidential”
and Rule 3 provides for the manner in maintaining the confidentiality of
the contents.
34. As rightly submitted by Mr. Tushar Mehta, the procedure under
D PMLA for arrest ensures sufficient safeguards viz.:- (i) only the specified
officers are authorised to arrest; (ii) based on “reasons to believe”
that an offence punishable under the Act has been committed; (iii) the
reasons for such belief to be recorded in writing; (iv) evidence and the
material submitted to the Adjudicating Authority in sealed envelope in
the manner as may be prescribed ensuring the safeguards in maintaining
E the confidentiality; and (v) every person arrested under PMLA to be
produced before the Judicial Magistrate or Metropolitan Magistrate within
24 hours. Section 19 of PMLA provides for the power to arrest to the
specified officer on the basis of material in his possession and has “reason
to believe” and the “reasons for such belief to be recorded in
F writing” that any person has been guilty of an offence punishable under
PMLA. The statutory power has been vested upon the specified officers
of higher rank to arrest the person whom the officer has “reason to
believe” that such person has been guilty of an offence punishable
under PMLA. In cases of PMLA, in exercising the power to grant
anticipatory bail would be to scuttle the statutory power of the specified
G officers to arrest which is enshrined in the statute with sufficient
safeguards.
35. Section 71 of PMLA gives overriding effect to the provisions
of PMLA. Section 71 of PMLA states that the provisions of the Act
would have overriding effect on the provisions of all other Acts applicable.
H
P. CHIDAMBARAM v. DIRECTORATE OF ENFORCEMENT 197
[R. BANUMATHI, J.]

The provisions of PMLA shall prevail over the contrary provisions of A
the other Acts. Section 65 of PMLA states that the provisions of Code
of Criminal Procedure, 1973 shall apply to the provisions under the Act
insofar as they are not inconsistent with the provisions of PMLA.
36. Insofar as the issue of grant of bail is concerned, Section 45
of PMLA starts with non-obstante clause. Section 45 imposes two B
conditions for grant of bail to any person accused of any offence
punishable for a term of imprisonment of more than three years under
Part-A of the Schedule of the Act viz., (i) that the prosecutor must be
given an opportunity to oppose the application for such bail; (ii) that the
court must be satisfied that there are reasonable grounds for believing
that the accused persons is not guilty of such offence and that he is not C
likely to commit any offence while on bail.
37. The twin conditions under Section 45(1) for the offences
classified thereunder in Part-A of the Schedule was held arbitrary and
discriminatory and invalid in Nikesh Tarachand Shah v. Union of India
and another (2018) 11 SCC 1. Insofar as the twin conditions for release D
of accused on bail under Section 45 of the Act, the Supreme Court held
the same to be unconstitutional as it violates Articles 14 and 21 of the
Constitution of India. Subsequently, Section 45 has been amended by
Amendment Act 13 of 2008. The words “imprisonment for a term of
imprisonment of more than three years under Part A of the Schedule” E
has been substituted with “accused of an offence under this Act…..”.
Section 45 prior to Nikesh Tarachand and post Nikesh Tarachand
reads as under:-
Section 45 - Prior to Nikesh Section 45 - Post Nikesh Tarachand
Tarachand Shah Shah
F
Section 45. Offence to be cognizable and Section 45. Offences to be cognizable
non-bailable. and non-bailable.
(1) Notwithstanding contained in the (1) Notwithstanding anything
Code of Criminal Procedure, 1973 contained in the Code of Criminal
(2 of 1974), no person accused of Procedure, 1973 (2 of 1974), no
an offence punishable for a term person accused of an offence
of imprisonment of more than under this Act shall be released
G
three years under Part A of the on bail or on his own bond
Schedule shall be released on bail
unless-
or on his own bond unless-
(i) the Public Prosecutor has
(i) the Public Prosecutor has been
been given an opportunity to
given an opportunity to oppose
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198 SUPREME COURT REPORTS [2019] 12 S.C.R.

A the application for such release; oppose the application for such
and release; and
(ii) where the Public Prosecutor (ii) where the Public Prosecutor
opposes the application, the court opposes the application, the court is
is satisfied that there are satisfied that there are reasonable
B reasonable grounds for believing grounds for believing that he is not
that he is not guilty of such offence guilty of such offence and that he is
and that he is not likely to commit not likely to commit any offence
any offence while on bail; while on bail;
Provided that a person, who, is under Provided that a person, who, is
the age of sixteen years, or is a woman or under the age of sixteen years, or
C is sick or infirm, may be released on bail, is a woman or is sick or infirm, or
if the Special Court so directs: is accused either on his own or
along with other co-accused of
money laundering a sum of less
than one crore rupees may be
released on bail, if the Special
D court so directs:

38. The occurrence was of the year 2007-2008. CBI registered
the case against Sh. Karti Chidambaram, the appellant and others on
15.05.2017 under Sections 120-B IPC read with Section 420 IPC and
under Section 8 and Section 13(2) read with Section 13(1)(d) of the
E Prevention of Corruption Act. Learned Senior counsel for the appellant,
Mr. A.M. Singhvi has submitted that there could not have been ‘reasons
to believe’ that the appellant has committed the offence under Section 3
of PMLA, since in 2007-2008 the time of commission of alleged offence,
Sections 120-B IPC and 420 IPC and Section 13 of the Prevention of
F Corruption Act were not there in Part ‘A’ of the Schedule to PMLA and
were included in Part ‘A’ of the Schedule only by Amendment Act 21 of
2009 w.e.f. 01.06.2009 and w.e.f. 26.07.2018 respectively and therefore,
no prima-facie case of commission of offence by the appellant under
PMLA is made out. It was urged that under Article 20 of the Constitution,
no person shall be convicted of any offence except for violation of law
G in force at the time of the commission of that act charged as offence.
When Section 120B IPC and Section 420 IPC and Section 13 of
Prevention of Corruption Act were not then included in Part A of the
Schedule, in 2007-2008, then the appellant and others cannot be said to
have committed the offence under PMLA. Insofar as Section 8 of the
H Prevention of Corruption Act is concerned, it was submitted that Section
P. CHIDAMBARAM v. DIRECTORATE OF ENFORCEMENT 199
[R. BANUMATHI, J.]

8 of the Prevention of Corruption Act is not attracted against the appellant A
as there are no allegations in the FIR that the appellant accepted or
agreed to accept any gratification as a motive or reward for inducing
any public servant and hence, the accusation under Section 8 of the
Prevention of Corruption Act does not apply to the appellant. It was
further submitted that even assuming Section 8 of the Prevention of
B
Corruption Act is made out, the amount allegedly paid to ASCPL was
only Rs.10,00,000/- whereas, Rs.30,00,000/- was the amount then
stipulated to attract Section 8 to be the Scheduled offence under Part A
of the Schedule to the Act and therefore, there was no basis for offence
against the appellant and in such view of the matter, the appellant is
entitled for anticipatory bail. C
39. Section 45 of the PMLA makes the offence of money
laundering cognizable and non-bailable and no person accused of an
offence punishable for a term of imprisonment of more than three years
under Part A of the Schedule shall be released on bail unless the twin
conditions thereon are satisfied. Section 120-B IPC – Criminal D
Conspiracy and Section 420 IPC - Cheating and dishonestly inducing
delivery of property were included in Part A of the Schedule to PMLA
by way of Amendment Act 21 of 2009 w.e.f. 01.06.2009 and by way of
Amendment Act 2 of 2013 w.e.f. 15.02.2013. Likewise, Section 13 of
the Prevention of Corruption Act has been introduced to Part A of the
Schedule (Paragraph 8) by way of Amendment Act 16 of 2018 w.e.f. E
26.07.2018. As pointed out earlier, the FIR was registered by CBI under
Section 8 of the Prevention of Corruption Act also which was then in
Part A of the Schedule at the time of alleged commission of offence.
40. Learned Senior counsel submitted that since the offence under
Sections 120-B IPC and 420 IPC and under Section 13 of Prevention of F
Corruption Act were included in the Schedule only w.e.f. 01.06.2009
and w.e.f. 26.07.2018 respectively and there can never be a retrospective
operation of a criminal/penal statue and the test is not whether the
proceeds are retained by the person; but the test as laid down by the
Constitution Bench of this Court is, the test of the acts constituting the G
offence at the time of the commission of the offence and the appellant
cannot be proceeded with prosecution under PMLA in violation of
constitutional protection under Article 20(1) of the Constitution of India.
41. Under Article 20(1) of the Constitution, no person shall be
convicted of any offence except for violation of law in force at the time H
200 SUPREME COURT REPORTS [2019] 12 S.C.R.

A of commission of that act charged as an offence. FIR for the predicate
offence has been registered by CBI under Section 120B IPC, 420 IPC
and Section 13 of the Prevention of Corruption Act and also under Section
8 of the Prevention of Corruption Act. As discussed earlier, Section
120B IPC and Section 420 IPC were included in Part A of the Schedule
only by Amendment Act 21 of 2009 w.e.f. 01.06.2009. Section 13 of the
B
Prevention of Corruption Act was included in Part A of the Schedule by
Amendment Act 16 of 2018 w.e.f. 26.07.2018. Section 8 of the Prevention
of Corruption Act is punishable with imprisonment extending upto seven
years. Section 8 of the Prevention of Corruption Act was very much
available in Part A of the Schedule of PMLA at the time of alleged
C commission of offence in 2007-2008. It cannot therefore be said that the
appellant is proceeded against in violation of Article 20(1) of the
Constitution of India for the alleged commission of the acts which was
not an offence as per law then in existence. The merits of the contention
that Section 8 of the Prevention of Corruption Act cannot be the predicate
offence qua the appellant, cannot be gone into at this stage when this
D
Court is only considering the prayer for anticipatory bail.
42. Yet another contention advanced on behalf of the appellant is
that minimum threshold for the Enforcement Directorate to acquire
jurisdiction at the relevant time was Rs.30 lakhs whereas, in the present
case, there is no material to show any payment apart from the sum of
E Rs.10 lakhs (approximately) allegedly paid by INX Media to ASCPL
with which the appellant is said to be having no connection whatsoever.
The merits of the contention that Section 8 of the Prevention of Corruption
Act (then included in Schedule A of the PMLA in 2007-08) whether
attracted or not and whether the Enforcement Directorate had the
F threshold to acquire jurisdiction under PMLA cannot be considered at
this stage while this Court is considering only the prayer for anticipatory
bail.
43. In terms of Section 4 of the PMLA, the offence of money-
laundering is punishable with rigorous imprisonment for a term not less
G than three years extending to seven years and with fine. The Second
Schedule to the Criminal Procedure Code relates to classification of
offences against other laws and in terms of the Second Schedule of the
Code, an offence which is punishable with imprisonment for three years
and upward but not more than seven years is a cognizable and non-
bailable offence. Thus, Section 4 of the Act read with the Second Schedule
H
P. CHIDAMBARAM v. DIRECTORATE OF ENFORCEMENT 201
[R. BANUMATHI, J.]

of the Code makes it clear that the offences under the PMLA are A
cognizable offences. As pointed out earlier, Section 8 of the Prevention
of Corruption Act was then found a mention in Part ‘A’ of the Schedule
(Paragraph 8). Section 8 of the Prevention of Corruption Act is
punishable for a term extending to seven years. Thus, the essential
requirement of Section 45 of PMLA “accused of an offence punishable
B
for a term of imprisonment of more than three years under Part ‘A’ of
the Schedule” is satisfied making the offence under PMLA. There is no
merit in the contention of the appellant that very registration of the FIR
against the appellant under PMLA is not maintainable.
Whether Court can look into the documents/materials
collected during investigation C

44. During the course of lengthy hearing, much arguments were
advanced mainly on the question whether the court can look into the
documents and materials produced by the prosecution before the court
without first confronting the accused with those materials.
D
45. The learned Solicitor General submitted that during investigation,
the Enforcement Directorate has collected materials and overseas banks
have given specific inputs regarding the companies and properties that
money has been parked in the name of shell companies and the said
money has been used to make legitimate assets and that custodial
interrogation is necessary with regard to the materials so collected. The E
learned Solicitor General sought to produce the materials so collected in
the sealed cover and requested the court to peruse the documents and
the materials to satisfy the conscience of the court as to the necessity
for the custodial interrogation.
46. Contention of learned Solicitor General requesting the court F
to peruse the documents produced in the sealed cover was strongly
objected by the appellant on the grounds :– (i) that the Enforcement
Directorate cannot randomly place the documents in the court behind
the back of the accused to seek custody of the accused; (ii) the materials
so collected by Enforcement Directorate during investigation cannot be G
placed before the court unless the accused has been confronted with
such materials.
47. Mr. Kapil Sibal, learned Senior counsel submitted that the
statements recorded under Section 161 Cr.P.C. are part of the case
diary and the case diary must reflect day to day movement of the
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202 SUPREME COURT REPORTS [2019] 12 S.C.R.

A investigation based on which the investigating agency came to the
conclusion that the crime has been committed so that a final report can
be filed before the court. The learned Senior counsel submitted that
during the course of such investigation, the investigating officer may
discover several documents which may have a bearing on the crime
B committed; however the documents themselves can never be the part
of the case diary and the documents would be a piece of documentary
evidence during trial which would be required to be proved in accordance
with the provisions of the Evidence Act before such documents can be
relied upon for the purpose of supporting the case of prosecution.
Enforcement Directorate does not maintain a case diary; but maintain
C the file with paginated pages. It was urged that even assuming that
there is a case diary maintained by the respondent in conformity with
Section 172 Cr.P.C., the opinion of the investigating officer for the
conclusion reached by the authorised officer under PMLA, can never
be relied upon for the purposes of consideration of anticipatory bail.
D 48. Having regard to the submissions, two points arise for
consideration – (i) whether the court can/cannot look into the documents/
materials produced before the court unless the accused was earlier
confronted with those documents/materials?; and (ii) whether the court
is called upon to hold a mini inquiry during the intermediary stages of
E investigation by examining whether the questions put to the accused are
‘satisfactory’ or ‘evasive’, etc.?
49. Sub-section (2) of Section 172 Cr.P.C. permits any court to
send for case diary to use them in the trial. Section 172(3) Cr.P.C.
specifically provides that neither the accused nor his agents shall be
F entitled to call for case diary nor shall he or they be entitled to see them
merely because they are referred to by the court. But if they are used
by the police officer who made them to refresh his memory or if the
court uses them for the purpose of contradicting the such police officer,
the provisions of Section 161 Crl.P.C. or the provision of Section 145 of
the Evidence Act shall be complied with. In this regard, the learned
G
Solicitor General placed reliance upon Balakram v. State of Uttarakhand
and others (2017) 7 SCC 668. Observing that the confidentiality is
always kept in the matter of investigation and it is not desirable to make
available the police diary to the accused on his demand, in Balakram,
the Supreme Court held as under:-
H
P. CHIDAMBARAM v. DIRECTORATE OF ENFORCEMENT 203
[R. BANUMATHI, J.]

“15. The police diary is only a record of day-to-day investigation A
made by the investigating officer. Neither the accused nor his
agent is entitled to call for such case diary and also are not entitled
to see them during the course of inquiry or trial. The unfettered
power conferred by the statute under Section 172(2) CrPC on
the court to examine the entries of the police diary would not B
allow the accused to claim similar unfettered right to inspect the
case diary.
……….
17. From the aforementioned, it is clear that the denial of right to
the accused to inspect the case diary cannot be characterised as C
unreasonable or arbitrary. The confidentiality is always kept in
the matter of investigation and it is not desirable to make available
the police diary to the accused on his demand.”
50. Reiterating the same principles in Sidharth and others v.
State of Bihar (2005) 12 SCC 545, the Supreme Court held as under:- D
“27. Lastly, we may point out that in the present case, we have
noticed that the entire case diary maintained by the police was
made available to the accused. Under Section 172 of the Criminal
Procedure Code, every police officer making an investigation has
to record his proceedings in a diary setting forth the time at which E
the information reached him, the time at which he began and closed
his investigation, the place or places visited by him and a statement
of the circumstances ascertained through his investigation. It is
specifically provided in sub-clause (3) of Section 172 that neither
the accused nor his agents shall be entitled to call for such diaries
nor shall he or they be entitled to see them merely because they F
are referred to by the court, but if they are used by the police
officer who made them to refresh his memory, or if the court uses
them for the purpose of contradicting such police officer, the
provisions of Section 161 CrPC or the provisions of Section 145
of the Evidence Act shall be complied with. The court is G
empowered to call for such diaries not to use it as evidence but to
use it as aid to find out anything that happened during the
investigation of the crime. These provisions have been incorporated
in the Code of Criminal Procedure to achieve certain specific
objectives. The police officer who is conducting the investigation
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204 SUPREME COURT REPORTS [2019] 12 S.C.R.

A may come across a series of information which cannot be divulged
to the accused. He is bound to record such facts in the case diary.
But if the entire case diary is made available to the accused, it
may cause serious prejudice to others and even affect the safety
and security of those who may have given statements to the police.
The confidentiality is always kept in the matter of criminal
B investigation and it is not desirable to make available the entire
case diary to the accused. In the instant case, we have noticed
that the entire case diary was given to the accused and the
investigating officer was extensively cross-examined on many
facts which were not very much relevant for the purpose of the
C case. The learned Sessions Judge should have been careful in
seeing that the trial of the case was conducted in accordance
with the provisions of CrPC.” [underlining added]
The same position has been reiterated in Naresh Kumar Yadav
v. Ravindra Kumar and others (2008) 1 SCC 632 [Paras 11 to 14],
Malkiat Singh and others v. State of Punjab (1991) 4 SCC 341
D
[Para 11] and other judgments.
51. It is seen from various judgments that on several instances,
court always received and perused the case diaries/materials collected
by the prosecution during investigation to satisfy itself as to whether the
investigation is proceeding in the right direction or for consideration of
E the question of grant of bail etc. In Directorate of Enforcement and
another v. P.V. Prabhakar Rao (1997) 6 SCC 647, the Supreme Court
perused the records to examine the correctness of the order passed by
the High Court granting bail. In R.K. Krishna Kumar v. State of Assam
and others (1998) 1 SCC 474, the Supreme Court received court
F diary maintained under Section 172 Cr.P.C. and perused the case diary
to satisfy itself that the investigation has revealed that the company
thereon has funded the organisation (ULFA) and that the appellants
thereon had a role to play in it. While considering the question of arrest
of five well known human rights activists, journalists, advocates and
political workers, in Romila Thapar and Others v. Union of India and
G Others (2018) 10 SCC 753, this Court perused the registers containing
relevant documents and the case diary produced by the State of
Maharashtra. However, the court avoided to dilate on the factual position
emerging therefrom on the ground that any observation made thereon
might cause prejudice to the accused or to the prosecution in any manner.
Upholding the validity of Section 172(3) Crl.P.C. and observing that “there
H
P. CHIDAMBARAM v. DIRECTORATE OF ENFORCEMENT 205
[R. BANUMATHI, J.]

can be no better custodian or guardian of the interest of justice than the A
court trying the case”, in Mukund Lal v. Union of India and another
1989 Supp. (1) SCC 622, the Supreme Court held as under:-
3. …..
“So far as the other parts are concerned, the accused need not
necessarily have a right of access to them because in a criminal B
trial or enquiry, whatever is sought to be proved against the
accused, will have to be proved by the evidence other than the
diary itself and the diary can only be used for a very limited purpose
by the court or the police officer as stated above. ………. When
in the enquiry or trial, everything which may appear against the C
accused has to be established and brought before the court by
evidence other than the diary and the accused can have the benefit
of cross-examining the witnesses and the court has power to call
for the diary and use it, of course not as evidence but in aid of the
enquiry or trial, I am clearly of the opinion, that the provisions
under Section 172(3) CrPC cannot be said to be unconstitutional.” D
We fully endorse the reasoning of the High Court and concur
with its conclusion. We are of the opinion that the provision embodied in
sub-section (3) of Section 172 of the CrPC cannot be characterised as
unreasonable or arbitrary. Under sub-section (2) of Section 172 CrPC
the court itself has the unfettered power to examine the entries in the E
diaries. This is a very important safeguard. The legislature has reposed
complete trust in the court which is conducting the inquiry or the trial. It
has empowered the court to call for any such relevant case diary; if
there is any inconsistency or contradiction arising in the context of the
case diary the court can use the entries for the purpose of contradicting
the police officer as provided in sub-section (3) of Section 172 of the F
CrPC. Ultimately there can be no better custodian or guardian of the
interest of justice than the court trying the case. No court will deny to
itself the power to make use of the entries in the diary to the advantage
of the accused by contradicting the police officer with reference to the
contents of the diaries. In view of this safeguard, the charge of
G
unreasonableness or arbitrariness cannot stand scrutiny. ……. Public
interest demands that such an entry is not made available to the accused
for it might endanger the safety of the informants and it might deter the
informants from giving any information to assist the investigating agency,
…….” [underlining added]
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206 SUPREME COURT REPORTS [2019] 12 S.C.R.

A 52. So far as the production of the case diary during trial and
reference to the same by the court and the interdict against accused to
call for case diary is governed by Section 172 Cr.P.C. As per sub-section
(3) of Section 172, neither the accused nor his agent is entitled to call for
such case diaries and also not entitled to see them during the course of
enquiry or trial. The case diaries can be used for refreshing memory by
B
the investigating officer and court can use it for the purpose of
contradicting such police officer as per provisions of Section 161 or
Section 145 of the Indian Evidence Act. Unless the investigating officer
or the court so uses the case diary either to refresh the memory or for
contradicting the investigating officer as previous statement under Section
C 161, after drawing his attention under Section 145, the entries in case
diary cannot be used by the accused as evidence (vide Section 172(3)
Cr.P.C.).
53. It is well-settled that the court can peruse the case diary/
materials collected during investigation by the prosecution even before
D the commencement of the trial inter-alia in circumstances like:- (i) to
satisfy its conscience as to whether the investigation is proceeding in the
right direction; (ii) to satisfy itself that the investigation has been conducted
in the right lines and that there is no misuse or abuse of process in the
investigation; (iii) whether regular or anticipatory bail is to be granted to
the accused or not; (iv) whether any further custody of the accused is
E required for the prosecution; (v) to satisfy itself as to the correctness of
the decision of the High Court/trial court which is under challenge. The
above instances are only illustrative and not exhaustive. Where the
interest of justice requires, the court has the powers, to receive the case
diary/materials collected during the investigation. As held in Mukund
F Lal, ultimately there can be no better custodian or guardian of the interest
of justice than the court trying the case. Needless to point out that when
the Court has received and perused the documents/materials, it is only
for the purpose of satisfaction of court’s conscience. In the initial stages
of investigation, the Court may not extract or verbatim refer to the
materials which the Court has perused (as has been done in this case by
G the learned Single Judge) and make observations which might cause
serious prejudice to the accused in trial and other proceedings resulting
in miscarriage of justice.
54. The Enforcement Directorate has produced the sealed cover
before us containing the materials collected during investigation and the
H
P. CHIDAMBARAM v. DIRECTORATE OF ENFORCEMENT 207
[R. BANUMATHI, J.]

same was received. Vide order dated 29.08.2019, we have stated that A
the receipt of the sealed cover would be subject to our finding whether
the court can peruse the materials or not. As discussed earlier, we have
held that the court can receive the materials/documents collected during
the investigation and peruse the same to satisfy its conscience that the
investigation is proceeding in the right lines and for the purpose of
B
consideration of grant of bail/anticipatory bail etc. In the present case,
though sealed cover was received by this Court, we have consciously
refrained from opening the sealed cover and perusing the documents.
Lest, if we peruse the materials collected by the respondent and make
some observations thereon, it might cause prejudice to the appellant and
the other co-accused who are not before this court when they are to C
pursue the appropriate relief before various forum. Suffice to note that
at present, we are only at the stage of considering the pre-arrest bail.
Since according to the respondent, they have collected documents/
materials for which custodial interrogation of the appellant is necessary,
which we deem appropriate to accept the submission of the respondent
D
for the limited purpose of refusing pre-arrest bail to the appellant.
55. Of course, while considering the request for anticipatory bail
and while perusing the materials/note produced by the Enforcement
Directorate/CBI, the learned Single Judge could have satisfied his
conscience to hold that it is not a fit case for grant of anticipatory bail.
On the other hand, the learned Single Judge has verbatim quoted the E
note produced by the respondent-Enforcement Directorate. The learned
Single Judge, was not right in extracting the note produced by the
Enforcement Directorate/CBI which in our view, is not a correct approach
for consideration of grant/refusal of anticipatory bail. But such incorrect
approach of the learned Single Judge, in our view, does not affect the F
correctness of the conclusion in refusing to grant of anticipatory bail to
the appellant in view of all other aspects considered herein.
Re: Contention:- The appellant should have been
confronted with the materials collected by the Enforcement
Directorate earlier, before being produced to the court. G
56. On behalf of the appellant, it was contended that the materials
produced by the Enforcement Directorate could have never been relied
upon for the purpose of consideration of anticipatory bail unless the
appellant was earlier confronted with those documents/materials. It was
submitted that if the appellant’s response was completely “evasive” and
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208 SUPREME COURT REPORTS [2019] 12 S.C.R.

A “non co-operative” during the three days when he was interrogated i.e.
19.12.2018, 01.01.2019 and 21.01.2019, the respondent should place
before the court the materials put to the appellant and the responses
elicited from the accused to demonstrate to the court that “the accused
was completely evasive and non-co-operative”.
B 57. Contention of the appellant that the court will have to scrutinise
the questions put to the accused during interrogation and answers given
by the appellant and satisfy itself whether the answers were “evasive or
not”, would amount to conducting “mini trial” and substituting court’s
view over the view of the investigating agency about the “cooperation”
or “evasiveness” of the accused and thereafter, the court to decide the
C questions of grant of anticipatory bail. This contention is far-fetched and
does not merit acceptance.
58. As rightly submitted by learned Solicitor General that if the
accused are to be confronted with the materials which were collected
by the prosecution/Enforcement Directorate with huge efforts, it would
D lead to devastating consequences and would defeat the very purpose of
the investigation into crimes, in particular, white collar offences. If the
contention of the appellant is to be accepted, the investigating agency
will have to question each and every accused such materials collected
during investigation and in this process, the investigating agency would
be exposing the evidence collected by them with huge efforts using their
E men and resources and this would give a chance to the accused to tamper
with the evidence and to destroy the money trail apart from paving the
way for the accused to influence the witnesses. If the contention of the
appellant is to be accepted that the accused will have to be questioned
with the materials and the investigating agency has to satisfy the court
F that the accused was “evasive” during interrogation, the court will have
to undertake a “mini trial” of scrutinizing the matter at intermediary stages
of investigation like interrogation of the accused and the answers elicited
from the accused and to find out whether the answers given by the
accused are ‘evasive’ or whether they are ‘satisfactory’ or not. This
could have never been the intention of the legislature either under PMLA
G or any other statute.
59. Interrogation of the accused and the answers elicited from
the accused and the opinion whether the answers given by the accused
are “satisfactory” or “evasive”, is purely within the domain of the
investigating agency and the court cannot substitute its views by
H conducting mini trial at various stages of the investigation.
P. CHIDAMBARAM v. DIRECTORATE OF ENFORCEMENT 209
[R. BANUMATHI, J.]

60. The investigation of a cognizable offence and the various stages A
thereon including the interrogation of the accused is exclusively reserved
for the investigating agency whose powers are unfettered so long as the
investigating officer exercises his investigating powers well within the
provisions of the law and the legal bounds. In exercise of its inherent
power under Section 482 Cr.P.C., the court can interfere and issue
appropriate direction only when the court is convinced that the power of B
the investigating officer is exercised mala fide or where there is abuse
of power and non-compliance of the provisions of Code of Criminal
Procedure. However, this power of invoking inherent jurisdiction to issue
direction and interfering with the investigation is exercised only in rare
cases where there is abuse of process or non-compliance of the provisions C
of Criminal Procedure Code.
61. In King-Emperor v. Khwaja Nazir Ahmad AIR 1945 PC
18 : 1944 SCC Online PC 29, it was held as under:-
“…..it is of the utmost importance that the judiciary should not
interfere with the police in matters which are within their province D
and into which the law imposes upon them the duty of enquiry.
In India as has been shown there is a statutory right on the part of
the police to investigate the circumstances of an alleged cognizable
crime without requiring any authority from the judicial authorities,
and it would, as their Lordships think, be an unfortunate result if it E
should be held possible to interfere with those statutory rights by
an exercise of the inherent jurisdiction of the Court. The functions
of the judiciary and the police are complementary not overlapping
and the combination of individual liberty with a due observance of
law and order is only to be obtained by leaving each to exercise
its own function, always, of course, subject to the right of the F
Court to intervene in an appropriate case when moved under S.
491 of the Crl. P.C. ….” [underlining added]
62. The above decision in Khwaja Nazir Ahmad has been quoted
with approval by the Supreme Court in Abhinandan Jha and others v.
Dinesh Mishra AIR 1968 SC 117 and State of Bihar and another v. G
J.A.C. Saldanha and others (1980) 1 SCC 554. Observing that the
investigation of the offence is the field exclusively reserved for the
executive through the police department and the superintendence over
which vests in the State Government, in J.A.C. Saldanha, it was held
as under:-
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210 SUPREME COURT REPORTS [2019] 12 S.C.R.

A “25. There is a clear-cut and well demarcated sphere of activity
in the field of crime detection and crime punishment. Investigation
of an offence is the field exclusively reserved for the executive
through the police department the superintendence over which
vests in the State Government. The executive which is charged
with a duty to keep vigilance over law and order situation is obliged
B
to prevent crime and if an offence is alleged to have been committed
it is its bounded duty to investigate into the offence and bring the
offender to book. Once it investigates and finds an offence having
been committed it is its duty to collect evidence for the purpose of
proving the offence. Once that is completed and the investigating
C officer submits report to the court requesting the court to take
cognizance of the offence under Section 190 of the Code its duty
comes to an end. On a cognizance of the offence being taken by
the court the police function of investigation comes to an end
subject to the provision contained in Section 173(8), there
commences the adjudicatory function of the judiciary to determine
D
whether an offence has been committed and if so, whether by the
person or persons charged with the crime by the police in its report
to the court, and to award adequate punishment according to law
for the offence proved to the satisfaction of the court. There is
thus a well defined and well demarcated function in the field of
E crime detection and its subsequent adjudication between the police
and the Magistrate. This had been recognised way back in King
Emperor v. Khwaja Nazir Ahmad AIR 1944 PC 18 ……...”.
The same view was reiterated in Dukhishyam Benupani, Asstt.
Director, Enforcement Directorate (FERA) v. Arun Kumar Bajoria
F (1998) 1 SCC 52, M.C. Abraham and Another v. State of
Maharashtra and Others (2003) 2 SCC 649, Subramanian Swamy
v. Director, Central Bureau of Investigation and another (2014) 8
SCC 682 and Divine Retreat Centre v. State of Kerala and Others
(2008) 3 SCC 542.
G 63. Investigation into crimes is the prerogative of the police and
excepting in rare cases, the judiciary should keep out all the areas of
investigation. In State of Bihar and another v. P.P. Sharma, IAS and
another 1992 Supp. (1) 222, it was held that “The investigating officer
is an arm of the law and plays a pivotal role in the dispensation of criminal
justice and maintenance of law and order. …..Enough power is therefore
H
P. CHIDAMBARAM v. DIRECTORATE OF ENFORCEMENT 211
[R. BANUMATHI, J.]

given to the police officer in the area of investigating process and granting A
them the court latitude to exercise its discretionary power to make a
successful investigation…”. In Dukhishyam Benupani, Asstt. Director,
Enforcement Directorate (FERA) v. Arun Kumar Bajoria (1998) 1
SCC 52, this Court held that “……it is not the function of the court to
monitor investigation processes so long as such investigation does not
B
transgress any provision of law. It must be left to the investigating agency
to decide the venue, the timings and the questions and the manner of
putting such questions to persons involved in such offences. A blanket
order fully insulating a person from arrest would make his interrogation
a mere ritual.”
64. As held by the Supreme Court in a catena of judgments that C
there is a well-defined and demarcated function in the field of investigation
and its subsequent adjudication. It is not the function of the court to
monitor the investigation process so long as the investigation does not
violate any provision of law. It must be left to the discretion of the
investigating agency to decide the course of investigation. If the court is D
to interfere in each and every stage of the investigation and the
interrogation of the accused, it would affect the normal course of
investigation. It must be left to the investigating agency to proceed in its
own manner in interrogation of the accused, nature of questions put to
him and the manner of interrogation of the accused.
E
65. It is one thing to say that if the power of investigation has
been exercised by an investigating officer mala fide or non-compliance
of the provisions of the Criminal Procedure Code in the conduct of the
investigation, it is open to the court to quash the proceedings where
there is a clear case of abuse of power. It is a different matter that the
High Court in exercise of its inherent power under Section 482 Cr.P.C., F
the court can always issue appropriate direction at the instance of an
aggrieved person if the High Court is convinced that the power of
investigation has been exercised by the investigating officer mala fide
and not in accordance with the provisions of the Criminal Procedure
Code. However, as pointed out earlier that power is to be exercised in G
rare cases where there is a clear abuse of power and non-compliance
of the provisions falling under Chapter-XII of the Code of Criminal
Procedure requiring the interference of the High Court. In the initial
stages of investigation where the court is considering the question of
grant of regular bail or pre-arrest bail, it is not for the court to enter into
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212 SUPREME COURT REPORTS [2019] 12 S.C.R.

A the demarcated function of the investigation and collection of evidence/
materials for establishing the offence and interrogation of the accused
and the witnesses.
66. Whether direction to produce the transcripts could be
issued:- Contention of the appellant is that it has not been placed before
B the court as to what were the questions/aspects on which the appellant
was interrogated on 19.12.2018, 01.01.2019 and 21.01.2019 and the
Enforcement Directorate has not been able to show as to how the
answers given by the appellant are “evasive”. It was submitted that the
investigating agency-Enforcement Directorate cannot expect the accused
to give answers in the manner they want and the investigating agency
C should always keep in their mind the rights of the accused protected
under Article 20(3) of the Constitution of India. Since the interrogation
of the accused and the questions put to the accused and the answers
given by the accused are part of the investigation which is purely within
the domain of the investigation officer, unless satisfied that the police
D officer has improperly and illegally exercised his investigating powers in
breach of any statutory provision, the court cannot interfere. In the
present case, no direction could be issued to the respondent to produce
the transcripts of the questions put to the appellant and answers given
by the appellant.
E Grant of Anticipatory bail in exceptional cases:-
67. Ordinarily, arrest is a part of procedure of the investigation to
secure not only the presence of the accused but several other purposes.
Power under Section 438 Cr.P.C. is an extraordinary power and the
same has to be exercised sparingly. The privilege of the pre-arrest bail
F should be granted only in exceptional cases. The judicial discretion
conferred upon the court has to be properly exercised after application
of mind as to the nature and gravity of the accusation; possibility of
applicant fleeing justice and other factors to decide whether it is a fit
case for grant of anticipatory bail. Grant of anticipatory bail to some
extent interferes in the sphere of investigation of an offence and hence,
G the court must be circumspect while exercising such power for grant of
anticipatory bail. Anticipatory bail is not to be granted as a matter of rule
and it has to be granted only when the court is convinced that exceptional
circumstances exist to resort to that extraordinary remedy.
68. On behalf of the appellant, much arguments were advanced
H contending that anticipatory bail is a facet of Article 21 of the Constitution
P. CHIDAMBARAM v. DIRECTORATE OF ENFORCEMENT 213
[R. BANUMATHI, J.]

of India. It was contended that unless custodial interrogation is warranted, A
in the facts and circumstances of the case, denial of anticipatory bail
would amount to denial of the right conferred upon the appellant under
Article 21 of the Constitution of India.
69. Article 21 of the Constitution of India states that no person
shall be deprived of his life or personal liberty except according to B
procedure prescribed by law. However, the power conferred by Article
21 of the Constitution of India is not unfettered and is qualified by the
later part of the Article i.e. “…except according to a procedure
prescribed by law.” In State of M.P. and another v. Ram Kishna
Balothia and another (1995) 3 SCC 221, the Supreme Court held
that the right of anticipatory bail is not a part of Article 21 of the C
Constitution of India and held as under:-
“7. ……We find it difficult to accept the contention that Section
438 of the Code of Criminal Procedure is an integral part of Article
21. In the first place, there was no provision similar to Section 438
in the old Criminal Procedure Code. The Law Commission in its D
41st Report recommended introduction of a provision for grant of
anticipatory bail. It observed:
“We agree that this would be a useful advantage. Though we
must add that it is in very exceptional cases that such power should
be exercised.” E

In the light of this recommendation, Section 438 was incorporated,
for the first time, in the Criminal Procedure Code of 1973. Looking
to the cautious recommendation of the Law Commission, the
power to grant anticipatory bail is conferred only on a Court of
Session or the High Court. Also, anticipatory bail cannot be granted F
as a matter of right. It is essentially a statutory right conferred
long after the coming into force of the Constitution. It cannot be
considered as an essential ingredient of Article 21 of the
Constitution. And its non-application to a certain special category
of offences cannot be considered as violative of Article 21.” G
[underlining added]
70. We are conscious of the fact that the legislative intent behind
the introduction of Section 438 Cr.P.C. is to safeguard the individual’s
personal liberty and to protect him from the possibility of being humiliated
and from being subjected to unnecessary police custody. However, the
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214 SUPREME COURT REPORTS [2019] 12 S.C.R.

A court must also keep in view that a criminal offence is not just an offence
against an individual, rather the larger societal interest is at stake.
Therefore, a delicate balance is required to be established between the
two rights - safeguarding the personal liberty of an individual and the
societal interest. It cannot be said that refusal to grant anticipatory bail
would amount to denial of the rights conferred upon the appellant under
B
Article 21 of the Constitution of India.
71. The learned Solicitor General has submitted that depending
upon the facts of each case, it is for the investigating agency to confront
the accused with the material, only when the accused is in custody. It
was submitted that the statutory right under Section 19 of PMLA has an
C in-built safeguard against arbitrary exercise of power of arrest by the
investigating officer. Submitting that custodial interrogation is a recognised
mode of interrogation which is not only permissible but has been held to
be more effective, the learned Solicitor General placed reliance upon
State Rep. By The CBI v. Anil Sharma (1997) 7 SCC 187; Sudhir v.
D State of Maharashtra and Another (2016) 1 SCC 146; and Assistant
Director, Directorate of Enforcement v. Hassan Ali Khan (2011) 12
SCC 684.
72. Ordinarily, arrest is a part of the process of the investigation
intended to secure several purposes. There may be circumstances in
E which the accused may provide information leading to discovery of
material facts and relevant information. Grant of anticipatory bail may
hamper the investigation. Pre-arrest bail is to strike a balance between
the individual’s right to personal freedom and the right of the investigating
agency to interrogate the accused as to the material so far collected and
to collect more information which may lead to recovery of relevant
F information. In State Rep. By The CBI v. Anil Sharma (1997) 7 SCC
187, the Supreme Court held as under:-
“6. We find force in the submission of the CBI that custodial
interrogation is qualitatively more elicitation-oriented than
questioning a suspect who is well ensconced with a favourable
G order under Section 438 of the Code. In a case like this effective
interrogation of a suspected person is of tremendous advantage
in disinterring many useful informations 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
H insulated by a pre-arrest bail order during the time he is
P. CHIDAMBARAM v. DIRECTORATE OF ENFORCEMENT 215
[R. BANUMATHI, J.]

interrogated. Very often interrogation in such a condition would A
reduce to a mere ritual. The argument that the custodial
interrogation is fraught with the danger of the person being
subjected to third-degree methods need not be countenanced, for,
such an argument can be advanced by all accused in all criminal
cases. The Court has to presume that responsible police officers
B
would conduct themselves in a responsible manner and that those
entrusted with the task of disinterring offences would not conduct
themselves as offenders.”
73. Observing that the arrest is a part of the investigation intended
to secure several purposes, in Adri Dharan Das v. State of W.B. (2005)
4 SCC 303, it was held as under:- C

“19. Ordinarily, arrest is a part of the process of investigation
intended to secure several purposes. The accused may have to
be questioned in detail regarding various facets of motive,
preparation, commission and aftermath of the crime and the
connection of other persons, if any, in the crime. There may be D
circumstances in which the accused may provide information
leading to discovery of material facts. It may be necessary to
curtail his freedom in order to enable the investigation to proceed
without hindrance and to protect witnesses and persons connected
with the victim of the crime, to prevent his disappearance, to E
maintain law and order in the locality. For these or other reasons,
arrest may become an inevitable part of the process of
investigation. The legality of the proposed arrest cannot be gone
into in an application under Section 438 of the Code. The role of
the investigator is well defined and the jurisdictional scope of
interference by the court in the process of investigation is limited. F
The court ordinarily will not interfere with the investigation of a
crime or with the arrest of the accused in a cognizable offence.
An interim order restraining arrest, if passed while dealing with
an application under Section 438 of the Code will amount to
interference in the investigation, which cannot, at any rate, be G
done under Section 438 of the Code.”
74. In Siddharam Satlingappa Mhetre v. State of Maharashtra
and Others (2011) 1 SCC 694, the Supreme Court laid down the factors
and parameters to be considered while dealing with anticipatory bail. It
was held that the nature and the gravity of the accusation and the exact H
216 SUPREME COURT REPORTS [2019] 12 S.C.R.

A role of the accused must be properly comprehended before arrest is
made and that the court must evaluate the available material against the
accused very carefully. It was also held that the court should also consider
whether the accusations have been made only with the object of injuring
or humiliating the applicant by arresting him or her.
B 75. After referring to Siddharam Satlingappa Mhetre and other
judgments and observing that anticipatory bail can be granted only in
exceptional circumstances, in Jai Prakash Singh v. State of Bihar
and another (2012) 4 SCC 379, the Supreme Court held as under:-
“19. Parameters for grant of anticipatory bail in a serious offence
C are required to be satisfied and further while granting such relief,
the court must record the reasons therefor. Anticipatory bail can
be granted only in exceptional circumstances where the court is
prima facie of the view that the applicant has falsely been enroped
in the crime and would not misuse his liberty. (See D.K. Ganesh
Babu v. P.T. Manokaran (2007) 4 SCC 434, State of
D Maharashtra v. Mohd. Sajid Husain Mohd. S. Husain (2008)
1 SCC 213 and Union of India v. Padam Narain Aggarwal
(2008) 13 SCC 305.)”
Economic Offences:-

E 76. Power under Section 438 Cr.P.C. being an extraordinary
remedy, has to be exercised sparingly; more so, in cases of economic
offences. Economic offences stand as a different class as they affect
the economic fabric of the society. In Directorate of Enforcement v.
Ashok Kumar Jain (1998) 2 SCC 105, it was held that in economic
offences, the accused is not entitled to anticipatory bail.
F
77. The learned Solicitor General submitted that the “Scheduled
offence” and “offence of money laundering” are independent of each
other and PMLA being a special enactment applicable to the offence of
money laundering is not a fit case for grant of anticipatory bail. The
learned Solicitor General submitted that money laundering being an
G economic offence committed with much planning and deliberate design
poses a serious threat to the nation’s economy and financial integrity
and in order to unearth the laundering and trail of money, custodial
interrogation of the appellant is necessary.
78. Observing that economic offence is committed with deliberate
H design with an eye on personal profit regardless to the consequence to
P. CHIDAMBARAM v. DIRECTORATE OF ENFORCEMENT 217
[R. BANUMATHI, J.]

the community, in State of Gujarat v. Mohanlal Jitamalji Porwal and A
others (1987) 2 SCC 364, it was held as under:-
“5. ….The entire community is aggrieved if the economic offenders
who ruin the economy of the State are not brought to book. A
murder may be committed in the heat of moment upon passions
being aroused. An economic offence is committed with cool B
calculation and deliberate design with an eye on personal profit
regardless of the consequence to the community. A disregard for
the interest of the community can be manifested only at the cost
of forfeiting the trust and faith of the community in the system to
administer justice in an even-handed manner without fear of
criticism from the quarters which view white collar crimes with a C
permissive eye unmindful of the damage done to the national
economy and national interest…..”
79. Observing that economic offences constitute a class apart
and need to be visited with different approach in the matter of bail, in
Y.S. Jagan Mohan Reddy v. CBI (2013) 7 SCC 439, the Supreme D
Court held as under:-
“34. Economic offences constitute a class apart and need to be
visited with a different approach in the matter of bail. The
economic offences having deep-rooted conspiracies and involving
huge loss of public funds need to be viewed seriously and E
considered as grave offences affecting the economy of the country
as a whole and thereby posing serious threat to the financial health
of the country.
35. While granting bail, the court has to keep in mind the nature
of accusations, the nature of evidence in support thereof, the F
severity of the punishment which conviction will entail, the
character of the accused, circumstances which are peculiar to
the accused, reasonable possibility of securing the presence of
the accused at the trial, reasonable apprehension of the witnesses
being tampered with, the larger interests of the public/State and G
other similar considerations.” [underlining added]
80. Referring to Dukhishyam Benupani, Assistant Director,
Enforcement Directorate (FERA) v. Arun Kumar Bajoria (1998) 1
SCC 52, in Enforcement Officer, Ted, Bombay v. Bher Chand Tikaji
Bora and others (1999) 5 SCC 720, while hearing an appeal by the
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218 SUPREME COURT REPORTS [2019] 12 S.C.R.

A Enforcement Directorate against the order of the Single Judge of the
Bombay High Court granting anticipatory bail to the respondent thereon,
the Supreme Court set aside the order of the Single Judge granting
anticipatory bail.
81. Grant of anticipatory bail at the stage of investigation may
B frustrate the investigating agency in interrogating the accused and in
collecting the useful information and also the materials which might have
been concealed. Success in such interrogation would elude if the accused
knows that he is protected by the order of the court. Grant of anticipatory
bail, particularly in economic offences would definitely hamper the
effective investigation. Having regard to the materials said to have been
C collected by the respondent-Enforcement Directorate and considering
the stage of the investigation, we are of the view that it is not a fit case
to grant anticipatory bail.
82. In a case of money-laundering where it involves many stages
of “placement”, “layering i.e. funds moved to other institutions to conceal
D origin” and “interrogation i.e. funds used to acquire various assets”, it
requires systematic and analysed investigation which would be of great
advantage. As held in Anil Sharma, success in such interrogation would
elude if the accused knows that he is protected by a pre-arrest bail
order. Section 438 Cr.P.C. is to be invoked only in exceptional cases
E where the case alleged is frivolous or groundless. In the case in hand,
there are allegations of laundering the proceeds of the crime. The
Enforcement Directorate claims to have certain specific inputs from
various sources, including overseas banks. Letter rogatory is also said to
have been issued and some response have been received by the
department. Having regard to the nature of allegations and the stage of
F the investigation, in our view, the investigating agency has to be given
sufficient freedom in the process of investigation. Though we do not
endorse the approach of the learned Single Judge in extracting the note
produced by the Enforcement Directorate, we do not find any ground
warranting interference with the impugned order. Considering the facts
G and circumstances of the case, in our view, grant of anticipatory bail to
the appellant will hamper the investigation and this is not a fit case for
exercise of discretion to grant anticipatory bail to the appellant.
83. In the result, the appeal is dismissed. It is for the appellant to
work out his remedy in accordance with law. As and when the application
H for regular bail is filed, the same shall be considered by the learned trial
P. CHIDAMBARAM v. DIRECTORATE OF ENFORCEMENT 219
[R. BANUMATHI, J.]

court on its own merits and in accordance with law without being A
influenced by any of the observations made in this judgment and the
impugned order of the High Court.

Ankit Gyan Appeal dismissed.
B

C

D

E

F

G

H