DIRECTOR OF ENFORCEMENT AND ANR.versusP.V. PRABHAKAR RAO

            DIRECTOR OF ENFORCEMENT AND ANR.                                A
                                    v.
                       P.V. PRABHAKAR RAO

                            AUGUST 5, 1997

            [M.K. MUKHERJEE, S.P. KURDUKAR AND                              B
                      K.T. THOMAS, JJ.)

      Code of Criminal Procedure, 1973 :

       S.438-Anticipatory bail--Person connected with Urea Scam-Ap- C
prehending arrest-Application for anticipatory bail-High Court granting the
prayer-Held, when the Single Judge himself felt, after going through the
records, that the materials already collected were capable of stretching accus-
ing finger towards the applicant, it was not at all a proper exercise of the
discretion by favouring him with an order of anticipatory bail.
                                                                            D
      Gurbaksh Singh v. State of Punjab, (1980) 2 SCC 565, referred to.

      CRIMINAL APPELLATE JURISDICTION: Crimi_nal Appeal No.
697 of 1997.

     From the Judgment and Order dated 26.3.97 of the Andhra Pradesh        E
High Court in Cr!. P. No. 802/97.

     S.B. Wad, T.C. Sharma, P. Parmeswaran and Y.P. Mahajan for the
Appellants.

     D.D. Thakur, T.N. Rao, Y. Rama Rao and Sunil Kumar for the              F
Respondent.

      The following Order of the Court was delivered :

      Leave granted.

      The respondent apprehended that he would be arrested in connec- G
tion with "Urea Scam". He approached the High Court of Andhra Pradesh
for an order under Section 438 of the Code of Criminal Procedure (for
short "the Code"). A Single Judge of the High Court initially granted an
interim order in his favour and finally passed the impugned order making
the interim order absolute. The Chief Enforcement Officer, Directorate of H
                                    247
    248                   SUPREME COURT REPORTS -(1997) SUPP. 3 S.C.R.

A Enforcement "Enforcement Director" for short) has filed this special. leave
    petition.

        It is not necessary to set out details of the case, yet we give a brief
  sketch of it. A fraud costing a whopping sum of Rs. 133 crores was
  perpetrated by some individuals after hatching a criminal conspiracy. A
B company by name M/s. National Fertilizer Ltd. entered into a deal with a            (
  Turkish Company known as M/s. Karsans Inc. for the supply of urea worth
  38 million US Dollars. The entire amount was paid to the Turkish company
  through the country's foreign exchange reserve without getting even an
  ounce of urea in return. It was later discovered that the siphoning of such
C a huge foreign exchange was the result of a well orchestrated conspiracy
  hatched by some individuals in and out of India. The Turkish company in
  return paid a substantial amount to "middlemen" as "kickbacks". The
  recipients of such kickbacks included those in India and abroad.

           When the print media highlighted the large dimension of the fraud
D   Central B'.lreau of Investigation was authorised to investigate into it. It was
    revealed that kickbacks were received by some middlemen in India in
    violation of the provisions of the Foreign Exchange Regulation Act, 1973.
    (for short "FERA"). It was then that the Enforcement Dfrectorate also
    came into the pictme and started investigation into offences involving
E   FERA.

          Some persons were already arrested including one Sambasiva Rao,
    who was Director of M/s. Sai Krishna Impex Ltd., Hyderabad. During
    investigation it appeared to the Enforcement Directorate that the respon-
    dent is also involved in this fraud and hence efforts were made to question
F   him but the respondent avoided such interrogation by the officials of the
    Directorate, on more than one occasion. In the meanwhile the respondent,
    on his own, approached the High Court with a petition for an order under
    Section 438 of the Code.

           Learned Single Judge, who granted the order to the respondent,
G pointed out that interim order was passed on 16.3.1996 on medical grounds.
  In the final order also learned Single Judge gave much leverage to the
  physical condition of the respondent. We may mention here that the
  physical impairment of the respondent which was pointed out was "spon-
  dylitis". Learned counsel for the respondent has fairly admitted that, by
H now, lapse of time and medical care have helped the respondent to get
      DIRECTOR OFENFORCEMENTv. P.V. PRABHAKAR RAO                        249

rid of the ailment considerably. So we need not vex our mind whether that A
was a germane ground to be considered for granting anticipatory bail.

      Learned counsel for the Enforcement Director forcefully attacked
the reasoning of the learned Single Judge of the High Court and contended
that the discretion under Section 438 of the Code was very improperly
exercised in this case. Learned counsel for the respondent on the contrary      B
defended the impugned order. Experts from Gurbaksh Singh v. State of
Punjab, [1980) 2 SCC 565 have been quoted in support of it.

      Legal position concerning the grant of anticipatory bail requires no
repetition particularly in veiw of the decision of the Constitution Bench of C
this Court in Gwubaksh Singh, (supra) which has settled the position well
neigh. Nonetheless, we remind ourselves that the order contemplated 1
under Section 438 of the Code is to be granted or refused by the High
Court or a court of sessions, after exercising its judicial dis<:retion wisely.
The constitution Bench in Gurbaksh Singh said thus :
                                                                                D
        "A wise exercise of judicial power inevitably takes care of the evil
        consequences which are likely to flow out of its intemperate use.
        Every kind of judicial discretion, whatever may be the nature of
        the matter in regard to which it is required to be exercised, has to
        be used with due care and caution. In fact, an awareness of the E
        context in which the discretion is required to be exercised and of
        the reasonably foreseeable consequences of its use, is the hallmark
        of a prudent exercise of judicial discretion. One ought not to make
        a bugbear of the power to grant anticipatory bail."

      After hearing both sides and after perusing the case records (which       F
was submitted to us in a sealed cover by the Enforcement Director, on our
request) we have no doubt that the learned Single Judge of the High Court
went wrong in exercising his discretion by granting anticipatory bail to the
respondent in this case. Learned Single Judge has observed :

        "I have examined the material in order to satisfy myself whether        G
        the apprehension of the petitioner is well-founded or not. Suffice
        it say that the files which are made available by the Enforcement
        Directorate would disclose an accusing finger against the petitioner.
        Be it noted that this is not the stage when this court can apply any
        test for its acceptability and hence a superficial examination is       H
     250                  SUPREME COURT REPORTS [1997) SUPP. 3 S.C.R.

A            done. It is also not ilecessary to see whether this material is
             sufficient to file a complaint against the petitioner or not. ·

            When we purused the records we felt that learned Single Judge has
     euphemistically stated that the files disclosed "an accusing finger" agamst
     the respondent. We, however,' refrain from saying anything more at this
B    stage.

          Learned Single Judge has taken into account the fact that all other'
    accused arrested in connection with this case have been released on bail.
    But they were released on ball only cin the failure of the investigating
· C agency to complete the investigatioh within the time prescribed in the
    proviso to Section 167(2) of ·the Code. How could this respondent take ·
    advantage of that fact? We cannot overlook that the respondent too has
    contributed to the non-completion of the investigation. Completion of
    investigation could be achie.ved only by interrogating all the. persons in-
    volved as well as acquainted with the matter and after collecting all
  D material evidence procurable. So learned Single Judge should never have
    counted this' point in favour of granting anticipatory bail to the respondent.

           The most glaring feature which even the respondent did not
     repudiate is the magnitude of the criminal conspirary hatched, the "in-
 E   genuity with which the cabal was orchestrated and the. metriculousness with
     which it was implemented and the colossal amount of foreign exchange
     siphoned off from the country. It is not disputed that whomsoever per-
     petrated this grave economic offence deserves to be dealt with sternly
     under law.

 F         When the learned Single Judge himself felt, after going through the
     records in this case, that the materials already collected were capable of.
     stretching accusing finger towards the respondent, it was not at all.a proper
     exercise of the discretion by favou.ring him with an order of anticipatory
     bail under Section 438 of the Code.
 G          For the aforesaid reasons we allow this appeal. Upset the impugned
      order and dismiss the application of the respondent filed under Section
      438 the Code.

      R.P.                                                      Appeal allowed.




                                                                                     c: