Wadhawan Brothers case: A Leeway to Investigating Agencies to File Charge-Sheets Without Completion of Investigation to Dilute Safeguard of Default Bail

The Supreme Court in CBI v. Kapil Wadhawan¹, appears to have committed an error of law, while taking the accused Wadhawan brothers in custody and setting aside the judgments of learned trial court/Special Court and the Delhi High Court, which granted default bail under Section 167(2)² CrPC to the Wadhawan Brothers on the ground that the investigation was incomplete and the charge-sheet so filed by the Central Bureau of Investigation (CBI) was in piecemeal.

The Court based its decision on the assertion that if a charge-sheet against the accused persons has been filed within the stipulated time-frame, and the Special Court has already taken cognizance, the provisions of Section 167(2) of the Code cannot be invoked based on the pending investigation concerning other accused persons.

Taking cognizance has nothing to do with default bail under Section 167(2) of the Code

The Court, through this ruling, has implicitly elevated the significance of taking cognizance as a crucial factor under Section 167(2) of the Code. This stance appears to be at odds with previous judicial pronouncements of the Court, notably in Suresh Kumar Bhikamchand Jain v. State of Maharashtra³. In the said case, the Court held that the issue of cognizance is unimportant when determining the completeness of an investigation for the purpose of granting bail under Section 167(2) of the Code.

Charge-sheets filed during continuation of investigation are not “police report” under Section 173(2) CrPC

Importantly, the threshold for grant of bail under Section 167(2) is whether the investigation qua the offence is complete within the stipulated time of 60/90 days and not the filing of charge-sheet. Section 167(2) nowhere employs the term “charge-sheet” or “police report” as contemplated under Section 173(2)⁴ of the Code and the same only emphasises on whether the investigation is complete within the stipulated time and on failure of which the indefeasible right of the accused arrested of default bail kicks in.

On bare perusal of the charge-sheet filed by the CBI in the present case, it is evident that “further investigation” under Section 173(8) of the Code is ongoing, which clearly demonstrates that the investigation in the case remains incomplete, consequently categorising the charge-sheet filed by the CBI as incomplete.

Para 66 of the charge-sheet reads as under:

With regard to ascertaining roles of remaining FIR named accused persons, namely, Sh. Sudhakar Shetty, M/s Amaryllis Realtors and M/s Gulmarg Realtors, remaining CAs (who had audited balance sheets of e-DHFL and shell companies and who had facilitated the promoters), ultimate beneficiaries/end use of diverted funds through shell companies and other Wadhawan Group Companies, the DHFL officials, insider share trading of DHFL shares, bank officials, NHB officials and other connected issues, further investigation under Section 173(8) CrPC is continuing. List of additional witnesses and additional documents will be filed as and when required.

Pertinently, Section 178(8)⁵ caters to such a situation when the investigating agency intends to undertake further investigation with respect to fresh information coming into picture subsequent to filing of charge-sheet. If any charge-sheet is filed during continuation of further investigation under Section 178(8), it would not be termed as “police report” within the meaning of Section 173(2) CrPC as the investigation is not complete in that case, thereby extending the benefit of default bail under Section 167(2) to the arrested person.

A two-Judge Bench of the Supreme Court in Ritu Chhabaria v. Union of India⁶, held that if any charge-sheet is filed within the stipulated period without completion of investigation, the right of an arrested person would not be extinguished under Section 167(2) of the Code. Pertinently, later on, the three-Judge Bench⁷ of the Supreme Court stayed the operation of judgment in the abovesaid case of Ritu Chhabaria⁸.

Dinesh Dalmia’s judgment wrongly applied

The Supreme Court in the present case has heavily relied upon the judgment of Dinesh Dalmia v. CBI⁹ to demonstrate that when further investigation under Section 178(8) is pending, arrested person cannot claim benefit under Section 167(2) of the Code to contend that the investigation in the case is incomplete. Interestingly, in Dinesh Dalmia¹⁰, the person qua whom the further investigation was pending was absconding which precluded the CBI to move ahead with the investigation qua that absconder but in the present case the persons qua whom further investigation is sought are not absconding, meaning thereby that the investigation in the present case is undoubtedly incomplete and the charge-sheet so filed is subterfuge to defeat the right of default bail.

While placing reliance on Aslam Babalal Desai v. State of Maharashtra¹¹, and Satender Kumar Antil v. CBI¹², it can unequivocally be said that it is no longer res integra that it is the duty of courts to protect the liberty of accused from the practice of investigating agencies of filing preliminary/incomplete charge-sheets without completing investigation as a subterfuge or ruse to defeat the right of default bail and misusing remand under Section 309¹³ of the Code.

Need for legislative amendment to extend stipulated time-frame of 60/90 days

Nevertheless, in cases of considerable magnitude, particularly those involving white-collar crimes, adhering to the stipulated investigation period of 60/90 days may prove to be impractical. Extensions for completing investigations are already accommodated in certain legislations like NDPS¹⁴, UAPA¹⁵, TADA¹⁶, etc. While it would be logical for the legislature to make relevant amendments to address such situations, even in the newly enacted Nagarik Suraksha Sanhita, 2023¹⁷ , the 60/90-day period remains unaltered. This leaves room for concern, as investigating agencies might continue filing charge-sheets without concluding investigations, potentially undermining the right of an arrested person to default bail.

In consideration of the aforementioned factors, it can be argued that the Supreme Court’s decision in the current case blatantly contradicts established legal principles and merits reconsideration. This deviation appears to impede the exercise of the fundamental right to life and liberty, as enshrined in Article 21¹⁸ of the Constitution of India, by an arrested person.