* IN THE HIGH COURT OF DELHI AT NEW DELHI

Reserved on: 11th March, 2019

Pronounced on: 20th August, 2019

+ BAIL APPLN. 1316/2018 & Crl. M. A. 10976/2018

P. CHIDAMBARAM ..... Petitioner

Through: Mr. Kapil Sibbal Mr. Abhishek
Manu Singhvi, Mr. Dayan
Krishnan and Mr. Mohit Mathur,
Senior Advocates with Mr. P. K.
Dubey, Mr. Arshdeep Singh, Mr.
Adit Pujari, Mr. Amit Bhandari,
Mr. Akshat Gupta, Mr. Avishkar
Singhvi, Mr. AyushAgarwal, Ms.
Ishita Garg, Mr. Sanjeevi Seshadri
& Mr. Harpreet Kalsi, Advocates
Versus

CENTRAL BUREAU OF INVESTIGATION ..... Respondent

Through: Mr. Tushar Mehta, Solicitor
General with Mr. K. M. Natraj,
Additional Solicitor General and
Mr. Amit Mahajan, Central
Government Standing Counsel
with Mr. Rajat Nair, Advocate

And
+ BAIL APPLN. 1713/2018 & Crl. M. (B) 1163/2018
P. CHIDAMBARAM ..... Petitioner
Through: Mr. Kapil Sibbal Mr. Abhishek
Manu Singhvi, Mr. Dayan
Krishnan and Mr. Mohit Mathur,
Senior Advocates with Mr. P. K.
Dubey, Mr. Arshdeep Singh, Mr.

Bail Appl. 1316/2018 & 1713/2018 Page 1 of 24

 Adit Pujari, Mr. Amit Bhandari,
Mr. Akshat Gupta, Mr. Avishkar
Singhvi, Mr. AyushAgarwal, Ms.
Ishita Garg, Mr. Sanjeevi Seshadri
& Mr. Harpreet Kalsi, Advocates

Versus

DIRECTORATE OF ENFORCEMENT, DELHI ..... Respondent

Through: Mr. Tushar Mehta, Solicitor
General with Mr. K. M. Natraj,
Additional Solicitor General and
Mr. Amit Mahajan, Central
Government Standing Counsel
with Mr. Rajat Nair, Advocate
CORAM:
HON'BLE MR. JUSTICE SUNIL GAUR

ORDER

1. In the above captioned first application [Bail Appln. 1316/2018],

petitioner seeks pre-arrest bail in FIR No. RC220-2017-E-0011, under
Section 120B read with Section 420 of IPC and Sections 8 and 13 (2) r/w
Section 13(1) (d) of The Prevention of Corruption Act, 1988 (henceforth
referred to as the 'PC Act'), whereas in the above captioned second
application [Bail Appln. 1713/2018], petitioner seeks pre-arrest bail in
ECIR/07/HIU/2017, registered under the provisions of The Prevention of
Money-Laundering Act, 2002 (henceforth referred to as the 'PMLA’).
2. With the consent of learned counsel representing both the sides,
these applications have been heard together and are being disposed of by
this common order.

Bail Appl. 1316/2018 & 1713/2018 Page 2 of 24

3. It is the case of petitioner that M/s INX Media Pvt. Ltd. sought
approval for FDI in a proposed TV channel upto 46.216 percent of the
issued equity capital. The policy allowed investment upto 74 percent of
equity. Foreign Investment Promotion Board (FIPB) Unit examined the
proposal, found it to be in order and submitted the case to the Finance
Minister. FIPB consisted of six secretaries to the Government of India
and was chaired by the Secretary, Economic Affairs. FIPB unanimously
recommended the proposal and placed it before the Finance Minister for
his approval, along with several other proposals. In May, 2007, the
Finance Minister (i.e. the petitioner herein) granted his approval in the
normal course of official business.
4. According to learned senior counsel for petitioner, ten years later,
based on alleged 'oral source of information', Central Bureau of
Investigation (CBI) recorded an FIR on 15th May, 2017 against four
companies, Karti P. Chidambaram (i.e. petitioner's son), unknown
officers/officials of the Ministry of Finance and other unknown persons
under Section 120B r/w Section 420 of IPC and Section 8 and Section 13
(1)(d) r/w Section 13(2) of the PC Act. The petitioner was not named as
an accused or suspect; there is no allegation against the petitioner in the
body of the FIR. The allegation in the FIR was that M/s INX Media Pvt.
Ltd. had made down-stream investment without obtaining prior approval
of the FIPB and, in order to regularize that investment, had approached
the petitioner's son and made a payment of ₹10 Lakh to another company
allegedly associated with petitioner's son. It is submitted that petitioner
learnt that it is the case of the said company that it had received the said

Bail Appl. 1316/2018 & 1713/2018 Page 3 of 24

payment towards consultancy work and further, the petitioner's son was
never a shareholder or Director of the said company. It is further
submitted by petitioner's counsel that ECIR/07/HIU/2017 is baseless,
politically motivated and an act of vendetta against petitioner and his son,
because petitioner is a vocal critic and opponent of the present Central
Government both inside Parliament and outside. It is also submitted that
petitioner is a sitting member of Rajya Sabha.
5. According to learned senior counsel for petitioner, based on
ECIR/07/HIU/2017, registered by the CBI, Enforcement Directorate (ED)
recorded an ECIR, which ED has maintained is an internal record. It is
submitted by learned senior counsel for petitioner that copy of the said
ECIR has not been given to petitioner. However, petitioner understands
and states that ECIR is virtually the same as an FIR.
6. It is a matter of record that while entertaining both these bail
applications, interim protection was granted to petitioner subject to
joining investigation and that petitioner had joined the investigation.
According to senior counsel for petitioner, respondent-CBI has sought
sanction to prosecute petitioner in January, 2019, which means that draft
charge-sheet has been put up before the authorities concerned to obtain
sanction to prosecute petitioner. So, it is submitted that investigation by
CBI is complete and there is no ground for ED to oppose the bail or to
seek petitioner's custody. It is urged that since petitioner is cooperating in
investigation, therefore, there is no ground to deny bail to petitioner.
7. Learned senior counsel for petitioner vehemently argued that there
is no averment or allegation in the FIR that the petitioner accepted or

Bail Appl. 1316/2018 & 1713/2018 Page 4 of 24

agreed to accept any gratification as a motive or reward for inducing any
public servant and hence, prima facie the accusation under Section 8 of
PC Act does not apply to the case of petitioner. It is further submitted that
since offence under Section 8 of PC Act is not made out, therefore, the
ED cannot lodge money laundering case against petitioner. Learned
senior counsel for petitioner vehemently submits that offences under
Sections 420/120B IPC and under the PC Act were not Scheduled
Offences under the PMLA and so, petitioner cannot be prosecuted under
the provisions of PMLA. It is pointed out by learned senior counsel for
petitioner that minimum threshold for ED to acquire jurisdiction at the
relevant time was ₹30 Lakh and in the instant case, there is no averment
of any payment apart from ₹10 Lakh approximately, which was allegedly
paid by M/s INX Media Pvt. Ltd. to M/s Advantage Strategic Consulting
Pvt. Ltd., with which petitioner is not concerned whatsoever in any
manner. The precise argument of learned senior counsel for petitioner is
that if any of the offences are applied qua petitioner, it would amount to
giving retrospective application to the provisions of the PMLA which
would be violative of petitioner’s fundamental rights enshrined under
Article 20(3) of the Constitution of India, 1950. To submit so, reliance is
placed upon decision in Arun Kumar Mishra Vs. Directorate of
Enforcement 2015 SCC OnLine Del 8658.
8. It was pointed out by learned senior counsel for petitioner that in
the case of co-accused Karti Chidambaram, this Court had stayed the
arrest of petitioner in proceedings under the PMLA and so, petitioner is
also entitled to similar relief. Learned senior counsel for petitioner

Bail Appl. 1316/2018 & 1713/2018 Page 5 of 24

submits that there are no allegations of petitioner tampering with the
evidence and nothing is to be recovered from petitioner and that co-
accused of petitioner are already on anticipatory bail or statutory bail and
thus, petitioner deserves to be granted pre-arrest bail, as his antecedents
are impeccable.
9. It was also pointed out that petitioner is a sitting member of Rajya
Sabha and there are no chances of his fleeing from justice. According to
learned senior counsel for petitioner, offence of money laundering is a
non-cognizable offence and investigation of ED is in violation of
petitioner’s fundamental rights. It is further submitted by learned senior
counsel for petitioner that amendment made in the year 2018 in the
PMLA does not restore Sub-Clause II of Section 45(1) of PMLA. So, it is
submitted that petitioner deserves the concession of pre-arrest bail. In
support of above submissions, reliance is placed upon Supreme Court’s
decisions in Central Bureau of Investigation Vs. Ashok Kumar Aggarwal
2014 (14) SCC 295; Arun Kumar Mishra Vs. Directorate of Enforcement
2015 SCC OnLine Del 8658; Bhadresh Bipinbhai Sheth Vs. State of
Gujarat and another (2016) 1 SCC 152; Nikesh Tarachand Shah Vs.
Union of India and another (2018) 11 SCC 1 and decisions of High Court
of Andhra Pradesh in W.P. 17525/2014 titled as Tech Mahindra Limited
Vs. Directorate of Enforcement; CRLRC No. 3222/2016 titled as Ashok
Kumar Jain Vs. Asst. Director, Hyderabad; W.P.No.37487/2012 titled as
M/S Satyam Computer Services Ltd. Vs. Directorate of Enforcement and
decision of High Court of Mumbai in Bail Appl. No. 286/2018 titled as
Sameer M. Bhujbal Vs. Assistant Director, Directorate of Enforcement &

Bail Appl. 1316/2018 & 1713/2018 Page 6 of 24

Ors. and decision of High Court of Madhya Pradesh in
M.Cr.C.No.34201/2018, titled as Vinod Bhandari Vs. Assistant Director,
Directorate of Enforcement.
10. On behalf of respondents, it is submitted that Section 19 of PMLA
empowers the ED to arrest petitioner on the basis of material collected so
far and respondents have reason to believe that petitioner is guilty of
offences of money laundering, cheating etc. and some of the proceeds of
crime have been already identified and have been attached vide
provisional attachment order of 10th October, 2018 and that petitioner’s
custodial interrogation is necessary in order to trace out further proceeds
of the crime. According to respondents, petitioner’s son Karti
Chidambaram is involved in INX Media case, which is being currently
investigated by CBI and ED and that petitioner’s son has committed
offences under the IPC and PMLA at the behest of petitioner. According
to learned Attorney General of India, material on record manifestly
indicates that petitioner was personally involved in the act of money
laundering and he is also found to be a beneficiary of the Proceeds of
Crime and to unearth the money trail, custodial interrogation of petitioner
is essential. Learned Attorney General of India has sought to rely upon
the diary of proceedings of investigation and has handed over a copy of
the diary of proceedings of investigation in a sealed cover to the Court for
perusal while seeking to maintain confidentiality in respect of these case
diaries. Highlighting the non-cooperation in investigation by petitioner,
learned Attorney General of India had vehemently submitted that in the
absence of custodial interrogation of petitioner, investigation in this case

Bail Appl. 1316/2018 & 1713/2018 Page 7 of 24

cannot be taken to its logical conclusion and in view of nature of gravity
of offence, custodial investigation of petitioner be granted. It is submitted
that petitioner is giving evasive replies and is not cooperating in the
investigation while he is under the protective umbrella of interim orders.
11. Reliance is place upon decision in CBI Vs. Anil Sharma (1997) 7
SCC 187 to justify custodial interrogation of petitioner by pointing out
that interrogation conducted under the protection order of the Court has
proved to be a mere ritual in the instant case. It is also submitted that
petitioner cannot claim parity with co-accused Karti Chidambaram, as
the said co-accused had committed the offence in question at the behest
of petitioner. In support of their case, respondents rely upon decisions in
State of Gujarat Vs. Mohanlal Jitamalji Porwal & Anr. (1987) 2 SCC
364; Prahlad Singh Bhati Vs. NCT, Delhi & Anr. (2001) 4 SCC 280 Ram
Pratap Yadav Vs. Mitra Sen Yadav And Anr. (2003) 1 SCC 15; Kalyan
Chandra Sarkar Vs. Rajesh Ranjan @ Pappu Yadav & Anr. (2004) 7
SCC 528; Anwari Begum Vs. Sher Mohammad & Anr. (2005) 7 SCC 326;
Prasanta Kumar Sarkar Vs. Ashis Chatterjee & Anr. (2010) 14 SCC 496;
Y.S. Jagan Mohan Reddy Vs. CBI (2013) 7 SCC 439; Gautam Kundu Vs.
Directorate of Enforcement (2015) 16 SCC 1; Sunil Dahiya Vs. State
2016 SCC Online Del 5566; Suresh Thimri Vs. State of Maharashtra
2016 SCC OnLine Bom 2602; Chhagan Chandrakant Bhujbal Vs. Union
of India 2016 SCC OnLine Bom 9938; State of Bihar & Anr. Vs. Amit
Kumar @ Bachcha Rai (2017) 13 SCC 751 and Rohit Tandon Vs.
Directorate of Enforcement (2018) 11 SCC 46.

Bail Appl. 1316/2018 & 1713/2018 Page 8 of 24

12. After having heard both the sides at length and on perusal of the
FIR of this case, short reply of respondent-CBI, material on record and
the decisions cited, I find that from the material collected by the
Investigating Agency, it prima facie appears that ₹3 Crores
approximately has come into the account of M/s Advantage Strategic
Consulting Pvt. Ltd. (ASCPL) and other concerns during the tenure of
the petitioner as the Finance Minister. The table below shows the
payments made from Span Fibre and Satyam Fibres to ASCPL and
associated entities:-
BROKER YEAR PERIOD TOTAL TDS AMOUNT Paid by
NAME Amount DEDUCTED PAID in ₹
in ₹ @

ASCPL 2007-08 Q1 3875077 439046 3436031 Span

2007-08 Q2 3462875 392344 3070531 Span

2007-08 Q3 2617386 296550 2320836 Span
2007-08 Q4 2573662 291596 2282066 Span

TOTAL 12529000 1419536 11109464

KRIYA 2007-08 Q1 2662667 301680 2360987 Span

FMCG
DISTRIBUTO
RS PVT. LTD.
2007-08 Q2 2259514 256003 2003511 Span
2007-08 Q3 1981732 224530 1757202 Span
2007-08 Q4 1331656 150876 1180780 Span

TOTAL 8235569 933089 7302480

CBN 2007-08 Q1 3186072 360982 2825090 Span

PLACEMENT
&
MANAGEMEN
T CENTRE
2007-08 Q2 3109656 352324 2757332 Span
Q3 1544592 175002 1369590 Satyam

Bail Appl. 1316/2018 & 1713/2018 Page 9 of 24

 Q4 2257155 255735 2001420 Satyam
TOTAL 10097475 1144043 8953432

Grand 30862044 3496668 27365376/-

Total

13. From the investigation conducted, it appeared that ASCPL and

other concerns are beneficially controlled and managed by Karti P.
Chidambaram. The beneficial ownership of Shri Karti P. Chidambaram in
ASCPL and associated entity becomes clear from the projected facts
enumerated as under:-
(a) In the year 2009-10, Shri Karti P. Chidambaram secured mandate
from Vasan Healthcare to raise funds through Spark Capital from which
Karti P. Chidambaram demanded money and in this connection several
emails were exchanged between Karti P. Chidambaram and K.
Ramamkrishnan of Spark Capital. Later on, Spark Capital received funds
from three entities i.e. M/s Advantage Strategic Consulting Pvt. Ltd.,
Kriya FMCG and Northstar as per the details given below:

S. Date Name of the Invoice Description Value

No. Entity
1. 20.03.2009 M/s Advantage Consultancy on new 9,50,000/-
Strategic business opportunities
Consulting for the YE 31.03.09
Pvt. Ltd.
2. 16.03.2009 M/s Kriya Consultancy on new 7,50,000/-
FMCG business opportunities
Distributors for the YE 31.03.09
Pvt. Ltd.
3. 10.03.2009 M/s Northstar Professional Charges 8,00,000/-
Software towards Legal due
Solution Pvt. Diligence &
Ltd. Researches.
4. 04.01.2010 M/s Northstar Management 12,50,000/-
Software Consultancy Fees

Bail Appl. 1316/2018 & 1713/2018 Page 10 of 24

 Solution Pvt. towards professional
Ltd. services.

(b) When GIC, a leading global investment firm headquartered in

Singapore, wanted to invest in Vasan Healthcare, Karti P. Chidambaram
had demanded ₹20 Crores in lieu of shares of ASCPL in Vasan
Healthcare for smooth closure of the transaction.
(c) One Shri R. Joseph Kennedy of Blue Bugs was given the task of
designing the logo, stationery of M/s Castle Gordon Global Advisory
Ltd., UK, development of its website, domain name registration, hosting
and email facilities. An invoice of ₹ 46,175/- for the work was raised by
Blue Bugs in the name of ASCPL. Shri Mike Nithavrianakis who had
allegedly floated M/s Castle Gordon Global Advisory Ltd. is the Director
and partner of Shri Karti P. Chidamdaram in M/s Totus Tennis Ltd.
(d) Incorporation expenses of M/s Ausbridge Holding and Investments
Pvt. Ltd. (in which Karti P. Chidambaram and Mohanan Rajesh were
promoters, directors and shareholders ) were paid by ASCPL vide cheque
no. 116868 dated 23.02.2006. Karti P. Chidambaram held 95% shares in
Ausbridge in 2006.
(e) Mohanan Rajesh, Director in ASCPL and a schoolmate of Karti P.
Chidambaram has disclosed in his statement that on Karti’s instructions
ASCPL allotted 66.67% of the total share to Ausbridge Holding and
Investments Pvt. Ltd., a company for purchase of shares of ASCPL was
made by Mohanan Rajesh from his personal account and he was later
compensated by way of payments from companies controlled by
acquaintances of Shri Karti P. Chidambaram.

Bail Appl. 1316/2018 & 1713/2018 Page 11 of 24

(f) Ms. Meena Saundarajan, a family friend of Karti P. Chidambaram,
had transferred about ₹30 Lakhs to Ausbridge through her companies for
purchase of shares of ASCPL on instructions of Karti P. Chidambaram.
(g) Expenses on internet used on the telephone number 9884216000
used by Karti.P Chidambaram.
(h) Expenses on travel by Karti P. Chidambaram and his associates
were borne by ASCPL. Also personal expenses of Karti P. Chidambaram
were borne by ASCPL viz, repair of his Patek Phillippe watch, hotel
stays, meals and tickets for tennis tournaments, paintings seized during
searches from the office of Karti P. Chidambaram (Chess Global
Advisory Services) etc. Even expenses of Sh. Murali, PA of Karti P
Chidambaram were paid by ASCPL.
(i) M/s Northstar Software Solutions Pvt Ltd, a company in which Sh.
CBN Reddy was a Director issued invoices for collection of illegal
gratification from INX Media in September 2008, after the FIPB approval
was granted by Shri P Chidambaram. Sh. CBN Reddy is one of the
Directors in ASCPL and also a tennis partner of Karti P.Chidambaram.
(j) Devender Saharia of M/s AGS Health had received ₹11 Crores
from M/s ASCPL on instructions of Karti P. Chidambaram in lieu of
which Karti P. Chidambaram had got inducted his CA, Mr. S.
Bhaskaraman and Mr. CBN Reddy as directors of ASG Health.
(k) Mr. Manoj Mohanka, in his statement recorded on 14.10.2016 in
Aircel Maxis case, has stated that 60 Lakh shares of Artevea Digital Ltd.
of value 0.01 Pound each, were allotted to ASC, Singapore without any
payment on the instructions of Karti P. Chidambaram. He explained that

Bail Appl. 1316/2018 & 1713/2018 Page 12 of 24

when Artevea Digital Ltd., UK was in financial crises in the year 2008,
its director Mr. Manoj Mohanka had met Karti P. Chidambaram for help
in arranging funds for the company because Manoj Mohanka’s wife,
Payal Singh Mohanka, was a contemporary of Karti P. Chidambaram at
Cambridge University, UK in 1990s. In response to the request, Karti P.
Chidambaram had asked Manoj Mohanka to place him suitably so that he
may act on behalf of Artevea, UK for raising capital and requested Manoj
to allot the above shares amounting to ₹60 Lakhs approximately (60
Thousand Pounds). In compliance to the request M/s Artevea Digital Ltd.
allotted 6 Lakhs shares without any payment and Karti P. Chidambaram
failed to raise funds for Artevea but he did not return these 60 Lakhs
shares or compensate any money for them.
(l)The recovery of paintings purchased by ASCPL from the premises of
Karti P. Chidambaram during searches conducted on 13.01.2018, the
statements of Shri S. Bhaskararaman recorded under Section 50 of
PMLA, the extracts of books of accounts of ASCPL as recovered from
the hard disks of Shri S. Bhaskararaman seized from the premises of Shri
Karti P. Chidambaram on 1.12.2015, banks statements of ASCPL,
statements of people dealing with ASCPL recorded under section 50 of
PMLA, emails of Shri Karti P. Chidambaram, Shri S. Bhaskararaman etc.
recovered from the aforesaid hard disks seized on 1.12.2015 all show that
every aspect of the business affairs of ASCPL was controlled by Karti P.
Chidamabram, every expense incurred by ASCPL no matter how small
was approved by Karti P. Chidambaram, expenses of Karti P.
Chidambaram were paid by ASCPL and the people making payments to

Bail Appl. 1316/2018 & 1713/2018 Page 13 of 24

ASCPL said that the payments were made to Karti P. Chidambaram. This
shows that the ASCPL was beneficially owned by Karti P. Chidambaram.
14. The investigation conducted reveals that ASCPL and other
concerns are not conducting any genuine and bona fide business
activities. The two Debit Notes raised by CBN Placement and
Management Center dated 01.10.2007, 17.11.2007 and Debit Note dated
01.04.2008 of Kriya FMCG were prepared by Bhaskararaman, who had
brought those Debit Notes for his signatures. He signed those Debit Notes
and he had no idea about the parties mentioned in the Debit Notes. The
money which was received from Span Fibre was utilised by him for
purchase of shares in his name in ASCPL, Chennai and various other
expenses and investments made in ASCPL on the instructions of Karti P.
Chidambaram. Mohanan Rajesh has stated that Debit Notes raised by
Kriya FMCG on Span Fibers, dated 1.10.2007 and 17.11.2007 bear the
signatures of Mr. S. Sundar, who resigned in January, 2008.
15. The third Debit Note dated 1.4.2008 bears the signatures of Sh.
C.B.N. Reddy, Director. The parties mentioned in the Debit Notes are
not known to him. It is only now that he had come to know about the
existence of these debit notes. Mr. S. Bhaskararaman, CA, had told him
that Polyester Fibre was sold for M/s. Span Fibre for the reason that
commission income was generated. He stated that the illegal gratification
in the form of commission received from M/s SPAN Fibre India Pvt. Ltd.
was split among M/s. ASCPL, M/s. Kriya FMCG and CBN Placement
and Management Centre as Sh. CBN Reddy was the common link among
the three entities, he was the director and major shareholder in M/s.

Bail Appl. 1316/2018 & 1713/2018 Page 14 of 24

ASCPL, M/s. Kriya FMCG and proprietor of CBN Placement and
Management Centre. The decision to split the said commission was
collectively taken by Karti P. Chidambaram, Sh. CBN Reddy and Mr.
Bhaskararaman himself. He further stated that the proportion of
commission between ASCPL, CBN Placement and Kriya FMCG was
also decided by Karti P. Chidambaram.
16. As per Bhaskararaman, CBN Reddy was the link between the 3
entities. Sh. CBN Reddy, however, has stated that this money belonged to
Karti P. Chidambaram and that he has no knowledge of the work done.
Thus, he admits that money is related to Shri Karti P. Chidambaram and
that money was received by three entities acting together i.e. CBN
Placement and Management Centre, Kriya FMCG and ASCPL. He also
stated that no separate work was done by CBN Placement and
Management Centre and M/s. Kriya FMCG. The Debit Notes were raised
through CBN Placement and Management Centre. These Debit Notes
bear the signature of Sh. CBN Reddy.
17. The investigation conducted further revealed that no brokerage
services were actually rendered by ASCPL or associate entities (CBN
Placement and Management Centre and Kriya FMCG). The
investigation conducted with the buyers of PSF shows that they had
never interacted with ASCPL or associate entities. This fact was also
admitted by the directors of ASCPL, including Sh. CBN Reddy who is
also the proprietor of CBN Placement and Management Centre and the
director and shareholder of Kriya FMCG. Sh. Bhaskararaman, the
main person behind the laundering of these funds also stated that these

Bail Appl. 1316/2018 & 1713/2018 Page 15 of 24

debit notes were raised on the directions of Sh. Karti P. Chidambaram
to show some transaction which in-fact did not occur. It is further
revealed that fake invoices were raised to the companies by ASCPL
and other concerns in order to show and legitimize the payments
received from those companies which were in fact the bribe money for
the favours shown by the petitioner. It is also established that the
money was collected by Karti P. Chidambaram through these concerns
on behalf of the petitioner for the favours shown by the petitioner to
the companies who had transferred money into the account of ASCPL
and other concerns. The illegal gratification collected was thereafter
invested in other companies /entities. The money received by ASCPL
from M/s Span Fibre India Pvt. Ltd. was nothing but illegal
gratification received for the approval given by the Finance Minister
for FDI in INX Media Ltd. The Bank statement of ASCPL for A/c No.
0602100003711 maintained with DCB Bank shows that ASCPL
received money from M/s Span Fibre India Pvt. Ltd. in 2007-08, as
follows :-
Sl. No. Date Amount in ₹
1 10.11.2007 34,36,031
2 21.01.2008 30,70,531
3 21.02.2008 23,20,836
4 29.05.2008 22,82,066
Total 1,11,09,464

18. The bank statement of ASCPL shows that initially this amount was
invested by ASCPL in fixed deposits. Thereafter the money was invested
Bail Appl. 1316/2018 & 1713/2018 Page 16 of 24
in shares of Vasan Health Care Ltd. Although the shares were acquired
by Smt. Meera Arun for ₹3 Crores, she gifted the shares to her father and
he immediately sold the same to ASCPL for ₹1.5 Crores at a price lower
than the price at which they themselves bought the shares at a loss of ₹1.5
Crores. Even though the sale was at a price of ₹1.5 Crores, at the time of
the sale, ASCPL paid Dwarkanathan (father of Smt. Meera Arun) a sum
of ₹50 Lakhs and that too after one year. The balance sheet of ASCPL for
the year 2007-08 and 2008-09 shows that at this time the only source of
funds available to ASCPL was the money received from Span Fibre India
Pvt. Hence, the share of Vasan Health Care Pvt. Ltd. (Vasan) acquired by
ASCPL were generated from proceeds of crime as they had been acquired
from the illegal gratification received by ASCPL for the approval granted
by Finance Minister, P. Chidambaram to INX Media Ltd. The remaining
payment of ₹1 Crore due for the shares of Vasan Health Care Pvt. Ltd.
purchased by ASCPL was made on 29.10.2010, only after these shares
were sold by ASCPL to Sequoia Capital India Growth Investment
Holding (Sequoia) on 26.10.2010.

19. It was projected by the Investigating Agencies that ASCPL

received ₹22,50,00,600/- from Sequoia for sale of Vasan shares and this
money is tainted money as it arises out of sale of shares of Vasan
Healthcare that are themselves acquired from tainted funds and is
property involved in money laundering. It is further projected that the
remaining shares of Vasan Health Care held by ASCPL is properly
involved in money laundering and thereafter, ASCPL sold further 36245
share of Vasan to Vasan Medical Hall @ ₹5242/- per share at a total

Bail Appl. 1316/2018 & 1713/2018 Page 17 of 24

value of ₹19 Crores. Therefore, it is projected that the amount of ₹19
Crores is also property involved in money laundering as it is arising from
sale of shares of Vasan i.e. property involved in money laundering.

20. The investigation conducted further reveals as follows:-

Out of the above property involved in money laundering i.e.

amount received by ASCPL from sale of shares of Vasan Healthcare,
further property was purchased including that of AGS Healthcare
acquired for ₹11 Crores. These shares are also property involved in
money laundering as they were bought from tainted money. They were
further sold by ASCPL for a sum of ₹29,49,25,885/- i.e. at benefit of
₹18.49 Crores approx. This money is again tainted money as it arises out
of sale of property involved in money laundering. The funds of ₹22.5
Crores derived by ASCPL from the sale of shares of Vasan Health Care
to Sequoia, funds of ₹19 Crores derived from the sale of shares of Vasan
to Vasan Medical Hall and the profit of ₹18.49 Crores approx. on the sale
of shares of AGS Health Care was arising out of sale of property involved
in money laundering. So, the funds of ₹59.99 Crores are property
involved in money laundering. In addition, Span Fibre (India) Pvt. Ltd.
and Satyam Fibres (India) Pvt. Ltd paid an amount of ₹3 Crores to
ASCPL and associate companies, out of which only ₹50 Lakhs was used
and the remaining ₹2.5 Crores were Proceeds of Crime in the hands of
ASCPL as both Kriya FMCG and CBN Placement and Management
Centre channelled the money back to ASCPL. The remaining shares of
Vasan held by ASCPL are also proceeds of crime. In addition ₹10 Lakhs
were received by ASCPL from INX Media on 22.07.2008. ₹62.68 Crores
Bail Appl. 1316/2018 & 1713/2018 Page 18 of 24
approximately worth properties are involved in money laundering by
ASCPL as a result of criminal activity relating to a Schedule Offence.

The remaining shares (83,755) of Vasan Health Care (1,50,000 less

30,000 less 36,245 = 83,755) held by ASCPL are also proceeds of crime
as they are derived from criminal activity relating to a Scheduled
Offence.

21. This Court is conscious of the fact that personal liberty of a citizen
is sacrosanct, but no one is above the law. Law makers cannot be allowed
to turn into law breakers with impunity, particularly in cases of this
magnitude. What is so far to be seen is the tip of ice berg. Pre-arrest is not
meant for high profile economic offenders. Time has come to recommend
to the Parliament to suitably amend the Law to restrict the provisions of
pre-arrest bail and make it inapplicable to economic offenders of high
profile cases like the instant one. It is need of the hour. The law must
come down upon economic offenders with a heavy hand. It is often seen
that when economic offenders are on pre-arrest bail, then the
investigation conducted is at a superficial level, like in the instant case.
This not only weakens mega scam cases but it actually stiffs the
prosecution. This Court cannot permit the prosecution in this sensitive
case to end up in smoke like it has happened in some other high profile
cases. Tendering of charge-sheet after obtaining sanction for prosecution
of petitioner cannot dilute the gravity of the offence in question. Both the
sides have cited legal precedents but the facts of instant case prima facie
reveal that petitioner is the king pin i.e. the key conspirator in this case.
Law enforcing agencies cannot be made ineffective by putting legal
Bail Appl. 1316/2018 & 1713/2018 Page 19 of 24
obstacles of offences in question being Scheduled or not Scheduled, as
these legal pleas are sub-judice before Supreme Court and cannot
persuade this Court to grant pre-arrest bail, as the gravity of offence
committed by petitioner is quite evident from case diaries etc. produced
by the Investigating Agencies. The gravity of offence committed by
petitioner demands denial of pre-arrest bail to him.

22. Economic offences constitute a class part and need to be visited

with a different approach in matters of bail. Taking note of huge
magnitude of conspiracy angle qua petitioner, it would be premature to
jump to a conclusion that provisions of PMLA would not apply to the
instant case, as it cannot be said that the amount involved is below ₹30
Lakhs. Rather, money laundering involved in this INX Media Scam and
Aircel Maxis deal scandal is of ₹3,500 Crores.

23. Supreme Court in Y.S Jagan Mohan Reddy (Supra) while dealing
with a money laundering case, has reiterated 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 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.”
24. The pertinent observations made by Supreme Court in ‘Gautam
Kundu Vs. Directorate of Enforcement (Prevention of Money-Laundering
Act)’ (2015) 16 SCC 1, which apply to the instant case, are as under:-

Bail Appl. 1316/2018 & 1713/2018 Page 20 of 24

 “32. We have heard the learned counsel for the
parties. At this stage we refrained ourselves from deciding
the questions tried to be raised at this stage since it is
nothing but a bail application. We cannot forget that this
case is relating to “money-laundering” which we feel is a
serious threat to the national economy and national interest.
We cannot brush aside the fact that the schemes have been
prepared in a calculative manner with a deliberative design
and motive of personal gain, regardless of the consequence
to the members of the society.”
25. Applying the afore-noted dictum to the instant case, this Court
finds that not naming of petitioner in FIR, is inconsequential, as petitioner
has been projected to be the main accused on whose dictates the offence
of this magnitude could be committed. Petitioner cannot claim parity with
co-accused who are on bail. It cannot be forgotten that petitioner was the
Finance Minister at the relevant time and he had given FDI clearances to
INX Media Group for receiving overseas funds to the tune of ₹305
Crores. The alleged irregularities committed by petitioner makes out a
case for refusing pre-arrest bail to petitioner. Simply because petitioner is
a sitting member of Parliament, would not justify grant of pre-arrest bail
to petitioner in this sensitive case. Offenders must be exposed, no matter
what their status is. Petitioner is member of legal fraternity too. But this
by itself does not and cannot justify concession of pre-arrest bail to him.
Discretion to grant or deny pre-arrest bail cannot be exercised de hors the
gravity of offence. It would be preposterous to say that prosecution of
petitioner is baseless, politically motivated and act of vendetta as on the
basis of material collected so far, it can be safely said that prima facie
case is made out against petitioner, thereby, justifying denial of pre-arrest

Bail Appl. 1316/2018 & 1713/2018 Page 21 of 24

bail to him. The magnitude of this case dissuades this Court to grant pre-
arrest bail to petitioner.

26. The pertinent observations of Supreme Court in CBI Vs. Anil

Sharma (Supra) which aptly apply to the instant case, are as follows:-

“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 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
insulated by a pre-arrest bail order during the time he is
interrogated. Very often interrogation in such a condition
would reduce to a mere ritual. 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 would conduct themselves in
a responsible manner and that those entrusted with the task
of disinterring offences would not conduct themselves as
offenders.”
27. Supreme Court in Y.S.Jagan Mohan Reddy (Supra), while dealing
with multiple investigations involving multiple conspirators has reiterated
that the approach to be followed while dealing with bail plea in cases
involving criminal conspiracy to commit economic offences of huge
magnitude relating to public money ought to be strict as fraudulent
transactions affect the economic system to the detriment of the country.
It was pertinently observed that economic crimes of such mammoth scale
Bail Appl. 1316/2018 & 1713/2018 Page 22 of 24
are craftily planned and executed. Thus, grant of bail in cases like instant
one will send a wrong message to the society.

28. In the instant case, in view of the enormous material placed on

record in respect of distinguished entities, various transactions etc, this
Court unhesitatingly opines that bail plea of petitioner is not acceptable.
Recently, Supreme Court in Rohit Tandon Vs. Directorate of
Enforcement (2018) 11 SCC 46 while dealing with the bail plea in a
money laundering case, has again reiterated that white collar crimes/
economic offenders have deep rooted conspiracies involving huge
amount of public funds and this should be viewed seriously and such
offences ought to be considered as grave offences. Pertinently, the bail
plea in the case of Rohit Tandon (Supra) was repelled by the Supreme
Court while observing that duty of the Court at the bail stage is not to
weigh the evidence meticulously but to arrive at a finding on the broad
probabilities of the case.

29. This is a classic case of money laundering. The twin factors which
have weighed to deny pre-arrest bail to petitioner are: (i) Gravity of
offence and (ii) evasive replies given by petitioner to the questions put to
him while he was under protective cover extended to him by this Court.
The parameters governing pre-arrest bail and regular bail are altogether
different. I have pondered over this matter for long and after weighing
the pros and cons, I am of the considered view that the gravity of the
offence committed in the instant case amply justifies denial of pre-arrest
bail to petitioner. Grant of pre-arrest bail in a serious matter like instant
one to an accused simply on the ground that investigation is complete and
Bail Appl. 1316/2018 & 1713/2018 Page 23 of 24
charge sheet has been filed, would defeat the ends of justice. In bail
matters, gravity of the offence is of utmost consideration which weighs
with the Court in granting or refusing pre-arrest bail or regular bail. The
facts of this case persuades me to decline pre-arrest bail to petitioner
while refraining to comment on the merits of the case.

30. Upon considering the case set up against petitioner in its entirety,
this Court is of prima facie opinion that it is not a fit case for grant of pre-
arrest bail to petitioner. Consequentially, both these applications are
accordingly disposed of, while observing that anything stated herein shall
not be taken as an expression on merits at trial.

Dasti.

(SUNIL GAUR)
JUDGE
AUGUST 20, 2019
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