Delhi HC Grants Bail in Corruption Case with Incomplete Chargesheet: CBI's Investigation Scrutinized

On Thursday, the Delhi High Court, under Justice Amit Sharma, heard the bail plea of a businessman accused in a corruption case, also involving public officials, relating to the siphoning of funds of State Bank of India (SBI). 

The Court held that the Central Bureau of Investigation (CBI) had filed an incomplete chargesheet in the case with respect to the offences alleged in the FIR and granted the applicant bail.

The CBI had registered a first information report (FIR) on November 19, 2020 after an SBI official alleged that a company, M/s Arise India Ltd, and its directors, including the present applicant, had availed credit facilities from a consortium of banks led by the SBI but diverted the borrowed funds. The account of the company was declared a non-performing asset with a total outstanding amount of ₹512.67 crore. A subsequent forensic audit of the company’s account termed the company as a “fraud” on May 27, 2019.

The FIR dated November 19, 2020, alleged offences under Sections 120B (criminal conspiracy) read with Sections 420 (cheating), 468 (forgery for purpose of cheating) and 471 (using a forged document as genuine) of the Indian Penal Code (IPC) besides corruption charges under Section 13(2) read with Section 13(1)(d) of the Prevent of Corruption Act.

The applicant was arrested on November 14, 2022 under these Sections and the investigating agency sought approval to probe the role of public servants in the case.

The Court underlined that the CBI had, however, proceeded to file the chargesheet before the expiry of the stipulated term of 60 days while keeping the investigation under Section 13(2) read with Section 13(1)(d) of the PC Act open. The chargesheet was filed on January 6, 2023 while the investigation continued. The competent authority rejected the grant of approval through a letter to the CBI on February 23, 2023.

By filing a supplementary report under Section 173(8) of the Code of Criminal Procedure (CrPC), the CBI cannot change the nature of the first chargesheet as one which can be termed as complete. The Court further observed that only a part of the investigation concerning the diversion of borrowed funds was complete, but the aspect of conspiracy with respect to unknown public servants was pending.

The Court noted that the practice of the CBI picking up one aspect of an investigation and filing a piecemeal chargesheet defeats the right of an applicant to default bail and goes against the mandate of Article 21 of the Constitution. The High Court thus granted the applicant bail.