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CASE NO.: Appeal (crl.) 394  of  2001

PETITIONER: UDAY MOHANLAL ACHARYA

       Vs.

RESPONDENT: STATE OF MAHARASHTRA

DATE OF JUDGMENT:       29/03/2001

BENCH: B.N.  Agrawal

JUDGMENT:

L...I...T.......T.......T.......T.......T.......T.......T..J JUDGMENT

B.N.  AGRAWAL,J.

   I  have  perused  the  judgment of  my  learned  Brother Pattanaik,J.,  for whom I have the highest regard and  while agreeing with him with respect to conclusion nos.  1 to 5, I find myself unable to agree on conclusion no.  6, enumerated hereunder,  upon  which  alone decision of  this  appeal  is dependent,   and   observations   and  direction   connected therewith:-

   The  expression  ‘if not already availed of   used  by this Court in Sanjay Dutt vs.  State through CBI Bombay(II), (1994)  5  SCC  410,  must be understood to  mean  when  the accused  files an application and is prepared to offer  bail on  being directed.  In other words, on expiry of the period specified  in paragraph (a) of proviso to sub-section (2) of Section 167 if the accused files an application for bail and offers  also to furnish the bail, on being directed, then it has  to  be  held  that  the  accused  has  availed  of  his indefeasible  right even though the Court has not considered the  said  application and has not indicated the  terms  and conditions  of  bail, and the accused has not furnished  the same.

   There was mushroom growth of financial establishments in the  State  of  Maharashtra in the recent  past.   The  sole object  of  these  establishments   was  of  grabbing  money received  as  deposits from public, mostly middle class  and poor  on  the  promises of unprecedented  highly  attractive rates  of interest or rewards and without any obligation  to refund  the deposit to the investors on maturity or  without any provision for ensuring rendering of the services in kind in   return,   as   assured.    Many  of   these   financial establishments  had  defaulted  to return  the  deposits  on maturity  or to pay interest or render the services in kind, in  return, as assured to the public.  As such deposits  run into  crores  of  rupees  it had resulted  in  great  public resentment and uproar, creating law and order problem in the State  of  Maharashtra, specially in the city  like  Mumbai.

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With  a  view to curb such unscrupulous activities  of  such financial establishments in the State of Maharashtra, it was found  expedient  to  make suitable special  legislation  in public  interest  and accordingly Maharashtra Protection  of Interest  of  Depositors (In Financial  Establishment)  Act, 1999 (hereinafter referred to as ‘the MPID Act) was enacted by  the Maharashtra Legislature, Section 3 whereof  provided that   any  financial   establishment,  which   fraudulently defaults any repayment of deposit on maturity along with any benefit  in  the form of interest, bonus, profit or  in  any other  form  as  promised or fraudulently  fails  to  render service  as  assured  against   the  deposit,  every  person including  the  promoter, partner, director, manager or  any other  person or an employee responsible for the  management of  or  conducting  of  the  business  or  affairs  of  such financial  establishment  shall, on conviction, be  punished with  imprisonment for a term which may extend to six  years and with fine which may extend to one lac of rupees and such financial establishment also shall be liable to a fine which may extend to one lac of rupees.

   The respondent-State of Maharashtra filed a complaint in the Court of the Special Judge, Greater Bombay, bearing C.R. No.   36  of 1999 for prosecution of the appellant  for  the offences under Sections 406 and 420 of the Indian Penal Code read  with  Section 3 of the MPID Act alleging therein  that the  appellant was carrying on business as a sole proprietor under  the  name  and style of M/s.  C.U.   Marketing,  C.U. Bhawan,  S.V.  Road, Andheri (W), Mumbai, during the  course of  which  he  collected about Rs.  450 crores  from  around 29000  depositors  under a scheme floated by  him  promising thereunder  to  return  the same on maturity  together  with highly  attractive  rates of interest, but failed to  refund the same.

   The  appellant surrendered before the Special Judge  and was  remanded to judicial custody by order dated  17.6.2000. The  period  of  sixty days as contemplated  by  proviso  to Section  167(2)  of  the Code of  Criminal  Procedure,  1973 (hereinafter  referred  to as ‘the Code) was  completed  on 16.8.2000.   On the next day, i.e., 17.8.2000 an application for  being  released  on  bail was filed on  behalf  of  the appellant  before the Special Judge alleging that no challan had been filed within the statutory period of sixty days and as such he was entitled to be released on bail under proviso to  Section  167(2) of the Code.  The said  application  was rejected  by  the Special Judge on the same day saying  that the  provisions  of  Section  167(2) of the  Code  were  not applicable to the case on hand as the prosecution was for an offence under Section 3 of the MPID Act as well to which the provisions of Section 167(2) of the Code had no application. Thereafter the appellant preferred an application before the Bombay  High  Court  which was placed for hearing  before  a Division Bench on 29.8.2000 on which date argument on behalf of the appellant was concluded and the case was adjourned to 31.8.2000  for  hearing learned Additional Advocate  General representing  the State.  In the meantime, challan was filed before  the  Special Judge on 30.8.2000.  The High Court  by its  judgment  dated  4.9.2000 came to the  conclusion  that proviso to Section 167(2) of the Code was applicable even to cases filed for prosecution of an accused for offences under MPID Act, but as the challan had already been filed, in view of the Constitution Bench judgment of this Court in the case of  Sanjay Dutt, it was not possible to consider the  prayer for  bail made on behalf of the accused on the ground of non

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submission  of  challan within the period  prescribed  under proviso  to Section 167(2) of the Code.  The High Court also placed reliance upon other judgments of this Court.

   In  order to appreciate the point in issue, it would  be useful  to refer to the provisions of Section 167(2) of  the Code which run thus:-

   S.167(2).-  The Magistrate to whom an accused person is forwarded  under this section may, whether he has or has not jurisdiction  to try the case, from time to time,  authorise the  detention  of  the  accused in  such  custody  as  such Magistrate thinks fit, for a term not exceeding fifteen days in the whole;  and if he has no jurisdiction to try the case or  commit  it  for trial, and considers  further  detention unnecessary,  he may order the accused to be forwarded to  a Magistrate having such jurisdiction:

   Provided that

   (a)  the  Magistrate may authorise the detention of  the accused person, otherwise than in the custody of the police, beyond  the period of fifteen days, if he is satisfied  that adequate grounds exist for doing so, but no Magistrate shall authorise  the  detention of the accused person  in  custody under this paragraph for a total period exceeding, --

   (i)  ninety days, where the investigation relates to  an offence  punishable  with  death, imprisonment for  life  or imprisonment for a term of not less than ten years;

   (ii)  sixty days, where the investigation relates to any other  offence,  and,  on the expiry of the said  period  of ninety  days, or sixty days, as the case may be, the accused person  shall  be released on bail if he is prepared to  and does  furnish bail, and every person released on bail  under this sub-section shall be deemed to be so released under the provisions  of  Chapter  XXXIII  for the  purposes  of  that Chapter;

   (b)  no  Magistrate  shall authorise  detention  in  any custody  under  this section unless the accused is  produced before him;

   (c)  no  Magistrate of the second class,  not  specially empowered  in this behalf by the High Court, shall authorise detention in the custody of the police.

   Explanation  I.-  For  the avoidance of  doubts,  it  is hereby  declared  that,  notwithstanding the expiry  of  the period  specified  in  paragraph (a), the accused  shall  be detained in custody so long as he does not furnish bail.

   Explanation  II.-  If  any question  arises  whether  an accused  person  was  produced   before  the  Magistrate  as required  under paragraph (b), the production of the accused person  may  be  proved  by   his  signature  on  the  order authorising detention.

   [Emphasis added]

   It  is  settled by series of judgments of this Court  in the  last  25 years that framers of the Code  conceived  and desired  that  after  expiry  of the  period  prescribed  in proviso  to Section 167(2) of the Code, an accused has to be

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released  on  bail if no challan is filed because after  the expiry  of the statutory period prescribed therein, there is no  power  in Magistrate to remand for further custody,  but the  same  proviso  prescribes in clause (a)(ii)  that  ‘the accused  person shall be released on bail if he is  prepared to  and does furnish bail.  To be released on bail  because of the default of submission of challan within the statutory period  is a valuable right of the accused, but the  framers of the Code have prescribed a condition in that very proviso referred to above that this right to be released on bail can be  exercised only on furnishing of bail.  Clause (a)(ii) of proviso to Section 167(2) of the Code not only says that the accused  ‘is  prepared to, but also says that the  ‘accused does  furnish  bail and Explanation I to Section 167(2)  of the  Code clearly mandates that notwithstanding the  expiry of  the period specified in paragraph (a), the accused shall be detained in custody so long as he does not furnish bail". Just  to  test the scheme of the said provision, can  it  be conceived  that  if the accused is prepared to furnish  bail but  does not furnish the same, even in that eventuality the court  concerned shall direct his release from custody  only on  the  ground  that  the statutory period  of  filing  the challan  has  expired?  Therefore, in my view,  for  release from  custody  both the conditions aforesaid, read with  the Explanation referred to above, must be fulfilled.

   The  next  question to be considered is as to what  will happen in a case where before any order directing release on bail  is  passed  or before the bail bonds are  furnished  a challan  is filed?  It is well settled that once challan  is filed,  no  sooner  the court concerned  applied  its  mind, cognizance  shall be deemed to have been taken.   Thereafter the power to remand the accused is under other provisions of the  Code, including sub-section (2) of Section 309 thereof. A  Constitution  Bench of this Court in the case  of  Sanjay Dutt  while  considering  correctness   of  Division   Bench decision of this Court in the case of Hitendra Vishnu Thakur &  Ors.  Vs.  State of Maharashtra & Ors., (1994) 4 SCC 602, laid  down  the law in paragraphs 48 and 49 of the  judgment which read thus:-

   48.   We have no doubt that the common stance before us of  the  nature of indefeasible right of the accused  to  be released  on bail by virtue of Section 20(4)(bb) is based on a  correct  reading  of  the  principle  indicated  in  that decision.  The indefeasible right accruing to the accused in such  a situation is enforceable only prior to the filing of the challan and it does not survive or remain enforceable on the  challan  being filed, if already not availed of.   Once the  challan  has been filed, the question of grant of  bail has  to be considered and decided only with reference to the merits of the case under the provisions relating to grant of bail  to  an accused after the filing of the  challan.   The custody  of the accused after the challan has been filed  is not  governed by Section 167 but different provisions of the Code  of  Criminal Procedure.  If that right had accrued  to the  accused  but it remained unenforced till the filing  of the  challan,  then there is no question of its  enforcement thereafter  since  it is extinguished the moment challan  is filed  because  Section 167 Cr.P.C.  ceases to  apply.   The Division  Bench  also  indicated that if there  be  such  an application  of  the accused for release on bail and also  a prayer  for extension of time to complete the  investigation according  to the proviso in Section 20(4)(bb), both of them should  be considered together.  It is obvious that no  bail

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can  be  given  even in such a case unless  the  prayer  for extension of the period is rejected.  In short, the grant of bail  in such a situation is also subject to refusal of  the prayer  for extension of time, if such a prayer is made.  If the  accused applies for bail under this provision on expiry of  the  period of 180 days or the extended period,  as  the case  may be, then he has to be released on bail  forthwith. The  accused,  so  released  on bail  may  be  arrested  and committed to custody according to the provisions of the Code of  Criminal Procedure.  It is settled by Constitution Bench decisions  that a petition seeking the writ of habeas corpus on  the  ground  of absence of a valid order  of  remand  or detention  of  the accused, has to be dismissed, if  on  the date  of return of the rule, the custody or detention is  on the basis of a valid order.  (See Naranjan Singh Nathawan v. State  of  Punjab,  AIR 1952 SC 106;  Ram Narayan  Singh  v. State  of  Delhi,  AIR  1953 SC 277  and  A.K.   Gopalan  v. Government of India, AIR 1966 SC 816).

   [Emphasis added]

   49.   This is the nature and extent of the right of the accused  to  be released on bail under Section 20(4)(bb)  of the  TADA  Act  read  with Section 167 Cr.P.C.   in  such  a situation.  We clarify the decision of the Division Bench in Hitendra  Vishnu  Thakur,  accordingly, and if  it  gives  a different  indication  because  of   the  final  order  made therein, we regret our inability to subscribe to that view.

   [Emphasis added]

   On  a bare perusal of law enunciated above, it would  be clear   that  the  Constitution   Bench  considered  and  in unequivocal  terms disapproved the ratio of decision in  the case of Hitendra Vishnu Thakur wherein it was laid down by a Division  Bench  of  this Court that if for any  reason  the right of the accused to be released on bail under proviso to Section  167(2)  of the Code has been denied then it can  be exercised  at  a later stage even if challan is filed  after expiry of the statutory period prescribed.  The Constitution Bench  in the aforesaid judgment has clearly laid down  that the  indefeasible right of the accused ‘is enforceable  only prior  to the filing of the challan and it does not  survive or  remain  enforceable on the challan being filed, if  not already  availed  of .  [Emphasis added].  It  has  further laid down that custody of the accused after challan has been filed  is  not governed by the provisions of Section 167  of the  Code, but different provisions of the Code.  The  right of the accused cannot be enforced after the challan is filed ‘since  it  is extinguished the moment challan is  filed  . The case of Sanjay Dutt also referred to the views expressed by  the three earlier Constitution Benches of this Court  in connection  with  writ of habeas corpus on the  ground  that there  was  no  valid order of remand passed  by  the  court concerned.   It has reiterated that a petition seeking  writ of  habeas corpus on the ground of absence of a valid  order of remand or detention of the accused has to be dismissed if on  the  date  of  the return of the  rule  the  custody  or detention is on the basis of a valid order.

   [Emphasis added].

   If  the  writ petition filed either under Article 32  or Article  226  of the Constitution, as the case may  be,  for issuance  of  a  writ of habeas corpus on  the  ground  that

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accused  was  under custody without a valid order of  remand has  to  be  dismissed  if during the  pendency  of  such  a petition  a  valid  order of remand has been passed  by  the court concerned then the right of an accused claiming relief on the ground that he has a statutory right under proviso to Section  167(2)  cannot be put on a higher footing than  the constitutional right.

   Out  of  the three Constitution Bench decisions of  this Court  referred  to  above and relied upon in  the  case  of Sanjay  Dutt, in the case of Naranjan Singh Nathawan &  Ors. vs.   State  of Punjab, AIR 1952 SC 106,  Patanjali  Sastri, C.J.,  as  he then was, speaking for  himself,  M.C.Mahajan, B.K.   Mukherjea,  S.R.  Das and Chandrasekhara Aiyar,  JJ., while  considering  an application for issuance of  writ  of habeas  corpus  whereby  order  of  detention  issued  under Section  3  of  the  Preventive   Detention  Act,  1950  was challenged, laid down the law at page 108 as follows:-

   This is undoubtedly true and this Court had occasion in the  recent case of Makhan Singh v.  State of Punjab,  Petn. No.   308  of 1951:  (AIR (39) 1952 S.C.27) to  observe  ‘it cannot  too  often  be emphasised that before  a  person  is deprived  of his personal liberty the procedure  established by  law  must be strictly followed and must not be  departed from to the disadvantage of the person affected.

   This  proposition, however, applied with equal force  to cases of preventive detention before the commencement of the Constitution, and it is difficult to see what difference the Constitution  makes in regard to the position.  Indeed,  the position is now made more clear by the express provisions of S.13 of the Act which provides that a detention order may at any  time  be revoked or modified and that  such  revocation shall not bar the making of a fresh detention order under S. 3  against  the  same person.  Once it is conceded  that  in habeas corpus proceedings the Court is to have regard to the legality  or  otherwise of the detention at the time of  the return and not with reference to the date of the institution of  the proceeding, it is difficult to hold, in the  absence of  proof of bad faith, that the detaining authority  cannot supersede  an  earlier  order  of  detention  challenged  as illegal  and  make a fresh order wherever possible which  is free from defects and duly complies with the requirements of the law in that behalf.

   [Emphasis added]

   In  another Constitution Bench decision of this Court in the case of Ram Narayan Singh v.  The State of Delhi & Ors., AIR  1953 SC 277, reliance whereupon has also been placed in Sanjay  Dutts case, again while considering a petition  for issuance  of  writ of habeas corpus, Patanjali Sastri,  C.J. as  he then was, noticed with approval, the law already laid down  in the case of Naranjan Singh (supra) and observed  at page 278 thus:-

   It  has  been held by this Court that in habeas  corpus proceedings  the Court is to have regard to the legality  or otherwise of the detention at the time of the return and not with reference to the institution of the proceedings.

   [Emphasis added]

   Similarly, again the Constitution Bench in its dictum in

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the  famous  case of A.K.  Gopalan v.  Government of  India, AIR  1966  SC  816,  was considering  an  application  under Article  32  of the Constitution of India for issuance of  a writ  of  habeas  corpus challenging an order  of  detention issued  under the Defence of India Rules wherein Wanchoo,J., speaking  for  himself and on behalf of  P.B.Gajendragadkar, C.J.,  M.  Hidayatullah, R.S.  Bachawat & V.   Ramawami,JJ., laid down the law that in dealing with a petition for habeas corpus  the Court has to see whether after the filing of the writ   and  before  the  date  of  hearing  there  was   any intervening  factor, meaning thereby that if on the date  of filing  of  the  writ a person was under  detention  without there being any valid order, but if on the date of hearing a person  was in detention under a valid order, merely because the  detention on the date of the filing of the petition was invalid, the same cannot be a ground for issuance of writ of habeas corpus.

   It  is true that the right of an accused to be  released on  bail for default in submission of challan is a  valuable and  indefeasible  right,  but  by the  time  the  court  is considering  the exercise of the said right if a challan  is filed  then  the  question  of  grant  of  bail  has  to  be considered  only with reference to merits of the case  under the  provisions of the Code relating to grant of bail  after filing of the challan which view is consistent with the view expressed by different Constitution Benches of this Court in several  decades in connection with the issuance of writ  of habeas corpus as well as for grant of bail.

   My  learned  Brother has referred to the expression  ‘if not  already  availed  of  referred to in the  judgment  in Sanjay  Dutts  case  for  arriving at  conclusion  no.   6. According  to me, the expression ‘availed of  does not mean mere  filing  of  application for  bail  expressing  therein willingness  of the accused to furnish bail bond.  What will happen  if on the 61st day an application for bail is  filed for  being released on bail on the ground of default by  not filing  the challan by the 60th day and on the 61st day  the challan  is also filed by the time the Magistrate is  called upon  to  apply  his  mind to the challan  as  well  as  the petition  for  grant  of  bail?   In  view  of  the  several decisions  referred to above and the requirements prescribed by  clause  (a)(ii)  of proviso read with Explanation  I  to Section  167(2)  of  the  Code, as no  bail  bond  has  been furnished,  such an application for bail has to be dismissed because  the stage of proviso to Section 167(2) is over,  as such right is extinguished the moment challan is filed.

   In  this  background, the expression availed of   does not  mean mere filing of the application for bail expressing thereunder  willingness to furnish bail bond, but the  stage for  actual furnishing of bail bond must reach.  If  challan is filed before that, then there is no question of enforcing the  right,  howsoever valuable or indefeasible it  may  be, after  filing  of the challan because thereafter  the  right under default clause cannot be exercised.

   In  case  the court concerned has adopted  any  dilatory tactics or an attitude to defeat the right of the accused to be  released  on bail on the ground of default, the  accused should  immediately move the superior court for  appropriate direction.   But if the delay is bona fide and unintentional and  in  the meantime challan is filed then in view  of  the aforesaid judgments of this Court, such a petition has to be

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dismissed and it cannot be said that the accused has already availed  of the right accruing under proviso to Section  167 of  the  Code.   It  need not be  repeated  that  the  right accruing  under proviso to Section 167(2) of the Code on the expiry  of the statutory period of sixty days cannot be said to have been availed of by mere making of an application for bail  expressing therein willingness to furnish bail, but on furnishing  bail  bond as required under clause  (a)(ii)  of proviso  read  with Explanation I to Section 167(2)  of  the Code.  If because of any bona fide view or procedure adopted by  the  court  concerned some delay is caused  and  in  the meantime  challan is filed, the Court has no power to direct release under proviso to Section 167(2) of the Code.

   The  present  case,  where the prosecution  was  for  an offence   under  the  MPID  Act,   being  a  case  of  first impression,  the  Court concerned was of bona  fide  opinion that  the provisions of Section 167(2) of the Code were  not applicable.   That view of the Special Judge was reversed by the  High  Court, but before it could fully apply its  mind, the  challan was filed.  In this background, I am clearly of the  opinion that the right of the accused to be enlarged on bail under proviso to Section 167(2) of the Code cannot be

   said to have been availed of  in the present case.

   This  being  the position, I have no option but to  hold that  the High Court has not committed any error in  passing the  impugned  order  so as to be interfered  with  by  this Court.

   Accordingly, the appeal is dismissed.

   J.  [B.N.AGRAWAL]

   MARCH 29, 2001.