Page 1 REPORTABLE

IN THE SUPREME COURT OF INDIA

CRIMINAL APPELLATE JURISDICTION

CRIMINAL APPEAL NO. 730 OF 2013

(Arising out of S.L.P. (Crl.) No. 3404 of 2013)

Y.S. Jagan Mohan Reddy .... Appellant(s)

Versus

Central Bureau of Investigation ....

Respondent(s)

J U D G M E N T

P.Sathasivam, J.

1)Leave granted.

2)This appeal is directed against the final judgment and

order dated 24.01.2013 passed by the High Court of

Judicature of Andhra Pradesh at Hyderabad in Criminal

Petition No. 8750 of 2012 in R.C. 19(A)/2011-CBI-Hyderabad,

whereby the High Court dismissed the petition filed by the

appellant herein for grant of bail.

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Page 2 3)The only question posed for consideration is whether

the appellant-herein has made out a case for bail.

Brief facts:

4)(a) On the orders of the High Court of Andhra Pradesh

in Writ Petition Nos. 794, 6604 and 6979 of 2011 dated

10.08.2011, the Central Bureau of Investigation (in short

“the CBI”), Hyderabad, registered a case being R.C. No.

19(A)/2011-CBI-Hyderabad dated 17.08.2011 under Section

120B read with Sections 420, 409 and 477-A of the Indian

Penal Code, 1860 (for short ‘IPC’) and Section 13(2) read

with Section 13(1)(c) and (d) of the Prevention of Corruption

Act, 1988 (in short “the PC Act”) against Y.S. Jagan Mohan

Reddy (A-1), Member of Parliament and 73 others.

(b)The appellant-Y.S. Jagan Mohan Reddy was named as

an accused at Sl. No. 1 in the FIR dated 17.08.2011 (after

the chargesheet was framed, he was arrayed as A-1 and

hereinafter, he will be referred to as A-1).

(c)During investigation, it was revealed that Y.S. Jagan

Mohan Reddy (A-1), son of Late Dr. Y.S. Rajasekhara Reddy,

the then Chief Minister of Andhra Pradesh, has adopted

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Page 3 several ingenious ways to amass illegal wealth which

resulted in great public injury. The then Chief Minister of the

State abused his public office to the benefit of his son Y.S.

Jagan Mohan Reddy (A-1). Since May, 2004, A-1 started

floating a number of companies including M/s Jagathi

Publications Pvt. Ltd., which was originally incorporated as a

private limited company on 14.11.2006 and later converted

into a public limited company on 12.01.2009. At the

relevant time, Y.S. Jagan Mohan Reddy (A-1) was designated

as the Authorised Signatory to operate the Bank accounts of

the said Company. He was appointed as a Director and

Chairman with effect from 21.06.2007. It is alleged that A-1

floated M/s Jagathi Publications Pvt. Ltd. with an objective of

conducting media business with the ill-gotten wealth. Most

of the shareholders were alleged to be the benamis of Y.S.

Jagan Mohan Reddy (A-1). Further, as a quid pro quo to

these investments, the benefits were received by various

investors including the companies/individuals from the

decisions of the State Government in allotment of lands for

Special Economic Zones (SEZs), contracts for irrigation

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Page 4 projects, special relaxations/permissions for real estate

ventures, mines etc. It is further revealed that Y.S. Jagan

Mohan Reddy (A-1) laundered the bribe money by routing it

through various individuals and companies and getting

investments made by them in his companies at a high

premium.

(d)On 31.03.2012, 23.04.2012 and 07.05.2012, the CBI

filed first, second and third charge sheet(s) respectively

before the Special Judge for CBI Cases, Hyderabad and the

appellant was arrayed as A-1 in all the charge sheets. The

Principal Special Judge for CBI Cases took cognizance of the

charge sheet dated 31.03.2012 which was numbered as CC

No. 8 of 2012. The appellant was arrested on 27.05.2012 for

his involvement and complicity in the case and presently, he

is in judicial custody. On 29.05.2012 and 30.05.2012, the

Principal Special Judge for CBI Cases took cognizance of

second and third charge sheet(s) which were numbered as

CC Nos. 9 and 10 of 2012 respectively.

(e)On 29.05.2012, the appellant filed Crl. M.P. No.

1055/2012 in CC No. 8 of 2012 before the Court of the

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Page 5 Special Judge for CBI Cases at Hyderabad for grant of regular

bail under Section 437 of the Code of Criminal Procedure,

1973 (in short ‘the Code’). The Special Judge, by order dated

01.06.2012, dismissed his application for bail.

(f)The CBI filed Criminal Petition Nos. 4743 and 4744 of

2012 before the High Court for the remand of A-1 for a

period of 5 days. The High Court, by order dated

02.06.2012, allowed the petitions and remanded A-1 to the

custody of the CBI from 03.06.2012 to 07.06.2012. By

further orders dated 08.06.2012 in Crl. M.P. No. 4785 of

2012 in Criminal Petition No. 4743 of 2012, the custody was

extended to a further period of 2 days.

(g)Being aggrieved, the appellant moved the High Court

for enlarging him on bail in Criminal Petition No. 5211 of

2012. The High Court, taking note of serious nature of the

offence and having regard to personal and financial clout of

the appellant (A-1) and finding that it cannot be ruled out

that witnesses cannot be influenced by him in case he is

released on bail at this stage, by impugned order dated

04.07.2012, dismissed his bail application.

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Page 6 (h)Being aggrieved by the orders dated 02.06.2012 and

04.07.2012, the appellant preferred two special leave

petitions being Nos. 5901 and 5902 of 2012 before this

Court. This Court, by order dated 09.08.2012, issued notice

in SLP (Crl.) No. 5902 of 2012 and dismissed SLP (Crl.) No.

5901 of 2012.

(i)On 13.08.2012, the CBI filed fourth charge sheet in the

Court of Principal Special Judge for CBI Cases, Hyderabad

which was numbered as CC No. 14 of 2012.

(j)This Court, on coming to know that the investigation is

continuing in connection with 7 matters, dismissed the

special leave petition being SLP (Crl.) 5902 of 2012 by order

dated 05.10.2012 with a direction to the CBI to complete the

investigation as early as possible and to file a consolidated

charge sheet on the remaining 7 issues. This Court also

directed the appellant to renew his prayer for bail before the

trial court on completion of the investigation by the CBI.

(k)On 16.11.2012, the appellant filed Crl. M.P. No. 1938 of

2012 before the Special Judge for CBI Cases, Hyderabad,

seeking default/statutory bail. On the same day, the

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Page 7 appellant filed Crl. M.P. No. 1939 of 2012 in CC No. 8 of 2012

before the Special Judge for CBI Cases, Hyderabad, seeking

regular bail. By orders dated 28.11.2012 and 04.12.2012,

the Special Judge rejected the bail applications filed by the

appellant herein in Crl. M.P. No. 1938 of 2012 and Crl. M.P.

No. 1939 of 2012 respectively.

(l)The appellant preferred Criminal Petition No. 8576 of

2012 before the High Court for grant of bail which came to

be dismissed on 24.12.2012. Being aggrieved, the appellant

preferred Criminal Petition No. 8750 of 2012 before the High

Court. The High Court, by order dated 24.01.2013,

dismissed the petition filed by the appellant herein.

(m) Being aggrieved by the order of the High Court, the

appellant herein has preferred this appeal by way of special

leave.

5)Heard Mr. Harish N. Salve, Mr. Mukul Rohatgi and Mr.

K.V. Vishwanathan, learned senior counsel for the appellant-

accused and Mr. Ashok Bhan and Mr. Mukul Gupta, learned

senior counsel for the respondent-CBI.

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Page 8 6)The CBI has filed a counter affidavit dated 06.05.2013,

sworn by a senior officer, namely, Deputy Inspector General

of Police and Chief Investigating Officer in RC No.

19(A)/2011-CBI-HYD and has furnished various information

such as allegations against the appellant,

companies/persons involved, investigation conducted so far

and progress of the investigation with regard to certain

companies/persons. During the course of hearing, the CBI

also circulated the Status Report in respect of the FIR being

No. 19(A)/2011-CBI-HYD regarding 7 issues mentioned in the

order of this Court dated 05.10.2012. Learned senior

counsel appearing for the appellant, by drawing our

attention to various materials/details including the fact that

the appellant is in custody nearly for a period of 1 year and

many persons alleged to have been involved in those

transactions are not in custody and no steps have been

taken by the CBI for their arrest, submitted that the

appellant may be enlarged on bail after imposing

appropriate conditions.

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Page 9 7) In order to appreciate the rival contentions,

particularly, the stand of the CBI, it is useful to refer the

earlier order passed by this Court on 05.10.2012 which reads

as under:

“SLP (Crl.)No. 5902 of 2012

Heard Mr. Gopal Subramaniam, learned senior

advocate appearing for the petitioner at some length.

Mr. Mohan Parasaran, learned ASG appearing on

behalf of the CBI, submitted before us a report from which

it appears that the investigation is still going on in

connection with seven matters. In paragraph 9 of the

report, it is stated as under:

“…..The matters which are pending investigation also

involved investigation into various serious economic

offences involving hundreds of crores of rupees. The major

matters which are now under investigation relating to

conspiracies distinctly involving the following entities which

by themselves are independent to each other and are,

therefore, distinct conspiracies.

(i)Sandur Power Co. Ltd.

(ii)Grant of mining lease to Bharti Cements/Raghuram

Cements which are companies none other than own

companies of A1, Mr. JMR.

(iii)Penna Cements and Group companies

(iv)Dalmia Cements

(v)India Cements

(vi)Investment through paper companies based in

Kolkata and Mumbai, popularly known as suit case

companies.

(vii)Indu Projects, Lepakshi knowledge Hub

The amounts involved and which is subject matter of

investigation in the above cases as per estimates exceed

Rs.3000 crores.”

(emphasis in the original)

Mr. Parasaran stated that the CBI is making

investigation without wasting any time and he assured the

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Page 10 Court that the investigation will be completed as early as

possible and on completion of the investigation the CBI

shall submit one final charge-sheet.

On hearing counsel for the parties and on going

through the report submitted by the CBI, we are not

inclined to interfere in the matter at this stage.

The special leave petition is, accordingly, dismissed.

It will be, however, open to the petitioner to renew

his prayer for bail before the trial court on completion of

the investigation by the CBI on the issues as indicated

above and submission of the final charge-sheet.

In case, such a prayer is made, the Court shall

consider the prayer for bail independently, on its own

merits, without being influenced by the dismissal of the

special leave petition.

SLP(Crl.)No.5946 of 2012

Put up after two weeks.”

8)Mr. Ashok Bhan, learned senior counsel for the CBI, by

pointing out the penultimate paragraph in the order dated

05.10.2012, i.e., “It will be, however, open to the petitioner

to renew his prayer for bail before the trial Court on

completion of the investigation by the CBI on the issues as

indicated above and submission of the final charge-sheet”,

submitted that in view of the fact that the investigation is

still continuing in respect of the transaction(s) with certain

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Page 11 companies/persons, the present application for bail is not

maintainable.

9)It is relevant to note that in the order dated 05.10.2012,

this Court noted the statement made by learned ASG, who

appeared for the CBI, that the investigation relating to

conspiracies distinctly involving 7 entities which by

themselves are independent to each other requires further

time. According to learned senior counsel for the CBI, they

require 4-6 months’ time to complete the investigation in

respect of the 7 entities as mentioned in the order dated

05.12.2012 and to file a charge sheet. In support of the

above claim, the CBI pointed out various instances from the

counter affidavit as well as from the Status Report justifying

their stand for the dismissal of the bail application.

10)In the Status Report, the CBI has assured that the

investigation is being carried out expeditiously as directed

by this Court. It is stated that among 7 issues, the CBI has

completed the investigation with respect to M/s Dalmia

Cements and consequently filed the charge sheet in the

Court of Special Judge for CBI Cases, Hyderabad on

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Page 12 08.04.2013. According to the CBI, presently, the

investigation is progressing with regard to other 6 issues

also and the CBI is in the final stages of investigation with

respect to the following, viz., M/s India Cements, Penna

Cements and Investments through Kolkata companies. It is

also assured to this Court that the CBI is likely to file charge

sheet/final reports in the above said three issues shortly.

11)The CBI in its Status Report has elaborated the progress

with regard to the investigation in the remaining issues

which are as under:-

M/s Dalmia Cements (Bharat) Ltd.

(a)The investigation has revealed that M/s Dalmia

Cements (Bharat) Ltd. invested an amount of Rs. 95 crores

into M/s Raghuram Cements Ltd. represented by Y.S Jagan

Mohan Reddy. In quid pro quo to the investments, A-1,

through his influence over his father Late Dr. Y.S.

Rajasekhara Reddy facilitated the grant and transfer of

mining lease to the extent of 407 hectares in Kadapa District

of Andhra Pradesh to M/s Dalmia Cements. The CBI has

highlighted the amount involved and the facilities provided

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Page 13 by the father of the appellant. It is further highlighted in the

Status Report that the searches were conducted by the

Income Tax Department, New Delhi at the offices of M/s

Dalmia Cements (Bharat) Ltd. and the residential premises

of their employees.

(b)It is also highlighted that as per the pre-arranged

agreement between Y.S. Jagan Mohan Reddy (A-1), V. Vijay

Sai Reddy (A-2) and Puneet Dalmia, M/s Dalmia Cements

(Bharat) Ltd. sold of their stake in M/s Raghuram Cements

Ltd. to M/s PARFICIM, France, for a total consideration of Rs.

135 crores out of which, an amount of Rs. 55 crores was paid

to Y.S. Jagan Mohan Reddy (A-1) between 16.05.2010 and

13.06.2011, in cash through hawala channels, and the

details of the said payments were found in the material

seized by the Income Tax Department, New Delhi.

(c)The CBI has further alleged that M/s Dalmia Cements

(Bharat) Ltd. have returned the alleged sale proceeds to Y.S.

Jagan Mohan Reddy (A-1) in cash through hawala channels

which clearly establish that the initial payment of Rs. 95

crores was only illegal gratification for the undue benefits

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Page 14 received by them from the Government of Andhra Pradesh

and was not genuine investments. It is further submitted

that the charge sheet has already been filed with regard to

the same on 08.04.2013 against A-1 and 12 others under

various sections of the IPC and the PC Act.

M/s Sandur Power Company Ltd.

(a)Regarding the investigation relating to M/s Sandur

Power Company Ltd., it is stated by the CBI that Y.S. Jagan

Mohan Reddy (A-1) was the Director of this Company from

16.06.2001 to 11.01.2010. M/s Sandur Power Company Ltd.

was incorporated on 23.10.1998 by M.B. Ghorpade and

subsequently, Y.S. Jagan Mohan Reddy (A-1) joined the

company during June 2001 along with the Board of Directors,

viz., Harish C. Kamarthy and JJ. Reddy. It is alleged by the

CBI that the Company is closely held by Y.S. Jagan Mohan

Reddy (A-1). The CBI also highlighted various share

transactions amounting to Rs. 124.60 crores with two

Mauritius based companies, viz., M/s 2i Capital and M/s Pluri

Emerging Company by M/s Sandur Power Company Ltd. It is

projected by the CBI that the above said amount is of A-1

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Page 15 which was routed through the Mauritius based companies. It

is also highlighted that the role of Nimmagadda Prasad (A-3),

who is currently under judicial custody is also being

investigated for the same. Vijay Sai Reddy (A-2), along with

Y.S. Jagan Mohan Reddy (A-1), was the brain behind this

conspiracy inasmuch as A-2 had floated fictitious companies

in Chennai so as to enable round tripping or routing monies

into M/s Sandur Power Company Ltd. from India and foreign

countries through companies falsely created in Chennai as

well as in certain foreign countries.

(b)It is also pointed out by the CBI that notice has also

been issued to one Maiank Mehta, who is suspected to be

the person who handled the routing of money of Y.S. Jagan

Mohan Reddy (A-1) and notice has been issued for his

presence in India for examination and interrogation. The

said person is presently based in Hong Kong and is refusing

to come to India citing frivolous reasons. It is suspected that

he is being influenced by Y.S. Jagan Mohan Reddy (A-1) and

Vijay Sai Reddy (A-2) which amply prove that the witnesses

are being influenced by these persons in this case.

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Page 16 Grant of Mining Lease to Bharti Cements/Raghuram

Cements:

It is pointed out by the CBI that investigation is under

progress regarding grant of mining lease of limestone to

Bharti Cements/Raghuram Cements which are the

companies owned by Y.S. Jagan Mohan Reddy (A-1). It is

claimed by the CBI that during the period under review, they

have collected nearly 400 documents running into thousands

of pages from various Departments/Banks including Oriental

Bank of Commerce, Jubilee Hills, Hyderabad, Koramangala,

Bangalore, Head Office, Gurgaon etc. for disbursement of

loan of Rs. 200 crores violating the bank guidelines and

rules. It is also stated that the investigation disclosed the

payment of illegal gratification of Rs. 30 crores to Y.S. Jagan

Mohan Reddy (A-1) by Nimmagadda Prasad (A-3) for the

wrongful gain obtained by A-3 from the Government of

Andhra Pradesh in connection with awarding a project

consisting of development of two Sea Ports and an Industrial

Corridor as VANPIC Project and falsification of documents to

cover up the said payment etc.

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Page 17 M/s Indu Projects Ltd. (M/s Lepakshi Knowledge Hub

Pvt. Ltd. and M/s Indus Tech Zone Pvt. Ltd.)

The CBI has pointed out that the investigation is in progress

in respect of the above said group of companies. In the

Status Report, the CBI has highlighted a number of details

about the nexus of the appellant along with those

companies. Since the investigation is still under progress in

respect of those companies, we are not highlighting all those

details furnished by the CBI in the Status Report.

M/s India Cements Ltd.

The CBI has highlighted the investigation relating to M/s

India Cements Ltd. and the various amounts exchanged

between the parties. In respect of the above, according to

the CBI, they had made illegal quid pro quo investments to

the tune of Rs.140 crores into the group companies of Y.S.

Jagan Mohan Reddy (A-1) and had received several benefits

in the form of permissions granted for utilization/additional

quantity of water from Kagna and Krishna Rivers and lease

of land. It is also pointed out that the investigation in the

case is almost complete except few more crucial witnesses

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Page 18 have to be examined. The CBI also pointed out the details of

investigation relating to investment through paper

companies based in Kolkata and Mumbai, popularly known

as suit case companies. Since investigation is on a half way,

we are not referring all those details mentioned in the Status

Report.

12)It is further pointed out that during investigation, a total

number of 140 witnesses including IAS officers and

concerned Ministers have been examined and 352

documents were collected. According to the CBI, out of

these, some more crucial witnesses have to be examined.

13)Learned senior counsel appearing for the appellant

pointed out that after the order dated 05.10.2012, the CBI is

not justified in prolonging the same just to continue the

custody of the appellant. It was also highlighted that even

according to the CBI, several Ministers and IAS officers are

involved, but no one has been arrested so far. As far as

those allegations are concerned, it is the claim of the CBI

that considering the huge magnitude of transactions, various

beneficiaries, companies/persons involved with A-1 and his

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Page 19 associates, the CBI is taking effective steps for early

completion of the same. Though learned senior counsel for

the appellant submitted that in view of non-compliance of

Section 167 of the Code the appellant is entitled to statutory

bail, in view of enormous materials placed in respect of

distinct entities, various transactions etc. and in the light of

the permission granted by this Court in the order dated

05.10.2012, we are unable to accept the argument of

learned senior counsel for the appellant.

14)On going into all the details furnished by the CBI in the

form of Status Report and the counter affidavit dated

06.05.2013 sworn by the Deputy Inspector General of Police

and Chief Investigating Officer, Hyderabad, without

expressing any opinion on the merits, we feel that at this

stage, the release of the appellant (A-1) would hamper the

investigation as it may influence the witnesses and tamper

with the material evidence. Though it is pointed out by

learned senior counsel for the appellant that since the

appellant is in no way connected with the persons in power,

we are of the view that the apprehension raised by the CBI

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Page 20 cannot be lightly ignored considering the claim that the

appellant is the ultimate beneficiary and the prime

conspirator in huge monetary transactions.

15)Economic offences constitute a class apart and need to

be visited with a different approach in the matter of bail. The

economic offence having deep rooted conspiracies and

involving huge loss of public funds needs 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.

16)While granting bail, the court has to keep in mind the

nature of accusations, the nature of evidence in support

thereof, the severity of the punishment which conviction will

entail, the character of the accused, circumstances which

are peculiar to the accused, reasonable possibility of

securing the presence of the accused at the trial, reasonable

apprehension of the witnesses being tampered with, the

larger interests of the public/State and other similar

considerations.

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Page 21 17)Taking note of all these facts and the huge magnitude

of the case and also the request of the CBI asking for further

time for completion of the investigation in filing the charge

sheet(s), without expressing any opinion on the merits, we

are of the opinion that the release of the appellant at this

stage may hamper the investigation. However, we direct the

CBI to complete the investigation and file the charge

sheet(s) within a period of 4 months from today. Thereafter,

as observed in the earlier order dated 05.10.2012, the

appellant is free to renew his prayer for bail before the trial

Court and if any such petition is filed, the trial Court is free to

consider the prayer for bail independently on its own merits

without being influenced by dismissal of the present appeal.

18)With the above observation, the appeal is dismissed.

………… .…………………………J.

(P. SATHASIVAM)

………….…………………………J.

(M.Y. EQBAL)

NEW DELHI;

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Page 22 MAY 9, 2013.

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