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       REPORTABLE    

IN THE SUPREME COURT OF INDIA

CRIMINAL APPELLATE JURISDICTION

CRIMINAL APPEAL NO.     728        OF 2013 (Arising out of S.L.P. (Crl.) No. 9706 of 2012)

Nimmagadda Prasad               ....  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  08.10.2012  passed  by  the  High  Court  of  

Judicature  of  Andhra  Pradesh  at  Hyderabad  in  Criminal  

Petition No. 6732 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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3) The only question posed for  consideration is  whether  

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

Brief facts:

4) 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.     

5) The appellant-Nimmagadda Prasad was named as  an  

accused at Sl. No. 12 in the FIR dated 17.08.2011 (after the  

chargesheet  was  framed,  he  was  arrayed  as  A-3  and  

hereinafter, he will be referred to as A-3).  It is further seen  

that  during the course of  investigation,  the appellant  was  

arrested on 15.05.2012 for his involvement and complicity in  

the case and presently, he is in judicial custody.  

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6) After filing two successive bail applications before the  

trial  Court  which ended in dismissal,  the appellant  moved  

the High Court for enlarging him on bail on 06.09.2012 by  

filing Criminal Petition No. 6732 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-3)  

and finding that it cannot be ruled out that witnesses cannot  

be influenced by A-3 in case he is released on bail at this  

stage and also taking note of the submission of the Special  

Public Prosecutor that the investigation of the case is  still  

continuing  even  after  filing  of  the  charge  sheet(s),  by  

impugned  order  dated  08.10.2012,  dismissed  his  bail  

application.  

7) Heard Mr. Harish N. Salve, learned senior counsel for  

the appellant and Mr. Ashok Bhan, learned senior counsel for  

the respondent-CBI.  

Contentions:

8) After  taking  us  through  the  entire  materials  

commencing  from  the  filing  of  FIR  dated  17.08.2011,  

contents  of  charge sheet dated 13.08.2012,  orders of  the  

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trial  Court  rejecting  the  bail  applications  twice,  the  stand  

taken by the CBI before the trial Court and the High Court,  

Mr.  Salve,  learned  senior  counsel,  vehemently  contended  

that the appellant is  entitled to an order of bail  from this  

Court.   He also submitted that in view of the inconsistent  

stand taken by the CBI at every stage and taking note of the  

fact  that  the  appellant  is  in  jail  since  15.05.2012,  by  

imposing  appropriate  conditions,  the  appellant  may  be  

released on bail.  

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

placing reliance on all the materials filed by the prosecution  

pointed out that the appellant, along with others, is involved  

in a serious economic offence.  He also submitted that the  

appellant (A-3) himself is a beneficiary of land worth several  

crores  of  rupees  and  properties  in  association  with  Jagan  

Mohan  Reddy  (A-1),  who  enriched  himself  for  more  than  

40,000 crores by the influence of  his  father  who was the  

then Chief Minister of Andhra Pradesh.  He also submitted  

that even after filing of the charge sheet on 13.08.2012, in  

view  of  further  investigation  under  Section  173(8)  of  the  

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Code of Criminal Procedure, 1973 (in short “the Code”), the  

CBI  is  looking  into  all  the  aspects  of  investment  of  the  

appellant in M/s Indus Projects and its group of companies,  

has collected a number of files from different departments of  

the Government of Andhra Pradesh, Banks/NBFCs and other  

private companies/individuals.  He finally concluded that in  

view of the Status Report dated 30.04.2013 filed by the DIG  

of Police, CBI, Hyderabad, stating that a further period of 4-6  

months is  required for  completing the  investigation under  

Section 173(8) of the Code, it would not be proper to release  

him on bail at this juncture.

10) We have carefully considered the rival submissions and  

perused  all  the  relevant  materials  relied  on  by  both  the  

sides.

Discussion:

11) In the Status Report dated 30.04.2013, it is stated that  

the allegations in the FIR against the appellant is that the  

Government of Andhra Pradesh awarded VANPIC (Vodarevu  

and  Nizampatnam  Port  Industrial  Corridor)  Project  to  the  

present appellant (A-3) and allotted more than 15,000 acres  

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of land in Prakasam and Guntur Districts to the companies  

promoted by the appellant in violation of all the laws, rules  

and norms and granted several concessions.  As a quid pro  

quo, the appellant invested in the following companies, viz.,  

M/s Carmel Asia Holdings Pvt.  Ltd., M/s Bharathi Cements,  

M/s Jagathi  Publications Pvt.  Ltd.,  M/s  Silicon Builders,  M/s  

Sandur Power Company etc. belonging to Y.S. Jagan Mohan  

Reddy, s/o the then Chief Minister, late Dr. Y.S. Rajasekhara  

Reddy.  

12) It  is  also brought to our notice that the investigation  

into  the  above  said  allegations  revealed  that  during  the  

period between 2006 and 2009, the Government of Andhra  

Pradesh,  led  by  the  then  Chief  Minister  late  Dr.  Y.S.  

Rajasekhara  Reddy  extended  many  undue  favours  to  the  

appellant  by  abusing  his  official  position  and  thereby,  an  

extent of 18878 acres was allotted in his favour, in return, A-

3 paid illegal gratifications amounting to Rs. 854.50 crores to  

Y.S. Jagan Mohan Reddy (A-1) and his group of companies for  

exercising personal influence over his father, the then Chief  

Minister of Andhra Pradesh. It is the claim of the CBI that  

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illegal  gratifications  were  paid  in  the  guise  of  

investments/share application money to give them corporate  

colour in order to escape the criminal liability.  

13) It is also the claim of the prosecution that the appellant  

acted  as  a  conduit  to  Y.S.  Jagan  Mohan  Reddy  (A-1)  to  

channelize  the  bribe  amounts  paid  by  other  

individuals/companies  as  a  quid  pro  quo for  the  undue  

benefits  received by him from the Government  of  Andhra  

Pradesh led by late Dr. Y.S. Rajasekhara Reddy.

14) It is also pointed out that based on the available oral  

and documentary evidence, a charge sheet was filed against  

the appellant and other accused (A-1 to A-14) on 13.08.2012  

before  the  Court  of  Principal  Special  Judge for  CBI  cases,  

Hyderabad  which  was  numbered  as  CC  No.  14  of  2012.  

Thereafter, according to the CBI, based on various materials,  

further investigation under Section 173(8) of the Code is still  

continuing in respect of other aspects of the case.  

15) It  is  highlighted  by  the  CBI  that  during  further  

investigation  in  CC  No.  14  of  2012,  the  role  of  A.J.  

Jagannathan and Dr.  Khater Massaad, who represented on  

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behalf of the Government of Ras Al Khaima (RAK) – UAE has  

to  be  ascertained in  view of  various  dubious  transactions  

revealed.  It is the stand of the CBI that A.J. Jagannathan,  

alleged Advisor to the Government of RAK-UAE had been a  

Director on the Board of Directors of M/s Indus Projects Ltd.,  

along with the present appellant.  According to the CBI, the  

further investigation has revealed that Rs. 140 crores, out of  

Rs.  525  crores,  the  money  of  the  appellant  flown  from  

Mauritius based companies into India under Automatic Route  

have been diverted and invested in M/s Jagathi Publications  

Pvt.  Ltd.  and M/s  Bharathi  Cements  Corporation  Pvt.  Ltd.,  

hence, the source of this money ought to be ascertained and  

investigated which is likely to take some time.  

16) According to the CBI,  the appellant (A-3) had been a  

Director in M/s Indus Projects Ltd., which was awarded many  

projects/contracts  by  the  Government  of  Andhra  Pradesh  

during the period between 2004 and 2009.  

17) The CBI has also projected the order dated 05.10.2012  

passed by this Court in Special Leave Petition (Criminal) No.  

5902  of  2012  filed  by  Y.S.  Jagan  Mohan  Reddy  (A-1),  

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directing  A-1 to apply for bail only after completion of the  

investigation  in  seven  issues  including  Indus  Projects  Ltd.  

and Lepakshi Knowledge Hub Private Ltd.  Mr. Ashok Bhan,  

by drawing our attention to the said order submitted that  

those directions are also applicable to Nimmagadda Prasad  

(A-3) - appellant herein, who was also a Director in M/s Indus  

Projects Ltd. which is under active investigation.  

18) From the status report, it is also brought to our notice  

that  during  the  year  2008-09,  the  Government  of  Andhra  

Pradesh alienated 8,844 acres of land in Ananthapur District  

in favour of M/s Lepakshi Knowledge Hub Private Limited, a  

newly  incorporated  company,  with  more  

exemptions/subsidies at a cost ranging between Rs. 50,000  

to Rs. 1,75,000 per acre.  It is also highlighted that files were  

processed  despite  serious  objections  by  the  Finance  

Department  about  (i)  the  financial  implications  of  the  

proposed concessions proposed on the State exchequer, (ii)  

company’s financial standing; lack of credibility in terms of  

their past experience of the fledging company incorporated  

in  July,  2008;  and  (iii)  absence  of  safety  clauses  in  the  

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proposed Memorandum of Agreement (MoA) to resume land  

in  case  of  violation/failure  to  implement  the  project.  

However, the Government of Andhra Pradesh led by late Dr.  

Y.S.  Rajasekhara Reddy went  ahead and entered into  the  

MoA  and  alienated  the  said  land  by  passing  various  

Government Orders between 22.09.2008 and 21.02.2009.   

19) In the status report, it is also mentioned that M/s Indus  

Projects Limited suddenly came into picture claiming to be  

the holding company of M/s Lepakshi Knowledge Hub Private  

Limited and availed loans amounting to Rs. 790 crores from  

different banks/NBFCs by mortgaging about 4,397 acres of  

land.  It is the assertion of the prosecution that all the funds  

were misappropriated by M/s Indus Projects Ltd. for their real  

estate activities and other business needs.  According to the  

CBI, so far, the investigation has revealed that at least Rs. 88  

crores out of the above funds have come back to M/s Indus  

Projects  Ltd.  through  hawala  channels/fake  work  

orders/forged RA bills.  It is the grievance of the CBI that the  

investigation so far has revealed that after more than four  

and a half years, the project has failed to take off and no job  

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has been generated so far.  It is also the allegation of the CBI  

that the Banks/NBFCs adopted an average market value of  

Rs.  20  lakh  per  acre  while  disbursing  loans  to  M/s  Indus  

Projects Ltd.  which were given to the company at a price  

ranging between Rs. 50,000 to Rs. 1,75,000 lakh per acre.  

According  to  the  CBI,  the  value  of  8,844  acres  of  land  

dishonestly alienated to a private company would be around  

Rs.  1,768  crores  approx.  Though  they  secured  loan  

documents from various banks, yet they are awaiting similar  

documents from Punjab National Bank, Bank of India, UCO  

Bank, Kotak Mahindra Bank and State Bank of India.  

20) In the status report, it is also claimed that the CBI has  

to  examine  various  persons  from  different  Government  

Departments,  Banks/NBFCs,  private  companies/individuals  

involved in diversion/misappropriation of funds,  employees  

of M/s Indus Projects Ltd., M/s Lepakshi Knowledge Hub Pvt.  

Ltd.,  and  their  group  companies  to  ascertain  the  facts  

related to the case.  

21) In addition to the same, it is also highlighted that M/s  

Indus  Projects  Ltd.,  who  did  not  fulfil  the  technical  and  

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financial criteria, submitted an application stating that they  

would develop the project through a consortium consisting of  

IDFC (Financial Member) and M/s Embassy Group (Technical  

Member) and would form a Special Purpose Vehicle (SPV).  In  

this regard, it is pointed out that M/s Indus Techzone Pvt.  

Ltd., projected as SPV, is fully owned by M/s Indus Projects  

Ltd.  While allotting 250 acres of prime land at Shamshabad,  

near  new  International  Airport  of  Hyderabad,  several  

exemptions such as stamp-duty and registration expenses,  

subsidized  power,  all  external  infrastructures  up  to  the  

boundary  of  SEZ,  tax  exemptions/holiday  were  provided  

under ICT Policy and SEZ Act, 2005 justifying that the project  

would create 45,000 new jobs.  In addition, land worth about  

Rs. 1 crore per acre was given at a price of Rs. 20 lakh per  

acre.  It is further pointed out that the said project has to be  

completed within five years of allotment of land which ended  

in  the  year  2011-2012,  however,  except  developing  a  

skeleton structure of  about 7.50 lakh SFT against  45 lakh  

SFT, M/s Indus Techzone Pvt. Ltd. has failed to develop the  

project and has not created any new employment so far.  

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22) It is also pointed out that M/s Indus Techzone Pvt. Ltd.,  

availed  Rs.  175  crores  of  loans  by  mortgaging  about  75  

acres  of  land which is  shown to  have been spent  for  the  

development of project.  The investigating agency is of the  

opinion  that  a  major  chunk  of  the  funds  was  

diverted/misappropriated  by  way  of  fake  work  orders/RA  

bills.  

23) No  doubt,  Mr.  Salve,  learned  senior  counsel  for  the  

appellant  pointed  out  the  different  stand  of  the  CBI  from  

court to court, he also commented upon the reasoning and  

the  ultimate  conclusion  of  the  trial  Judge,  namely,  the  

Principal  Special  Judge  for  CBI  Cases,  Hyderabad  for  

rejecting the bail application of the appellant.  It is true that  

after highlighting the stand taken by the prosecution as well  

as the right of the accused and taking note of the various  

aspects, the trial Judge was of the view that if the appellant  

is  enlarged on bail,  he will  influence the  witnesses,  since  

some of them are on his pay rolls, and thereby investigation  

will  suffer  a  set  back.   Even  if  it  is  accepted  that  the  

statements have been recorded from those employees, as  

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rightly pointed out by the counsel for the CBI, the matter is  

not going to end with their statements.  

24) Mr.  Salve,  after  taking  us  through  various  

documents/correspondences from the Government of Ras Al  

Khaima submitted that in view of the contents of the same  

and the specific stand of the Government of Andhra Pradesh,  

there is no basis for the claim made by the CBI.  Though we  

were taken through all those details, it is not proper for this  

Court  to  make  a  comment  about  the  acceptability  or  

otherwise at this juncture and those materials ought to be  

considered only at the trial.  

25) As  pointed  out  by  Mr.  Ashok  Bhan,  learned  senior  

counsel  for  the  CBI,  after  filing  of  the  charge  sheet  on  

13.08.2012,  in  view  of  further  materials,  the  CBI  started  

investigation which is  permissible  under  Section 173(8)  of  

the Code to look into the aspects of the involvement of the  

appellant in M/s Indus Projects Ltd. and its group companies,  

viz., M/s Lepakshi Knowledge Hub Private Ltd. as well as M/s  

Indus  Techzone  Private  Limtied.   In  view  of  the  same,  

undoubtedly,  the investigating agency may require further  

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time to collect all the materials, particularly, the nexus of the  

appellant with those concerns and the appellant being the  

beneficiary of the quantum of the amount secured.  In the  

course of the arguments, it is also brought to our notice by  

learned senior counsel for the CBI that a sitting Minister in-

charge  of  the  Ports  had  nexus  with  those  transactions.  

Considering all these developments, taking note of various  

details furnished in the Status Report dated 30.04.2013, we  

are of the view that though the appellant is in custody for  

nearly 11 months, at the same time, the claim of the premier  

investigating agency cannot be underestimated.  As pointed  

out by the CBI, if ultimately it is established, it is a grave  

economic  offence  of  alienating  prime  lands  to  selected  

private  companies/individuals  under  the  garb  of  

development  using  deceptive  means  resulting  in  wrongful  

ownership and control of material resources detrimental to  

the common good.  Further, in order to establish all those  

events, it is the claim of the CBI that documents have to be  

obtained  from  different  banks,  other  private  

companies/individuals, who facilitated the said diversion of  

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funds.  In addition to the same, public servants involved in  

processing of government files have to be examined apart  

from  private  persons/companies.  A  higher  officer  of  the  

investigating agency, namely, DIG of Police, CBI assured this  

Court  that  further  investigation  is  being  carried  out  at  a  

faster  pace  and  is  expected  to  be  completed  within  six  

months.  

26) Unfortunately,  in  the last  few years,  the country  has  

been seeing an alarming rise in white-collar crimes, which  

has affected the fiber of the country’s economic structure.  

Incontrovertibly,  economic  offences  have  serious  

repercussions on the development of the country as a whole.  

In  State of Gujarat vs. Mohanlal Jitamalji Porwal and  

Anr. (1987)  2  SCC  364  this  Court,  while  considering  a  

request of the prosecution for adducing additional evidence,  

inter alia, observed as under:-

“5.....The  entire  Community  is  aggrieved  if  the  economic  offenders  who  ruin  the  economy  of  the  State  are  not  brought to book. A murder may be committed in the heat of  moment upon passions being aroused. An economic offence  is  committed  with  cool  calculation  and  deliberate  design  with  an  eye  on  personal  profit  regardless  of  the  consequence to the Community. A disregard for the interest  

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of  the Community  can be manifested only  at  the cost  of  forfeiting the trust and faith of the Community in the system  to administer justice in an even handed manner without fear  of criticism from the quarters which view white collar crimes  with a permissive eye unmindful of the damage done to the  national economy and national interest….”

27) 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. It  has also to be kept in mind that for the  

purpose of granting bail, the Legislature has used the words  

"reasonable grounds for believing" instead of "the evidence"  

which means the Court dealing with the grant of bail  can  

only satisfy it as to whether there is a genuine case against  

the accused and that the prosecution will be able to produce  

prima  facie evidence  in  support  of  the  charge.  It  is  not  

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expected, at this stage, to have the evidence establishing  

the guilt of the accused beyond reasonable doubt.  

28) 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.  

29) Taking note of all these aspects, without expressing any  

opinion on the merits of the case and also with regard to the  

claim of the CBI and the defence, we are of the opinion that  

the appellant cannot be released at this stage, however, we  

direct the CBI to complete the investigation and file charge  

sheet(s)  as early as possible preferably within a period of  

four months from today.  Thereafter, 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  

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prayer for bail independently on its own merits without being  

influenced by dismissal of the present appeal.

30) With the above direction, the appeal is dismissed.  

………….…………………………J.                   (P. SATHASIVAM)                                  

       ………….…………………………J.                  (M.Y. EQBAL)          

NEW DELHI; MAY 9, 2013.

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