Greater Bombay, February 15, 2018 – The Special Court for CBI at Greater Bombay, presided over by His Honour Judge Shri S.R. Tamboli (Court Room No. 47), has granted bail to Sanjeev Raghunath Malhotra, a Chartered Accountant (CA), who was accused No. 3 in a bribery case (RC 05(A)/2018-CBI, ACB, Mumbai). Malhotra was arrested on February 1, 2018, for alleged offences under Sections 7 and 8 of the Prevention of Corruption Act, 1988. The order for bail was passed on February 13, 2018, and the certified copy was uploaded on February 15, 2018.
The bail application, No. 100 of 2018, was filed in Remand Application No. 138 of 2018. Advocate Mr. Sujit Shelar appeared for the applicant/accused No. 3, while SPP Mr. J.K. Sharma represented the CBI, EOW.
Prosecution’s Case:
According to the prosecution, co-accused No. 1, an Assistant Commissioner of Customs (Refund & TAR, Audit – CRA), allegedly demanded illegal gratification from co-accused No. 2, a director of M/s Hope (India) Polishing Works Pvt. Ltd. and M/s Hope (India) Diamond Trading Company Pvt. Ltd. The bribe was allegedly demanded through the present applicant for issuing a favorable order regarding the acceptance of the declared value of imported goods.
Based on source information, an FIR was registered, and a trap was laid. An amount of ₹2 lakhs was seized from the cabin of co-accused No. 1. At that time, co-accused No. 1, co-accused No. 2, and the present applicant were arrested. Subsequently, ₹9 lakhs were seized from the residence of the present applicant.
Applicant’s Defense:
Ld. Counsel for the applicant submitted that Malhotra is a practicing CA with a respected standing. He resides in a bungalow in Andheri with his brother, who is a heart patient and keeps a substantial amount of cash at home for emergencies. The applicant explained that out of the ₹9 lakhs recovered, ₹6 lakhs belonged to his brother, and the remaining ₹3 lakhs found on the first floor (where the applicant resides) were his cash in hand for daily and emergency expenses. The applicant argued that a satisfactory explanation for the possession of the cash was provided and that it had no connection to the alleged offences. He further stated that all alleged incriminating documents had been seized, and the investigation concerning him was complete. Given his professional standing, residential and office premises, and deep roots in society, he would not abscond if released on bail.
CBI’s Opposition:
Ld. SPP for CBI argued that co-accused No. 1 demanded the bribe through the present applicant for a favorable order. The alleged modus operandi involved co-accused No. 2 raising bills in the applicant’s name, who would then encash the cheques and hand over the money to co-accused No. 2 for payment to co-accused No. 1. The CBI claimed that on February 1, 2018, co-accused No. 2 was to hand over ₹2 lakhs to co-accused No. 1 in the presence of the applicant, leading to the trap and arrests. The ₹2 lakhs were seized from co-accused No. 1’s cabin. The CBI also claimed that recorded conversations between the applicant and co-accused showed the demand for illegal gratification and that the investigation was ongoing with a possibility of witness tampering.
Legal Precedents Relied Upon:
The applicant’s counsel relied on several Supreme Court and High Court decisions, including:
- B. Jayaraj vs. State of A.P. (2014): Mere possession and recovery of currency notes without proof of demand do not establish offences under Sections 7 and 13(1)(d) of the PC Act.
- Krishan Chander vs. State of Delhi (2016): Mere acceptance of an amount without proof of demand does not constitute an offence under Sections 7(1) and 13(1)(d) of the PC Act.
- P. Satyanarayana Murthy vs. The Dist. Inspector of Police and Ors. (2015): Similar observations regarding the necessity of proving demand.
- Shashikant vs. Central Bureau of Investigation and Ors. (2006), S. Murali Mohan and Ors. vs. State (2017), and Vineet Narain and Ors. vs. Union of India (1998): Emphasizing the mandatory nature of guidelines in the CBI Manual.
Based on these rulings, the applicant’s counsel argued that the demand for the bribe had not been proven, the source information was not disclosed, no preliminary inquiry was made, and the manner of recording the conversation was unclear, thus no prima facie case existed against the applicant.
The CBI’s counsel also relied on the Vineet Narain case (1998), submitting that the trap was laid after proper inquiry. The Supreme Court in this case emphasized the importance of the CBI adhering to its Manual’s guidelines for investigations.
The Bombay High Court’s decision in Amit Suresh Arya vs. Central Bureau of Investigation and Ors. (2017) regarding the locus of the complainant and the Supreme Court’s ruling in R. Venkatakrishnan vs. Central Bureau of Investigation (2009) regarding who can set criminal law in motion were also cited by the CBI.
Court’s Reasoning for Granting Bail:
Special Judge Tamboli acknowledged the legal precedents cited by both sides. However, the court noted that the present applicant, a CA, was not caught red-handed while handing over the alleged bribe. He had also offered an explanation for the cash recovered from his residence. The court observed that the amount and documents had already been seized.
The court pointed out that the FIR did not specify the source of the reliable information or the steps taken by the CBI after receiving it, as per the guidelines in the CBI Manual highlighted in the Vineet Narain case.
Crucially, the court noted that no one had complained about the demand for money by the present applicant himself, and the CBI did not catch co-accused No. 1 accepting money from co-accused No. 2 directly.
Referring to the precedents in B. Jayaraj, Krishan Chander, and P. Satyanarayana cases, the court emphasized the necessity of proving the demand for gratification, which appeared to be lacking against the present applicant.
Regarding the recorded conversation, the court found the prosecution’s reply to be cryptic, lacking details of mobile numbers, recording time, and the specifics of the dialogue, which were also absent in the FIR.
The court also considered that the IO had already seized the bribe amount from co-accused No. 1 and the ₹9 lakhs from the applicant’s residence. Therefore, the applicant was not deemed necessary for further investigation. While the alleged offence carried a potential imprisonment of up to ten years, this alone was not sufficient to deny bail.
Addressing the prosecution’s concern about witness tampering, the court stated that conditions could be imposed on the applicant, and the prosecution could seek cancellation of bail if any such attempts were made. This concern was not considered a sole ground for rejecting bail.
Finally, the court noted that it had already granted bail to co-accused Nos. 1 and 2. Considering that the applicant was a resident of Mumbai, a practicing CA, and the alleged offence involved conspiracy which would require significant time for investigation, the court deemed it proper to release the applicant on bail.
Order of the Court:
Special Judge (CBI) S.R. Tamboli passed the following order:
- BA 100/18 is hereby allowed on the following conditions:i) Accused Sanjeev Raghunath Malhotra shall be released on bail on executing a P. R. Bond of ₹2,00,000/- (Rupees Two Lacs Only) with one or two sureties in the like amount.ii) Accused shall attend the office of CBI once a week, i.e., every Sunday from 10:00 a.m. to 5:00 p.m., until the filing of the chargesheet.iii) Accused shall not leave the country of India without prior permission of this court.iv) Accused shall not interfere in the investigation in any manner.v) Accused shall not tamper with the prosecution witnesses and record relating to the offence.
- Bail Application 100/18 is disposed off accordingly.
The granting of bail to the CA accused in this bribery case highlights the court’s emphasis on the lack of direct evidence of demand against him and the principle of parity with other accused who were already released. The conditions imposed aim to ensure the applicant’s cooperation with the ongoing investigation and prevent any obstruction of justice.