Law

The ED, CBI Role is Unsurprising in Bail Denial to P. Chidambaram, Not So the Courts

Despite his advanced age of 74, and the complete absence of any material or verbal evidence that he was involved in any of his son’s affairs, the Delhi high court and Supreme Court have refused to grant bail to Chidambaram.

On November 15, a single judge bench of the Delhi high court once again refused to grant bail to former finance and home minister P. Chidambaram in the INX Media money laundering case.

This is the fifth time, between them, that the Delhi high court and Supreme Court have refused to grant bail to a 74-year-old man whose health has deteriorated dangerously while in prison, and who is therefore even less of a “flight risk” than the prosecution tirelessly alleges him to be.

Not only did the judge, Justice Suresh Kumar Kait, refuse bail, but his verbal opinion, delivered in court and reported in the Hindu, convicted Chidambaram of a variety of crimes even before the CBI and the Enforcement Directorate had framed a case against him.

The Hindu reported that the bench

“was of the opinion that the prima facie allegations against Chidambaram are serious in nature and that he played a key and active role in the case. While declining the bail plea … the judge said granting relief to such offenders would send a wrong message”.

Please examine the phrases italicised above and reflect on the fact that this was a bail hearing, not a sentencing. Chidambaram was not “an offender”. That had yet to be proved. Nor had the government adduced, or in the mass of conjecture it had released to the media, voiced anything but a suspicion that Chidambaram may have “influenced” the Foreign Investment Promotion Board (FIPB) to overlook certain “irregularities” in the INX Media case.

Chidambaram has a legal and constitutional right to be treated as innocent until proven guilty. But the bench seemed not even to be aware of any such right.

Also read: No ‘Copy-Paste’ Says Delhi HC On Chidambaram Bail Order, asks Newspapers to Publish Clarification

The right is habeas corpus – in plain language, the right to freedom. The law allows this to be curtailed in exceptional circumstances. These are when the court has reason to suspect that the defendant will flee the country and escape its jurisdiction, and when there are solid grounds for believing that if left free he has the capacity to tamper with the evidence by bribing, intimidating, or killing  the prosecution’s witnesses.

What the law does not allow the prosecution to do is incarcerate a suspect before it has collected even prima facie evidence of his or her possible guilt. Even less does the law allow a government to imprison a suspect in order to give itself time to find, concoct, or coerce ‘witnesses’ into providing the evidence that it does not have.

Habeas corpus was, admittedly, a much abused right even before Modi came to power. But never before had it been used by a government to pick out and target specific political rivals, with the express purpose of wiping out all democratic opposition to itself. Yet that is exactly what the courts have made themselves a party to doing.

An examination of Justice Kait’s finding on the merits of Chidambaram’s request for bail shows that he has lifted paragraph after paragraph of the ED’s submission opposing the grant of bail, and presented them as his “Findings on the Merit,” on Chidambaram’s bail application. To say that he did not apply his mind would therefore be an understatement.

Sadly, the practice of simply allowing the ED or another prosecuting agency to,  in effect, write the decision of the high court is far from uncommon. Another Delhi high court judge did exactly the same thing in Rohit Tandon vs. The Enforcement Directorate in 2018.

The sole difference with what Justice Kait has done is that in the Rohit Tandon case, the judge copied the ED’s accusation into her judgment, which was perhaps more egregious than what Justice Kait did, which was to use it in his bail ruling.

Chidambaram is only  one  of hundreds, and if we include Kashmir , thousands,  of political leaders  and civil rights activists who are  languishing in jail without trial as the police, the CBI, or the ED search for evidence of real or imagined wrongdoing, with which to bring them to heel.

Their appeals for bail come up regularly before one high court or special judge, or another, and are routinely rejected. Is it possible that this egregious dereliction of duty is now universal in the Indian judiciary? The very thought is chilling, and its implications for democracy, and the future of our benighted country, dire.

Chidambaram’s case, however, stands out boldly even against this grim background. He was arrested by the CBI on August 21, just 16 days after the government turned Kashmir into an open-air prison, and, as of today has been in prison for nearly 100 days without any charge having been framed against him.

India’s former finance minister P. Chidambaram looks on as he leaves a court after a hearing following his arrest, in New Delhi, August 22, 2019. Photo: Reuters/Anushree Fadnavis

He is being kept in jail to give the CBI, and the Enforcement Directorate – both now complete puppets of the ruling government – time to find the evidence  that might make it possible for them to secure a conviction.

The charge levelled against him  by the CBI and the ED is that in 2007 and 2008, he allowed his son Karti Chidambaram to use his  name to persuade the Foreign Investment Promotion board to regularise a clandestine infusion of Rs 305 crore worth of foreign investment into INX Media Private Ltd. For this, he is alleged to have accepted bribes amounting to $3 million.

So much has been written about this case for so long and with so much deliberate misinformation, that it is now virtually impossible to make sense of the allegations against father and son without going back to the very beginning of the alleged scam, which was perpetrated by Peter and Indrani Mukherjea in 2007.

Here, to the best of my understanding, is what happened and how the case against them has been concocted.

In March 2007, at the height of India’s eight year economic boom, INX Media applied for permission from the Foreign Investment Promotion Board, to sell Rs 4.62 million equity and preference shares with  a face value of Rs 10 each to foreign investors . The Mukherjeas also applied for permission to invest a part of the proceeds in buying a controlling stake in a second company they wanted to establish called INX News Ltd.

In May 2007, the FIPB gave them permission to sell the 4.62 million  shares but told them that they needed to make  a separate, application for permission to create INX News. But by then, the Mukherjeas  had put the new shares on the market, so the sale proceeds had begun to flow in. But what came in was not Rs. 4.62 crore, the figure that the government and the media have been endlessly harping  upon today, but a whopping Rs. 305 crores.

The money came in through three companies based in Mauritius. Mauritius has been a thorn in the Income Tax department’s side since the 1990s, because after economic liberalisation, tax concessions given to citizens of Mauritius had made the island a tax haven for foreign companies wishing to invest in India. So, not surprisingly, this inflow caught the attention of the Financial Intelligence Unit of the Ministry of Finance.

In January 2008, therefore, it alerted the Income tax department to the large inflow of funds into INX Media. This is the genesis of the money laundering charge that the Mukherjeas are facing, and of which Indrani Mukherjea has now been pardoned in exchange for testifying that both the Chidambarams had accepted bribes for regularising it.

Also read: Chidambaram Arrest: Infatuation with Roughness is Turning India into a Banana Republic

There was, however, nothing inherently illegal about the inflow because in May 2007 the Indian economy was at the height of its explosive growth, and the market price of INX Media’s existing shares was Rs 862 per share . The inflow of only Rs 305 crore therefore suggests that the new share issue had fetched an average of Rs 660 per share.

This was a perfectly reasonable price because it fully discounted the likely fall in INX Media’s share price when such a large volume of new shares entered the market. But it left the managers of the share issue abroad with a large sum of money that could not be invested in the new company. It is possible, therefore, that this was chanelled back to INX Media through three companies headquartered in Mauritius.

The Mukerjeas got their second permission in May 2008. But by then, Lehman Brothers had declared bankruptcy and the global financial crash had begun. In India, the Sensex was nosediving from a peak of 20,000 in January 2008 to 9,000 by August. Advertisers stopped paying their bills, and the INX media group found itself headed for bankruptcy.

The Mukherjeas therefore sold INX Media in 2009 for whatever they could get for it and resigned from their posts in the group. By then, an audit of the company by Temasek holdings had raised the suspicion that they had siphoned Rs 150 crore out of the company, before jumping ship.

Nothing more was therefore heard of the INX media “scam” till 2017, a full nine years later. How did it get revived in 2017, and why was the target no longer Karti, but also his father? There is a single answer to this question: in 2015 Indrani Mukherjea and her husband Peter Mukherjea were arrested for the murder, in 2012, of Sheena Bora, her daughter by a previous marriage.

The police allowed it to be known that a financial dispute between mother and daughter was the cause of the murder. But for many in Mumbai, this confirmed a widely held belief that the Mukherjeas had parked the money they had allegedly siphoned off in an offshore account in Sheena Bora’s name.

Indrani Mukherjea may have come to the BJP’s notice in December 2016 when, at a trial hearing in Mumbai, she asked the court for permission to publish 700 verses from the Bhagavad Gita that she had translated from Sanskrit into English, and followed it up with a letter requesting this permission from the Patiala House court in February.

Whether this was so or nor, the fact remains that the CBI registered an FIR, alleging irregularities in Foreign Investment Promotion Board clearance given to INX Media for receiving overseas funds to the tune of Rs 305 crore in 2007 and accusing Chidambaram of using his influence as Union finance minister in May 2017 only three months later.

Both the Chidambarams have strongly disputed this allegation. Karti claims that he was never hired by the Mukherjeas to represent them. FIPB officials of the time have also deposed that they never even met Karti.

Karti was interrogated intensively by the CBI, arrested on February 28, 2018 and he spent 24 days in CBI custody before getting bail from the Madras high court and the Supreme court. In May this year, he was elected to parliament from Tamil Nadu, and remains, technically, a free man.

But his father has not been so lucky.

Also read: The Chidambaram Case Lays Bare the Paradoxes Facing the Congress

Despite his advanced age of 74, and the complete absence of any material or verbal evidence that he was involved in any of his son’s affairs, Chidambaram has been denied bail in anticipation, then bail by the CBI’s special judge Ajay Kumar Kuhar, then bail by Justice Sunil Gaur of the Delhi high court (who was tipped to be appointed as the chairman of the Appellate Tribunal under the Prevention of Money Laundering Act, but no formal announcement has been made public yet), then most surprisingly by the Supreme Court, and most recently by Justice Kait of the high court. 

Today, based on the sole and so far completely unsubstantiated accusation by a woman accused of murdering her own daughter, and who would say or do anything to avoid life imprisonment, if not the death penalty, the CBI and the Enforcement Directorate are coercively interviewing every friend and associate of Karti Chidambaram to establish how $3 million – the sum that Indrani Mukherjea claims to have paid to him and his father – have been siphoned away abroad through a dozen different shell companies. It is doing so in spite of the fact that Peter Mukherjea has categorically refuted Indrani’s allegation.

This blatant witchhunt has made a mockery of the rule of law. But what is worse, it has exposed just how seriously hollowed out not only the CBI and ED are, but also the judiciary, the last remaining pillar of India’s tottering democracy.

Prem Shankar Jha is a Delhi-based journalist and writer.