Supreme Court Denies Anticipatory Bail in Andhra Pradesh Liquor Syndicate Corruption Case, 2025

Case Details

Before the Supreme Court of India, Bench comprising Justices J.B. Pardiwala and R. Mahadevan, in Special Leave Petition (Criminal) Nos. 7532, 7533, and 7534 of 2025, decided on 16 May 2025. The proceedings were applications seeking special leave to appeal against the common order of the High Court of Andhra Pradesh at Amaravati, dated 07.05.2025, which denied anticipatory bail to the petitioners. The statutory setting involved allegations under the Indian Penal Code, 1860 (corresponding sections of the Bharatiya Nyaya Sanhita, 2023) and the Prevention of Corruption Act, 1988, concerning a large-scale corruption scandal in the state's excise policy.

Facts

The petitioners, P. Krishna Mohan Reddy and K. Dhananjaya Reddy, former public servants, sought anticipatory bail in connection with Crime No.21 of 2024 registered at the CID Police Station, Mangalagiri, Guntur District. The First Information Report (FIR) was registered based on a report from the Principal Secretary to the Government, which cited an internal committee's findings of serious irregularities in the liquor procurement system of the Andhra Pradesh State Beverages Corporation Limited (APSBCL). The prosecution alleged a criminal conspiracy where established popular liquor brands were systematically suppressed and sidelined, while select new brands were promoted through a manipulated manual order-for-supply (OFS) process, deviating from the earlier automated system. The allegations included that this scheme facilitated the collection of kickbacks amounting to approximately Rs. 3,000 crores for a liquor syndicate, with the petitioners, due to their official positions, being responsible for the policy manipulations and allegedly receiving monthly kickbacks of Rs. 50-60 crores. The petitioners contended the case was actuated by political vendetta, that they had cooperated with the investigation, and that the Competition Commission of India had earlier found no wrongdoing for a overlapping period. The High Court denied anticipatory bail, prompting the appeal to the Supreme Court.

Issues

The Supreme Court identified and addressed the following primary legal issues: (1) Whether the petitioners were entitled to anticipatory bail under Section 438 of the Code of Criminal Procedure, 1973, considering the gravity of allegations, the stage of investigation, and the need for custodial interrogation. (2) The correct legal position regarding the admissibility and use of confessions or statements made by a co-accused, particularly those recorded under Section 161 Cr.P.C., at the stage of considering anticipatory or regular bail, and the interpretation of Section 30 of the Indian Evidence Act, 1872. (3) The handling of allegations that the investigating agency was employing coercive or third-degree methods to extract statements. (4) The consequential directions regarding the consideration of regular bail, should the petitioners be arrested subsequently.

Decision

The Supreme Court dismissed the special leave petitions and upheld the denial of anticipatory bail. The Court provided extensive reasoning on each issue, which is elaborated below.

On the first issue concerning the grant of anticipatory bail, the Court held that the High Court had justifiably exercised its discretion to deny relief. The Court emphasized the gravity and magnitude of the allegations, which involved a prima facie case of misappropriation of public funds to the tune of Rs. 3,000 crores, market manipulation, and a deep-rooted conspiracy. The investigation was at a crucial stage, and the Court agreed with the High Court's finding that custodial interrogation was deemed essential. The Court reasoned that custodial interrogation is qualitatively more effective for eliciting information and unearthing concealed materials, especially in complex corruption cases involving influential persons. A pre-arrest bail order would insulate the suspect and reduce interrogation to a mere ritual, harming the investigation. The Court rejected the argument that the petitioners' past cooperation negated the need for custodial interrogation, citing Sumitha Pradeep v. Arun Kumar C.K. to hold that even if custodial interrogation is not immediately required, the nature of the offence and the prima facie case are paramount considerations. The Court also addressed the allegation of political vendetta, holding that while it could be a relevant consideration, it is not by itself sufficient to grant anticipatory bail if other prima facie materials exist. The frivolity of the entire case must be attributable to the bias for it to outweigh other factors.

The second issue formed the core of the Court's doctrinal elaboration. The Court disapproved of the High Court's observation that confessional statements of co-accused, admissible under Section 30 of the Evidence Act during trial, could also be looked into at the bail stage. The Supreme Court undertook a comprehensive analysis of Sections 24 to 30 of the Evidence Act and Section 161 of the Cr.P.C. It held that a confession by a co-accused cannot be relied upon for granting or denying anticipatory bail. The Court outlined the strict conditions for applying Section 30: (i) a joint trial for the same offence; (ii) the statement must be a confession; (iii) it must inculpate both the maker and the co-accused; and (iv) it must be duly proved. These conditions can only be ascertained and tested during trial, not at the pre-trial bail stage. The Court clarified that a confession made to a police officer is generally inadmissible under Section 25 of the Evidence Act, and Section 30 cannot be used to bypass this prohibition.

The Court then meticulously distinguished between statements of witnesses and statements of accused persons recorded under Section 161 Cr.P.C. It affirmed that while statements of witnesses under Section 161 can be looked into at the bail stage to assess the prima facie case (as held in Indresh Kumar and Salim Khan), statements of an accused stand on a completely different footing. An accused's Section 161 statement can be inculpatory (a confession or admission) or exculpatory. An inculpatory confessional statement is per se inadmissible against anyone due to Sections 25/26 of the Evidence Act. An inculpatory admission cannot be used against a co-accused as it violates the principle in Sections 17 and 21 of the Evidence Act that an admission is evidence only against its maker. An exculpatory statement of an accused implicating a co-accused has no credibility, is not given on oath or subject to cross-examination, and thus cannot be relied upon against the co-accused. It can only be used for the limited purpose of contradicting that same accused if they testify later. Therefore, the Court concluded that statements of an accused under Section 161 Cr.P.C., in whatever form, cannot be used against a co-accused at the stage of anticipatory or regular bail.

On the third issue, the Court issued a stern warning to the investigating agency against using any third-degree methods, coercion, or undue influence to extract confessions or statements from witnesses or co-accused. It directed that the investigation must be fair, impartial, transparent, and in accordance with law. It held that any future complaint of ill-treatment with cogent material would be viewed seriously by the concerned courts.

On the fourth issue, the Court clarified the distinct principles governing regular bail versus anticipatory bail. It directed that if the petitioners are arrested and remanded to judicial custody, any subsequent application for regular bail must be considered on its own merits by the concerned court, applying the correct principles of law for regular bail. The Court also left it open for the petitioners to approach the High Court for appropriate relief if they had genuine apprehension of ill-treatment during investigation.

Quotes

On Custodial Interrogation: "Custodial interrogation is qualitatively more elicitation oriented than questioning a suspect who is well ensconced with a favourable order under Section 438. In corruption cases concerning influential persons, effective interrogation of the suspect is of tremendous advantage in disinterring many useful information and also materials which are likely to be concealed."

On Political Vendetta: "Political vendetta or bias if any is one of the relevant considerations while considering the plea of anticipatory bail... However, political vendetta by itself is not sufficient for the grant of anticipatory bail. The courts should not just look into the aspect of political vendetta and ignore the other materials on record constituting a prima facie case..."

On Section 30, Evidence Act: "We are of the considered opinion that such a confession if any cannot be looked into at the stage of anticipatory bail or even regular bail... Before a confession is taken into consideration against a co-accused, the said confession has to be duly proved against the maker... which can only be ascertained in the course of trial."

On Accused's Section 161 Statement: "A statement of an accused under Section 161 of the Cr.P.C stands on a different footing from a police statement of any ordinary witness... Since, Section 17 of the Evidence Act does not postulate the use of an admission by one accused against another, any statement of the accused under Section 161 of the Cr.P.C., implicating such co-accused cannot be looked into by the courts."

On Investigation Fairness: "It is expected of the investigating agency to carry out a fair, impartial and transparent investigation, more particularly, in accordance with law."