A man accused of bank fraud got bail because he settled with the bank and paid part of the money; his bail was later cancelled when he stopped paying. The Delhi High Court set aside both orders, holding that liberty cannot be traded for a repayment undertaking, and that a criminal court is not a recovery agent. The bail plea now goes back to be decided afresh, purely on merits.
New Delhi: The Delhi High Court has held that the liberty of an accused cannot be made dependent on the performance of a monetary settlement with the complainant, and that bail can neither be granted on the strength of a promise to repay nor cancelled for a breach of such a settlement [Gurmeet Singh @ Harpreet Singh v. State of NCT of Delhi and Another].
Justice Sanjeev Narula, allowing a petition under Section 482 of the CrPC, set aside both the order granting the petitioner bail and the subsequent order cancelling it, and remitted the bail application for fresh consideration on its merits.
The case
The petitioner was an accused in an FIR registered by the Economic Offences Wing under Sections 406, 419, 420, 468, 471 and 120-B of the IPC, arising from a Rs 50 lakh cash-credit facility sanctioned by Punjab National Bank to a concern said to be his proprietorship. The prosecution alleged that the facility was obtained on forged documents and a guarantee purportedly executed in the name of a person who had died years earlier; the truth of those allegations, the Court noted, is a matter for trial.
Arrested in August 2022, the petitioner was granted bail by the Sessions Court in November 2022. That order, the High Court noted, was passed “in view of the settlement arrived at between the parties”: the petitioner had placed a settlement before the Court, paid the Bank Rs 45 lakh, and undertaken to repay the balance within six months, and bail was granted subject to the condition that he adhere to the terms of the settlement. When no further amount was paid, the Bank sought cancellation, and the Sessions Court, in October 2023, cancelled the bail on the ground that the petitioner had breached the settlement condition.
A criminal court is not a recovery agent
The Court held that the question was a narrow one: whether an undertaking to repay could take the place of the considerations that ordinarily govern bail, and whether its breach, without anything more, could justify taking away liberty. Relying on the Supreme Court’s decision in Biman Chatterjee v. Sanchita Chatterjee, the Court reiterated that the non-fulfilment of the terms of a compromise cannot be the basis for granting or cancelling bail, and that the CrPC’s scheme for bail does not contemplate either the grant of bail on an assurance of compromise or its cancellation for violation of such terms.
Drawing on Dilip Singh v. State of MP, Bimla Tiwari v. State of Bihar and Ramesh Kumar v. State (NCT of Delhi), the Court emphasised that criminal proceedings are not for the realisation of disputed dues, that a criminal court granting bail is not expected to act as a recovery agent for the complainant, and that the process of criminal law cannot be used for arm-twisting and money recovery. Bail, it held, must be decided with reference to the material on record and the settled parameters; it may be declined even where the accused has offered payment, and granted irrespective of any such payment, and a condition requiring payment of the money allegedly cheated wrongly creates the impression that liberty can be bought.
Both orders set aside
The Court held that the defect ran through both orders: the 2022 order had made the financial settlement the substantial basis for enlargement on bail, and the 2023 order had made its non-performance the basis for cancellation; neither could stand. It rejected the course of merely deleting the settlement condition and preserving the rest of the bail order, since the settlement was not incidental to that order but its principal foundation. The appropriate remedy, it held, was to set aside both orders and remit the bail application for the consideration on merits that it had never received.
The Court directed that the restored bail application be decided afresh and independently on its merits, in accordance with the settled principles governing regular bail, and that the settlement, the Rs 45 lakh payment and the alleged breach shall not, by themselves, be a ground either for granting or for refusing bail, nor shall the petitioner’s liberty be made conditional on fulfilling any monetary obligation. The Sessions Court was directed to consider the nature and gravity of the accusations, the material against the petitioner, the stage of the proceedings, the period he has been at liberty and his conduct during it, and to decide, preferably within four weeks; interim protection was directed to continue meanwhile.
The Rs 45 lakh already paid
On the Rs 45 lakh the petitioner had paid the Bank pursuant to the settlement, the Court observed that if the bail adjudication is to be disentangled from the monetary arrangement, it cannot be done only on one side: it would be incongruous to set aside the order founded on that arrangement, require the petitioner’s liberty to be decided afresh, and yet leave the payment with the complainant. It, however, consciously refrained from directing a refund at this stage, leaving it open to the petitioner to seek a refund, if so advised, when the bail application is decided, to be considered by the Sessions Court in accordance with law. The Court clarified that nothing in its order expresses any view on the petitioner’s ultimate entitlement to bail.
Why it matters
The order reaffirms a principle the Supreme Court has stated repeatedly but which continues to surface in practice: bail is not a mechanism for debt recovery. The purpose of bail is to secure the accused’s presence for trial while balancing personal liberty against the interests of the investigation and the community; it is not to pressure an accused into settling a civil or contractual liability with the complainant. Making release, or continued liberty, turn on the payment of money allegedly involved in the offence converts the criminal process into a collection tool, and creates the corrosive impression that liberty is available to those who can pay.
The decision is careful, however, not to let the accused have it both ways. The Court accepted that a person who obtained liberty on an undertaking cannot simply discard the undertaking while keeping the benefit; but the answer, it held, is not to enforce the undertaking through incarceration, it is to undo the flawed bargain on both sides, sending the bail question back for a proper, merits-based decision and leaving the paid amount to be dealt with in that context. That symmetry, unwinding both the improper grant and the improper cancellation, is what makes the order a clean application of principle rather than a windfall to either side.
For the petitioner, nothing is finally decided: his entitlement to bail will now be assessed on the ordinary parameters, and the underlying allegations of fraud remain to be tried, with the presumption of innocence intact. What the order settles is the method, that the bail court must look to the material and the settled tests, and not to whether the accused has paid or promised to pay the complainant.
Case Title: Gurmeet Singh @ Harpreet Singh v. State of NCT of Delhi and Another [CRL.M.C. 7279/2023]
Bench: Justice Sanjeev Narula, High Court of Delhi at New Delhi
Date of Order: September 22, 2026
Appearances: Advocate Shailendra Babbar, with others, for the petitioner; Additional Public Prosecutor Tarang Srivastav for the State; Advocate Anmol Panwar for the Bank.
Status: Petition allowed. Both the grant and cancellation of bail set aside; bail application remitted for fresh consideration on merits within four weeks; interim protection to continue; refund of Rs 45 lakh left open. No view on entitlement to bail or on the merits.