The Supreme Court has emphasized that anticipatory bail should be granted sparingly in economic offences, given their serious impact on the financial system and public trust. The observation came while the Court set aside anticipatory bail granted to several accused in the Adarsh Group of Companies scam. It noted that economic offences require thorough investigation and custodial interrogation, which can be hampered by pre-arrest bail.
New Delhi: The Supreme Court recently reiterated that economic offenses are a “class apart” and should be treated with seriousness, emphasizing that anticipatory bail should be granted sparingly in such cases.
A bench comprising Justices Bela Trivedi and Prasanna B. Varale made this observation while overturning anticipatory bail granted to several individuals involved in the Adarsh Group of Companies scam.
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The Court stated that individuals accused of economic offenses, especially those who evade the law or obstruct the execution of warrants, should not be eligible for anticipatory bail.
The judgment noted,
“It is no more res integra that economic offences constitute a class apart, as they have deep rooted conspiracies involving huge loss of public funds, and therefore such offences need to be viewed seriously. They are considered as grave and serious offences affecting the economy of the country as a whole and thereby posing serious threats to the financial health of the country,”
To provide context, the Serious Fraud Investigation Office (SFIO) investigated 125 companies linked to the Adarsh Group, which is controlled by businessman Mukesh Modi and his associates.
The investigation, initiated under the Ministry of Corporate Affairs, revealed that the Adarsh Credit Co-operative Society Ltd (ACCSL), a multi-state credit cooperative society, had illegally disbursed loans totaling Rs.1,700 crores to its own group companies and other entities, violating regulatory norms.
A criminal complaint was filed against 181 individuals, including directors and key officials of these companies, in the Special Court, Gurugram. The Special Court issued both bailable and non-bailable warrants against the accused, but many failed to appear, leading to proclamation proceedings under Section 82 of the Code of Criminal Procedure, 1973, declaring them absconders.
Their attempts to secure anticipatory bail from the Special Court were unsuccessful.
However, they obtained anticipatory bail from the Punjab and Haryana High Court between March and April 2023, prompting the SFIO to appeal to the Supreme Court against these orders. On April 9, the Supreme Court nullified the High Court’s decisions.
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The Supreme Court emphasized that anticipatory bail should not be granted routinely, particularly when the accused have evaded legal summons and concealed their presence to obstruct legal proceedings.
The Court stated,
“The law aids only the abiding and certainly not its resistants … When a person is evading the process of law after cognisance is taken and warrants are issued, the privilege of anticipatory bail should not be extended to them,”
The Court reaffirmed that offenses under Section 447 are “cognizable” and subject to specific “twin conditions” for bail under Section 212(6) of the Companies Act. These conditions are: (i) allowing the public prosecutor an opportunity to oppose bail, and (ii) providing reasonable grounds for the court to believe that the accused is not guilty and not likely to reoffend.
“These twin conditions are mandatory in nature,” the Court reiterated.
The Court further observed,
The Court also referenced the case of Vijay Madanlal Choudhary v. Union of India, where similar twin conditions in the Prevention of Money Laundering Act (PMLA) were upheld. “They are applicable even in the anticipatory bail proceedings,”
The Court expressed strong disapproval of the High Court’s decision to grant anticipatory bail to the accused, especially given the repeated issuance of non-bailable warrants and the initiation of proclamation proceedings by the Special Court.
The judgment stated,
“Such orders being in the teeth of the settled legal position…would fall into the category of perverse orders and therefore untenable at law,”
It was noted that the High Court had not adequately considered the detailed proceedings of the Special Court, undermining the due process of law.
The Supreme Court concluded,
“In none of the impugned orders, the High Court has bothered to look into the proceedings conducted, and the detailed orders passed by the Special Court for securing the presence of the Respondents – Accused. It cannot be gainsaid that the judicial time of every court, even of Magistrate’s Court is as precious and valuable as that of the High Courts and the Supreme Court. The accused are duty bound to cooperate with the trial courts in proceeding further with the cases and bound to remain present in the Court as and when required by the Court,”
The judgment further highlighted that non-compliance with court orders and attempts to evade legal proceedings constitute obstruction of justice.
The Court stated,
“Disobeying the orders of the Court and trying to delay the proceedings by hook or crook certainly amounts to interference with the administration of justice,”
It added that granting anticipatory bail under such circumstances is certainly not the rule, particularly when the accused have shown no intention to cooperate with the trial court.
The Court allowed the SFIO’s appeals and directed the accused to surrender before the Special Court within a week, stating that their bail applications would be considered according to the law.
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However, the pleas challenging anticipatory bail for certain accused, namely Akshat Singh, Naveen Kumar, and Mahesh Dutt Sharma, were dismissed as the lower court had already granted them anticipatory bail.
The SFIO was represented by Advocates Padmesh Mishra, Hari Kishan, Sudarshan Lamba, and Amrish Kumar.
Akshat Singh was represented by Senior Advocate Sidharth Luthra, while another accused was represented by Senior Advocate Siddharth Dave along with Advocate Aditya Samaddar.
Other accused were represented by Advocates Abhishek Singh, Amit Bhalla, Aniruddh Joshi, Umang Shankar, Sumit Kumar, Gautam Awasthi, Arjun Sharma, Upendra Pratap Singh, Rohan Ganpathy, Jawaid Hussain Khan, V. Elanchezhiyan, Rajat Mittal, Sadapurna Mukherjee, and Davesh Bhatia.
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