caselaws

Supreme Court of India
Centrum Financial Services … vs State Of Nct Of Delhi on 28 January, 2022Author: M.R. Shah

Bench: M.R. Shah, B.V. Nagarathna

[REPORTABLE]

IN THE SUPREME COURT OF INDIA
CRIMINAL APPELLATE JURISDICTION

CRIMINAL APPEAL NO.94 OF 2022

Centrum Financial Services Limited …Appellant

Versus

State of NCT of Delhi and Anr. …Respondents

JUDGMENT

M. R. Shah, J.

1. Feeling aggrieved and dissatisfied with the impugned

judgment and order dated 14.09.2020 passed by the High

Court of Delhi at New Delhi in Bail Application No.2442 of

Signature Not Verified
2020 by which the High Court has allowed the said
Digitally signed by R
Natarajan

application preferred by the Respondent No.2 herein and
Date: 2022.01.28
16:53:10 IST
Reason:

has directed that he be released on bail in connection with

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FIR No.128 of 2019 PS Economic Offences Wing in New

Delhi for the offences under Sections 409, 420, 467, 468,

471 and 120B IPC, the original complainant has preferred

the present appeal.

2. That the appellant herein a non­banking financial

company (NBFC) lodged an FIR/complaint with the

Economic Offences Branch, New Delhi against the company

M/s Sri Aranath Logistics Limited (formerly known as M/s

LMJ Logistics Limited), Respondent No.2 herein Jayant

Kumar Jain – Managing Director and others for the offences

under Sections 409, 420, 467, 468, 471 and 120B IPC. It

was alleged against the accused – Respondent No.2 herein

that he is the Managing Director of M/s Aranath Logistics

Limited engaged in the business of multi­commodity trading

of agricultural and non­commodities agricultural. That by

way of written agreement accused availed loan credit

facilities to the tune of Rs.25 crores for a term of 180 days

from the complainant company. It was alleged that the said

amount of Rs.25 crores was disbursed in the year 2017. It

was alleged that the said amount of Rs.25 crores was

required to be used by the company for its own purpose. It

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was further alleged that for the purpose of repayment of

loan, no stock statement was submitted and mortgage was

also not created as agreed between the parties. It was

further alleged that instead of using the amount for the

purpose mentioned in the agreement the same was

transferred to several fake/shell companies. It was further

alleged that at the time of availing the loan the accused

misrepresented to the complainant about the financial

health of the company of the accused. It was further alleged

that the amount of around Rs.8 crores stated to have been

diverted into such shell companies which were created by

the accused in the name of his employees and bank account

was opened for transaction of those companies by using

forged and fabricated documents of identities of those

employees and the said amount was further siphoned off to

other companies which were connected to the accused. It

was further alleged that Directors of those shell entities

have stated that they have not opened the bank account in

the said name or said firm and their KYC form was misused

by the accused. It was further alleged that a sum of Rs.15

crores was transferred to another company – LMJ

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International Ltd. and the said amount was used for the

purpose of setting off against the previous liability of the

said company with the Corporation Bank, Calcutta. That

after the preliminary investigation on the complaint of the

appellant herein – original complainant, the Economic

Offences Wing having found a prima facie case against

Respondent No.2 and others, FIR being FIR No.128 was

registered. The Respondent No.2 came to be arrested on

03.07.2020. The Respondent No.2 filed an application

before the learned Metropolitan Magistrate seeking bail

under Section 437 Cr.P.C. One another bail application for

regular bail being Bail Application No.903 of 2020 was

moved on behalf of the Respondent No.2 – Accused before

the Court of Sessions Judge, Patiala House Courts, New

Delhi. The said bail application was opposed by the I.O. A

status report was filed pointing out how the amount of 25

crores was siphoned off and transferred to other shell

companies and how the said amount was used by the

Respondent No.2 for other companies. Vide order dated

04.08.2020 by a detailed speaking order, the learned

Sessions Judge dismissed the bail application. That

4
thereafter, respondent no.2 – accused filed the present bail

application before the High Court. The detailed status report

was filed on behalf of the I.O. It was also submitted that the

charge­sheet has been filed against Respondent No.2 and

other co­accused. The detailed status report was filed

pointing out how a sum of Rs.25 crores to be used by M/s

LMJ Logistic Limited was transferred to shell and other

companies such as M/s LMJ Logistic Limited and how a

systematic fraud was committed. Despite the above, by the

impugned judgment and order, the High Court has directed

to release Respondent No.2 on bail merely on the ground

that the case arises out of a commercial transaction and is

based on documents already seized.

3. Feeling aggrieved and dissatisfied with the impugned

judgment and order passed by the High Court directing to

release Respondent No.2 – accused on bail, the original

complainant has preferred the present appeal.

3.1 At the outset, it is required to be noted that after this

Court directed to issue notice to the respondents vide order

dated 17.12.2020 and thereafter the matter was adjourned

from time to time, on 08.01.2022 the petitioner(appellant)

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moved an application being Criminal Miscellaneous

Application No.4818 of 2022 seeking permission to

withdraw the present Special Leave Petition submitting that

during the pendency of the present Special Leave Petition, a

settlement agreement has been entered into between the

petitioner(appellant) and Respondent No.2 on 08.01.2022

and therefore, the Petitioner(appellant) is no longer

interested in pursuing the present Special Leave Petition in

view of the settlement. The said application was heard by

this Court on 10.01.2022. This Court shown its

disinclination to permit the petitioner(appellant) to withdraw

the Special Leave Petition by observing that the

petitioner(appellant) cannot be permitted to withdraw the

Special Leave Petition in view of the serious allegations

against Respondent No.2 and others. That thereafter the

learned counsel appearing on behalf of the

petitioner(appellant) withdrew the said application. That

thereafter the present Special Leave Petition was adjourned

to 17.01.2022, at the request of the learned counsel for the

respective parties to consider the present Special Leave

Petition on merits.

6
4. Shri Mukul Rohatgi, learned Senior Advocate

appearing on behalf of Respondent No.2 has made the

following submissions in support of his prayer and

requested not to cancel the bail granted by the High Court.

4.1 It is vehemently submitted by Shri Rohatgi, learned

Senior Advocate appearing on behalf of Respondent No.2

that in the facts and circumstances of the case and

considering the fact that the dispute is of a civil nature

arising out of commercial transactions and the investigation

is concluded and the case rests on documentary evidence

already collected by the Investigating Officer during the

investigation which have been seized and that the impugned

order passed by the High Court releasing Respondent No.2

on bail is as far as back on 14.09.2020 and thereafter there

are no allegations that Respondent No.2 has misused the

liberty in between and that during the investigation

Respondent No.2 has cooperated and neither the

complainant nor the State are opposing the bail application

seriously, this Court may not cancel the bail.

4.2 It is further submitted by Shri Rohatgi, learned Senior

Advocate for Respondent No.2 that in the present case out

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of Rs.25 crores, Rs.15 crores were transferred to the sister

concern LNJ International Limited and the sister concern

paid off its loan which cannot be said to be an offence.

4.3 Shri Rohatgi, learned Senior Advocate on behalf of

Respondent No.2 – accused has heavily relied upon the

decisions of this Court in the case of Dolat Ram vs. State

of Haryana, (1995) 1 SCC 349; X vs. State of Telangana,

(2018) 16 SCC 511; Prabhakar Tewari vs. State of U.P.,

(2020) 11 SCC 648 as well as the decision of this Court in

the case of Gurcharan Singh vs. State (Delhi

Administration) (1978) 1 SCC 118 in support of his

submissions that once the bail has been granted by the

High Court and/or the Court below the same may not be

cancelled unless it is found that the accused has violated

any of the terms and conditions of the bail order and/or has

misused any liberty shown to him while releasing him on

bail and/or there are any other peculiar circumstances.

4.4. Making the above submissions it is prayed to dismiss

the present appeal.

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5. Present appeal is opposed by learned Counsel on

behalf of Respondent – State. A status report on behalf of

the State has been filed in which it is stated that the State

had filed a status report on 09.09.2020 before the High

Court and before the High Court, the State vehemently

opposed the bail of Respondent No.2. However, at that

stage, further investigation was underway and a

supplementary charge­sheet was yet to be filed. The same

has now been filed. The State shall abide by the

directions/order passed by this Hon’ble Court.

6. In the status report it has been pointed out how

systematic fraud has been committed by Respondent No.2

and others siphoning off huge amount of Rs.25 crores

through other Shell Companies who are found to be fake

and non­existent. A supplementary charge­sheet is also

filed on further investigation. A detailed status report has

been filed pointing out how shell entities were used as

conduit entities to transfer money to the main company of

the accused i.e., LMJ Logistics Limited.

7. We have heard learned counsel appearing on behalf of

the respective parties at length.

9
8. Having gone through the impugned judgment and

order passed by the High Court directing to release the

Respondent No.2 on bail it appears that the High Court has

directed to release the Respondent No.2 on bail mainly on

the ground that the case arises out of a commercial

transaction and is based on documents already seized.

Para 16 contains the only reasoning while releasing

Respondent No.2 on bail, which reads as under:

“16. Coming to the facts of the present case, it is an
admitted fact that the co­accused namely Navin
Kumar Jain and Hulash Chand Jain were the other
Directors and shareholders of SALL as well as LMJIL.
They also signed/undertook personal guarantee to the
complainant company in their capacity as Directors of
the SALL against the “Working Capital Demand Loan”.
Navin Jain had also signed the Tripartite Off­take
Agreement in the capacity of Director of LMJIL. Both
of them were not even arrested and the charge sheet
against them was filed without arrest. During two
years of enquiry/investigation, the petitioner joined
investigation on multiple occasions. After his arrest,
the EOW sought only one day PC remand. Neither in
the Status Report nor during the course of arguments,
any apprehension was shown that the petitioner is a
“flight risk”. The case arises out of a commercial
transaction and is based on documents that already
stand seized. The petitioner has already approached
the NCLT where a moratorium on the
assets/properties has been declared and an IRP has
been appointed. The complainant has already
approached NCLT.”

9. From the aforesaid it can be seen that while releasing

the Respondent No.2 on bail the High Court has not at all
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adverted to and/or considered the nature of accusation and

the material found/collected during the course of

investigation and the serious allegations of siphoning off the

huge amount through various shell companies. The High

Court has not at all dealt with and/or considered any of the

allegations and/or material collected during the course of

the investigation which were specifically pointed out and

mentioned in the status report filed by the I.O. From the

status report and even the charge­sheet/supplementary

charge­sheet papers it has been found during the course of

the investigation that a sum of Rs.25 crores was disbursed

by the complainant to Respondent No.2 and its company

M/s LMJ Logistics Limited. The said amount was

disbursed for its own use. During the course of the

investigation, it has been found that the said amount was

debited to the various companies/entities as under:Sr. Date Beneficiary Voucher Amount (In
No. Firm No. Rs.)
1. 03.11.17 LMJ 860388 1500,00,000/
International ­
Ltd.
Corporation
Bank Kolkata
2. 06.11.17 Sairam 860391 2,49,25,720/­
Agrocorp Pvt.
11
Ltd. Bandhan
Bank,
Connaught
Place, Delhi
3. 30.11.17 LMJ Logistics 860407 2,00,00,000/­
Ltd. RBL
Bank Ltd.,
Connaught
Place, New
Delhi
4. 30.11.17 Vasudev Agro 860410 2,51,30,176/­
Foods Pvt.
Ltd.
ICICI Bank,
Parliament
Street, New
Delhi
5. 30.11.17 Sairam 860405 99,98,874/­
Agrocorp Pvt.
Ltd. Bandhan
Bank,
Connaught
Place, Delhi
6. 30.11.17 Vasudev Agro 860406 99,96,387/­
Foods Pvt.
Ltd.,
Bandhan
Bank,
Connaught
Place, Delhi
7. 30.11.17 Sairam 860409 98,74,563/­
Agrocorp Pvt.
Ltd. Bandhan
Bank,
Connaught
Place, Delhi

9.1 During the course of the investigation, it has been

found that Rs.15 crores was transferred to another

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company/LMJ International Limited through some of the

fake companies and the said another company – M/s LMJ

International Limited used that amount to clear its dues of

Corporation Bank, Kolkata. During the investigation it has

been found that a sum of Rs.2,49,25,720/­ was transferred

to one Sairam Agrocorp Pvt. Ltd. and it was further

transferred to LMJ International Limited on the same day.

Similarly, the amount of Rs.2,51,30,176/­ was transferred

in the account of Vasudev Agro Foods Pvt. Ltd. out of which

Rs.1.82 crores approximately was transferred into account

of Aldera Traders Pvt. Limited and it was further transferred

to LMJ International Limited on the same day. During the

course of the investigation, it has been found that an

amount of Rs.99,98,874/­ and Rs.98,74,563/­ were

transferred in the account of Sairam Agrocorp Pvt. Ltd. and

consolidated amount of Rs.1,98,72,914/­ was further

transferred to LMJ International Limited on the same day.

It has been further found that an amount of Rs.99,96,387/­

was transferred to Vasudev Agro Foods Pvt. Limited and it

was further transferred to LMJ International Limited on the

same day. Thus, it has been found that the credit facility to

13
the tune of Rs.25 crores availed by M/s LMJ Logistics

Limited were not used for any business purposes i.e., sale

purchase of agri or non­agri products but it has been

rotated through shell entities and immediately transferred

to other company M/s LMJ International Limited to square

off the liabilities through the shell companies. During the

course of the investigation/further investigation it has been

revealed that Sairam Agrocorp Pvt. Ltd. and Vasudev Agro

Foods Pvt. Ltd. are fake and shell companies and they do

not exist at the registered address. During the course of the

investigation, it has been found that some of the employees

were made directors without their knowledge and their KYC

and other documents were misused without their

knowledge. As per the charge­sheet/supplementary charge­

sheet it appears that the investigation revealed that the

accounts in question were created to inflate the turnover of

the company so that they could avail the credit facility from

various banks. It further reveals that the shell companies

were created to misappropriate/siphoned off the money

entrusted to them as a loan to the tune of Rs.25 crores. It

has been revealed that there was no genuine transaction of

14
sale and purchase but it was simply routing and re­routing

of the amount received from the complainant to different

entities which were in actual being operated by Respondent

No.2. All these aforesaid allegations and the material

collected during the course of the investigation which are

being part of the charge­sheet and supplementary charge­

sheet are not taken note of by the High Court and the High

Court has just simply ignored the same and has released

Respondent No.2 on bail by simply observing that case

arises out of a commercial transaction and the dispute is of

a civil nature. Therefore, the High Court has not at all

taken into consideration the relevant considerations while

grant of bail. Even the High Court has not at all taken note

of the reasoning given by the learned Sessions Court while

rejecting the bail application of Respondent No.2.

9.2 In the light of the above facts, it is required to be

considered whether the High Court is at all justified in

releasing Respondent No.2 on bail.

10. At this stage few decisions of this Court on the

relevant considerations to be considered by the High Court

while grant of bail are required to be referred to. In the case

15
of Prasanta Kumar Sarkar vs. Ashis Chatterjee and Anr.,

(2010) 14 SCC 496, while cancelling the bail and quashing

and setting aside the order passed by the High Court

granting the bail to the accused it is observed in para 9 to

12 as under:

“9. We are of the opinion that the impugned order
is clearly unsustainable. It is trite that this Court does
not, normally, interfere with an order passed by the
High Court granting or rejecting bail to the accused.
However, it is equally incumbent upon the High Court
to exercise its discretion judiciously, cautiously and
strictly in compliance with the basic principles laid
down in a plethora of decisions of this Court on the
point. It is well settled that, among other
circumstances, the factors to be borne in mind while
considering an application for bail are:
(i) whether there is any prima facie or
reasonable ground to believe that the accused
had committed the offence;
(ii) nature and gravity of the accusation;
(iii) severity of the punishment in the event
of conviction;
(iv) danger of the accused absconding or
fleeing, if released on bail;
(v) character, behaviour, means, position
and standing of the accused;
(vi) likelihood of the offence being repeated;
(vii) reasonable apprehension of the
witnesses being influenced; and
(viii) danger, of course, of justice being
thwarted by grant of bail.

[See State of U.P. v. Amarmani Tripathi [(2005) 8 SCC
21] (SCC p. 31, para 18), Prahlad Singh Bhati v. NCT of
Delhi [(2001) 4 SCC 280], and Ram Govind
Upadhyay v. Sudarshan Singh [(2002) 3 SCC 598].

16
10. It is manifest that if the High Court does not
advert to these relevant considerations and
mechanically grants bail, the said order would suffer
from the vice of non­application of mind, rendering it to
be illegal. In Masroor [(2009) 14 SCC 286], a Division
Bench of this Court, of which one of us (D.K. Jain, J.)
was a member, observed as follows: (SCC p. 290, para
13)

“13. … Though at the stage of granting bail
an elaborate examination of evidence and
detailed reasons touching the merit of the
case, which may prejudice the accused,
should be avoided, but there is a need to
indicate in such order reasons for prima facie
concluding why bail was being granted
particularly where the accused is charged of
having committed a serious offence.”

11. We are constrained to observe that in the instant
case, while dealing with the application of the accused
for grant of bail, the High Court completely lost sight
of the basic principles enumerated above. The
accused, in the present case, is alleged to have
committed a heinous crime of killing an old helpless
lady by strangulation. He was seen coming out of the
victim’s house by a neighbour around the time of the
alleged occurrence, giving rise to a reasonable belief
that he had committed the murder. We feel that under
the given circumstances, it was not the stage at which
bail under Section 439 of the Code should have been
granted to the accused, more so, when even charges
have not yet been framed.

12. It is also pertinent to note that, as stated above,
the Additional Chief Judicial Magistrate had rejected
three bail applications of the accused but the High
Court did not find it worthwhile to even make a
reference to these orders. In this regard, it would be
useful to refer to the following observations echoed
in Kalyan Chandra Sarkar v. Rajesh Ranjan [(2004) 7
SCC 528]: (SCC p. 536, para 12)

17
“12. In regard to cases where earlier bail
applications have been rejected there is a
further onus on the court to consider the
subsequent application for grant of bail by
noticing the grounds on which earlier bail
applications have been rejected and after
such consideration if the court is of the
opinion that bail has to be granted then the
said court will have to give specific reasons
why in spite of such earlier rejection the
subsequent application for bail should be
granted.”

10.1 In the case of Neeru Yadav vs. State of UP & Anr.,

(2016) 15 SCC 422, it is held by this Court in para 11 as

under:

“11. It is a well­settled principle of law that while
dealing with an application for grant of bail, it is the
duty of the Court to take into consideration certain
factors and they basically are: (i) the nature of
accusation and the severity of punishment in cases of
conviction and the nature of supporting evidence, (ii)
reasonable apprehension of tampering with the
witnesses for apprehension of threat to the
complainant, and (iii) prima facie satisfaction of the
Court in support of the charge. (See Chaman
Lal v. State of U.P., (2004) 7 SCC 525)”

10.2 In Anil Kumar vs. State (NCT of Delhi), (2018) 12

SCC 129, it is observed and held by this Court that while

granting bail, the relevant considerations are, (i) nature of

seriousness of the offence; (ii) character of the evidence and

18
circumstances which are peculiar to the accused; and (iii)

likelihood of the accused fleeing from justice; (iv) the impact

that his release may make on the prosecution witnesses, its

impact on the society; and (v) likelihood of his tampering.

10.3 In the case of Prahlad Singh Bhati vs. NCT of Delhi

& Ors., (2001) 4 SCC 280, it is observed and held by this

Court that the jurisdiction to grant bail has to be exercised

on the basis of well settled principles having regard to the

circumstances of each case and not in an arbitrary manner.

It is observed and held as under:

“The jurisdiction to grant bail has to be exercised on
the basis of well settled principles having regard to the
circumstances of each case and not in an arbitrary
manner. While granting the bail, the court has to keep
in mind the nature of accusations, the nature of
evidence in support thereof, the severity of the
punishment which conviction will entail, the
character, behaviour, means and standing of the
accused, circumstances which are peculiar to the
accused, reasonable possibility of securing the
presence of the accused at the trial, reasonable
apprehension of the witnesses being tampered with,
the larger interests of the public or State and similar
other considerations. It has also to be kept in mind
that for the purposes of granting the bail the
Legislature has used the words ‘reasonable grounds
for believing’ instead of “the evidence” which means
the court dealing with the grant of bail can only satisfy
it as to whether there is a genuine case against the
accused and that the prosecution will be able to

19
produce prima facie evidence in support of the
charge.”

11. Applying the law laid down by this Court in the

aforesaid decisions to the facts of the case on hand and the

grounds on which the High Court has released the

Respondent No.2 on bail, we are constraint to observe that

in the instant case while dealing with the application of the

accused for grant of bail, the High Court has completely lost

sight of the basic principles enumerated above. The High

Court has not at all considered the modus operandi adopted

by the accused in commission of serious offence of

siphoning and/or transferring the huge sum to another

company through shell companies. The High Court has

also not taken into consideration the status report filed by

the I.O. in which in detail it has been pointed out how

systematically the accused have committed the offence and

misappropriated/siphoned off the huge sum through shell

companies. Thus, it appears that the High Court has not

adverted to the relevant considerations and has granted the

bail mechanically by observing that the case arises out of a

commercial transaction.

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12. Now so far as the submission on behalf of the accused

that as the accused has been released on bail as far as back

on 14.09.2020 and that thereafter there are no allegations

of misusing the liberty and therefore the bail may not be

cancelled and reliance placed upon the decisions of this

Court referred to hereinabove more particularly in the case

of X (Supra) are concerned at the outset it is required to be

noted that this is a case where it is found that the order

passed by the High Court releasing the accused –

Respondent No.2 on bail has been passed mechanically and

without adverting to the relevant facts and without

considering the nature of accusation and allegations and

the nature of the gravity of the accusation. Even in the

decisions which are relied upon by Shri Rohatgi, learned

Senior Advocate appearing on behalf of Respondent No.2,

there is no absolute proposition of law laid down by this

Court in the aforesaid decisions that once the bail is

granted by the High Court, though the High Court could not

have granted the bail, in absence of any allegation of misuse

of liberty and/or breach of any of the conditions of the bail,

21
the bail cannot be set aside when grant of bail is itself

subject matter of challenge in appeal/revision.

12.1 What is observed and held is that the rejection of bail

in a non­bailable case at an initial stage and cancellation of

bail so granted has to be dealt with and considered on

different basis and that very cogent and overwhelming

circumstances are necessary for an order directing the

cancellation of the bail already granted. Therefore, on very

cogent and overwhelming circumstances the bail can be

cancelled. At this stage the decision of this Court in the

case of Mahipal vs. Rajesh Kumar alias Polia and

Another, (2020) 2 SCC 118 is required to be referred to.

In the said decision, it is observed and held by this Court

that though this Court does not ordinarily interfere with the

order of the High Court granting bail, however, where the

discretion of the High Court to grant bail has been exercised

without due application of mind and in contravention of the

directions of this Court, such an order of granting bail is

liable to be set aside. Thereafter after drawing the

distinction between the power of an appellate court in

assessing the correctness of an order granting bail and an
22
application for the cancellation of the bail, in paragraph 16

it is observed and held as under:

“16. The considerations that guide the power of an
appellate court in assessing the correctness of an
order granting bail stand on a different footing from an
assessment of an application for the cancellation of
bail. The correctness of an order granting bail is tested
on the anvil of whether there was an improper or
arbitrary exercise of the discretion in the grant of bail.
The test is whether the order granting bail is perverse,
illegal or unjustified. On the other hand, an
application for cancellation of bail is generally
examined on the anvil of the existence of supervening
circumstances or violations of the conditions of bail by
a person to whom bail has been granted.

In Neeru Yadav v. State of U.P., (2014) 16 SCC 508],
the accused was granted bail by the High Court
[Mitthan Yadav v. State of U.P., 2014 SCC OnLine All
16031]. In an appeal against the order [Mitthan
Yadav v. State of U.P., 2014 SCC OnLine All 16031] of
the High Court, a two­Judge Bench of this Court
surveyed the precedent on the principles that guide
the grant of bail. Dipak Misra, J. (as the learned Chief
Justice then was) held: (Neeru Yadav case [Neeru
Yadav v. State of U.P., (2014) 16 SCC 508], SCC p.
513, para 12)

“12. … It is well settled in law that
cancellation of bail after it is granted because
the accused has misconducted himself or of
some supervening circumstances warranting
such cancellation have occurred is in a
different compartment altogether than an
order granting bail which is unjustified, illegal
and perverse. If in a case, the relevant factors
which should have been taken into
consideration while dealing with the
application for bail have not been taken note
of, or bail is founded on irrelevant

23
considerations, indisputably the superior
court can set aside the order of such a grant
of bail. Such a case belongs to a different
category and is in a separate realm. While
dealing with a case of second nature, the
Court does not dwell upon the violation of
conditions by the accused or the supervening
circumstances that have happened
subsequently. It, on the contrary, delves into
the justifiability and the soundness of the
order passed by the Court.”

12.2 Thus, as per the law laid down by this Court where a

Court while considering an application for bail fails to

consider the relevant factors, an Appellate Court may

justifiably set aside the order granting bail. Appellate Court

is thus required to consider whether the order granting bail

suffers from a non­application of mind or a prima facie view

from the evidence available on record.

13. From the aforesaid it emerges that while releasing

Respondent no.2 on bail, the High Court has not at all

considered the relevant factors including the nature and

gravity of accusation; the modus operandi and the manner

in which the offences have been committed through shell

companies and creating the false/forged documents and/or

misusing the PAN Cards, Aadhar Cards and KYCs of the

employees and showing them as Directors of the fake and

24
shell companies. As observed hereinabove, the High Court

has not at all considered and taken into consideration the

status report and the evidence collected during the course

of the investigation. Therefore, the impugned judgment and

order passed by the High Court releasing Respondent No.2

on bail is unsustainable as the High Court while releasing

Respondent No.2 on bail has not exercised the jurisdiction

judiciously and has not considered the relevant factors

which are required to be considered while grant of bail.

14. In view of the above and for the reasons stated above,

the impugned judgment and order passed by the High Court

releasing Respondent No.2 on bail deserves to be quashed

and set aside and is accordingly quashed and set aside.

Now on quashing and setting aside the impugned judgment

and order passed by the High Court releasing Respondent

No.2 on bail and consequently the bail being set aside, the

Respondent no.2 – accused to surrender before the

concerned Court/Jail Authority forthwith. Present Appeal is

accordingly allowed.

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However, it is made clear that any observations by this

Court in the present order shall not affect the trial and the

observations made in the present order be treated to be

confined to the impugned judgment granting bail. It is

further observed that after surrender it will be open for

Respondent No.2 to move an appropriate application for bail

before the High Court afresh after a period of three months,

which shall be considered by the High Court in accordance

with law and on its own merits and after taking into

consideration the relevant material collected during the

course of the investigation which is part of the charge­

sheet/further charge­sheet and taking into consideration

the relevant factors to be considered while grant of bail.

……………………………….J. [M.R. SHAH]

NEW DELHI; ……………………………….J.
JANUARY 28, 2022. [SANJIV KHANNA]

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