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IN THE HIGH COURT OF BOMBAY
N. J. Jamadar, J.
Capalpha Trade Pvt. Ltd. - Appellant
Versus
Ushik Gala & Ors. - Respondents
Criminal Application (Appln) No.103 of 2023
Decided On : 10-06-2024
BAIL - CANCELLATION OF BAIL - IPC SECTIONS 406, 409, 420, 465, 467, 468, 471, 34 - The court discussed the legal framework surrounding bail cancellation, emphasizing that bail once granted should not be canceled lightly. It highlighted that substantial grounds are necessary for cancellation, particularly in cases where the accused has provided an undertaking. The court interpreted that non-compliance with an undertaking does not automatically warrant bail cancellation unless explicitly stated in the bail order. The court also referenced precedents that clarify the conditions under which bail can be granted or canceled, reinforcing the principle that bail should not be contingent upon financial conditions in private disputes.
Fact of the Case:
The applicant, a corporate entity, sought cancellation of bail granted to the respondent, who was accused of fraudulently inducing the applicant to provide trade finance based on false representations. The respondent was released on bail after an undertaking to pay the owed amount, but the applicant alleged breach of this undertaking.
Finding of the Court:
The court found that the learned Magistrate had not imposed conditions for payment in the bail order, and thus, the breach of the undertaking alone did not justify cancellation of bail. The court noted that the applicant had consented to the bail, indicating a risk taken as part of litigation strategy.
Issues: Whether the breach of an undertaking given for bail constitutes sufficient grounds for cancellation of bail, and whether the learned Magistrate's decision to grant bail was influenced by the undertaking.
Ratio Decidendi: The court established that cancellation of bail requires substantial grounds and that non-compliance with an undertaking does not automatically lead to cancellation unless explicitly stated in the bail order. The court emphasized the distinction between initial bail rejection and cancellation of already granted bail, requiring a higher standard for the latter.
Final Decision: The application for cancellation of bail was rejected, with the court clarifying that its observations were limited to the breach of the undertaking and did not reflect on the merits of the case.
JUDGMENT
N. J. Jamadar, J. - The Applicant, a Corporate entity, on whose behalf Vinay Kumar Agarwal had lodged First Information Report (FIR) leading to registration of C.R. No.50 of 2022 with Worli Police Station, Mumbai (subsequently transferred to EOW and registered as EOW CR No.8 of 2022) for the offences punishable under Sections 406, 409, 420, 465, 467, 468, 471 read with Section 34 of the Indian Penal Code, 1860, has preferred this application seeking cancellation of bail granted to Respondent No.1 by the learned Additional Chief Metropolitan Magistrate, 47th Court, Esplanade, Mumbai by an order dated 14th March 2022, primarily on the ground that, the Respondent No.1 has committed breach of the undertaking on the basis of which he was released on bail.
2. The background facts necessary for the determination of this application can be stated in brief as under:-
Capalpha Trade Pvt. Ltd.-first informant's company deals in the business, inter-alia, of trade finance. Capsave is a sister concern of the Applicant herein. Dentsu Communications India Pvt. Ltd. (Dentsu) made a representation to the first informant to initially provide invoice finance and, later on, the first informant company was induced to provide trade finance to Dentsu. Sahil Arora (A2), Robin Gupta (A3), Haresh Nayak (A4), Sarthak Behel (A5), Shubham Tiwari (A6) representing Dentsu; Ushik Gala (A8)-respondent No.1, Ishita Gala (A9), Sumit Singh (A10) and Dhwani Dattani (A11), who represented Suumaya Industries Ltd., and Suumaya Agro Ltd. and Pruthvi Shah and Jignesh Shah, the partners of Veda Multicorp LLP allegedly induced the first informant company to provide trade finance in connection with a program purportedly under CSR, 'Need To Feed' by making false representation that the first informant company would generate lucrative returns.
3. First informant was induced to part with the sum of Rs.117,73,12,1289/- by tendering false and fabricated mercantile documents like bills, invoices, lorry receipts evidencing the sale and delivery of the goods, when, in fact, there was no procurement and sale of the goods. The amount so fraudulently obtained from the first informant company was siphoned off. Under the terms of the contract, the accused had agreed to pay interest at the rate of 2% per month on the outstanding amount. Thus, a sum of Rs.19,31,93,260/- was due towards interest. Having realized that it was deceived to provide trade finance without any trade on the basis of false and fabricated documents and false representations, first informant lodged the report.
4. The Respondent No.1-(A8), who was the Director of Suumaya came to be arrested on 25th February 2022. He was remanded to police custody till 10th March 2022.
5. The respondent No.1 preferred an application for bail. On 14th March 2022, a submission was made before the learned Metropolitan Magistrate that the matter between first informant and the accused-respondent No.1 came to be settled and consent terms have been drawn and undertaking has been filed by accused No.8 wherein accused had shown willingness to pay entire due amount to the first informant in installments as mentioned in paragraph 6 of the said undertaking.
6. Recording the said settlement and the statement on behalf of first informant that the informant has no objection to release the accused on bail, the learned Magistrate was persuaded to allow the application finally.
7. It must be noted that the prayer for bail was opposed by the learned APP However, the learned Magistrate was persuaded to allow the application as the dispute was settled between the parties and the possibility of tampering with evidence and fleeing away from justice appeared to be remote.
8. The first informant preferred an application (Case No.1506/Misc./2022 in EOW C.R. No.08/2022) before the learned Magistrate seeking cancellation of bail granted to accused No.8 on the ground that, the accused No.8 has committed breach of the undertaking. The accused No.8 had deliberatel
AI
Bail cannot be canceled solely on the basis of breach of an undertaking unless such conditions were explicitly included in the bail order, and substantial grounds must be demonstrated for cancellatio....
Violation of bail conditions justifies cancellation of bail, emphasizing the court's authority to enforce compliance.
Bail should not be granted or conditioned on financial undertakings; it must be assessed strictly on its merits according to law.
The court emphasized the limitations on the court's power to cancel bail and the need for strong and substantive reasons to arrest a person who is set at liberty by admitting him to bail.
Cancellation of bail requires compelling evidence of misconduct or supervening circumstances affecting fairness of trial; mere subsequent offenses do not suffice.
Mere violation of bail condition is not sufficient to warrant cancellation of bail; a summary inquiry is necessary to determine the impact of the accused's involvement on the administration of justic....
The main legal point established in the judgment is that consistent violation of court directions and non-compliance with previous court orders can warrant the cancellation of bail. Additionally, the....
Cancellation of bail requires overwhelming reasons and cannot be allowed to be a tool in the hands of the first informants.
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