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IN THE HIGH COURT OF HIMACHAL PRADESH, SHIMLA
Rakesh Kainthla, J.
Yudh Chand Bains - Petitioner
Versus
State of Himachal Pradesh - Respondent
Cr.MP(M) Nos. 103, 509, 579 & 611 of 2025
Decided On : 24-04-2025
(A) Indian Penal Code - Sections 420, 468, 471, 120-B - Prevention of Corruption Act, 2018 - Sections 13(1)(a) & (2) - Pre-arrest bail applications - Petitioners sought bail in connection with FIR alleging financial fraud involving loans disbursed in violation of banking norms - The court emphasized that economic offences require careful consideration and that anticipatory bail should be granted sparingly, particularly in cases involving significant public interest and potential for tampering with evidence. (Paras 12, 13, 15, 26)
(B) Economic Offences - Distinction in treatment - Economic offences are to be treated differently from other offences due to their impact on society and the economy - The court reiterated that the power to grant anticipatory bail is extraordinary and should be exercised with caution. (Paras 12, 13, 22)
(C) Conditions for Bail - The court clarified that bail should not be used as a means for recovery of dues and that conditions imposed must not be onerous or excessive. (Paras 25, 26)
Facts of the case:
The petitioners, associated with a cooperative bank, faced allegations of fraud involving loans disbursed under questionable circumstances, including the use of forged documents. The FIR was registered following a complaint regarding financial irregularities.
Findings of Court:
The court found that the allegations did not substantiate a clear case of economic fraud warranting pre-arrest bail denial, emphasizing the need for a fair investigation.
Issues: The main issues included whether the petitioners were guilty of economic fraud and the appropriateness of pre-arrest bail in light of the allegations.
Ratio Decidendi: The court ruled that the absence of action against the Board of Directors who sanctioned the loans raised doubts about the prosecution's case, and that the mere act of receiving funds does not constitute a crime without further evidence of wrongdoing.
Result: Petitions allowed.
JUDGMENT :
Rakesh Kainthla, J.
Since all the bail applications emanate out of a common F.I.R., hence the same are taken up together for disposal by way of a common judgment.
2. The petitioners have filed the present petitions for seeking pre-arrest bail. It has been asserted that the Police have registered an F.I.R. No. 2 of 2025, dated 8.01.2025, at Police Station State Vigilance and Anti-Corruption Bureau (SV & ACB), Una, H.P for the commission of offences punishable under Sections 420, 468, 471, and 120-B of the IPC and Section 13 (1) (a)& (2) of Prevention of Corruption (PC) Act, 2018. The petitioners apprehend that the Police would arrest them in connection with the aforesaid FIR. The prosecution story is false and the petitioners were falsely implicated in the case. They belong to respectable family and their reputation would be harmed by their arrest and detention in custody. They have roots in the society and there is no likelihood of their absconding. They would abide by all the terms and conditions, which the Court may impose. Hence the petitions.
3. The petitions are opposed by filing status reports asserting that a complaint was received from the Secretary (Cooperation) to the Government of Himachal Pradesh alongwith a report of the Managing Director of Kangra Central Cooperative Bank Ltd. (KCCB) regarding fraud in the bank accounts of M/s. Himalaya Snow Village and M/s. Hotel Lake Palace., properties of petitioner Yudh Chand Bains. Yudh Chand Bains has taken multiple loans from KCC Bank and the bank had advanced the loans in violation of its lending policies and the guidelines of Reserve Bank of India (RBI) and National Bank for Agriculture and Rural Development (NABARD). Police conducted an inquiry and found that a utilization certificate dated 30.6.2019 was stated to have been issued by Future Craft Palampur to Himalaya Snow Village Proprietor Yudh Chand Bains, who submitted the certificate to the bank. However, Future Craft clarified that it is an architectural firm that can only issue structural stability certificates and building drawings. Hence Utilization Certificate was found to be forged. The bank approved petitioner Yudh Chand Bains’s loan requests unconditionally. His investment from personal resources was not verified. Family members who were already guarantors in another loan were again included as guarantors. No monitoring of fund utilization was conducted. The loans were granted despite several accounts being in default. Post-loan fund utilization monitoring was completely ignored. Reports by Chartered Accountant and Additional Registrar, Cooperative Societies declared the loan as fraudulent. Branch Manager of KCCB Bank Government College, Una also informed that a loan account was maintained in the Bank in the name of Hotel Himalaya Snow Village Manali. Rs.16 crores were disbursed on 11.7.2019 and Rs.4 crores were disbursed on 27.7.2019. Petitioner Yudh Chand Bains transferred the amount to another account in the name of Himachal Home Furnishing and Hotel through RTGS. The money was disbursed to other accounts and further investigation is required. The Board of Directors relaxed the terms and conditions mentioned in the sanction letter. The first instalments of Rs.16 crore and Rs.4 crore were disbursed on 11.7.2019 and 22.7.2019 respectively. Project Monitoring and Loan Disbursement Committee (PMLDC) recommended reconsideration of the relaxations granted to the petitioner but the loan was disbursed despite this recommendation. The police registered the FIR after receipt of the preliminary inquiry report. It was found after the investigation that petitioner Yudh Chand Bains and his family members obtained the loan in the year 2017- 2018 from Shri Anand & Investment Company Pvt. Ltd. and Himachal Pradesh Cooperative Non-Agriculture Thrift & Credit Society Ltd. 35 cheques issued by the petitioner and his family members were dishonoured and the cases were pending before learned Judicial Magistrate First Cla
The court emphasized that anticipatory bail in economic offences should be granted sparingly, considering the gravity of accusations and the potential for tampering with evidence.
Anticipatory bail should be granted sparingly in cases of economic offences due to their potential to undermine public interest and the necessity for custodial interrogation.
Bail in economic offences should be denied to protect the larger public and state interest and prevent tampering with witnesses.
The main legal point established in the judgment is that the grant of bail is the rule and refusal is the exception, and the gravity of the offence is an aspect to be kept in view by the Court. The c....
The judgment emphasized the seriousness of economic offences, the need for custodial interrogation, and the balance between individual rights and public interest in granting anticipatory bail.
The delay in trial, seriousness of economic offences, and the larger interest of the public are crucial factors in determining bail applications for serious economic offences.
Economic Offence - Refusal to grant pre-arrest bail - Petitioner has made out no case for his release on pre-arrest bail, more particularly when present is prima-facie not a case where allegations br....
Anticipatory bail should not be granted routinely in serious economic offences involving large-scale fraud, as custodial interrogation is crucial for effective investigation.
Pre-arrest bail is an extraordinary remedy, granted sparingly, especially in economic offences where custodial interrogation is necessary for effective investigation.
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