2026 Supreme(Online)(HP) 2573

IN THE HIGH COURT OF HIMACHAL PRADESH, SHIMLA
HON'BLE MR. JUSTICE RAKESH KAINTHLA
YUDH CHAND – Appellant
Versus
STATE OF HP – Respondent
CRMPM/103/2025

Pre-arrest bail can be granted in alleged economic offences if custodial interrogation is not judicially justified, the criminal process is used for recovery of dues, or the investigating agency targets borrowers/subordinates while exempting the primary decision-makers.

Headnote:(A) Indian Penal Code - Sections 420, 468, 471 and 120-B; Prevention of Corruption Act - Sections 13(1)(a) & 13(1)(2); Code of Criminal Procedure - Section 438; Bhartiya Nagrik Suraksha Sanhita - Sections 180 and 192; SARFAESI Act - Power of pre-arrest bail is extraordinary and should be exercised sparingly, especially in economic offences as they affect the economic fabric of society and involve deep-rooted conspiracies (Paras 18, 19).

(B) Personal Liberty - Article 21 of the Constitution of India - Deprivation of personal freedom must be founded on serious considerations; bail is the rule and refusal the exception. An offence cannot be denied pre-arrest bail simply because it is termed an 'economic offence' without the commission of such an offence being established (Paras 32, 46).

(C) Custodial Interrogation - Not a mechanical act; the court must apply its mind to determine if there are adequate grounds for remand. The demand for custodial interrogation is not 'magic words' that preclude the court from examining its necessity (Paras 34, 36).

(D) Cooperation and Recovery - Non-cooperation is distinct from a refusal to confess to a crime; an accused cannot be compelled to be a witness against himself. Furthermore, criminal proceedings, particularly bail hearings, cannot be converted into recovery proceedings for disputed dues, which are civil in nature (Paras 38, 42).

Facts of the case:
Petitioners, including a borrower, his relative, and bank officials, sought pre-arrest bail in an FIR alleging loan fraud, forgery of utilization certificates, and violation of regulatory guidelines. The prosecution alleged a huge financial fraud and misappropriation of funds. It was observed that while the borrower and processing officials were targeted, several members of the bank's board of directors, who allegedly sanctioned the loans in violation of norms, had either been released via notices or not interrogated at all.

Findings of Court:
The court found that the case diary produced by the investigating agency did not comply with statutory requirements as it was not a paginated volume. The court noted a discrepancy in the agency's conduct, where the individuals responsible for approving the loans were not treated with the same severity as the borrowers and officials who merely processed the files.

Issues: Whether the petitioners were entitled to pre-arrest bail in a case alleged to be a serious economic offence and whether the prosecution's demand for custodial interrogation for the purpose of recovery was legally sustainable.

Ratio Decidendi: The court reasoned that the privilege of anticipatory bail must balance individual liberty with the need for fair investigation. Since the primary decision-makers were not in custody and the underlying recovery process was already pending under the SARFAESI Act, custodial interrogation was not justified. Refusal to make self-incriminating statements does not amount to non-cooperation, and the criminal process cannot be used for arm-twisting money recovery.

Result: Petitions allowed, and the interim order passed by the Court is made absolute.