Supreme Court Disposes of Appeal and Affirms Law Regarding Conditions for Bail in Case of Alleged Offense under Section 420 IPC

Supreme Court Disposes of Appeal and Affirms Law Regarding Conditions for Bail in Case of Alleged Offense under Section 420 IPC

Court: In the Supreme Court of India

Citation: Criminal Appeal Arising Out Of SLP (Crl.) No.2358 Of 2023

Case title: Ramesh Kumar vs. The State of NCT of Delhi

Date of Order:

Bench: Hon’ble Justice Dipankar Datta

Parties:

Appellant- Ramesh Kumar

Respondent - The State Of NCT of Delhi

SUBJECT

IMPORTANT PROVISIONS-

Section 438 of the Cr. PC- Direction for grant of bail to person apprehending arrest.

OVERVIEW-

• In recent times, a concerning pattern has emerged, gaining momentum over the years. We have observed multiple instances in the past few months where individuals accused of cheating, upon filing First Information Reports (FIRs) under section 420 of the Indian Penal Code, 1860 (referred to as "the IPC" hereafter), initiate judicial proceedings to obtain orders under Section 438 of the Code of Criminal Procedure, 1973 (referred to as "the Cr. PC" hereafter).
• However, these proceedings unintentionally transform into processes aimed at recovering the allegedly cheated amount, leading the courts to impose conditions for deposit or payment as a prerequisite for granting pre-arrest bail.
• The current case follows the same pattern, and it is important to remind the high courts and sessions courts to not be unduly influenced by the arguments put forth by the accused's counsel, which involve promises to deposit or repay any amount while seeking bail under section 438 of the Cr. PC. It is crucial to refrain from incorporating such conditions regarding deposit or payment as prerequisites for granting bail.
• The pertinent details essential for deciding this appeal, as extracted from the challenged judgment of the Delhi High Court, are as follows. The appellant in this case is the proprietor of a property and had intentions to redevelop it.
• To fulfill this objective, the appellant entered into three agreements with a person named Ashwani Kumar (referred to as "the builder" from hereon) on the dates of December 10th and 19th, 2018, and January 30th, 2019.
• According to the agreement dated December 19th, 2018, the builder was obligated to construct a multi-story building in which the appellant would obtain ownership rights over the 3rd floor and upper floors, in addition to receiving a payment of Rs. 55,00,000/- (fifty-five lakh rupees) from the builder.
• Simultaneously, the builder would have rights over the 1st and 2nd floors, along with other specified rights. In accordance with this agreement, the builder entered into a sale and purchase agreement/bayana on December 14th, 2018, with two individuals named Vinay Kumar and Sandeep Kumar (referred to as "the complainants" from hereon) regarding the 2nd floor of the proposed building (excluding roof rights), while also enjoying other specified rights, for a total sum of Rs. 60,00,000/- (sixty lakh rupees).
• Allegedly, the complainants paid Rs. 11,00,000/- (eleven lakh rupees) to the builder at the time of executing the agreement on December 14th, 2018, which consisted of Rs. 1,00,000/- (one lakh rupees) as token money and Rs. 10,00,000/- (ten lakh rupees) as earnest money.
• Subsequently, as per the builder's instructions, the complainants made additional payments, both in cash and through checks, to the appellant and the builder on different dates, amounting to a total of Rs. 35,00,000/- (thirty-five lakh rupees).
• It is alleged that the complainants did not fulfill the terms and conditions stated in the agreement dated December 14th, 2018, which prompted the builder to file a civil suit against the complainants. In this suit, the builder sought the cancellation of the agreement and forfeiture of the amount of Rs. 13,00,000/- (thirteen lakh rupees), citing the invocation of clause 8 of the agreement.
• Additionally, it is on record that the builder has initiated another civil suit, including the appellant, to enforce the specific performance of the agreements dated December 10th and 19th, 2018. However, the available evidence does not provide clarity regarding the dates when these civil suits were filed.
• The complainants did not receive possession of the second floor they intended to purchase. Even as recently as November 18th, 2021, the complainants took action by filing a complaint with the Station House Officer at Gulabi Bagh Police Station in Delhi.
• This complaint was registered as FIR No. 322 of 2021, under sections 420/406/34 of the IPC. The accused named in the complaint were the appellant, the builder, and a broker.
• Since the complainants had effected payment of substantial amount of money to the appellant and the builder having failed to deliver possession of the second floor of the proposed building, the complainants felt cheated and urged the police to investigate the crime committed inter alia by the appellant and the builder.
• Anticipating arrest, the appellant approached the relevant criminal court [MACT-02 (CENTRAL)] to seek an order under section 438 of the Cr. PC, which provides protection from arrest. Initially, on November 30th, 2011, the Presiding Officer granted the appellant temporary protection from arrest, on the condition that the appellant cooperates with the investigating agency.
• This decision was made based on information provided by the investigating officer, stating that no agreement had been executed between the appellant and the complainants. However, in a subsequent order dated January 18th, 2022, the Presiding Officer dismissed the application and revoked the earlier granted temporary protection for reasons provided in the order.
• Against the backdrop of the aforementioned facts and circumstances, both the appellant and the builder approached the High Court, seeking an order under section 438 of the Cr. PC for bail. On November 24th, 2022, the High Court issued a joint order granting bail to both the appellant and the builder, subject to specific conditions. One of the conditions set by the High Court in order to grant bail is stated as follows:
• "(e) As per their undertaking, the builder Ashwani Kumar is required to deposit a sum of Rs. 13,00,000/- (Thirteen lakhs only), and the owner Ramesh Kumar is required to deposit a sum of Rs. 22,00,000/- (Twenty-two lakhs only) with the learned Trial Court, in the form of a Fixed Deposit Receipt (FDR) in the name of the Court. This deposit should be made initially for a period of one year, with an automatic renewal clause, within four weeks.

ISSUES RAISED-

The condition pertains to the deposit of Rs. 22,00,000/- (twenty-two lakh rupees) as a prerequisite for granting bail. The appellant is seeking the removal of this condition while urging the court to uphold the other aspects of the High Court's order.

ARGUMENTS ADVANCED BY THE APPELLANT-

• As per the appellant's counsel, the imposed condition is burdensome and unnecessary, considering the High Court's acknowledgment in paragraph 8.0 that the appellant has cooperated with the investigation and is willing to provide any clarification or explanation required.
• It is further argued on behalf of the appellant that he is a victim of a conspiracy orchestrated between the builder and the complainants, resulting in his inability to enjoy his own property, which was supposed to be redeveloped by the builder within the agreed timeframe.
• Lastly, it is contended on behalf of the appellant that based on the decision of this Court in the case of Munish Bhasin vs. State (NCT of Delhi), the challenged condition for granting bail, which mandates the deposit of Rs. 22,00,000/- (twenty-two lakh rupees) in the form of an FDR at the Trial Court, is legally flawed and should be overturned.

ARGUMENTS ADVANCED BY THE RESPONDENT-

• The State's counsel has presented opposition to the appeal. According to the State's counsel, the challenged condition was imposed because the appellant, through his counsel, had willingly offered to deposit Rs. 22,00,000/- (twenty-two lakh rupees) while reserving his rights and contentions.
• The State's counsel argues that since the High Court made its order based on such undertaking and considering that the appellant had already been granted an extension of time, it is not a suitable case for this Court to intervene in the exercise of its jurisdiction.

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JUDGEMENT ANALYSIS-

• During the proceedings before the High Court, a status report was presented to update the court on the progress of the investigation. This report revealed that the construction of the proposed building had only advanced as far as the 1st floor.
• Consequently, it was evident that the 2nd and 3rd floors, which the complainants intended to purchase and the floors where the appellant was supposed to exercise his rights, respectively, were not yet built or completed. The status report clarified that neither the floor intended for purchase by the complainants nor the floors where the appellant's rights were concerned were in existence at that time.
• An intriguing aspect of the case is that the appellant, through his counsel, had agreed to deposit a sum of Rs. 22,00,000/- (twenty-two lakh rupees) with the trial court. Additionally, it was noted by the Presiding Officer, while dismissing the appellant's application in the order dated January 18th, 2022, that the appellant had received a total amount of Rs. 17,00,000/- (seventeen lakh rupees) through cheques.
• However, it is undisputed that the appellant's counsel had explicitly stated before the High Court that the appellant was prepared to deposit Rs. 22,00,000/- (twenty-two lakh rupees), which prima facie exceeds the amount allegedly received by the appellant through cheques issued in their favor based on the builder's instructions. At this stage, court is not concerned with any purported payments made by the complainants to the builder.
• In the case of Mahesh Candra vs. State of U.P., this Court dealt with a situation where the relevant high court had imposed a condition for the grant of anticipatory bail, requiring the payment of Rs. 2,000/- (two thousand rupees) per month to the victim (daughter-in-law). This Court made the following ruling:

"In the condition for granting anticipatory bail, the High Court has recorded the undertaking of the petitioners to pay the victim daughter-in-law a sum of Rs. 2000 per month, and failure to comply would result in the bail order being revoked. [...] We fail to comprehend how they can be compelled to deposit Rs. 2000 per month for the victim's maintenance. Furthermore, when deciding a bail application, it is not within the court's jurisdiction to adjudicate on civil disputes between the parties. Therefore, we remit the matter back to the High Court to reconsider the bail application on its merits and to issue an appropriate order without imposing any conditions similar to those set forth in the impugned order."

• The Supreme Court has established clear principles regarding the exercise of discretion in granting bail under section 438 of the Cr. PC, and therefore, we strongly disapprove of the imposition of the challenged condition.
• Even assuming that there is merit to the complainants' allegations that the appellant cheated them, either in collusion with the builder or independently, it is important to note that the investigation has yet to culminate in the filing of a charge-sheet under section 173(2) of the Cr. PC, let alone the alleged offense being proven before a competent trial court in accordance with established procedures and laws.
• Subsection (2) of section 438 of the Cr. PC does empower the high court or the court of sessions to impose conditions, as deemed appropriate in the specific case, when granting bail under subsection (1), including those outlined in clauses (i) to (iv).
• However, the precedents set by this Court make it clear that the imposed conditions must not be burdensome, unreasonable, or excessive. In the context of granting bail, conditions that ensure the accused's appearance before the investigating officer/court, unhindered progress of the investigation/trial, and the safety of the community are relevant.
• Nevertheless, including a condition for the payment of money by the bail applicant creates the impression that bail can be obtained by depositing the allegedly cheated amount. However, that is not the purpose or intent of the provisions for granting bail. It should be noted that we are not stating that the willingness of the accused to make payment/deposit should never be considered before granting bail.
• In exceptional cases, such as those involving allegations of misappropriation of public funds, if the accused, while seeking the court's indulgence to secure/restore their liberty, voluntarily offers to account for the whole or part of the allegedly misappropriated public funds, the court may consider whether, in the larger public interest, allowing the deposited money would be appropriate before the application for anticipatory bail/bail is finally considered.
• After all, no court should be averse to returning public funds to the system when the circumstances allow for it. We believe that such an approach would be in the broader interest of the community.
• However, this approach is not warranted in cases involving private disputes where private parties complain of their money being involved in the offense of cheating.
• In the judgment, the court concluded that even if the appellant had made a commitment to make payment, which the court is inclined to believe was a desperate attempt to avoid losing their liberty, such commitment should not have influenced the High Court's decision on the grant of anticipatory bail.
• The criteria for granting anticipatory bail are well-established and have gained recognition over time. The High Court would have been better advised to assess whether the appellant met these criteria for anticipatory bail. It appears that the submission made by the appellant's counsel before the High Court had an impact, despite not being a relevant consideration for the purpose of granting bail.

CONCLUSION-

• Given the circumstances, Supreme Court determined that the High Court made a significant mistake by relying on the appellant's undertaking and imposing the payment of Rs. 22,00,000/- (twenty-two lakh rupees) as a condition for granting bail.
• Supreme Court acknowledged that the appellant's own submissions influenced the High Court in granting bail with the contested condition.
• Therefore, Court is inclined to follow the approach taken by this Court in the case of Mahesh Chandra (previously mentioned) and hereby instruct the matter to be referred back to the High Court for a fresh consideration of the application for pre-arrest bail.
• The High Court should evaluate the application based on its own merits, taking into account the observations made in this judgment. Supreme Court emphasize the importance of expediting this process and expect the High Court to make a decision by August 31st, 2023, if not sooner. This order is given accordingly.
• The Supreme Court determined that, at this point, the complainants do not have the right to be heard before either this Court or the High Court, considering the nature of the offense alleged against the appellant. Unless a situation arises where the offense under Section 420 of the IPC can be compounded with the Court's permission, the complainants do not have the standing to participate in the proceedings.
• Accordingly, the appeal is resolved based on the terms mentioned above. Additionally, the application for intervention is dismissed.