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Why Bail May Be Granted In Economic Offence


Procedure by which a judge or magistrate sets at liberty one who has been arrested or imprisoned, upon receipt of security to ensure the released prisoner's later appearance in court for further proceedings. Release from custody is ordinarily effected by posting a sum of money, or a bond, although originally bail included the delivery of other forms of property, such as title to real estate.

The principal use of bail in modern legal systems is to secure the freedom, pending trial, of one arrested and charged with a criminal offense, although it may also be used in some cases to secure release pending an appeal of a conviction. Subject to jurisdictional variations, its use in civil cases has diminished along with the decline of imprisonment for debt.

Economic offences

The economic offence is a vast subject but for understanding the term it means any offence or crime which deals with fraud (chit funds), forgery (cheques; stolen or original), cheating, or deceiving (financial institutes) or counterfeiting of money or money equivalents. The economic offence is also known as a Financial Offence. The reason why it is called a Financial Offence is that the crime (offence) is relating to money and its equivalence which in turn deals with a nation. Corruption is also a part of economic offences.

Why bail may be granted in economic offence

The Court thus held granting bail to the petitioner in economic offences of this nature would be against the larger interest of public and State as it involves criminal misappropriation and cheating of huge amount of public money and there is also reasonable apprehension of tampering with the witnesses.

Economic offences constitute a class apart and need to be visited with a different approach in the matter of bail. The economic offence having deeprooted conspiracies and involving huge loss of public funds need to be viewed seriously and considered as grave offences affecting the economy of the country as a whole and thereby posing serious threat to the financial health of the country.

While granting 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 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 public/State and other similar considerations.

It is, no doubt, true that the nature of the charge may be relevant, but at the same time, the punishment to which the party may be liable, if convicted, also bears upon the issue. Therefore, in determining whether to grant bail, both the seriousness of the charge and the severity of the punishment should be taken into consideration. The grant or refusal to grant bail lies within the discretion of the Court.

The grant or denial is regulated, to a large extent, by the facts and circumstances of each particular case. But at the same time, right to bail is not to be denied merely because of the sentiments of the community against the accused. The primary purposes of bail in a criminal case are to relieve the accused of imprisonment, to relieve the State of the burden of keeping him, pending the trial, and at the same time, to keep the accused constructively in the custody of the Court, whether before or after conviction, to assure that he will submit to the jurisdiction of the Court and be in attendance thereon whenever his presence is required.

Some landmark judgment
D.K. Sethi vs Central Bureau Of Investigation on 24 September, 2018
Petitioner D. K. Sethi has approached this Court by way of filing present petition under Section 439 of the Code of Criminal Procedure, 1973 (for short - 'Cr.P.C.') for grant of regular bail to him in case FIR No.RCBD1/2015/E/0010 dated 19.10.2015 registered by CBI, BS & FC, New Delhi under Sections 420, 467, 468, 471, 120-B of the Indian Penal Code (for short - 'IPC') read with Section 13(2) & 13(1) (d) of the Prevention of Corruption Act, 1988.

Learned senior counsel for the petitioner submits that the petitioner has falsely been implicated, whereas he has not played any role. The name of the petitioner was not mentioned in the FIR and as per the allegations the role of the petitioner is at par with co-accused S. K. Sinha, 1 of 18 who has been found innocent in the investigation. The allegations in the FIR pertain to credit facilities sanctioned by the bank, which were availed by the firm M/s R. S. Fastners, which was the customer of the bank. Petitioner joined his duty on promotion as Chief Manager on 10.09.2010.

A proposal was submitted by the said firm for expansion-cum-modernisation of their industrial unit in the year 2010. For the purpose of proposed expansion, said firm purchased land and building over a plot measuring 6750 square yards. The sale deed of the said property indicated the consideration amount of ` 1.30 crores. The title of the property was found in order stating to be clear from all encumbrances. Learned counsel further submits that for examination of proposal of additional credit facilities, a techno economic viability study was got conducted through Manager (Industry) in the concerned branch.

Apart from that study, two separate valuations reports were also obtained in respect of assets including added assets of the industrial unit. Said valuations were obtained from two separate approved valuers of the bank. The value of assets was `11.83 crores and ` 12.82 crores respectively. The report was submitted to the independent officer i.e. Manager (Industries) who was not only having technical knowledge about the industry but was also having good experience.

The company was sanctioned enhancement of limit from `36 crores to `48 crores vide Head Office sanction dated 15.05.2012. The amount of loan was directly paid through draft/RTGS from the concerned branch of the bank. Learned counsel also submits that internal audits and a stock audit were also conducted through independent professionals. No material deviation was found in the conduct of business of the borrower firm.

The industrial unit of the borrowers was also jointly inspected by the petitioner along with other officers of the bank and same was found to be running satisfactory as per unanimous opinion of the inspecting team. Learned senior counsel also submits that no offence is made out under Section 420 IPC. Even no allegation under Section 467 and 471 IPC has been attributed to the petitioner as all the documents were subject to scrutiny not only by petitioner but additionally and independently by Circle Office of the Bank as well as its Head Office.

Those documents were also subjected to repeated collateral securities by concurrent auditors, CARD auditors, statutory auditors and Inspectors from time to time. Learned senior counsel also submits that the petitioner is retired officer of the bank and he is ready to join the Court proceedings on each and every date of hearing and also to abide by all the terms and conditions to be imposed by this Court.

Even the complainant bank has not only filed a civil suit i.e. an Original Application before DRT for recovery of the dues by exercising its powers under 3 of 18 Securitization and Reconstruction of Financial Assets and Enforcement Security Interest Act, 2002, auctioned the plant and machinery of the industrial unit and has realised the funds towards part recovery of the dues. Learned senior counsel submits that recourse of recovery is pending. The petitioner is 62 years old person and is having unblemished service record in his long career.

He is in custody for the last more than one year and two months. In support of his arguments, learned senior counsel for the petitioner has relied upon judgment of Hon'ble the Apex Court in case Sanjay Chandra Vs. CBI 2011(4) R.C.R. (Criminal) 898 and judgment of this Court in case CRM-M No.19535 of 2018 titled as Giri Raj Vs. State of Haryana decided on 14.09.2018.

Mr. S. S. Sandhu, Special Prosecutor for CBI has vehemently opposed the submissions made by learned counsel for the petitioner on the ground of seriousness of offence. He also submits that it was the responsibility of the petitioner to obtain performa invoices, final invoices from the foreign and local suppliers, in respect of machines and equipments for end use of Term Loans funds by M/s RSF. It has been found in the investigation that M/s RSF through its accused Directors were involved in 4 of 18 circular financial transaction in allowing the release of loan amount to bogus firms/companies in furtherance of criminal conspiracy with other accused and cheated the bank by relying upon forged documents and wrongful loss has been caused to the bank. Specific allegations are there against the petitioner and other co-accused.

The nature of evidence in support thereof, severity of the punishment which conviction will entail, the character of the accused and facts and circumstances of the case. It is also one of the factors while considering the bail that that is a reasonable possibility of securing the presence of the accused during trial and reasonable apprehension of the witnesses being tampered with. The larger interest of the public/State and some other similar considerations are also there.

However, for the purpose of granting bail, the Legislature has used the words reasonable grounds for believing instead of the evidence, which means the Court while dealing with the grant of bail can only satisfy itself as to whether there is a genuine case against the accused and the prosecution will be able to produce prima facie evidence in support of the charges. At this stage, it is not expected to have the evidence establishing the guilt of the accused beyond reasonable doubt.

It has been held in various judgments of this Court as well as Hon'ble the Apex Court that in economic offence, the view point is to be taken differently with different approach in case of bail. The economic offence having deep rooted conspiracies and involving huge loss of public funds needs to be taken seriously and considered as grave offence affecting the economy of the country as a whole and thereby posing serious threat to the financial health of the country as has been held by Hon'ble Apex Court in judgment of case Nimmagadda Prasad Vs. Central Bureau of Investigation, (2013) AIR SC 2821. 20. It is a settled preposition of law that while granting bail though the Court may impose reasonable conditions as it thinks fit but the object of putting conditions is to avoid the possibility of the person hampering investigation.

The discretion of the Court while putting condition is to be in exercise of judicial discretion. 21. Accordingly, without commenting anything on the merits of the case as allegations are matter of evidence to be tested by the trial Court during the course of trial and by considering that the petitioner is in custody for the last more than one year and two months and also the fact that challan has been presented before the trial Court, the offences are triable by Magistrate and also by considering the ratio of judgment of Hon'ble the Apex Court in case Manoranjana Sinh alias Gupta Vs. Central Bureau of Investigation, (2017) 1 RCR (Criminal) 1025, wherein the concession of bail has been granted to the accused persons who were involved in a big scam, the present petition is allowed and the petitioner is directed to be released on regular bail to the satisfaction of the trial Court subject to following conditions:
  1. The petitioner shall furnish a personal bond in the sum of Rs. 5 lacs (Rupees Five Lacs) with the sureties in the like amount to the satisfaction of the trial Court.
  2. The petitioner shall surrender his passport, if already not seized, any hold by him, before the trial Court.
  3. He shall not leave country without permission of Court.
  4. He shall not tamper with the evidence or do any act which will create a reasonable ground to assume that the petitioner is trying to create hurdle in the investigation or trial of the case which will entail cancellation of bail.
  5. Any other condition which may be imposed by the trial Court.
  1. J.P Singh v. Inspecting A.C Of I.T Jaipur
  2. The State Of Karnataka V. Srikant Jinna And Ors
  3. Anil Mahajan v. Commissioner Of Customs & Anr

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