“Bail Granted in Breach of High Court Findings Amounts to Legal Perversity” – Supreme Court Sets Aside Bail in ₹6.25 Crore Cheating Case

“Courts Have Been Taken for a Ride by False Undertakings” – Supreme Court of India delivered a stinging verdict against the grant of bail to accused persons in a high-value cheating case involving over ₹6 crore. The bench of Justice Ahsanuddin Amanullah and Justice S.V.N. Bhatti overturned the orders passed by the ACMM, Sessions Court, and the Delhi High Court, holding that “bail cannot be granted by mechanically citing filing of chargesheet, especially when superior courts have recorded serious findings of fraud, suppression and abuse of judicial process.”

The case presents a textbook illustration of how procedural laxity, disregard for precedent, and neglect of material facts can collectively vitiate judicial orders. The Court's decision reinstates the principle that liberty cannot be purchased through misrepresentation, and that prior misconduct before courts must weigh heavily against the accused at the stage of bail.

“Courts Below Ignored Prior Misconduct and Suppression of Facts – Such Grant of Bail is Unsustainable in Law”

Introduction

In this landmark decision, the Supreme Court quashed the regular bail granted to two accused—a husband-wife duo—who were facing prosecution under Section 420 IPC for allegedly cheating the complainant to the tune of ₹6.25 crore. Despite the Delhi High Court having earlier rejected their anticipatory bail, finding that they had misled the court and given false undertakings of repayment, the ACMM granted them bail, which was later upheld by the Sessions Judge and the Delhi High Court.

The Supreme Court held this chain of orders to be fundamentally flawed, observing:

“The consideration adopted therein borders on the perversity… Bail ought not to have been granted in light of the glaring factual matrix.”

“Judicial Orders Cannot Be Passed in Isolation of Superior Court Findings” – Court Decries Lower Courts Ignoring High Court’s Bail Rejection

The appellant, M/s Netsity Systems Pvt. Ltd., alleged that the accused had taken ₹1.90 crore from it under the promise of transferring certain land. It was later discovered that the land in question had already been mortgaged and sold to a third party. When confronted, the accused refused to return the money. The complainant claimed a total loss of ₹6.25 crore, including interest.

A criminal complaint was filed, leading to FIR No. 81/2018 under Section 420 IPC. The accused sought anticipatory bail from both the Sessions Court and Delhi High Court, initially obtaining interim protection in December 2018.

In 2019, the accused gave an undertaking before the High Court during mediation proceedings that they would repay the money. Relying on this, the court continued interim protection. But the accused later backtracked and refused to pay.

In its detailed order dated 01.02.2023, the High Court rejected the anticipatory bail, noting:

“This situation will amount to travesty of justice, and taking the court and complainant for a ride.”

Despite this, the accused applied for regular bail before the ACMM in 2023, without disclosing that their anticipatory bail had been rejected. The ACMM granted bail solely on the ground that the chargesheet had been filed, and that custodial interrogation was no longer needed. This bail was upheld by the Sessions Court and the High Court.

“Regular Bail Cannot be a Backdoor After Anticipatory Bail Rejection Based on Fraud” – Supreme Court Warns Against Misuse of Process

Legal Issues and Observations

The Supreme Court’s analysis turned on several key legal issues. First, whether a trial court can disregard a superior court’s prior rejection of anticipatory bail on misconduct grounds. Second, whether appearance before court without any formal bail order could be construed as judicial custody. And third, whether routine invocation of the ‘filing of chargesheet’ can justify release when the accused had earlier abused judicial process.

The Court stated emphatically:

“The ACMM proceeded on the simplistic premise that since the chargesheet had been submitted, no useful purpose would be served by taking the accused into custody… Such reasoning is untenable.”

It reiterated that "bail is not to be granted mechanically" and observed that the lower courts had failed to "discuss or even examine the material available in the chargesheet, despite noting that the role of both accused was clearly delineated."

Moreover, the accused were permitted to walk out of the courtroom without any interim bail or formal bond, in complete disregard of the procedure under the CrPC. The Court found this conduct procedurally unacceptable and damaging to rule of law.

“We are unable to comprehend how, having formally surrendered before the Court, the accused were permitted to leave the Court without any formal order of release.”

“Judicial Training Necessary Where Orders Reflect Ignorance of Established Principles” – Court Orders 7-Day Training for Judges Who Granted and Upheld Bail

The Supreme Court didn’t stop at merely quashing the bail orders. Recognising the systemic implications of the case, it issued directions for institutional accountability.

Noting that the ACMM and Sessions Judge had failed to apply binding precedent and judicial discipline, the Court ordered:

“The Judicial Officers who passed the Orders dated 10.11.2023 and 16.08.2024 shall undergo special judicial training for a period of at least seven days.”

This training is to be conducted at the Delhi Judicial Academy, with special emphasis on:

• How to handle bail cases involving economic offences;

• The obligation to consider prior judicial findings;

• The importance of recording reasons reflecting judicial application of mind.

“Police Officers' Conduct Aided Improper Bail Grant” – Court Directs Commissioner of Police to Conduct Enquiry

In another rare but significant step, the Court directed the Commissioner of Police, Delhi, to conduct a personal enquiry into the Investigating Officers (IOs) in the case. The IOs had taken the stand that custodial interrogation was not required, without giving due weight to the prior history and the nature of the fraud.

“The stand(s) taken by them before the Court(s) below speak volumes… We would not shut our eyes to the role(s) played by the IOs either.”

The Commissioner is expected to take appropriate action based on the outcome of the enquiry.

“Matter Was Not Mere Bail Cancellation—It Was a Case of Bail Secured Through Deception” – Supreme Court Rejects High Court’s Narrow Approach

The Court held that the High Court erred in treating the petition as a cancellation of bail simpliciter, failing to appreciate that the issue involved grant of bail through concealment and suppression, which vitiates the order ab initio.

The High Court’s refusal to refer the matter to the same judge who earlier rejected anticipatory bail was also found to be based on a flawed understanding of judicial roster. The Court clarified:

“Bench composition is the sole prerogative of the learned Chief Justice… Not for a Coordinate Bench to determine based on the judge’s present assignment.”

The Supreme Court underscored that judicial consistency must be maintained, especially when multiple bail applications arise from the same FIR or facts.

The Supreme Court, in a judgment both legally rigorous and institutionally instructive, set aside the bail orders passed by the ACMM (10.11.2023), Sessions Judge (16.08.2024), and the Delhi High Court (18.11.2024). It directed the accused to surrender within two weeks, refused to remand the matter, and instead, imposed systemic correctives through judicial training and police enquiry.

The Court’s warning is clear: “Bail is not a remedy for abuse of process. Liberty does not shield dishonesty.”

In an era where economic offences are growing in scale and complexity, this judgment serves as a crucial precedent reinforcing judicial caution, procedural integrity, and accountability at all levels of the criminal justice system.

Date of Decision: 25th September 2025