To Set aside - Appellate Court must consider whether the bail order erroneous – SC

Supreme Court observed in the recent Judgement (JANUARY 28, 2022) that where a Court while considering an application for bail fails to consider the relevant factors, an Appellate Court may justifiably set aside the order granting bail.  Appellate Court is thus required to consider whether the order granting bail suffers from a non­application of mind or a prima facie view from the evidence available on record.

Appellant a non­banking financial company (NBFC) lodged an FIR/complaint against the company M/s Sri Aranath Logistics Limited, Respondent No.2 herein Jayant Kumar Jain – Managing Director and others for the offences under Sections 409, 420, 467, 468, 471 and 120B IPC. That by way of written agreement accused availed loan credit facilities to the tune of Rs.25 crores for a term of 180 days from the complainant company. It was alleged that the said amount of Rs.25 crores was disbursed in the year 2017and same was required to be used by the company for its own purpose. But no stock statement was submitted, and mortgage was also not created as agreed between the parties. Accused instead of using the amount for the purpose mentioned in the agreement the same was transferred to several fake/shell companies.

At the time of availing the loan the accused misrepresented to the complainant about the financial health of the company of the accused. It was further alleged that the amount of around Rs.8 crores stated to have been diverted into such shell companies which were created by the accused in the name of his employees and bank account.

The Respondent No.2 came to be arrested and filed bail application for regular bail, learned Sessions Judge dismissed the bail application. That, thereafter, accused approached to High Court.  The detailed status report was filed pointing out how a sum of Rs.25 crores to be used and was transferred to shell and other companies The High Court has directed to release Respondent No.2 on the ground that the case arises out of a commercial transaction and is based on documents already seized.

Appellant approached Supreme court against the Order and Judgement of the High Court on the ground , while accused opposed the appeal in the ground that once the bail has been granted by the High Court and/or the Court below the same may not be cancelled unless it is found that the accused has violated any of the terms and conditions of the bail order and/or has misused any liberty shown to him while releasing him on bail and/or there are any other peculiar circumstances.

Supreme court observed that while releasing the Respondent No.2 on bail the High Court has not at all adverted to and/or considered the nature of accusation and the material found/collected during investigation and the serious allegations of siphoning off the huge amount through various shell companies. It further reveals that the shell companies were created to misappropriate/siphoned off the money entrusted to them as a loan to the tune of Rs.25 crores. It has been revealed that there was no genuine transaction of sale and purchase, but it was simply routing and re­routing of the amount received from the complainant to different entities which were in actual being operated by Respondent No.2.

Supreme Court further observed that Material collected during the investigation which are being part of the charge­sheet and supplementary chargesheet are not taken note of by the High Court and the High Court has just simply ignored the same and has released Respondent No.2 on bail by simply observing that case arises out of a commercial transaction and the dispute is of a civil nature……the High Court has not at all taken into consideration the relevant considerations while grant of bail. Court has not adverted to the relevant considerations and has granted the bail mechanically by observing that the case arises out of a commercial transaction.  in the instant case while dealing with the application of the accused for grant of bail, the High Court has completely lost sight of the basic principles.

Apex Court quashed the judgment and order passed by the High Court .

D.D: - 28 JANUARY, 2022.

Centrum Financial Services Limited  Versus State of NCT of Delhi and Anr.