2015 (1) TMI 1485 - SC - Insolvency and Bankruptcy

Grant of Bail - failure to comply with the condition, upon which the bail was granted - Failure to make deposit of amount - HELD THAT - Admittedly, Respondent No. 2 has not deposited the first instalment, but has twice applied for extension of time in the High Court and has been granted extension till 28th February, 2015. Considering the facts and circumstances of the case including the fact that Respondent No. 2 has been involved in similar cases and apparently owes a large amount of money to various investors, we are of the opinion that the High Court ought not to have granted bail to Respondent No.2. Bail application dismissed.

Summary

Issues involved: Grant of bail, Ponzi schemes, Non-deposit of bail amount, Extension of time

Grant of Bail:
The Supreme Court heard the appeal against the grant of bail to Respondent No. 2 by the High Court of Gujarat. Respondent No. 2 was involved in numerous cases related to cheating individuals through ponzi schemes. The High Court had directed Respondent No. 2 to deposit specific amounts by certain dates as a condition for bail. Despite not depositing the first installment, Respondent No. 2 had sought and obtained extensions from the High Court. The Supreme Court, considering the gravity of the offenses and the outstanding debts to investors, concluded that bail should not have been granted to Respondent No. 2. Consequently, the Supreme Court set aside the High Court's order and dismissed the bail application.

Ponzi Schemes:
The judgment highlighted that Respondent No. 2 was allegedly involved in perpetrating ponzi schemes, which are fraudulent investment schemes that promise high returns to investors but use the capital from new investors to pay existing investors. The involvement of Respondent No. 2 in multiple cases related to such schemes was a significant factor in the Supreme Court's decision to revoke the bail granted by the High Court.

Non-deposit of Bail Amount:
A crucial aspect of the case was the failure of Respondent No. 2 to comply with the High Court's order to deposit the specified bail amounts within the stipulated time frames. Despite not meeting this condition, Respondent No. 2 had requested and received extensions from the High Court, which the Supreme Court viewed as unwarranted given the nature of the offenses and the financial obligations towards investors.

Extension of Time:
The Supreme Court noted that Respondent No. 2 had twice applied for and received extensions of time to deposit the bail amount, with the final extension granted until a specific date. However, considering the history of similar cases and the substantial debts owed to investors, the Supreme Court deemed these extensions as inadequate grounds for allowing further delays in fulfilling the bail conditions. Consequently, the Supreme Court overturned the extensions granted by the High Court and dismissed the bail application.

This detailed analysis of the judgment provides insights into the issues of grant of bail, involvement in ponzi schemes, non-deposit of bail amount, and the extension of time, offering a comprehensive understanding of the Supreme Court's decision in this case.