Pre-condition of furnishing bank guarantee in case of bail not sustainable

[CA Bimal Jain]

The Hon’ble Supreme Court in Makhijani Pushpak Harish v. The State of Gujarat [2023 (4) TMI 1064 - SC ORDER] set aside the order passed by the Superintendent which was modified by the Gujarat High Court directing the assessee to furnish bank guarantee for bail.

Facts:

Makhijani Pushpak Harish (“the Petitioner”) was arrested on the basis of complaint filed by the Superintendent (Prevention) of Central GST and Central Excise, Vadodara, for the offences punishable under section 69 and section 132(1)(a) of the Central Goods and Services Tax Act, 2017 (“the CGST Act”), the Petitioner filed an application for bail under Section 437 of the Code of Criminal Procedure, 1973 (“the CRPC”) for seeking bail before the Court of Chief Judicial Magistrate (“the Magistrate”), Vadodara.

The bail was granted by the Magistrate subject to the condition that the Petitioner has to submit bank guarantee of INR 3 crores along with certain other conditions.

Aggrieved by the condition to furnish bank guarantee the Petitioner filed a Criminal Miscellaneous Application before the Hon’ble Gujrat High Court which was disposed vide the order dated January 12, 2023 (“the Impugned Order”), whereby the Hon’ble Gujrat High Court modified the condition of furnishing bank guarantee of an amount of INR 3 Crores by reducing it to INR 1.5 Crores.

Aggrieved by the imposition of condition for deposit of bank guarantee, as a pre-deposit for a bail, the Petitioner filed Special Leave Petition (“SLP”) before the Hon’ble Supreme Court.

Issue:

Whether furnishing bank guarantee is required for seeking bail?

Held:

The Hon’ble Supreme Court in SLP (CRL.) NO. 2868 of 2023 held as under:

• Observed that, the condition of furnishing bank guarantee has been held bad in in multiple cases by the Hon’ble Supreme court.
• Referred the case of Subhash Chouhan v. Union of India 2023 (1) TMI 1168 - SC ORDER, wherein the Hon’ble Supreme Court has set aside the order passed by the High Court imposing the condition of pre-deposit while granting bail to the assessee.
• Further, it was also pointed out by the Supreme court that Additional Solicitor General in the Subhash Chouhan (supra) had fairly stated that the condition of pre-deposit cannot be imposed while granting bail.
• Noted that, the view taken in the Subhash Chouhan (supra) has been reaffirmed by Hon’ble Supreme Court in another case, Anatbhai Ashokbhai Shah v. State of Gujarat & Ors. - 2023 (3) TMI 684 - SC ORDER
• Noted that, the present case is identical to the facts of the aforesaid two Criminal appeals thus, there is no reason to deviate from the view taken in the aforesaid cases.
• Opined that, that pre-condition of furnishing bank guarantee imposed by the High Court is liable to be set aside however added that, the rest of the condition imposed for grant of bail by the Magistrate which were upheld by the Gujarat High Court are sustained.
• Directed the Revenue Department to release Petitioner on bail without any bank guarantee.

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