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2022 (1) TMI 1172 - SC - Indian LawsValidity of bail granted - siphoning of funds - shell companies - by the impugned judgment and order, the High Court has directed to release Respondent No.2 on bail merely on the ground that the case arises out of a commercial transaction and is based on documents already seized - proper investigations not carried out by High Court - HELD 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 the course of investigation and the serious allegations of siphoning off the huge amount through various shell companies. The High Court has not at all dealt with and/or considered any of the allegations and/or material collected during the course of the investigation which were specifically pointed out and mentioned in the status report filed by the I.O. From the status report and even the charge sheet/supplementary charge sheet papers it has been found during the course of the investigation that a sum of ₹ 25 crores was disbursed by the complainant to Respondent No.2 and its company M/s LMJ Logistics Limited. The said amount was disbursed for its own use. All these allegations and the material collected during the course of the investigation which are being part of the charge sheet 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. Therefore, the High Court has not at all taken into consideration the relevant considerations while grant of bail. Even the High Court has not at all taken note of the reasoning given by the learned Sessions Court while rejecting the bail application of Respondent No.2. Whether the High Court is at all justified in releasing Respondent No.2 on bail? - HELD THAT - In the instant case, while dealing with the application of the accused for grant of bail, the High Court completely lost sight of the basic principles enumerated above. The accused, in the present case, is alleged to have committed a heinous crime of killing an old helpless lady by strangulation. He was seen coming out of the victim's house by a neighbour around the time of the alleged occurrence, giving rise to a reasonable belief that he had committed the murder - under the given circumstances, it was not the stage at which bail under Section 439 of the Code should have been granted to the accused, more so, when even charges have not yet been framed - The High Court has also not taken into consideration the status report filed by the I.O. in which in detail it has been pointed out how systematically the accused have committed the offence and misappropriated/siphoned off the huge sum through shell companies. Thus, it appears that the High 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. While releasing Respondent no.2 on bail, the High Court has not at all considered the relevant factors including the nature and gravity of accusation; the modus operandi and the manner in which the offences have been committed through shell companies and creating the false/forged documents and/or misusing the PAN Cards, Aadhar Cards and KYCs of the employees and showing them as Directors of the fake and shell companies - the High Court has not at all considered and taken into consideration the status report and the evidence collected during the course of the investigation. Therefore, the impugned judgment and order passed by the High Court releasing Respondent No.2 on bail is unsustainable as the High Court while releasing Respondent No.2 on bail has not exercised the jurisdiction judiciously and has not considered the relevant factors which are required to be considered while grant of bail. The impugned judgment and order passed by the High Court releasing Respondent No.2 on bail deserves to be quashed and set aside and is accordingly quashed and set aside - Appeal allowed.
Issues Involved:
1. Legality of the High Court's decision to grant bail to Respondent No.2. 2. Nature and gravity of the accusations against Respondent No.2. 3. Consideration of relevant factors and evidence by the High Court while granting bail. 4. Impact of the settlement agreement between the appellant and Respondent No.2 on the bail decision. Detailed Analysis: 1. Legality of the High Court's Decision to Grant Bail to Respondent No.2: The Supreme Court scrutinized the High Court's decision to grant bail to Respondent No.2, emphasizing that the High Court had not considered the nature of the accusations and the material collected during the investigation. The High Court's reasoning was primarily based on the assertion that the case arose from a commercial transaction and involved documents already seized. The Supreme Court found this approach to be inadequate, noting that the High Court failed to consider the serious allegations of siphoning off ?25 crores through shell companies and the detailed status report submitted by the Investigating Officer (I.O.). 2. Nature and Gravity of the Accusations Against Respondent No.2: The accusations against Respondent No.2 involved serious offenses under Sections 409, 420, 467, 468, 471, and 120B IPC. The appellant, a non-banking financial company (NBFC), alleged that Respondent No.2, as the Managing Director of M/s Aranath Logistics Limited, misused a loan of ?25 crores by transferring the funds to several fake/shell companies instead of using them for the intended business purposes. The investigation revealed that the funds were siphoned off to other companies connected to the accused, and the KYC documents of employees were misused to create shell entities. The Supreme Court highlighted that the High Court had not considered these serious allegations and the evidence collected during the investigation. 3. Consideration of Relevant Factors and Evidence by the High Court While Granting Bail: The Supreme Court noted that the High Court had not taken into account the relevant considerations while granting bail, such as the nature and gravity of the accusations, the modus operandi of the accused, and the material collected during the investigation. The High Court's decision was deemed to be mechanical and lacking in judicial discretion. The Supreme Court emphasized that the High Court should have considered the detailed status report and the evidence indicating systematic fraud and misappropriation of funds through shell companies. 4. Impact of the Settlement Agreement Between the Appellant and Respondent No.2 on the Bail Decision: The Supreme Court addressed the appellant's application to withdraw the Special Leave Petition due to a settlement agreement with Respondent No.2. The Court disallowed the withdrawal, citing the serious allegations against Respondent No.2. The Supreme Court maintained that the settlement did not negate the need to address the legality of the bail decision, given the gravity of the accusations and the evidence collected. Conclusion: The Supreme Court quashed the High Court's order granting bail to Respondent No.2, directing Respondent No.2 to surrender before the concerned court/jail authority forthwith. The Supreme Court allowed Respondent No.2 to file a fresh bail application after three months, which the High Court should consider based on the relevant material and factors. The Supreme Court's decision emphasized the need for judicial discretion and consideration of all relevant factors in bail decisions, particularly in cases involving serious allegations and substantial evidence.
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