2025 (4) TMI 1144 - HC - GST

Seeking cancellation and setting aside of the regular bail granted to the Respondent - fraudulent billing racket operating through 16 firms/ companies engaged in the practice of issuing GST invoices without the actual supply of goods or services - HELD THAT - While it is undisputed that no further investigation was conducted after the issuance of the first bail order it was not the case before the CJM that the investigation had been completed which would have warranted the Respondent s release on bail. The Court finds that there was no material change in circumstances as held by the CJM in the impugned order. Therefore in the opinion of the Court the CJM s conclusion regarding a material change in circumstances is unfounded. To this extent the observations made in the impugned order are deemed incorrect and are hereby set aside. The Court proceeds to examine as to whether the Respondent is now required to be re-arrested and committed to custody. On this issue Mr. Harpreet Singh has apprised the Court that the investigation is now complete and the Petitioner department is on the verge of filing a prosecution complaint. As previously mentioned the Petitioner department on 28th February 2025 with permission from the CJM Patiala House Courts recorded the Respondent s statement while he was in judicial custody. Therefore as such there is no requirement to direct the detention of the Respondent. Additionally the Respondent has fully cooperated in the investigation and after being released from custody has informed the authorities that he is available for further statements as and when needed. Conclusion - The CJM s conclusion regarding a material change in circumstances is unfounded and set aside. The Court is of the opinion that significant time has elapsed since the issuance of the impugned order - Petition disposed off.

Summary

The core legal questions considered in the judgment include: (1) Whether the second bail application filed by the Respondent was maintainable in the absence of any material change in circumstances since the dismissal of the first bail application; (2) The applicability of judicial discipline and precedent principles in entertaining successive bail applications; (3) Whether the impugned order granting bail was justified on the facts and law, particularly in light of the investigation status; and (4) Whether the Respondent should be re-arrested or continue on bail following the Court's assessment of the investigation and cooperation by the Respondent.

Regarding the maintainability of the second bail application, the Court examined the legal framework governing bail applications, particularly Section 483(3) of the Bharatiya Nagarik Suraksha Sanhita, 2023 (formerly Section 439(2) Cr.P.C.), and relevant Supreme Court precedents. The Court relied heavily on the principles laid down in Kalyan Chandra Sarkar v. Rajesh Ranjan, which emphasize judicial discipline and caution against entertaining successive bail applications on identical grounds without material change in circumstances. The Court noted that while res judicata does not strictly apply in criminal proceedings, the doctrine of judicial discipline requires courts to give due weight to prior findings and avoid forum shopping or re-agitating previously rejected grounds. The Court highlighted that a subsequent bail application is only maintainable if there is a material change in fact or law, or if the earlier findings have become obsolete.

Applying these principles, the Court scrutinized the facts surrounding the Respondent's bail applications. The first bail application was dismissed on 24th February 2025, with the Magistrate observing that the investigation was at an initial stage and the offence was grave and serious. The second bail application was filed shortly thereafter on 27th February 2025 and granted on 3rd March 2025 by the CJM. The impugned order granting bail was primarily premised on the observation that no substantial investigation had been conducted against the Respondent after 30th January 2025, and that no case diary entries were made after 24th February 2025. The CJM reasoned that the Investigating Officer was merely seeking permission for provisional attachment of suspected firms and concluded that the Respondent's continued judicial custody was unnecessary.

The Court, however, found this reasoning flawed. It pointed out that the same investigative status existed at the time arguments concluded on the first bail application (15th February 2025). Therefore, even if the relevant date for assessing change in circumstances is taken as 15th February 2025 rather than 24th February 2025, there was no material change justifying a different decision. The Court held that the CJM's conclusion regarding a material change in circumstances was unfounded and set aside those observations.

In addressing the competing arguments, the Court balanced the Petitioner's contention that the second bail application was an abuse of process with the Respondent's right to seek bail and the fact that he had cooperated with the investigation. The Petitioner argued that the impugned order was arbitrary and contradicted the earlier order dismissing bail, emphasizing the absence of new grounds. The Respondent's counsel countered that the second bail application was maintainable because the first bail order had not been pronounced at the time of filing, and that the Respondent had no opportunity to challenge the dismissal effectively until the order was passed. The Court rejected this technical distinction, reaffirming that the date of conclusion of arguments is the relevant benchmark for assessing change in circumstances, not the date of order pronouncement.

Regarding the Respondent's custody status post-impugned order, the Court noted that the investigation was complete or near completion, with the Respondent's statement recorded twice, including once while in judicial custody. The Petitioner confirmed readiness to file a prosecution complaint, and the Respondent had shown willingness to cooperate further. Consequently, the Court declined to order re-arrest or curtail the Respondent's liberty, allowing bail to continue on the same terms as the impugned order, subject to conditions such as surrender of passport, not leaving the country without court permission, and cooperation with investigation.

Significant holdings from the judgment include the Court's reiteration of the principle that successive bail applications must demonstrate a material change in circumstances to be entertained, as encapsulated in the following verbatim excerpt from Kalyan Chandra Sarkar:

"The decision given by a superior forum, undoubtedly, is binding on the subordinate fora on the same issue even in bail matters unless of course, there is a material change in the fact situation calling for a different view being taken. Therefore, even though there is room for filing a subsequent bail application in cases where earlier applications have been rejected, the same can be done if there is a change in the fact situation or in law which requires the earlier view being interfered with or where the earlier finding has become obsolete. This is the limited area in which an accused who has been denied bail earlier, can move a subsequent application."

The Court established the core principle that judicial discipline and consistency require courts to respect prior bail rejections unless fresh grounds justify reconsideration. It underscored that entertaining successive bail applications without new grounds leads to speculation, uncertainty, and forum hunting, which undermines the administration of justice.

On the facts, the Court's final determination was that the impugned bail order's reasoning on material change in circumstances was incorrect and set aside those observations. However, the Court did not cancel the bail or order re-arrest, given the progress of the investigation and the Respondent's cooperation. The Respondent's bail was allowed to continue on the same conditions as imposed by the CJM.

In sum, the judgment clarifies the threshold for maintainability of successive bail applications, reinforces the need for courts to exercise judicial discipline, and emphasizes a fact-based approach to assessing material change in circumstances. It also balances the rights of the accused to seek bail with the State's interest in effective investigation and prosecution of serious economic offences involving fraudulent GST credit claims amounting to hundreds of crores of rupees.