BAIL OR JAIL: A FUNDAMENTAL QUESTION OF LAW IN ECONOMIC OFFENCES


“Deprivation of liberty must be considered a punishment, unless it is required to ensure that an Accused person will stand his trial when called upon. Bail is the rule and committal to jail an exception. Refusal of bail is a restriction on the personal liberty of the individual guaranteed under Article 21 of the Constitution of India.”


In view of the above obiter dicta in the case of Sanjay Chandra vs. CBI, (2012) 1 SCC 40, the Hon’ble Supreme Court of India in catena of judgments has categorically observed that bail involves the question of personal liberty of an accused which is of paramount importance and therefore the Court of law should deal with the bail matters with utmost sensitivity.


Hon’ble Supreme Court of India in many cases has emphasized on the TRIPOD TEST which the court should consider while deciding a bail application:

i) Flight Risk

ii) Tampering of Evidence

iii) Influencing the Witnesses


Further, in the entire Chapter XXXIII of Code of Criminal Procedure 1973, the bail provisions for each and every offence are same irrespective of nature of offence, punishment for offence etc.


In view of the above settled bail jurisprudence, a question comes into existence whether the bail application of an accused can be dismissed merely on the premise of commission of an economic offence by him.


The term economic offences define those crimes which are of an economic nature. These offences are committed while in the course of some kind of economic or business activity. However, a precise and unambiguous definition of this term is still lacking in India. This is the reason why it is difficult to indicate the kinds of crimes which are covered within the broad term of economic offences in India.


Activities like company frauds, smuggling of Narcotic substances, counterfeiting of currency and valuable securities, Financial Scams, Frauds, Money Laundering and Hawala transactions come under the term Economic offences in the Indian context.


Hon’ble Supreme Court of India in the case of Y.S. Jagan Mohan Reddy Vs. CBI, (2013) 7 SCC 439 has categorically observed that:


“Economic offences constitute a class apart and need to be visited with a different approach in the matter of bail. The economic offence having deep rooted conspiracies and involving huge loss of public funds needs to be viewed seriously and considered as grave offences affecting the economy of the country as a whole and thereby posing serious threat to the financial health of the country.”


After recording the aforesaid observations in its order, the Apex Court refused to release the applicant on bail.


The aforesaid observation by the Apex Court of the country regarding gravity of Economic Offences, proved to be extremely detrimental for economic offenders. Many High Courts and District Courts across India, started rejecting the bail applications of the economic offenders in view of the aforesaid obiter dicta in the Y. S. Jagan Mohan Reddy Case (supra).


There are even instances of dismissal of bail applications in economic offences where the investigating agency has filed the Charge Sheet before the competent jurisdictional court and the entire evidence is in the custody of the Court. In the case of Nittin Johari vs. Serious Fraud Investigation Office, Bail Appln. No. 1971/2019, Hon’ble High Court of Delhi dismissed the bail application considering the aforesaid observation by the Apex Court in Y. S. Jagan Mohan Redy Case (supra).


This unreasonable difference in treating the bail applications in relation to economic offences has not seen the light of the day even during this unprecedented times of COVID-19 pandemic. Addressing the impending threat that COVID-19 poses; the Supreme Court directed all states and union territories to constitute High-Powered Committees to consider releasing under-trial prisoners (UTP) on interim bail. Showing much needed alacrity, states constituted their respective Committees and have initiated the process of ‘decongestion’. However the resolutions passed by some of the High-Powered Committees are completely perfunctory and arbitrary.


On May 4, 2021, the High-Powered Committee of the Delhi High Court issued guidelines for the purpose of releasing UTPs on interim bail in order to decongest the prisons. However, it has left out the UTPs incarcerated for economic offences under special legislations like Prevention of Money Laundering Act, 2002 (PMLA), the Prevention of Corruption Act, 1988 (PC Act) or the Companies Act, 2013 etc. and UTPs facing investigation by CBI/ED/SFIO etc.


How does one differentiate between the severity of an economic crime u/s 420 of the Indian Penal Code (IPC) and an offence under the PC Act or an offence under the PMLA, when the maximum punishment for the said violations is the same?


Now, as per the resolution of the High-Powered Committee, the accused will be entitled to secure interim bail in the predicate offence registered by the police (FIR), but he will not get the same concession in the ECIR registered by the ED. Even though the substratum of the offence in both the FIR and ECIR is the same, he will be entitled to interim bail in the former but not the latter.


Such a classification is prima facie violative of Article 14 and 21 of the Constitution. There is a need to promulgate guidelines on the basis of reasonable classification based upon intelligible differentia.


A seven-judge Bench of the Supreme Court in State of West Bengal vs. Anwar Ali Sarkar, while dealing with the Constitutional validity of the West Bengal Special Courts, Act 1950 (which laid down a special procedure for providing speedy trial for only a select class of offences which would be decided as per the discretion of the State Government), held that:


“Equality of right is a principle of republicanism and article 14 enunciates this equality principle in the administration of justice. In its application to legal proceedings the article assures to everyone the same rules of evidence and modes of procedure. In other words, the same rule must exist for all in similar circumstances” (M.C Mahajan J.)”


The pre-trial incarceration of economic offenders is in complete contravention to one of the golden principles of the Criminal Jurisprudence in India that an accused is presumed to be innocent until proven guilty.


This fundamental question of law, whether the accused persons of the economic offences should be released on bail or committed to jail, requires a detailed deliberation and interpretation by the Apex Court which should be in consonance with the basic structure of Constitution of India and Code of Criminal Procedure and which should also protect the Fundamental Right of an accused person.


A ray of hope has come in the form of a recent judgment in the case of P Chidambaram vs. Directorate of Enforcement, (2020) 13 SCC 791 wherein the three judge bench of Hon’ble Supreme Court of India has categorically held that:


“even if the allegation is one of grave economic offence, it is not a rule that bail should be denied in every case since as there is no such bar created in the relevant enactment passed by the legislature nor does the bail jurisprudence contemplate such a position.”


Judiciary is one of the most important organ of the democracy. In India, the courts are regarded as temples of justice. Therefore it is very important that such pure river of justice should flow from these temples which is entirely free from any arbitrariness and unintelligible differentia.

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