1. The Applicant, a Corporate entity, on whose behalf Vinay Kumar Agarwal had lodged First Information Report (FIR) leading to registration of C.R. No.50 of 2022 with Worli Police Station, Mumbai (subsequently transferred to EOW and registered as EOW CR No.8 of 2022) for the offences punishable under Sections 406, 409, 420, 465, 467, 468, 471 read with Section 34 of the Indian Penal Code, 1860, has preferred this application seeking cancellation of bail granted to Respondent No.1 by the learned Additional Chief Metropolitan Magistrate, 47 th Court, Esplanade, Mumbai by an order dated 14th March 2022, primarily on the ground that, the Respondent No.1 has committed breach of the undertaking on the basis of which he was released on bail.

2. The background facts necessary for the determination of this application can be stated in brief as under:-

Capalpha Trade Pvt. Ltd.-first informant’s company deals in the business, inter-alia, of trade finance. Capsave is a sister concern of the Applicant herein. Dentsu Communications India Pvt. Ltd. (Dentsu) made a representation to the first informant to initially provide invoice finance and, later on, the first informant company was induced to provide trade finance to Dentsu. Sahil Arora (A2), Robin Gupta (A3), Haresh Nayak (A4), Sarthak Behel (A5), Shubham Tiwari (A6) representing Dentsu; Ushik Gala (A8)-respondent No.1, Ishita Gala (A9), Sumit Singh (A10) and Dhwani Dattani (A11), who represented Suumaya Industries Ltd., and Suumaya Agro Ltd. and Pruthvi Shah and Jignesh Shah, the partners of Veda Multicorp LLP, allegedly induced the first informant company to provide trade finance in connection with a program purportedly under CSR, “Need To Feed” by making false representation that the first informant company would generate lucrative returns.

3. First informant was induced to Rs.117,73,12,1289/- by tendering mercantile documents like bills, invoices, lorry receipts evidencing the sale and delivery of the goods, when, in fact, there was no procurement and sale of the goods. The amount so fraudulently obtained from the first informant company was siphoned off. Under the terms of the contract, the accused had agreed to pay interest at the rate of 2% per month on the outstanding amount. Thus, a sum of Rs.19,31,93,260/- was due towards interest. Having realized that it was deceived to provide trade finance without any trade on the basis of false and fabricated documents and false representations, first informant lodged the report.

4. The Respondent No.1-(A8), who was the Director of Suumaya came to be arrested on 25th February 2022. He was remanded to police custody till 10th March 2022.

5. The respondent No.1 preferred an application for bail. On 14 th March 2022, a submission was made before the learned Metropolitan Magistrate that the matter between first informant and the accused-respondent No.1 came to be settled and consent terms have been drawn and undertaking has been filed by accused No.8 wherein accused had shown willingness to pay entire due amount to the first informant in installments as mentioned in paragraph 6 of the said undertaking.

6. Recording the said settlement and the statement on behalf of first informant that the informant has no objection to release the accused on bail, the learned Magistrate was persuaded to allow the application finally.

7. It must be noted that the prayer for bail was opposed by the learned APP. However, the learned Magistrate was persuaded to allow the application as the dispute was settled between the parties and the possibility of tampering with evidence and fleeing away from justice appeared to be remote.

8. The first informant preferred an application (Case No.1506/Misc./2022 in EOW C.R. No.08/2022) before the learned Magistrate seeking cancellation of bail granted to accused No.8 on the ground that, the accused No.8 has committed breach of the undertaking. The accused No.8 had deliberately and willfully failed to comply with terms of the undertaking on the basis of which bail was granted to the accused No.8. It was also alleged that the approach of the accused No.8 was evasive and he had not been co-operating with the investigation.

9. After considering the averments in the application and reply filed thereto on behalf of the accused No.8, the learned Magistrate was persuaded to reject the application opining, inter alia, that the accused No.8 was not running away from his undertaking. The accused No.8 had claimed that a sum of Rs.36 crores was paid to the first informant and EOW had freezed the shares of WORL worth Rs.80 crores. The learned Magistrate was of the view that the amount so secured was in the range of the amount which the first informant claimed from the accused No.8. In any event, there was an agreement to pay interest at the rate of 18% p.a. on the principal amount. Thus, it was not just and proper to cancel the bail.

10. Being aggrieved the first informant has preferred this application.

11. I have heard Mr.Mustafa Doctor, the learned Senior Counsel for the first informant, Mr.Ashok Mundargi, the learned Senior Counsel for Respondent No.1-Accused No.8 and Mr.Pethe, the learned APP for Respondent No.2 and 3-State. With the assistance of the learned Counsel for the parties, I have perused the material on record including the affidavit in reply, rejoinder and sur-rejoinder thereto.

12. Mr.Doctor, the learned Senior Counsel for the applicant, strenuously submitted that, the learned Magistrate approached the application for cancellation of bail from an incorrect perspective. The brazen stand of accused No.8 that the bail order was not passed on the strength of the undertaking was not properly appreciated by the learned Magistrate. Nor the learned Magistrate properly appreciated the material on record which indicates that a fraud was played on the court in as much as undertakings were given to comply the terms which the accused No.8 could never have performed. Few of the properties which were agreed to be furnished by way of security did not belong to the accused No.8.

13. The subsequent conduct of the accused No.8 was also not accounted for. Instead, the learned Magistrate went on to a record wholly unsustainable finding that the conduct of the accused No.8 subsequent to his release on bail did not indicate that he was resiling from his undertakings. Taking the Court through the terms of the undertaking, Mr.Doctor made a strenuous effort to draw home the point that there is a willful non-compliance of most of the undertakings. In such a situation, according to Mr.Doctor, the bail deserves to be cancelled.

14. To bolster up this submission, Mr. Doctor placed reliance on the decision of the Supreme Court in the case of Satish P. Bhatt Vs. State of Maharashtra and Anr. 2024 SCC OnLine SC 16, an order of Gujarat High Court in the case of Sunil Ganpat Kunjir Vs. State of Gujarat and anr. in Criminal Misc. Application No.9184 of 2017 dated 17th November 2017; orders passed by this Court in the case of Anil Mahavir Gupta Vs. State of Maharashtra and Ors. in Interim Application No.01 of 2019 in Bail Application No.1648 of 2019 on 28th January 2020 and in the case of Mahesh Thakkar @ Mahes Manubhai Gadhai Vs. State of Maharashtra and Anr. in Criminal Application No.106 of 2011, decided on 10 th August 2011 and an order passed by the Punjab and Haryana High Court in the case of Radhey Sham Singhal and Anr. Vs. State of Haryana and Anr. in CRM-M-46210 of 2022 decided on 8th December 2022.

15. Mr.Pethe, the learned Additional Public Prosecutor supplemented the submissions of Mr. Doctor. It was submitted that in addition to non-compliance of the terms of the undertaking, the accused No.8 had attempted to tamper with the evidence, threatened the witnesses by lodging report against them and also steadfastly refused to co-operate with the investigation. It was submitted that the accused has also made himself scarce as he could not be found on the address furnished by him. Therefore, the Investigating Agency has already moved an application for cancellation of bail before the learned Magistrate, on 23rd December 2023.

16. As against this, Mr.Mundargi, the learned Senior Advocate for Respondent No.1, submitted that no case for cancellation of bail has been made out. It was urged that the first informant company made an endevour to recover the amount pertaining to a transaction, which is purely of civil nature, by using the criminal prosecution as a lever. Taking undue advantage of the vulnerable position in which the accused No.8 found himself, an endevour was made to effect recovery.

17. Mr. Mundargi further submitted that the order passed by the learned Magistrate releasing the accused No.8 on bail is abundantly clear. Neither the Court directed the accused No.8 to pay any amount to the first informant nor the bail order was made subject to the compliance of the terms of the undertaking. In the circumstances, application for cancellation of bail does not merit countenance.

18. Even otherwise, according to Mr.Mundargi, applicant has complied with a substantial part of the undertaking. The first informant has been putting hindrances in the compliance of those terms by adopting an unreasonable stand. Attention of the Court was invited to the contentions in paragraph Nos.32 to 35 of the affidavit in reply which, according to Mr.Mundargi, demonstrate the compliance of material terms of the undertaking. An endevour was made to demonstrate as to how the accused No.8 had made an effort to comply with the terms of undertaking and the alleged obstacles placed by the first informant therein.

19. Mr.Mundargi further submitted that it is well recognized that deposit of the amount or making good the loss suffered by alleged victim cannot be a condition of bail nor the bail can be cancelled on the ground of failure of the accused to comply with such condition.

20. To buttress this submission, Mr.Mundargi placed reliance on the decision of the Supreme Court in the case of Biman Chatterjee Vs. Sachita Chatterjee and Anr. (2004) 3 SCC 388, the recent pronouncement of the Supreme Court in the case of Ramesh Kumar Vs. The State of NCT of Delhi arising out of SLP (Crl.) No.2358 of 2023 and the judgment of this Court in the case of Shri Ashok Meghji Chheda Vs. State of Maharashtra and Ors. passed in Criminal Writ Petition No.4850 of 2015 decided on 21st July 2016.

21. To begin with, it is necessary to note that, there is a world of difference between cancellation of bail once granted and initial rejection of bail. Cancellation of bail stands on a higher pedestal. Bail granted to secure liberty of a person cannot be lightly interfered with, unless there are substantial and compelling grounds. The position in law is well settled.

22. A useful reference can be made to the decision of the Supreme Court in the case of Dolat Ram and Ors. Vs. State of Haryana (1995) 1 SCC 349, wherein the legal position was instructively stated in para No.4 which reads as under:

“4. Rejection of bail in a non-bailable case at the initial stage and the cancellation of bail so granted, have to be considered and dealt with on different basis. Very cogent and overwhelming circumstances are necessary for an order directing the cancellation of the bail, already granted. Generally speaking, the grounds cancellation of bail, broadly (illustrative and not exhaustive) are: interference or attempt to interfere with the due course of administration of justice or evasion or attempt to evade the due course of justice or abuse of the concession granted to the accused in any manner. The satisfaction of the court, on the basis of material placed on the record of the possibility of the accused absconding is yet another reason justifying the cancellation of bail. However, bail once granted should not be cancelled in a mechanical manner without considering whether any supervening circumstances have rendered it no longer conducive to a fair trial to allow the accused to retain his freedom by enjoying the concession of bail during the trial. These principles, it appears, were lost sight of by the High Court when it decided to cancel the bail, already granted. The High Court it appears to us overlooked the distinction of the factors relevant for rejecting bail in a non-bailable case in the first instance and the cancellation of bail already granted.”

23. In the case at hand, since the cancellation of bail is sought primarily on the ground that the accused No.8 had committed breach of the undertaking on the strength of which, the bail was granted by the learned Magistrate, it may be necessary to note the order passed by the learned Magistrate releasing the accused No.8 on bail. From the perusal of the said order, it appears that, the fact that there was a settlement between the parties and undertaking was given by the accused No.8, who was then in judicial custody, weighed with the Court in granting the bail. It is true the learned Magistrate while dealing with opposition for grant of bail mounted by learned APP recorded that the possibility of tampering with evidence and fleeing away from justice was remote. However, those observations cannot be read torn out of context to hold that the bail was granted on merits uninfluenced by the factum of settlement between the parties and undertaking furnished by the accused No.8. It is also necessary to note that the learned Magistrate had noted that, the accused No.8 was then admitted in St.George's Hospital as he had tested positive for covid-19. That fact also weighed with the learned Magistrate.

24. Prima facie, I am inclined to hold that the factum of undertaking furnished by the accused No.8 weighed with the learned Magistrate and it would be audacious to urge that the bail was granted after adverting to the merits of accused No.8’s case for bail. At the same time, it must be noted that, the learned Magistrate neither imposed conditions to make payment and/or furnish security or proceeded to grant the bail subject to the undertakings. The first informant approached the learned Magistrate for cancellation of bail alleging that, the undertakings were not complied with.

25. Before this Court also, the counsel for the respective parties made an endevour to substantiate the claim of non-compliance/compliance of the undertakings. I do not deem it necessary to delve into this aspect of the matter. The parties were at issue over the quantum of the amount paid/secured; the value of the security furnished/offered and the value of the shares which are freezed. All these questions are rooted in facts and cannot be legitimately delved into in an application for cancellation of bail.

26. Mr.Doctor submitted that only a sum of Rs.16 crores has been paid as against the admitted liability of Rs.137 crores. In contrast, it was urged on behalf of accused No.8 that a sum of Rs.36 crores has been paid/secured.

27. First and foremost, grant of bail subject to the condition of deposit or payment, or on the basis of undertaking to pay the amount, is not commendable. Invariably non-compliance of such a condition, leads to filing an application for cancellation of bail. In that event, the Court is faced with a predicament. It is, therefore, advisable not to impose such conditions or grant bail on the strength of undertaking.

28. In a recent pronouncement in the case of Ramesh Kumar Vs. The State of NCT of Delhi (supra), after adverting to the decisions in the cases of Munish Bhasin Vs. State (NCT of Delhi) [(2009) 4 SCC 45], Sumit Mehta Vs. State (NCT of Delhi) [(2013) 15 SCC 570], Mahesh Candra Vs. State of UP. [(2006) 6 SCC 196], Dilip Singh Vs. State of Madhya Pradesh [(2021) 2 SCC 779) and Bimla Tiwari Vs. State of Bihar [(2023) SCC OnLine SC 51), the Supreme Court enunciated the law as under:-

“26. Law regarding exercise of discretion while granting a prayer for bail under Section 438 of the Cr.P.C. having been authoritatively laid down by this Court, we cannot but disapprove the imposition of a condition of the nature under challenge. Assuming that there is substance in the allegation of the complainants that the appellant (either in connivance with the builder or even in the absence of any such connivance) has cheated the complainants, the investigation is yet to result in a charge-sheet being filed under section 173(2) of the Cr.P.C., not to speak of the alleged offence being proved before the competent trial court in accordance with the settled procedures and the applicable laws. Sub-section (2) of section 438 of the Cr.P.C. does empower the high court or the court of sessions to impose such conditions while making a direction under sub-section (1) as it may think fit in the light of the facts of the particular case and such direction may include the conditions as in clauses (i) to (iv) thereof. However, a reading of the precedents laid down by this Court referred to above makes the position of law clear that the conditions to be imposed must not be onerous or unreasonable or excessive. In the context of grant of bail, all such conditions that would facilitate the appearance of the accused before the investigating officer/court, unhindered completion of investigation/trial and safety of the community assume relevance. However, inclusion of a condition for payment of money by the applicant for bail tends to create an impression that bail could be secured by depositing money alleged to have been cheated. That is really not the purpose and intent of the provisions for grant of bail. We may, however, not be understood to have laid down the law that in no case should willingness to make payment/deposit by the accused be considered before grant of an order for bail. In exceptional cases such as where an allegation of misappropriation of public money by the accused is levelled and the accused while seeking indulgence of the court to have his liberty secured/restored volunteers to account for the whole or any part of the public money allegedly misappropriated by him, it would be open to the concerned court to consider whether in the large public interest the money misappropriated should be allowed to be deposited before the application for anticipatory bail/bail is taken up for final consideration. After all, no court should be averse to putting public money back in the system if the situation is conducive therefor. We are minded to think that this approach would be in the larger interest of the community. However, such an approach would not be warranted in cases of private disputes where private parties complain of their money being involved in the offence of cheating.”

29. The question of cancellation of bail in the event of breach of such a condition arose before the Supreme Court in the case of Biman Chatterjee Vs. Sanchita Chatterjee and Anr. (supra), wherein the Supreme Court has ruled, the High Court was not justified in cancelling the bail on the ground that the appellant had violated the terms of the compromise. It was observed that non-fulfilment of the terms of the compromise cannot be the basis of granting or cancelling a bail. Paragraph 7 reads as under:

“7. Having heard the learned counsel for the parties, we are of the opinion that the High Court was not justified in cancelling the bail on the ground that the appellant had violated the terms of the compromise. Though in the original order granting bail there is a reference to an agreement of the parties to have a talk of compromise through the media of well wishers, there is no submission made to the court that there will be a compromise or that the appellant would take back his wife. Be that as it may, in our opinion, the courts below could not have cancelled the bail solely on the ground that the appellant had failed to keep up his promise made to the court. Here we hasten to observe first of all from the material on record, we do not find that there was any compromise arrived at between the parties at all, hence, question of fulfilling the terms of such compromise does not arise. That apart non-fulfilment of the terms of the compromise cannot be the basis of granting or cancelling a bail. The grant of bail under the Criminal Procedure Code is governed by the provision of Chapter XXXIII of the Code and the provision therein does not contemplate either granting of a bail on the basis of an assurance of a compromise or cancellation of a bail for violation of the terms of such compromise. What the court has to bear in mind while granting bail is what is provided for in Section 437 of the said Code. In our opinion, having granted the bail under the said provision of law, it is not open to the trial court or the High Court to cancel the same on a ground alien to the grounds mentioned for cancellation of bail in the said provision of law.”

30. As against this, the decisions on which reliance was placed by Mr.Doctor, take a view that a party, who has obtained favourable orders of the Court by voluntarily making a statement must be hold to the terms of undertaking/settlement and should be made to face the consequence of failure to abide by the undertaking/directions. In the case of Mahesh Thakkar @ Mahes Manubhai Gadhai Vs. The State of Maharashtra and Anr. (supra), a learned Single Judge of this Court observed as under:

“17. The question that is required to be determined in this case is, whether a party, who obtains favourable orders from the Court by voluntarily making a statement: and on the strength of that statement, can be, later on, heard to say that he should not be made to face the consequence of the failure to abide by the directions, declared in the order itself. It is quite possible that in cases of the offences relating to property, that an accused is offering to repay the loss allegedly caused to the aggrieved person, would weigh very heavily with the Court for grant of bail. If an accused offers to the Court that he would repay such amount and thereby prevents examination of the bail application on merits and secures bail only on this ground, he cannot, later on, say that such a condition, namely- ‘to repay the amount within the stipulated time’ should no have claimed that the condition to repay the amount ought not to have been imposed by the Court or that in any event, on his failure to comply with the conditions, the bail could not be cancelled.”t have been imposed at all by the Court.

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19. In my opinion, since the applicant secured bail by making a statement that he would be paying the amount to the aggrieved persons, the conditions imposed by the court for his release on bail were proper. In fact, they were based on the submissions made by the applicant himself. The order granting bail itself stipulates that the bail would automatically stand cancelled on the failure to abide by the conditions. This order was not only not challenged by the applicant, but he further confirmed the correctness of the order by repeating his assurance by filing an application for extension of time to repay the amount. In fact, the Court, even though had stipulated that the bail order would stand cancelled automatically, still, allowed the applicant to show cause against the proposed cancellation of bail. At that time also, the applicant does not appear to have claimed that the condition to repay the amount ought not to have been imposed by the Court or that in any event, on his failure to comply with the conditions, the bail could not be cancelled.”

31. I am afraid the aforesaid pronouncement is of assistance to the applicant. As noted above, the learned Magistrate had not put the condition of payment, much less, provided in the order that in the event of default the bail would be liable to be cancelled. Undoubtedly, the learned Magistrate had taken into account the undertaking furnished by the accused No.8. However, the consequences that entail the breach of undertaking given to the Court, were not spelled out in the order.

32. Even otherwise, in view of well recognized position that bail cannot be granted subject to condition of deposit/payment of the amount, it is debatable whether bail could have been cancelled on account of non-compliance, even if such condition was imposed by the learned Magistrate.

33. The situation which thus emerges is that the order of bail cannot be cancelled solely on the premise that there is a breach of the undertaking. In the case at hand, full compliance of the undertaking is in the arena of contest as, at any rate, a sum of Rs.16 crores has been paid. As noted above, whether the securities have been furnished/offered and what is the value of those securities are the matters rooted in facts. Undisputedly, the first informant had given consent for releasing accused No.8 on bail and, on that day, the receipt of a sum of Rs. 5 crores was acknowledged.

34. The act on the part of the first informant to give consent for grant of bail was in the nature of a risk which the first informant took as a part of the litigation strategy. The Court can also not loose sight of the fact that subsequently, post investigation, charge-sheet has been lodged. A substantial period has elapsed since the release of the accused No.8 on bail. All the offences are triable by learned Magistrate. Prima facie, the possibility of fleeing away from justice appears to be remote.

35. Since the Investigating Agency has allegedly moved for cancellation of bail adverting to the merits of the matter and subsequent conduct of the accused No.8, any observations by this Court, on those aspects, may have bearing on the said application. Moreover, since this application for cancellation was moved primarily on the ground of breach of undertakings, I deem it appropriate not to deal with the submissions on behalf of the prosecution with regard to the merits of the matter and conduct of accused No.8.

36. The upshot of aforesaid consideration is that the application for cancellation of bail does not meet the higher standard which is required to be satisfied for cancellation of bail. Hence, the following order:-

ORDER

(i) Criminal Application No. 103 of 2023 stands rejected.

(ii) It is clarified that, the observations are confined to the prayer for cancellation of bail on the ground of breach of undertaking and this Court may not be understood to have expressed any opinion on the merits of the matter.