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KEY FACTORS THE COURTS CONSIDER IN ALLOWING OR REJECTING THE BAIL IN FRAUD or EMBEZZLEMENT CASES
In instances of fraud or embezzlement, bail can be granted if the court determines that the accused's fundamental rights are being infringed upon. Constitutional courts possess the authority to grant bail even in cases with strict bail provisions, such as those under the Prevention of Money Laundering Act (PMLA).
Bail was granted in a case involving alleged fraud, account manipulation, and breaches of the Companies Act and Indian Penal Code. Despite the stringent bail provisions under PMLA, Constitutional Courts have the power to grant bail on the grounds of fundamental rights violations.
Bail is rule and jail is exception applicable in money laundering cases, SC observes while granting bail to Hemant Soren's aide in an illegal mining related case registered by the Enforcement Directorate.
(Source: Economic times, link below for details)
https://economictimes.indiatimes.com/news/india/bail-is-rule-and-jail-is-exception-is-applicable-even-in-money-laundering-cases-sc/articleshow/112857009.cms?utm_source=contentofinterest&utm_medium=text&utm_campaign=cppst
The Hon’ble Courts in India normally evaluates several critical factors when deciding to reject bail in cases of economic fraud. These considerations ensure a balance between protecting individual rights and safeguarding public interest. Here are the key factors:
Key Factors in Bail Decisions
Nature and Severity of the Charges: The Court assesses the seriousness of the allegations, particularly in cases involving significant financial misconduct that affects a large number of people. For example, in a recent ruling, the Supreme Court emphasized the need for strict bail conditions in cases involving substantial financial irregularities, highlighting that such offenses require careful scrutiny due to their impact on victims.
illustration (Nature and Severity of the Charges):
In a case involving a cooperative society scam where ₹79.54 crores were misappropriated, the Hon’ble Supreme Court emphasized that the gravity of such financial crimes necessitates strict scrutiny before granting bail. The Court noted that the large scale of fraud impacts numerous victims, warranting a cautious approach to bail decisions
Role of the Accused (Nature and Severity of the Charges): The specific involvement of the accused in the alleged fraud is critically examined. The Court looks into how actively the individual participated in committing the offense and whether their actions were premeditated or systematic.
illustration (Nature and Severity of the Charges):
If an individual is found to be a close associate of the main perpetrator in a financial scam, their role becomes critical. For instance, in a case where an accused was closely linked to the president of a cooperative society, their involvement in facilitating the embezzlement led to bail being denied due to their significant complicity in the crime.
Risk of Evidence Tampering: There is a strong concern that releasing an accused individual could lead to tampering with evidence or influencing witnesses. This was a significant factor in a case where the Supreme Court canceled bail after three years, stating that the accused's release could jeopardize ongoing investigations and lead to dissipation of assets related to the fraud.
illustration (Risk of Evidence Tampering):
In situations where an accused has access to key evidence or witnesses, such as financial documents or testimony from employees, the Court may deny bail. For example, if an accused is suspected of attempting to influence witnesses or destroy evidence related to a fraud investigation, this risk can lead to bail rejection
Flight Risk: The potential for the accused to flee and avoid prosecution is a crucial consideration. If there are reasonable grounds to believe that an individual might abscond, bail is likely to be denied.
illustration (Flight Risk):
An individual with substantial resources and connections might pose a flight risk if released on bail. If there are indications that an accused has made plans to leave the country or has previously evaded legal proceedings, this factor significantly influences the Court's decision against granting bail.
Previous Criminal History: The past conduct of the accused, particularly any history of similar offenses, influences bail decisions. A pattern of fraudulent behavior can weigh heavily against granting bail.
Illustration (Previous Criminal History): An accused with a history of financial crimes may find it challenging to secure bail. For example, if an individual has been previously convicted for similar offenses, this pattern can lead the Court to conclude that they are likely to reoffend if released.
https://api.sci.gov.in/supremecourt/2023/20478/20478_2023_15_1501_51515_Judgement_18-Mar-2024.pdf
Severity of Possible Punishment: The potential penalties that could be imposed upon conviction are considered, as more severe punishments may justify denying bail due to increased flight risk and public safety concerns.
Illustration: (Severity of Possible Punishment):
If the potential punishment for the offense is severe, such as imprisonment for several years for large-scale fraud, this can justify denying bail. The Court may reason that the greater the punishment, the higher the incentive for the accused to flee.
https://main.sci.nic.in/supremecourt/2022/4542/4542_2022_6_1501_55092_Judgement_28-Aug-2024.pdf
Likelihood of Reoffending: If there is a reasonable apprehension that the accused may engage in further fraudulent activities if released, this factor will contribute to denying bail.
illustration (Likelihood of Reoffending):
If there is credible evidence suggesting that an accused might commit further offenses upon release, such as continuing fraudulent activities or attempting to defraud additional victims, this concern will weigh heavily against granting bail.
8. Impact on Victims: The interests of victims are paramount. The Court often considers how releasing an accused individual might further harm those who have been defrauded, as seen in cases where large-scale scams have left numerous victims.
https://www.livelaw.in/high-court/gujarat-high-court/gujarat-high-court-anticipatory-bail-businessman-bhupendrasinh-zala-6000-crore-financial-fraud-279538
illustration (Impact on Victims):
The Court considers how releasing an accused might affect those who have been defrauded. For example, if victims are still seeking restitution and releasing the accused could hinder these efforts or lead to further victimization, this factor will strongly influence bail decisions
Overall Judicial Discretion: Finally, the Supreme Court emphasizes that judicial discretion must align with established legal principles governing bail, ensuring that decisions reflect fairness and justice while considering all relevant circumstances.
https://api.sci.gov.in/supremecourt/2023/29998/29998_2023_17_1501_48447_Judgement_20-Nov-2023.pdf
illustration (Overall Judicial Discretion):
The Supreme Court maintains that each case must be evaluated on its own merits while adhering to established legal principles. If a judge feels that granting bail would undermine public confidence in the justice system or allow for further injustices, they may reject bail regardless of other factors.
These factors collectively guide the Supreme Court's approach to bail in economic fraud cases, reflecting its commitment to uphold justice while protecting societal interests. The illustrations provide context for how each factor plays a role in judicial decisions regarding bail in economic fraud cases.
Some other recent cases on bails in frauds/embezzlement
The Supreme Court of India has recently dealt with several cases involving the rejection or cancellation of bails for officers of banks and cooperative societies facing charges of embezzlement or fraud. Here are notable citations from recent judgments:
Manik Madhukar Sarve & Ors. v. Vitthal Damuji Meher & Ors.
Date: September 8, 2024
Summary: The Supreme Court set aside a bail order from the Bombay High Court concerning a cooperative society scam involving misappropriation of approximately ₹80 crores. The Court emphasized the necessity of a thorough judicial scrutiny in economic offenses, highlighting that the High Court had failed to adequately consider significant evidence against the accused, including a forensic audit and testimonies from society staff. The Supreme Court directed the accused to surrender and allowed for a future bail application under changed circumstances
This case cases illustrate the Supreme Court's rigorous stance on granting bail in cases involving financial misconduct by bank officials OR cooperative society office-bearers or , ensuring that justice is served while balancing individual rights.
2. CBI v. Subramani Gopal Krishanan & anr. (SC)
Criminal Appeal No.985-86 of 2011 decided on 21.04.2011
Cancellation of Bail (Click below to know the details)
Central Bureau Of Investigation, Hyderabad v. Subramani Gopalakrishnan And Another | Supreme Court Of India |
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