Court’s Decision
The Bombay High Court dismissed the anticipatory bail application filed by two businessmen accused of orchestrating the diversion of imported petroleum products and circulating adulterated diesel under the guise of process oil. The Court held that custodial interrogation was essential to unearth the conspiracy, trace the money trail, and safeguard public interest. It observed that anticipatory bail cannot be granted in serious economic offences where the allegations affect the public at large and the investigation is at a crucial stage.
Facts
The applicants were implicated in a case registered at Uran Police Station involving adulterated diesel. On 12 July 2024, police officials found eight tankers in a customs bonded warehouse. Upon inspection, six contained Process Oil–40, while two were found to carry adulterated diesel fuel. The tankers and goods were seized.
Documents produced showed a chain of transactions: Sole Bloom Pvt. Ltd. imported Process Oil–40, which was sold through high seas agreements to Siddhidhata Trading Company, and later to Naksh Trading Company. However, forensic reports suggested that adulterated petroleum was being circulated under this guise.
The prosecution alleged that the accused brothers, directors of Sole Bloom Pvt. Ltd. and Siddhidhata Trading Company, created layered transactions through multiple companies using one common email ID, thereby controlling all operations. They were charged under provisions of the Bharatiya Nyaya Sanhita, 2023, the Essential Commodities Act, the Petroleum Act, and the Inflammable Substances Act.
Issues
- Whether the Assistant Police Inspector (API) was authorised to register the FIR and conduct seizure.
- Whether the FIR and laboratory reports, not based on NABL-accredited testing, were admissible.
- Whether layered company transactions controlled through a single email ID indicated fraudulent diversion of petroleum.
- Whether anticipatory bail could be granted when investigation was ongoing into serious economic offences with public impact.
Petitioner’s Arguments
The applicants contended that the FIR and seizure were illegal, as the API lacked authority under the Petroleum Orders of 1999, 2000, and 2005. They argued that customs and police officers had no jurisdiction under the Essential Commodities Act without government authorization.
They further submitted that the laboratory report was defective since it was not NABL-accredited, all mandatory tests under IS 1460:2017 were not conducted, and the report did not clearly establish adulteration. Another forensic report described the oil as “petroleum hydrocarbon,” not diesel.
The applicants also argued that “process oil” is not a notified commodity under Section 3 of the Essential Commodities Act. They emphasized that the allegations only reflected irregular shifting of chemicals inside a bonded warehouse, which did not constitute a crime.
Lastly, they relied on precedents like Abhay Anup Rathi v. State of Maharashtra (2023), Avtar Singh v. State of Punjab (2023), and a Bombay High Court writ petition to argue that such procedural lapses render the FIR illegal..
Respondent’s Arguments
The prosecution argued that three bank accounts of different companies—Sole Bloom Pvt. Ltd., Siddhidhata Trading Company, and Naksh Trading Company—were all linked to the email ID of accused No.2. This indicated common control and deliberate camouflage through paper transactions.
It was submitted that Naksh Trading Company was only a front, and the applicants were the real beneficiaries. The forensic report confirming adulteration constituted prima facie evidence.
The prosecution stressed that offences under the Petroleum Act and Essential Commodities Act directly affect public safety, the economy, and the State exchequer. Adulterated diesel in circulation risks lives, damages vehicles, and erodes public trust. Given the seriousness and ongoing investigation, custodial interrogation was essential and bail should be denied.
Analysis of the Law
The Court emphasized that anticipatory bail under Section 438 BNSS (equivalent to Section 438 CrPC) is an extraordinary remedy, granted only when accusations are manifestly false or motivated.
On the issue of the FIR’s legality, the Court held that questions of procedural irregularities, authority of API, and admissibility of evidence must be decided at trial, not at the bail stage.
The Court applied the principle of “lifting the corporate veil,” holding that the use of multiple companies under one common email ID suggested deliberate camouflage and fraudulent design. The layered transactions were prima facie evidence of an economic offence intended to mislead authorities.
It also observed that economic offences with wide-ranging impact on public safety and national economy must be treated seriously, in line with Supreme Court precedents.
Precedent Analysis
- Abhay Anup Rathi v. State of Maharashtra (2023) – Cited by defence to argue against improper seizure, but distinguished at bail stage.
- Avtar Singh v. State of Punjab (2023) – Relied on for procedural irregularities, but the Court noted such issues are matters of trial.
- Criminal Writ Petition No.1839 of 2013 (Bom HC) – Defence cited for illegality of customs reports; Court held evidentiary value to be tested at trial.
- Supreme Court precedents – Cited by the Court that economic offences with deliberate design warrant stricter scrutiny and bail is not to be granted casually.
Court’s Reasoning
The Court found prima facie that:
- The applicants controlled all transactions through one email ID, showing fraudulent layering.
- The forensic report, though challenged, indicated adulteration, and could not be ignored at the bail stage.
- Custodial interrogation was necessary to identify the larger conspiracy, trace the money trail, and secure evidence.
- Granting bail at this stage could derail investigation into an economic offence of grave public impact.
It reiterated:
“Anticipatory bail is an extraordinary remedy. It is not meant to shield an accused involved in serious economic offences, particularly when the investigation is at a nascent stage.”
Conclusion
The High Court rejected the anticipatory bail application. It held that the accusations involved serious offences affecting public safety and national economy, and prima facie evidence linked the applicants to fraudulent transactions and adulterated diesel circulation. Custodial interrogation was deemed necessary.
Implications
- Reaffirms stricter judicial approach in economic offences involving essential commodities and petroleum products.
- Clarifies that procedural irregularities in FIR or testing cannot be grounds for anticipatory bail; they are triable issues.
- Demonstrates readiness to apply lifting of corporate veil where companies are used to camouflage fraudulent activity.
- Strengthens jurisprudence that anticipatory bail is not meant to insulate accused in serious economic crimes.
FAQs
1. Can procedural irregularities in seizure and testing justify anticipatory bail?
No. Such issues go to trial. At bail stage, Court only considers prima facie case, gravity of allegations, and need for custodial interrogation.
2. Why was common email ID linking companies significant?
It showed that multiple firms were only a façade, controlled by one person to layer fraudulent transactions.
3. Why is anticipatory bail harder in economic offences?
Because they impact public safety, economy, and governance. Courts treat such crimes with higher gravity and insist on custodial interrogation.