Court’s Decision
The Delhi High Court dismissed an anticipatory bail application filed by the Managing Director of a company in an FIR registered by the Economic Offences Wing, Delhi. The FIR concerned allegations of cheating, criminal breach of trust and conspiracy in relation to supply of materials worth approximately ₹9.31 crore for electrical infrastructure projects. The Court held that, considering the nature and gravity of the allegations, it was not inclined to grant anticipatory bail at this stage.
Facts
The applicant was the Managing Director of a company engaged in electrical infrastructure and CAPEX projects awarded by BESCOM. The company had been awarded a contract valued at approximately ₹47.20 crore for works in the Chikkaballapura Division. According to the applicant, substantial work had already been completed before the complainant company became involved, and the applicant’s company had longstanding commercial relations with BESCOM involving projects exceeding ₹300 crore.
The applicant’s company entered into a Memorandum of Understanding dated 08.08.2024 with the complainant company for supply of materials and supervision/execution of works. The complainant alleged that it was induced to supply materials worth approximately ₹9.31 crore on the representation that payments from BESCOM would be routed through an Escrow Account. However, according to the complainant, the project payments received from BESCOM were diverted to another account instead of the proposed Escrow Account.
Issues
The main issue before the Court was whether the applicant deserved anticipatory bail in an economic offence case involving allegations of inducement, fund diversion, disputed purchase orders, alleged fabrication of documents, and non-routing of payments through the promised Escrow Account.
Applicant’s Arguments
The applicant argued that the MoU with the complainant was executed in August 2024, whereas the payments received from BESCOM in October 2024 related to bills submitted in March 2024, much before the MoU. It was submitted that there was no dishonest intention and that the applicant had regularly joined and cooperated with the investigation.
The applicant also submitted that the Escrow Account could not be operationalised because BESCOM did not process the request. According to the applicant, payments received in October 2024 were unrelated to the projects covered under the MoU with the complainant.
Respondent’s Arguments
The complainant opposed the application and alleged that the applicant had filed forged and fabricated documents before the Court. It was argued that the original Purchase Order consisted of only three pages, while the Purchase Order relied upon by the applicant was a six-page document.
The complainant further pointed out that the MoU provided for Delhi jurisdiction, while the Purchase Order relied upon by the applicant contained a clause conferring jurisdiction on Bengaluru courts. The State also submitted that BESCOM had confirmed that no payment was ever released to any Escrow Account, no invoices were pending, and no amount remained payable by BESCOM.
Analysis of the Law
The Court referred to Supreme Court precedents on anticipatory bail and noted that pre-arrest bail is an extraordinary remedy, not to be granted routinely. In serious cases, courts must be cautious because protection from arrest may hamper investigation or lead to tampering or diversion of evidence.
The Court also relied on principles relating to economic offences, observing that the existence of a civil remedy does not dilute criminal allegations where ingredients of cheating or fraud are prima facie made out.
Precedent Analysis
The Court relied on:
- Nikita Jagganath Shetty alias Nikita Vishwajeet Jadhav v. State of Maharashtra & Anr. — for the principle that anticipatory bail is an exceptional remedy and must not be granted as a matter of routine.
- Srikant Upadhyay v. State of Bihar — cited within Nikita Jagganath Shetty, holding that the power to grant anticipatory bail is extraordinary and must be exercised cautiously.
- Saurabh Agarwal v. State of Uttar Pradesh and Anr. — for the principle that a civil remedy does not preclude criminal proceedings where criminal ingredients are prima facie made out, especially in economic offences involving substantial amounts.
Court’s Reasoning
The Court noted that the applicant failed to substantially rebut the allegation that there were two materially different versions of the Purchase Order. The Court found it significant that the MoU contained a Delhi jurisdiction clause, whereas the Purchase Order relied upon by the applicant contained a Bengaluru jurisdiction clause.
The Court observed that although it was not required to conclusively decide the genuineness of the Purchase Order at the anticipatory bail stage, the serious dispute regarding its authenticity could not be ignored. The Court further found that BESCOM’s reply did not support the applicant’s stand because no payment had been released to any Escrow Account, no invoices were pending, and no outstanding amount remained payable.
Conclusion
The Delhi High Court held that, in view of the nature and gravity of the allegations, the applicant was not entitled to anticipatory bail at this stage. The application was accordingly dismissed.
Implications
This order reiterates that courts are cautious while granting pre-arrest protection in economic offence cases, especially where allegations involve substantial amounts, disputed documents, alleged diversion of funds, and issues requiring effective investigation. The judgment also clarifies that merely calling a dispute commercial or civil will not automatically protect an accused from criminal investigation if allegations of cheating or fraud are prima facie present.