Sandeep Chaudhary and Another vs State and Others

A.K. Sikri, J.—Petitioners had business dealings with the respondents No. 2 to 4, who are the partners of M/s. Jain Art Jewels (hereinafter

referred to as the ''Complainants''). According to the complainants, while dealing with them, the petitioners committed fraud and cheating.

Accordingly, FIR No. 283/05 has been lodged with the Police Station Connaught Place, New Delhi under Sections 420/406/467/468/471/120B

IPC. Though it is not necessary to go into the details of the allegations regarding the said fraud and cheating in this petition, suffice it to mention that

the petitioners were working as commission agents for the complainants. They were obtaining orders from Dubai for stainless steel utensils, which

used to be executed by the complainants and the petitioners were getting commission thereon. As per the allegations, after gaining confidence of

the complainants in this manner, both the petitioners, who are brothers, represented in January, 2004 that they had got a very huge order for which

they needed advance payment from the complainants to be given to M/s. Prima Enterprises, Wazirpur Industrial Area, Delhi. Various cheques

were thus issued in favor of M/s. Prime Enterprises for a total amount of Rs. 77 lacs, but no utensils were received from M/s. Prime Enterprises.

When the complainants met the petitioners, they informed that since the utensils were not manufactured/finished as per the requirement, the same

were rejected and they had asked M/s. Prime Enterprises to return the money. From May, 2004 to July, 2004 only Rs. 35,61,500/- were

returned and balance amount of Rs. 41,38,500/- still remained. However, afterwards the complainants came to know from M/s. Prime Enterprises

that they had never received the payment as aforesaid nor any order from the complainants was received for fabricating utensils nor was the

consignment ever rejected. Since cheques were issued in the name of M/s. Prime Enterprises by the complainants, the complainants approached

their bankers and found out that the petitioner No. 2 had opened an account in the name of M/s. Prime Enterprises, which was introduced by the

petitioner No. 1 in Model Town Branch of Federal Bank in the name of proprietorship firm and got the money in question from the complainants.

In the FIR dated 18.5.2005, the petitioners were arrested on the same date. On 22.5.2005, bail was granted to the petitioners when they

represented that they would settle the accounts of the complainants and two months'' time was given for this purpose. However, thereafter the

respondent No. 2 moved application for cancellation of bail before the learned AJS, which was allowed and bail of the petitioners was cancelled

and consequently, the petitioners surrendered on 7.6.2005. The petitioner No. 1 was granted interim bail subsequently on 28.8.2005. On

10.9.2005, the petitioner No. 2 was also granted interim bail. A Memorandum of Understanding (MOU) was entered into by the petitioners with

the respondents No. 2 to 4 (complainants) agreeing to make payment of Rs. 97.80 lacs. Out of this, from time to time a sum of Rs. 48.50 lacs was

paid. Since interim bail was granted to the petitioners to settle the matter with the respondents, on 23.3.2006 this bail was extended by another six

months. However, as during this period no payment was made, on 14.9.2006 the learned ASJ declined to extend the time for payment and also

declined to extend the interim bail. The petitioners approached this Court and moved Crl.M.C. No. 5987-88/2006 seeking extension of time for

payment of Installment money. In these petitions order dated 19.9.2006 was passed extending the interim bail till 16.10.2006. During the interim

protection, present petition was filed challenging the orders of the ASJ and the legal ground taken is that for violation of the terms of the MOU bail

cannot be rejected. In support learned Counsel for the petitioners relied upon the judgment of the Supreme Court in the case of Biman Chatterjee

Vs. Sanchita Chatterjee and Another, and while issuing notice, interim bail was extended. Since the petitioners wanted to press this petition on the

aforesaid legal grounds, earlier petition filed, namely, Crl.M.C. No. 5987-88/2006 was withdrawn by the petitioners and the same was dismissed

as withdrawn on 16.10.2006. Mr. Mittal, learned senior counsel appearing for the petitioners, referred to various orders passed by the learned

ASJ from time to time as mentioned above and submitted that interim bail was given to settle the matter, which was extended from time to time.

Ultimately, settlement was arrived at. Even if there was some default in making payment in terms of the said settlement, though some amount was

paid, bail now could not be denied only on this ground, namely, failure to adhere to the said settlement by the petitioners. He also submitted that

investigation had been concluded, charge-sheet had been filed and the case was fixed for arguments on charge. The petitioners had remained in

custody for about three months. When they remained in custody for this period, under duress and compulsion they agreed to enter into settlement

with the complainants on the terms and conditions dictated by them and the total amount of Rs. 48.50 lacs was paid. He also submitted that due to

sudden depletion of working capital the petitioner could not generate the returns from the business as expected and because of that they could not

make monthly payment of Rs. 3.50 lacs after July, 2006. They had even approached the complainants pleading their difficulty but not only their

bona fide request was refused by the complainants, the complainants were also threatening them that they would not co-operate in the quashing of

the FIR/judicial proceedings even when the entire payment is made. He submitted that in this backdrop judgment of the Supreme Court in Biman

Chatterjee (supra) was applicable where the Court held that non-adherence to terms of compromise could not be the basis for cancelling the bail.

That was a case where the complainant was the wife, who had filed complaint u/s 498A of the IPC. The husband/accused was arrested and he

sought the grant of bail. On hearing both the sides and noticing the fact that there was a possibility of compromise between the parties, the accused

was released on bail by the Magistrate. Thereafter, application for cancellation of bail was preferred by the complainant alleging that the accused

was not co-operating in the compromise talks. Bail was cancelled on this ground and revision petition filed by the accused was also rejected by the

High Court of Judicature at Patna. The accused, in these circumstances, challenged the said order in the Supreme Court and reversing the order of

the High Court and holding that it was not proper to cancel the bail in these circumstances, the Court made the following observations:

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 compromise. Though in the original order granting bail there is a reference to an agreement of the

parties to have a talk of compromise though 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 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 provisions of Chapter xxxviii

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.

Learned Counsel for the respondent on the other hand, submitted that after the petitioners stopped the payment, they even entered into another

MOU pursuant whereto the properties given in security earlier by the petitioner were released. On the one hand they were not making the

payment, on the other hand, they started disposing off their assets. He further submitted that there was no agreement regarding quashing even if the

payment is made fully and, Therefore, there was no question of the complainants agreeing for this course of action. In the case of Narayanan v.

State of Delhi 2002 (VIII) AD (Delhi) 768, a Division Bench of this Court took note of three judgments of the Single Judges of this Court as it was

argued that there was some conflict of opinion taken in these judgments. Whereas in one case interim bail was granted when the petitioners had

voluntarily undertaken to deposit the amount and on failure to deposit the said amount bail was rejected, in other case condition imposed by the

Magistrate being a condition precedent for confirmation of bail was held to be contrary to law, the Division Bench held that there was no conflict

between the three cases, which were decided on their facts. The relevant portion is contained in the following paras:

It would be thus seen that the three decisions aforementioned by three learned Single Judges of this Court proceeded on the facts peculiar to

each case. In vansh Bahgdur''s case (supra) before the court could consider the question as to whether bail should or should not be granted

voluntarily the petitioner came forward and undertook to deposit the amount, which was the subject matter of the FIR. He had voluntarily

undertaken to deposit the amount due to which he had been granted some interim indulgence. He had declined to honour his undertaking. His

application for bail was rejected solely on the ground that the petitioner had tried to over reach the court.

In Rajeshwari Verma''s case (supra) there was no offer or undertaking by the accused to pay or deposit the amount, being subject matter of

the FIR. The Additional Sessions Judge had of his own imposed the condition being a condition precedent for confirmation of bail. Such a

condition was held to be contrary to the law being onerous, harsh and making the order of bail illusory.

In Sarkar Saheb''s case (supra) the condition of depositing the amount, equivalent to the amount of istridhan was held to be a reasonable and

just condition for grant of bail.

...

In the light of the position of law aforementioned, a view expressed by the learned Single Judge in Sarkar Saheb''s case (supra) is not in

conflict with the decision rendered in Rajeshwari Varma''s case (supra) since in Sarkar Saheb''s case the court considered the condition to be just,

fair and reasonable, in the facts and circumstances of the case and not a harsh condition. However, in Sarkar Saheb''s case the court did not

examine the question as to whether the object of imposing condition was the one which is provided in Sub-section (2) of Section 438 of Cr.P.C.

The learned Single Judge in Rajeshwari Verma''s case found the condition imposed to be in consonance with the purposes laid down in Sub-

section (2) of Section 438 or Sub-section (3) of Section 437 of Cr.P.C. In Vansh Bahadur Singh''s case (supra) learned Single Judge adopted the

same approach as was adopted by the Supreme Court in M. Sreenivasulu Reddy''s case that when an accused has undertaken to deposit the

amount and acting on that undertaking an interim order of bail was granted, the order did not require any interference thereafter since the accused

was bound to pay and since the balance amount which he had undertaken to pay and since the balance amount was not paid, rightly the court had

declined to grant indulgence to the accused.

It is clear from the reading of para 18 that the Division Bench referred to the judgment in the case of M. Sreenivasulu Reddy v. State of Tamil

Nadu 2001 (2) CRIMES 230 and the dicta of the said judgment was explained by them in the following terms:

The questions which have been referred by learned Single Judge in the light of the aforementioned provisions of the Act will not need any

further elaboration since the same can be said to have been squarely answered by Supreme Court in M. Sreenivasulu Reddy v. State of Tamil

Nadu 2001 (2) Crimes 230. The appellants before the Supreme Court was an accused against whom offences u/s 420 and 409 IPC read with

Section 120B IPC had been alleged. He had moved an application for grant of anticipatory bail and the High Court from time to time had

exercised discretion in granting anticipatory bail but subject to certain terms and conditions. By order dated 31.1.2000 after taking into

consideration all relevant facts as well as the undertaking of the accused, anticipatory bail was granted subject to his depositing Rs. 20 crores on or

before 15.2.2000. This order stood modified by order dated 30.3.2000 when several other conditions were imposed. Accused approached the

Supreme Court. By that date out of Rs. fifty cores a sum of Rs. thirty five crore had already been paid. The Supreme Court stayed the operation

of the order. Before Supreme Court on behalf of accused appellant it was urged that when the High Court exercised its discretion u/s 438 Cr.P.C.

granting anticipatory bail, it was entitled to put conditions but such conditions must be reasonable and judicious and should not be arbitrary. It was

thus urged that the conditions imposed were arbitrary. Learned Solicitor General contended that bearing in mind the nature of accusations no

anticipatory bail should have been granted but the same having been granted the terms and conditions imposed should not be interfered with by the

Supreme Court under Article 136 of the Constitution of India. Supreme Court in the light of the aforementioned background and the submissions

made before it held that the court while exercising jurisdiction u/s 438 Cr.P.C. must bear in mind and be satisfied that the accused will not abscond

or otherwise misuse liberty and this can be ascertained from several factors like conduct of the accused in the past, his assets in the country and so

on. While granting such anticipatory bail though the court may impose such conditions, as it thinks fit, but the object of putting conditions should be

to avoid the possibility of the person hampering investigation. The discretion of the court while putting conditions should be an exercise of judicial

discretion. In case for offence u/s 409 and 420 IPC the court will certainly not proceed to recover the alleged amount as a condition of grant of

bail. After lying down this law that any offence, may be u/s 409 and 420 IPC or such other offence, the court certainly will not go into and recover

the amount as a condition of grant of bail, the Supreme Court declined to modify the order of the High Court observing that the high court had

directed payment of the amount on the basis of the undertaking given by the accused. Therefore, the accused would be required to pay the balance

amount.

The Division Bench also held that the doctrine of estoppel would apply in such a case as approved by the Supreme Court in Sajan K. Varghese

and Ors. v. State of Kerala and Ors. 1989 SCC (CrI.) 339 wherein it was held that when the Court was persuaded to accept the terms of

compromise for grant of bail, it is not permissible for the parties to resile from those terms and conditions.

In the present case, bail application of the petitioners was never decided on merits. The petitioners were arrested and were in custody when

their bail applications were considered. On 25.8.2005, interim bail was granted for a period of one month on the submission of the parties to

enable them to arrive at amicable settlement. This interim bail was extended from time to time in subsequent orders after taking note of the fact that

the petitioners had entered into separate MOU with all the three respondents. Thus, de hors the talks of settlement, there was no consideration by

the trial court as to whether the petitioners were entitled to bail or not and only interim bail was granted when the petitioners expressed their desire

to settle the matter and thereafter to make the payment in accordance with the said settlement. The judgment in the case of Biman Chatterjee

(supra) shall have no application where regular bail was granted and the question was as to whether such a bail could be cancelled if the accused

was not co-operating in the compromise talks. The Court subsequently observed that though in the original order granting bail there was a

reference to an agreement of the parties to have a talk of compromise, there was no submission made to the Court that there would a compromise

or that the accused would take back his wife. In the present case as mentioned above, the petitioners wanted sojourn for some time to enable them

to settle the matter and in view of this, the Court granted the petitioners a breather. The petitioners cannot take advantage of such an interim

protection and thereafter breach the agreement and still say that the interim protection should be confirmed. If the petitioners are not in a position to

make the payment, as alleged by them, it would be proper for the trial court to consider the bail application of the petitioners on merits and to

decide as to whether the petitioners have backed out, for whatever reason. They cannot continue to enjoy such an interim protection. Therefore,

while dismissing this petition and upholding the order of the trial court, matter is remanded back to the learned ASJ to consider the bail application

of the petitioners on merits de hors the MOU or breach thereof. Since the petitioners have been granted interim protection, that shall remain

operative for a period of two weeks during which period the petitioners shall apply for regular bail before the trial court and the said bail

application shall be considered on its own merits without being influenced by the MOU or breach thereof. The petition is disposed of in the

aforesaid terms.