Bail Hearing Can't Be Deferred Citing Failure Of Accused To Comply With Undertaking To Deposit Amount : Supreme Court

The Supreme Court observed that the hearing on the bail pleas cannot be deferred merely because the accused has failed to comply with an undertaking to deposit the amount.

A Bench of Justices Manoj Misra and Manmohan set aside the Delhi High Court's order that had kept the bail application of a company director accused under Section 409 IPC pending solely on the ground that he failed to honour an undertaking to deposit further amounts, despite a substantial portion of the allegedly diverted funds having already been deposited with the Court.

“In our view, the appropriate course for the court was to decide the bail application on its own merits rather than to keep the matter pending by extending the interim bail and insisting on the upfront deposit.”, the court observed.

The case relates to the alleged diversion of a government subsidy amounting to about ₹4.10 crore granted to M/s Pragat Akshay Urja Limited. Appellant, one of the directors of the company, was arrested on December 12, 2019. The company deposited ₹2,17,92,500 on December 26, 2019, and on the basis of a statement made by Appellant's counsel that the remaining amount would also be deposited, the High Court granted him interim bail on April 22, 2020.

Although Jain's regular bail application remained pending, the interim bail was extended from time to time. Eventually, the High Court cancelled the interim bail on the ground that the appellant had failed to honour the undertaking to deposit the remaining amount, prompting the Appellant to move to the Supreme Court.

Before the Supreme Court, the Appellant argued that even if he had failed to comply with the undertaking, the High Court ought to have decided his bail application on the merits instead of cancelling interim bail. Reference was made to the case of Gajanan Dattatray Gore vs. State of Maharashtra and Anr., 2025 LiveLaw (SC) 756, where it was held that the bail pleas must be decided on their own merit, rather than deciding based on an undertaking by the accused or its family member to deposit a particular amount.

Opposing the Appellant's appeal, the State cited Kundan Singh v. Superintendent of CGST, 2025 LiveLaw (SC) 686 to contend that since the interim protection was obtained on Jain's own statement, he could not later challenge the condition attached to it.

Upon hearing both sides, the Court differentiated the judgments cited by the parties, stating that the judgments operate in different fields. It added that insistence on deposit of upfront payment as a precondition for bail hearing should be discouraged, and cannot become the ground to defer the bail hearing, which shall be decided on merits.

“In our view, the two decisions operate on different fields. The decision in Gajanan Dattatray Gore (supra) deprecates the practice of the courts in insisting on upfront deposits, or undertaking for such deposits, or compliance(s) of certain obligations, from bail/ stay applicant(s) for consideration of their prayer on merits as that encourages implication with an oblique purpose and has the potential to derail the criminal justice delivery system by making it a tool in the hand of unscrupulous complainant(s) to extort a settlement and force the other side to give up its right of defence. On the other hand, the decision in Kundan Singh (supra) is on a fundamental principle that a person who has agreed for a condition cannot question the same.”, the court observed.

The Appellant faces charges under Section 409 IPC for the alleged diversion of a government subsidy. As the culpability of a Director cannot be presumed and must be proven at trial, denying bail merely for non-compliance with an undertaking to deposit funds is not justified, the court said.

“Here the applicant is one of the Directors of a Company. The allegations are in respect of diversion of funds by the Company. In an offence punishable under Section 409 IPC there is no presumption regarding culpability of a Director. The same would have to be established in a trial. In such circumstances, when more than 50 per cent of the amount of subsidy alleged to have been diverted has been deposited by the Company, whether the court should have insisted on a further deposit for considering his regular bail prayer is the issue that troubles us.”, the court said.

Resultantly, the appeal was disposed with the direction “…requiring the High Court to decide the regular bail application of the appellant as expeditiously as could be possible preferably within a period of three weeks…”

Cause Title: RAKESH JAIN VERSUS STATE

Citation : 2026 LiveLaw (SC) 81

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Appearance:

For Appellant(s) : Mr Rauf Rahim, Sr. Adv. Mr Rajesh Kundani, Adv. Mr Ali Rahim, Adv. Mr Mohsin Rahim, Adv. Mr. Vikrant Singh Bais, AOR

For Respondent(s) : Mr. Anil Kaushik, A.S.G. Mr. Mukesh Kumar Maroria, AOR Mr. Gaurang Bhushan, Adv. Mr. Arkaj Kumar, Adv. Mr. Bhuvan Kapoor, Adv. Mr. Diwakar Sharma, Adv.