Anticipatory Bail Granted in FIR Involving Sections 409, 420, and 506(2) IPC by Gujarat High Court, 2024

Case Details

Before the Gujarat High Court, the Honourable Mr. Justice J.C. Doshi, in a common oral order dated 03.01.2024, disposed of a cluster of anticipatory bail applications filed under Section 438 of the Code of Criminal Procedure, 1973. The applications, led by Criminal Misc. Application No. 13608 of 2023, arose from a single First Information Report (C.R. No. 11198035230749 of 2023) registered with the Mahuva Police Station. The alleged offences spanned the Indian Penal Code (Sections 409, 420, 506(2), and 34), the Gujarat Money Lenders Act (Sections 40 and 42(a)), the Gujarat Protection of Interest of Depositors (Financial Establishment) Act (Section 3), and the Banning of Unregulated Deposit Schemes Act, 2019 (Section 22). The court, after a detailed examination of the FIR and submissions, granted anticipatory bail to the applicants with specific conditions.

Facts

The factual matrix, as emerging from the FIR, indicates that the first informant invested money in a company expecting double returns within a short period but did not receive them. To recover from this financial loss, the first informant subsequently borrowed substantial amounts from the various petitioners (applicants for bail). As security for these loans, the first informant issued cheques to the petitioners. The FIR alleges that due to an inability to repay these borrowed amounts, which were taken at a high rate of interest, the first informant and his wife faced threats, harassment, and coercion from the petitioners. This alleged harassment culminated in the first informant and his wife consuming a poisonous substance (finail). Following this incident, the FIR in question was registered against the petitioners for the aforementioned offences. The petitioners contended that the FIR was a "counter-blast" filed with an oblique motive to avoid repaying the legally borrowed amounts and to pre-empt legal action under the Negotiable Instruments Act for the dishonoured cheques.

Issues

The central legal questions before the court were: (1) Whether, on a prima facie reading of the FIR and available material, a case for offences under Sections 409 (criminal breach of trust by public servant, or by banker, merchant or agent), 420 (cheating and dishonestly inducing delivery of property), and 506(2) (criminal intimidation) of the Indian Penal Code was made out against the petitioners? (2) Whether the allegations under the Gujarat Money Lenders Act, the Gujarat Protection of Interest of Depositors Act, and the Banning of Unregulated Deposit Schemes Act warranted custodial interrogation of the petitioners? (3) Whether, considering the totality of circumstances and the applicable principles governing anticipatory bail, the discretionary relief under Section 438 Cr.P.C. should be granted to the petitioners?

Decision

The Gujarat High Court allowed the anticipatory bail applications, granting relief to all petitioners subject to stringent conditions. The court's decision was predicated on a multi-faceted analysis encompassing a prima facie assessment of the FIR, the application of established bail jurisprudence, and an evaluation of the petitioners' personal circumstances.

The court first undertook a critical examination of the FIR allegations vis-à-vis the specific ingredients of the IPC offences. On the offence under Section 409 IPC, the court held that no prima facie case of criminal breach of trust was discernible from a plain reading of the FIR. The foundational relationship necessary for such an offence was absent; the transactions were presented as simple loans advanced by the petitioners to the first informant, secured by cheques. There was no allegation of entrustment of property or dominion over property being abused in a manner constituting criminal breach of trust. Similarly, for the offence under Section 420 IPC (cheating), the court found no prima facie material to suggest that at the inception of the loan transactions, the petitioners had fraudulent or dishonest intentions to induce the first informant to deliver property. The FIR itself indicated the first informant voluntarily borrowed money to extricate himself from a prior financial loss. The court concluded that the dispute, at its core, appeared to be of a civil nature—a debt recovery matter—lacking the essential criminal intent for cheating. Regarding the offence under Section 506(2) IPC (criminal intimidation), while the FIR contained allegations of threats and harassment leading to the consumption of poison, the court, in the context of the overall financial dispute and the absence of detailed, corroborative specifics in the FIR, did not find these allegations, standing alone, sufficient to deny anticipatory bail at this preliminary stage, especially when balanced against the other factors.

The court then elaborated on the general principles governing the grant of anticipatory bail, judiciously exercising its discretion as mandated by a plethora of Supreme Court precedents. The court explicitly relied upon and incorporated the principles laid down in Gurubaksh Singh Sibbia v. State of Punjab, Siddharam Satlingappa Mhetre v. State of Maharashtra, and Sushila Agarwal v. State (NCT of Delhi). It systematically applied the following factors to the case at hand: (i) the absence of a reasonable prima facie belief of commission of the specific IPC offences of breach of trust and cheating; (ii) the nature and gravity of the accusation, which, upon scrutiny, appeared rooted in a financial transaction; (iii) the severity of punishment upon conviction, which, while serious for some charges, had to be weighed against the initial lack of prima facie evidence for the gravest allegations; (iv) the danger of the accused absconding, which was negated as the petitioners were residents of Bhavnagar District with movable and immovable properties, showing no flight risk; (v) the character and standing of the accused, with no adverse material presented; (vi) the likelihood of the offence being repeated, which was not a pressing concern in the context of an isolated financial dispute; (vii) reasonable apprehension of witness tampering, which the court aimed to mitigate through strict bail conditions; and (viii) the overarching danger of justice being thwarted. The court emphasized that at the bail stage, an elaborate examination of evidence or detailed merits prejudicial to the accused must be avoided.

Concerning the other statutory offences under the Gujarat Money Lenders Act, the Gujarat Protection of Interest of Depositors Act, and the Banning of Unregulated Deposit Schemes Act, the court noted a significant evidentiary gap. It observed that the Investigating Officer's affidavit did not point out any cogent material to substantiate that offences under these specific Acts were made out against the present petitioners. The IO's opposition to bail was based primarily on the ground that eight other accused were yet to be arrested, which the court deemed an insufficient reason to deny bail, reiterating that it is the duty of the IO to investigate thoroughly irrespective of the bail status of some accused.

A pivotal factor favouring the petitioners was their unequivocal undertaking, communicated through their senior advocates, to cooperate fully with the investigation. This assurance addressed a key concern in anticipatory bail matters. Consequently, the court held that the custodial interrogation of the petitioners was not necessary at this juncture.

The anticipatory bail was granted with the following comprehensive conditions: (a) cooperation with the investigation and availability for interrogation; (b) mandatory presence at the concerned Police Station on 11.01.2024 and 12.01.2024 between 10:00 a.m. and 4:00 p.m.; (c) non-interference with witnesses or evidence; (d) furnishing of current address to the IO and the court, with no change of residence without orders; (e) surrender of passport and not leaving India without trial court permission; and (f) execution of a personal bond of Rs. 10,000 with one surety of like amount. The order explicitly preserved the right of the investigating agency to apply for police remand before the competent Magistrate, and the petitioners were directed to present themselves before the Magistrate if such an application was made. The court also clarified that any breach of conditions would entitle the concerned court to take appropriate action, and the trial court was directed not to be influenced by the prima facie observations made in the bail order.

Quotes

"What appears from the plain reading of the FIR is that prima facie allegations under Section 406, 420 and 409 of the IPC is not made out. No criminal breach of trust or forgery as alleged is made out from the plain reading of the FIR. To the contrary, it appears from the record that first informant has taken different amount from the petitioners to get out from the financial burden he has sustained due to joining in the fraudulent scheme and none of the petitioners have received their amount back."

"It is well settled that, among other circumstances, the factors to be borne in mind while considering an application for bail are (i) whether there is any prima facie or reasonable ground to believe that the accused had committed the offence; (ii) nature and gravity of the accusation; (iii) severity of the punishment in the event of conviction; (iv) danger of the accused absconding or fleeing, if released on bail; (v) character, behaviour, means, position and standing of the accused; (vi) likelihood of the offence being repeated; (vii) reasonable apprehension of the witnesses being influenced; and (viii) danger, of course, of justice being thwarted by grant of bail."

"In fact, the IO has stated the reason that since eight other accused are to be arrested, present petitioners are not to be enlarged on bail which is insufficient ground to deny bail because it is the duty of the IO to investigate the offence in its true, letter and spirit."

"Affidavit of IO does not point out that offence under Gujarat Protection Interest of Depositors (Financial Establishment) Act or under of the Banning of Unregulated Deposit Scheme Act, 2019 qua present petitioners is made out or not."