Supreme Court Sets Aside Anticipatory Bail in Adarsh Group Companies Act Fraud Case, 2025
Case Details
This judgment was delivered by the Supreme Court of India on 9 April 2025, by a bench comprising Justices Bela M. Trivedi and Prasanna B. Varale, in a batch of sixteen criminal appeals arising from Special Leave Petitions (Criminal). The proceedings originated from Criminal Case No. COMA/5/2019 pending before the Special Judge, Gurugram. The legal framework central to the dispute includes Section 438 of the Code of Criminal Procedure, 1973 (anticipatory bail), and Sections 212(6) and 447 of the Companies Act, 2013, pertaining to investigation by the Serious Fraud Investigation Office (SFIO) and punishment for fraud. The nature of the proceedings was an appeal by the SFIO against orders of the Punjab and Haryana High Court granting anticipatory bail to various accused persons in a large-scale economic fraud case involving the Adarsh Group of Companies.
Facts
The Ministry of Corporate Affairs directed the Serious Fraud Investigation Office (SFIO) to investigate the affairs of 125 companies belonging to the Adarsh Group. The investigation revealed that the Adarsh Credit Cooperative Society Limited (ACCSL), a multi-state credit cooperative society with over 20 lakh members and deposits exceeding Rs. 9253 crores, had illegally advanced loans amounting to approximately Rs. 4120 crores to its own controlled companies and other entities. These loans were allegedly sanctioned based on forged documents, and the funds were siphoned off by the directors and associates. Upon completion of the investigation, the SFIO filed a criminal complaint before the Special Court at Gurugram on 18 May 2019, implicating 181 accused persons for offences under the Companies Act, 1956 and 2013, the Limited Liability Partnership Act, 2008, and the Indian Penal Code. The Special Court took cognizance of the offences on 3 June 2019 and initially issued bailable warrants against all accused, including the respondents. The accused persons, however, repeatedly avoided the execution of these warrants and subsequent non-bailable warrants issued by the court. Reports from process servers indicated that the accused were not found at their given addresses, with reasons ranging from houses being locked for long periods to individuals having left the premises. Consequently, the Special Court initiated proclamation proceedings under Section 82 of the CrPC against most of these accused. The Special Court had also rejected the anticipatory bail applications filed by these accused on various dates between 2019 and 2022. Aggrieved by these rejections, the accused approached the Punjab and Haryana High Court, which granted them anticipatory bail through orders dated 29 March 2023 and 20 April 2023. The SFIO appealed these High Court orders to the Supreme Court.
Issues
The Supreme Court identified and addressed the following principal legal issues: First, whether anticipatory bail under Section 438 of the CrPC should be granted as a matter of routine in cases involving serious economic offences, particularly those under the Companies Act, 2013. Second, whether the mandatory twin conditions for granting bail under Section 212(6) of the Companies Act, 2013, which apply to offences under Section 447 (punishment for fraud), are applicable to anticipatory bail proceedings and were correctly considered by the High Court. Third, whether the conduct of the accused in deliberately avoiding the execution of court-issued warrants and summons, leading to the initiation of proclamation proceedings under Section 82 of the CrPC, is a relevant and decisive factor for rejecting anticipatory bail. Fourth, whether the Special Court exercised its discretion judiciously in issuing non-bailable warrants under Section 204 of the CrPC instead of summons at the cognizance stage. Fifth, whether the impugned orders of the High Court granting anticipatory bail, despite the accused's conduct and the statutory restrictions, were perverse and untenable in law.
Rule / Law
The court's analysis was governed by specific statutory provisions and established legal principles. The primary statutes were Section 438 of the Code of Criminal Procedure, 1973, which provides for the grant of anticipatory bail as an extraordinary remedy; Section 212(6) of the Companies Act, 2013, which makes offences under Section 447 cognizable and imposes twin mandatory conditions for bail—namely, giving the Public Prosecutor an opportunity to oppose the bail and the court being satisfied that there are reasonable grounds to believe the accused is not guilty and is not likely to commit any offence on bail; and Section 82 of the CrPC, which allows for the proclamation of absconding accused. The court relied on the legal principle, consistently affirmed in precedents such as P. Chidambaram v. Directorate of Enforcement and Y.S. Jagan Mohan Reddy v. Central Bureau of Investigation, that economic offences constitute a distinct class due to their deep-rooted conspiracies, impact on public funds, and threat to the national economy, warranting a stricter approach to bail. Furthermore, the court reiterated the principle from Inder Mohan Goswami v. State of Uttaranchal that the issuance of warrants or summons under Section 204 CrPC is a discretionary power of the court, to be exercised based on factors like the seriousness of the offence and the likelihood of the accused appearing voluntarily.
Analysis
The Supreme Court conducted a thorough, multi-faceted analysis, systematically addressing each legal issue by integrating the facts with the governing law and precedent. The court began by reaffirming the settled jurisprudential position that anticipatory bail under Section 438 CrPC is an "extraordinary remedy" and not a rule. It emphasized that this power must be exercised sparingly and only in exceptional circumstances. The court then dedicated substantial reasoning to establishing why economic offences, particularly those involving fraud under the Companies Act, merit a categorically stricter scrutiny. Drawing from its earlier decisions in Y.S. Jagan Mohan Reddy and Nimmagadda Prasad, the court elaborated that such offences have a devastating impact on the economic fabric of the nation, affect a large number of common depositors and investors, and are typically committed with cool calculation and deliberate design for personal profit, setting them apart from crimes of passion. Therefore, the liberal principles sometimes applied in ordinary bail matters cannot be automatically extended to this category of crimes.
The court then meticulously examined the statutory scheme of the Companies Act, 2013, focusing on the non-obstante clause in Section 212(6). It held that the twin conditions stipulated therein for granting bail are mandatory in nature. These conditions require the court to provide an opportunity for the Public Prosecutor to oppose the bail and, upon such opposition, to record satisfaction that there exist reasonable grounds to believe the accused is not guilty and will not commit any offence while on bail. The court reasoned that these restrictive conditions reflect a deliberate legislative intent to curb the release of individuals accused of serious corporate fraud, given the gravity of such offences. It cited the three-judge bench decision in Vijay Madanlal Choudhary v. Union of India, which upheld similar conditions under the PMLA, to affirm that such conditions apply to bail applications generally, including those for anticipatory bail. The court found a fatal flaw in the High Court's orders: they were passed in "utter disregard" of these mandatory conditions. The High Court had not demonstrated any application of mind to whether these statutory prerequisites were met, rendering its orders legally untenable.
A central pillar of the Supreme Court's reasoning was its emphasis on the conduct of the accused. The court painstakingly reviewed the procedural history, noting that after the Special Court took cognizance and issued bailable warrants, the accused did not appear. Following this, multiple non-bailable warrants were issued, which were returned unexecuted with reports that the accused were not available at their addresses. Crucially, the court rejected the accused's contention that they were unaware of the proceedings. It found this assertion falsified by the fact that the very same accused had filed anticipatory bail applications before the Special Court, demonstrating clear knowledge of the pending case. The court characterized this pattern as a "brazen attempt" to stall criminal proceedings and cause obstruction in the administration of justice. When such avoidance persists, the law provides for proclamation proceedings under Section 82 CrPC, which the Special Court rightly initiated. Relying on its recent judgment in Srikant Upadhyay v. State of Bihar, the Supreme Court held that a person who continuously defies court orders and absconds is not entitled to the extraordinary relief of anticipatory bail, except in extreme, exceptional cases not present here. The court quoted the principle that "law aids only the abiding and certainly not its resistants."
The court also addressed the accused's argument that the Special Court should have issued summons instead of warrants at the cognizance stage, citing Tarsem Lal v. Directorate of Enforcement. The Supreme Court rejected this argument by elaborating on the scope of judicial discretion under Section 204 CrPC. It explained that in a warrant case, the court has the discretion to decide whether to secure the accused's attendance via summons or warrant. This discretion must be exercised judicially, considering factors like the nature and seriousness of the offence, the character of the evidence, and the possibility of the accused absconding. Given the colossal scale of the alleged fraud (involving thousands of crores of public deposits) and the accused's subsequent conduct of avoiding court processes, the Supreme Court held that the Special Court's decision to issue warrants, and later non-bailable warrants, was not only justified but reflected a proper exercise of discretion aimed at securing the accused's presence for a fair trial.
In synthesizing these strands, the Supreme Court concluded that the High Court's impugned orders were "perverse." The perversity arose from several concurrent failures: the failure to accord due weight to the serious nature of the economic offences; the failure to apply the mandatory twin conditions under Section 212(6) of the Companies Act; and the failure to treat the accused's conduct in evading warrants and facing proclamation proceedings as a decisive factor militating against the grant of anticipatory bail. The High Court had considered these aspects casually, if at all. By granting anticipatory bail in such a factual and legal context, the High Court had effectively allowed its extraordinary power to be used to shield individuals who were resisting the due process of law, thereby undermining the administration of justice. The Supreme Court stressed that the judicial time of every court, including a Magistrate's court, is precious, and accused persons have a duty to cooperate with the trial process.
Conclusion
The Supreme Court allowed fourteen of the sixteen appeals filed by the Serious Fraud Investigation Office. It set aside the orders dated 29 March 2023 and 20 April 2023, whereby the Punjab and Haryana High Court had granted anticipatory bail to the respondent-accused. The court directed these accused persons to surrender before the Special Court, Gurugram, within one week from the date of the judgment. It clarified that the accused would be at liberty to file fresh bail applications before the Special Court, which were to be decided in accordance with law, including due consideration of the mandatory conditions under Section 212(6) of the Companies Act, 2013. However, the court dismissed the appeals concerning three specific accused—Akshat Singh, Naveen Kumar, and Mahesh Dutt Sharma—for distinct reasons: in the cases of Akshat Singh and Naveen Kumar, the Special Court itself had granted them anticipatory bail, and the High Court had merely rejected the SFIO's petitions for cancellation of that bail; and in the case of Mahesh Dutt Sharma, no non-bailable warrants or proclamation proceedings had been initiated against him. The Supreme Court expressly stated that it had not expressed any opinion on the ultimate merits of the criminal case itself.