July 21, 2023 In Uncategorized


A two-Judge Bench of the Supreme Court, comprising of Justice Dipankar Datta and Justice S. Ravindra Bhat, passed a judgment dated 04.07.2023 in the matter of Ramesh Kumar v. The State of NCT of Delhi [SLP (Crl.) No. 2358 of 2023], wherein, the Bench observed that in recent times, a concerning trend has emerged where judicial proceedings initiated by individuals accused of cheating under Section 420 of the Indian Penal Code, 1860 (IPC) have been inadvertently turning into mechanisms for complainants to recover the alleged cheated amount. The Courts are being compelled to impose conditions for deposit / payment as a requirement for granting pre-arrest bail to the accused. The Bench observed that it is important for High Courts and Sessions Courts to remember not to be unduly influenced by such submissions and to avoid incorporating pre-deposit/payment conditions while considering bail applications under Section 438 of the Code of Criminal Procedure, 1973 (Cr.P.C.).

Fact –

1) The Appellant, Ramesh Kumar owned an immovable property and intended to redevelop it. Three Agreements were executed between the Appellant and a Builder named Ashwani Kumar on 10-12-2018, 19-12-2018 and 30-01-2019.

2) According to the Agreement dated 19-12-2018 between the Builder and the Appellant, the Builder was responsible for constructing a multi-storied building, with the Appellant having ownership rights to the 3rd floor and upper floors, along with a payment of Rs. 55,00,000/-.

3) The Builder further entered into an Agreement to Sell and Purchase / Bayana on 14-12-2018, with Vinay Kumar and Sandeep Kumar (Complainant) for the 2nd floor (without roof rights) of the proposed building, for a sum of Rs. 60,00,000/-.

4) The Complainants allegedly paid Rs. 11,00,000/- to the Builder (Rs. 1,00,000/- as token money and Rs. 10,00,000/- as earnest money) at the time of executing the Agreement on 14-12-2018. Subsequently, the Complainants made additional payments in cash and by cheques, totalling Rs. 35,00,000/-, as instructed by the Builder, to both the Appellant and the Builder on different dates.

5) The Complainants were allegedly non-compliant with the terms and conditions stated in the Agreement dated 14-12-2018. As a result, the Builder filed a civil suit against the Complainants, seeking cancellation of the Agreement and forfeiture of Rs. 13,00,000/-.

6) The cancellation was reportedly based on the invocation of clause 8 of the Agreement. Additionally, it is known that the Builder has filed another civil suit against the Appellant, including a claim for specific performance of the Agreements dated 10-12-2018 and 19-12-2018.

7) The Complainants did not receive possession of the second floor they intended to purchase. On 18-11-2021, the Complainants lodged a complaint with the Station House Officer, Police Station Gulabi Bagh, Delhi, resulting in the registration of FIR No.322 of 2021. The complaint accused the Appellant, the Builder, and a broker.

8) Despite the existence of an executed Agreement to sell between the Builder and the Complainants, the Complainants allegedly issued cheques totaling Rs. 17,00,000/- to the Appellant based on the Builder’s instructions.

9) Due to the substantial payment made by the Complainants to the Appellant and the failure of the Builder to deliver possession of the second floor, the Complainants felt deceived and urged the police to investigate the alleged crime committed by the Appellant and the Builder.

The Appellant, fearing arrest, approached the relevant criminal court (MACT-02 (CENTRAL) to seek an order under Section 438 of the Code of Criminal Procedure. Initially, on 30-11-2011, the Presiding Officer granted the Appellant interim protection from arrest, contingent upon cooperating with the investigating agency. This decision was based on information provided by the investigating officer stating that no Agreement existed between the Appellant and the Complainants. However, in a subsequent Order dated 18-01-2022, the Presiding Officer dismissed the application and withdrew the interim protection previously granted to the Appellant.

High Court –

Aggrieved by the Trial Court Order dated 18-01-2022, the Appellant and the Builder sought bail from the High Court under Section 438 of the Code of Criminal Procedure. The High Court granted bail with conditions, including depositing specific amounts. The Appellant requested an extension to arrange funds and the High Court granted a 3-day extension. The Appellant now appeals to revoke one condition while maintaining the rest of the order.

It is evident that the Appellant agreed to deposit Rs. 22,00,000/- without prejudice, but failed to arrange sufficient funds. Consequently, the Appellant questions the condition imposed by the High Court for pre-arrest bail. Notably, although the Appellant’s counsel pledged to deposit Rs. 22,00,000/- with the trial court, the FIR states that the Appellant received separate cheques totalling Rs. 17,00,000/-. The Presiding Officer acknowledged this when dismissing the Appellant’s Application on 18-01-2022. However, it is important to note that the Appellant’s counsel informed the High Court of their readiness to deposit Rs. 22,00,000/-, which exceeds the alleged amount received from the Complainants through cheques issued on the Builder’s instructions.

Supreme Court –

Aggrieved by the High Court Order, the Apex Court disapproves the imposition of conditions involving the payment of money as a prerequisite for granting bail under Section 438 of the Code of Criminal Procedure. The investigation is ongoing, and no charge-sheet has been filed or offence proven. While conditions may be imposed, they should not be burdensome or unreasonable. Bail conditions should focus on ensuring the accused’s appearance, facilitating investigation or trial, and safeguarding the community. However, in exceptional cases involving the misappropriation of public funds, the court may consider allowing the accused to deposit the alleged amount in the interest of the community. This approach does not apply to private disputes involving allegations of cheating with private funds.

Looking at the facts, the FIR indicates payment of Rs. 17,00,000/- to the Appellant through cheques, not Rs. 22,00,000/-. The discrepancy in the figures remains unclear, suggesting a possible calculation error. Additionally, doubts arise regarding the Appellant’s conduct in accepting cheques without a mutual agreement. The High Court should have recognized that criminal law should not be used to settle civil disputes. Even if the Appellant made a payment commitment to avoid losing liberty, such undertaking should not have influenced the grant of anticipatory bail. The High Court should have assessed whether the Appellant met the established tests for anticipatory bail instead. Although the Appellant’s counsel’s submission had an effect, it was irrelevant to the bail decision.

There is no evidence to suggest that the Complainants have filed a civil suit to recover the money they allegedly paid to the Appellant. Even if the Appellant is convicted of the offence, he may not be legally obligated to repay the amount to the Complainants. The High Court, while considering the bail application under Section 438 of the Code of Criminal Procedure, failed to consider this aspect.

The Apex Court held that:

i) The High Court made a serious mistake by relying on the Appellant’s undertaking and imposing a condition of paying Rs. 22,00,000/- (Rupees twenty-two lakh) for granting bail. It is appropriate to refer the matter back to the High Court for reconsideration.

ii) The High Court should reevaluate the application for pre-arrest bail, considering the observations made in this judgment. The reconsideration should occur promptly, preferably by August 31st, 2023. The Appellant’s liberty should not be restricted by the investigating officer until further orders are issued by the High Court. However, the Appellant must cooperate with the investigating officer when required.

iii) The Apex Curt addresses IA 94276 of 2023, an intervention application filed by the Complainants. They request the opportunity to be heard, as any order made on the appeal without considering their input would result in significant prejudice.

iv) However, at this stage, the Complainants do not have the right to be heard before the Supreme Court or the High Court, considering the nature of the alleged offence, unless there is a possibility of compounding the offence under Section 420, IPC, with the Court’s permission.

v) The appeal is resolved accordingly, and the intervention application is dismissed. No costs are awarded.

Conclusion –

In conclusion, the Supreme Court has reaffirmed the importance of carefully considering the conditions for granting bail and the rights of Complainants. The Court emphasized that the criminal justice system should not be used to settle civil disputes and highlighted the need for proportionate and reasonable conditions for bail. The decision emphasizes the significance of due process and ensures that the Appellant’s liberty is protected while cooperation with the investigating officer is expected. Additionally, the Court clarified that the Complainants do not have an automatic right to be heard unless there are circumstances for compounding the offence. With these considerations, the appeal has been disposed of, and the intervention application has been dismissed.


Udit Krishna


The Indian Lawyer & Allied Services



Sushila Ram

Chief Consultant

The Indian Lawyer & Allied Services


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