In a significant ruling, the Punjab and Haryana High Court has set aside the harsh bail conditions imposed on Pawan Kumar in a case under the Central Goods and Services Tax (CGST) Act, 2017. The case, revolving around allegations of fraudulent input tax credit claims, resulted in the petitioner being incarcerated for over four years due to the impractical financial conditions attached to his bail order. The ruling underscores the importance of personal liberty and fair trial, essential principles of the Indian judicial system.
Case Background
Pawan Kumar was accused of being involved in a tax fraud case under Sections 132(1)(b) & (c) of the CGST Act, along with related provisions of the Punjab Goods and Services Tax Act, 2007, and the Integrated Goods and Services Tax Act, 2017. The allegations suggested that co-accused Sahil Jain orchestrated a scheme involving fictitious firms and invoices to fraudulently avail and pass on ineligible input tax credits amounting to ₹17.65 crores.
The petitioner was arrested on January 12, 2021. However, since the prosecution failed to complete the investigation and file a final report within the mandatory 60-day period, he was granted default bail under Section 167(2) of the Code of Criminal Procedure (CrPC). Despite this, stringent bail conditions were imposed, including:
- Bail bonds worth ₹1.10 crore with two sureties of the same amount.
- A mandatory bank guarantee of ₹55 lakh.
- Restrictions on travel, including surrendering his passport.
These conditions rendered the bail ineffective as the petitioner was unable to comply. Seeking relief, he moved multiple applications before various courts, including the Supreme Court, but the conditions remained unchanged. Finally, the Punjab and Haryana High Court, where the case was argued by Advocate Anoop Verma, granted relief.
Arguments Presented
Petitioner’s Contentions
Representing the petitioner, Advocate Anoop Verma argued:
- The imposed financial conditions were overly harsh and made the bail order meaningless.
- The petitioner’s right to default bail under Section 167(2) CrPC was violated by attaching conditions that were impossible to meet.
- The petitioner had already spent over four years in custody, despite the maximum prescribed punishment under the CGST Act being five years.
- Several Supreme Court judgments have held that excessively high bail conditions cannot be used to deny an accused person their right to liberty.
Respondent’s Contentions
The prosecution contended:
- The accused played a role in a large-scale economic fraud causing significant loss to the government.
- The petitioner voluntarily admitted to his role in the scheme.
- Given the scale of the fraud, the stringent conditions were necessary to prevent flight risk or tampering with evidence.
Court’s Observations and Judgment
Violation of Personal Liberty
The Punjab and Haryana High Court noted that Pawan Kumar had been in custody for over four years while the maximum punishment under the alleged offenses was five years. The Court emphasized that prolonged incarceration without trial violated the petitioner’s fundamental rights under Article 21 of the Indian Constitution.
Unreasonable Bail Conditions
The Court ruled that the bail conditions were excessively harsh and effectively amounted to a denial of bail. It cited key Supreme Court precedents, including:
- Moti Ram vs. State of M.P. (1978), which held that bail conditions should not be unreasonably stringent.
- Hussainara Khatoon vs. State of Bihar (1980), which stressed that financial conditions should not be used as a means to deny bail.
- Saravanan vs. State (2020), where the Supreme Court disapproved of excessive financial conditions for default bail.
Implementation of Bail Guidelines
The Court referred to the Supreme Court’s directions in In Re Policy Strategy for Grant of Bail (2024), which mandates the release of undertrial prisoners who cannot meet strict bail conditions. The ruling emphasized that lower courts must ensure that bail conditions do not amount to an indirect denial of bail.
Final Order
Considering the prolonged incarceration and legal precedents, the Punjab and Haryana High Court ruled in favor of the petitioner. It ordered:
- The petitioner’s release on modified bail conditions.
- Bail bond of ₹50,000 with one surety of the same amount.
- No requirement of a bank guarantee or local surety.
- The petitioner must cooperate with the investigation and appear before the court as required.
Synopsis
Case Title: Pawan Kumar vs. Inspector (Preventive), CGST
Court: Punjab and Haryana High Court
Date of Judgment: March 5, 2025
Judge: Hon’ble Justice Harpreet Singh Brar
Legal Issue: Reduction of harsh bail conditions in a CGST fraud case
Key Findings:
- Bail conditions must be reasonable and not amount to an indirect denial of bail.
- Courts must follow Supreme Court guidelines ensuring fairness in bail conditions.
- The petitioner was entitled to default bail and relief under Section 479 BNSS due to prolonged incarceration.
- The ruling reinforces that bail conditions should be just and not impose an undue financial burden on the accused.
Conclusion
This case serves as an important reminder that bail conditions must be reasonable and should not serve as a tool for prolonged incarceration. The judgment highlights the responsibility of courts to ensure that the principle of ‘bail, not jail’ is upheld in line with constitutional safeguards. The decision reinforces judicial accountability in ensuring that personal liberty is not unfairly curtailed through impractical bail conditions.
About Advocate Anoop Verma
Advocate Anoop Verma is a highly experienced criminal lawyer practicing at the Punjab and Haryana High Court and the Supreme Court of India. With a deep understanding of criminal law, he has successfully represented clients in high-profile cases, including white-collar crimes, frauds, and economic offenses. Known for his strategic legal acumen, Advocate Anoop Verma is committed to ensuring justice and safeguarding the rights of his clients.