State of Bihar Vs Divesh Kumar Chaudhry & Anr. (Supreme Court of India)
Summary: The Supreme Court of India in State of Bihar Vs Divesh Kumar Chaudhry & Anr. considered a batch of special leave petitions filed by the State of Bihar and Bihar State Food and Civil Supplies Corporation challenging orders granting anticipatory bail or regular bail to accused persons in cases involving alleged misappropriation of government-supplied paddy. The State alleged that approximately Rs. 1,500 crore had been misappropriated and around 600 First Information Reports (FIRs) had been registered. Under agreements executed with various rice mills, paddy was entrusted to mill operators for milling and return of the corresponding quantity of rice. However, according to the prosecution, the rice was either not returned or was returned only partially, resulting in substantial financial loss to the State. The State argued that granting anticipatory bail or regular bail in cases involving such large-scale alleged misappropriation could adversely affect the investigation and trial.
The Supreme Court examined the relevant contractual provisions governing the milling arrangements. Clause 3 of the agreement required the rice mill operators to furnish bank guarantees equivalent to the value of the paddy received for milling or pledge immovable property of corresponding value. Clause 12 provided that, in the event of default in complying with the agreement, the bank guarantees could be forfeited and legal proceedings initiated for recovery from the mortgaged immovable property. The Patna High Court had granted anticipatory bail or regular bail subject to deposit of 10% to 20% of the amount allegedly involved in the respective cases. The Supreme Court observed that the bail orders had been operating for more than one year and that the financial interests of the State were already secured or could be adequately protected through contractual guarantees. Consequently, the Court declined to cancel the anticipatory bail or regular bail granted to the accused persons.
While refusing cancellation of bail, the Supreme Court modified the existing bail orders by imposing additional mandatory conditions. It directed all accused persons to furnish bank guarantees, wherever not already furnished, or renew expired guarantees within one month, failing which their anticipatory bail or regular bail would automatically stand cancelled. The accused were also required to cooperate with the investigation and trial, and failure to appear when required could constitute grounds for cancellation of bail by the trial court. The Court further directed that investigation in the concerned cases must be completed within three months. To ensure efficient disposal of the prosecutions, it ordered that all accused persons should be tried at five designated centres, namely Patna, Gaya, Chhapra, Darbhanga and Purnia, before judicial officers of appropriate rank determined by the High Court. The High Court was authorised to specify the territorial jurisdiction of these courts, while the State Government could provide additional judicial officers and infrastructure where necessary.
The Supreme Court further directed that the judicial officers assigned to these cases would deal with them exclusively, although other work could be assigned when they were free from their designated responsibilities. The concerned authorities were permitted to encash bank guarantees upon determining that the terms of the milling agreements had been breached, subject to the legal remedies available to the parties. Bank guarantees not otherwise encashed were required to remain valid until completion of the trials, subject to further interim or final orders of the trial courts. Any amounts already deposited by the accused were to be adjusted against the bank guarantees required to be furnished. Additionally, all accused persons were directed to surrender their passports before the respective courts within four weeks and were prohibited from leaving India without prior permission of the concerned court. These conditions were intended to secure the State’s financial interests while ensuring the availability of the accused during investigation and trial.
The Supreme Court clarified that any accused person remaining in custody would be entitled to bail in accordance with law upon compliance with the stipulated conditions. It further held that other proceedings pending between the parties would remain unaffected and could continue independently in accordance with law. The trial courts and the High Court were granted liberty to issue additional directions or modify the conditions imposed by the Supreme Court, depending upon the individual facts of a case or the exigencies of the situation. Accordingly, the Supreme Court disposed of the special leave petitions and all pending applications. The decision demonstrates that where bail has already been granted and the financial interests of the State can be secured through appropriate guarantees, cancellation of bail may not be necessary merely because substantial monetary allegations are involved. However, continuation of such bail may be made subject to stringent financial safeguards, cooperation with investigation, attendance before courts and restrictions on foreign travel.
FULL TEXT OF THE SUPREME COURT JUDGMENT/ORDER
Heard.
Permission granted.
Delay condoned.
These petitions have been preferred by the State of Bihar/Bihar State Food Civil Supplies Corporation against orders granting anticipatory bail/bail, in connection with cases, the facts of which are identical.
It has been stated by Mr. Siddharth Luthra, learned senior counsel appearing for the State/Corporation, that a sum of Rupees fifteen hundred crores in all has been allegedly misappropriated by the accused for which 600 FIRs have been filed. According to the case of the State, agreements for milling of paddy were entered into with different rice mills in pursuance of which paddy was handed over for milling but the rice from the milled paddy was not returned or was returned partly. Thus, there is misappropriation to a huge extent. In such circumstances, grant of anticipatory bail/bail will seriously hamper the investigation/trial resulting in huge loss to the State.
Our attention has been drawn to the Deed of Agreement. Clause 3 thereof provides for furnishing of bank guarantee for the value of paddy, which is taken for milling, or for pledging of the immovable property of the value of the paddy. There is also provision in clause 12 that in case of default of terms of agreement the bank guarantee can be forfeited and legal action initiated for recovery of the amount from the mortgaged immovable property.
The High Court has passed an order for deposit of 10 to 20 % of the amount, alleged to be involved in different cases for grant of bail/anticipatory bail..
Since the anticipatory bail/bail was granted more than one year back and financial interest of the State is or can be secured, we are not inclined to cancel the anticipatory bail/bail but modify the order of granting of anticipatory bail/bail conditional adding conditions as follows:
(1) The accused in all the FIR(s), will ensure that bank guarantee, if not furnished, is furnished and if lapsed, is renewed within a period of one month from today failing which the anticipatory bail/bail granted will stand cancelled.
(2) The accused will cooperate with investigation/trial and their failure to appear, when required, will be a ground for cancellation of anticipatory bail/bail. An order of cancellation will be passed by the trial court on being satisfied about such failure.
(3) The investigation will be completed within a period of three months.
(4) All the accused will be tried only at five places viz. Patna, Gaya, Chhapra, Darbhanga and Purnia by officers of the appropriate rank determined by the High Court within one week from today. The High Court may specify the area of jurisdiction of the said five courts by a public order. If required by the High Court, the State Government may sanction extra strength of officers with requisite infrastructure so that normal work of courts is not disturbed on account of the special arrangement for these cases.
(5) The officers posted will deal with these cases exclusively. If free from their work, any other work may be assigned to the said officers.
(6) The concerned authorities will be at liberty to encash the bank guarantee(s) after holding that there is a breach of terms of the agreement which decision will be subject to appropriate remedies of the parties.
(7) If not otherwise encashed, the bank guarantee will be kept alive till the trial is over. However, deposits/furnishing of bank guarantees will be abide by further orders of the trial court, interim or final.
(8) If any amount is deposited by the accused, the said amount will be adjusted in the amount of the bank guarantee, which is to be furnished by the accused.
(9) The accused will surrender their passports to the respective courts within a period of four weeks from today and will not leave the country without prior permission from the concerned court.
On compliance of the above order, if any accused is in custody, he will be granted bail in accordance with law.
Any other proceedings between the parties will remain unaffected by this order and the same can proceed in accordance with law.
The trial court/High Court will be at liberty to pass any further order which it considers appropriate, having regard to the individual fact situation or modify the above directions in exigencies of the situation.
The special leave petitions are disposed of accordingly.
Pending applications, if any, shall also stand disposed of.
