Rajiv Jindal Vs State of U.P. (Allahabad High Court)
Bail Denied in Fake GST Scam Case: Court Cites Economic Offence Gravity and Accused Conduct; Allahabad High Court Upholds Bail Rejection in Large-Scale Forgery and GST Fraud
Prayagraj: The Allahabad High Court has rejected the bail applications in the case of Rajiv Jindal Vs State of U.P., a matter involving allegations of large-scale forgery and the creation of fake firms to evade Input Tax Credit (ITC) under the Goods and Services Tax (GST) regime. The court, in its detailed observations, underscored the seriousness of economic offenses and the conduct of the accused as key factors in denying liberty.
The case stems from an FIR lodged after the Aadhaar and PAN cards of an informant were allegedly misused to register fake GST firms. This led to a racket purportedly designed to fraudulently claim and evade GST. The investigation uncovered a money trail reportedly running into crores of rupees.
One of the applicants, Gaurav Singhal, had sought bail citing that he had already been granted bail in a separate case under the GST Act concerning the operation of a racket for evading ITC through fake firms. However, the court distinguished the present case, noting it primarily involved allegations of forgery, distinct from the GST-specific offense in the previous matter. Consequently, the bail granted in the GST case was deemed not applicable here.
Jurisdiction Argument Dismissed
A significant point of contention raised by the applicants’ counsel was the matter of territorial jurisdiction. The court addressed this by referencing Section 77 of the Code of Criminal Procedure (Cr.P.C.), 1973, which stipulates that every offense shall ordinarily be inquired into and tried by a court within whose local jurisdiction it was committed. The court also clarified the definitions of ‘inquiry’ under Section 2(g) and ‘investigation’ under Section 2(h) of the Cr.P.C., highlighting that inquiry and trial are centered around the court, while investigation is conducted by the police. The court found the arguments challenging jurisdiction on this ground to be without merit, noting that while fake firms might have been registered in other states like Punjab and Maharashtra, the complainant resided in New Delhi, and the FIR was lodged in Gautam Buddh Nagar. The court observed that the offense’s occurrence could not be confined to a single location where a firm was registered, given the interconnected nature of such fraudulent schemes with other fake entities.
Admissibility of Information Leading to Discovery
The court also delved into the admissibility of information received from an accused person in police custody that leads to the discovery of a fact, as per Section 27 of the Indian Evidence Act, 1872. This section acts as an exception to the general rule that confessions made to police officers are inadmissible under Sections 25 and 26 of the Act.
The court explained that Section 27 allows for the admission of “so much information” from an accused as distinctly relates to the fact discovered. The rationale is to balance the protection against coerced confessions with the need for law enforcement to uncover facts related to a crime. The court emphasized that only the portion of the statement directly leading to the discovery is admissible, not the entire confession.
Several judicial precedents were cited to expound on the scope and application of Section 27. The landmark judgment in Pulukuri Kotayya and others v. King Emperor was referenced, which held that the phrase “distinctly related to the fact thereby discovered” is crucial, limiting admissibility only to the part of the statement that directly led to the discovery. This principle was reiterated by the Apex Court in State of Uttar Pradesh v. Deoman Upadhyaya.
More recently, in Perumal Raja @ Perumal v. State, Rep. By Inspector of Police, the court clarified that the “discovery of a fact” includes not just the object found but also the place of recovery and the accused’s knowledge of its existence. This means the discovery encompasses both the physical object and the mental awareness of the accused regarding it. The court in Perumal Raja’s case also outlined the conditions for applying Section 27: the accused must be in police custody, the information must lead to the discovery of a relevant fact not already known to the police, and only the part of the information distinctly related to the discovery is admissible. The court noted that the facts proved through admissible portions of the accused’s statement could suggest either the accused deposited the items or merely knew their location, with the former hypothesis pointing towards involvement in the offense.
Applying Section 27 to the present case, the court noted that following a secret informer’s tip and the arrest of two accused individuals, information was disclosed about an office where the firm’s work was conducted. Acting on this information, the Investigating Officer reached the premises and recovered laptops, mobiles, SIM cards, and fake invoices, thereby discovering facts that connected the individuals to the main accused involved in registering fake firms and the consequential forgery and GST theft. The court held that this part of the discovery of facts was admissible under Section 27, thus dismissing the argument that confessional statements could not be considered as evidence.
Bail is the Rule, But With Exceptions
The court acknowledged the fundamental principle in criminal law that “bail is the rule, jail is the exception,” recognizing the importance of personal liberty and the presumption of innocence. However, it also stressed that this principle is not absolute and is subject to exceptions where compelling reasons necessitate denying bail. These exceptions are typically based on factors indicating a potential risk to society, the judicial process, or the investigation.
The court enumerated several factors that courts consider while deciding on bail applications: the nature and gravity of the offense, the likelihood of the accused fleeing, the risk of tampering with evidence or witnesses, whether the accused are habitual offenders, the danger posed to society or the victim, the possibility of committing further offenses while on bail, interference with justice, and specific statutory provisions like those in the NDPS Act, UAPA, and PMLA. Economic offenses and white-collar crimes were highlighted as significant exceptions.
Economic Offences Viewed Seriously
The court placed particular emphasis on the gravity of economic offenses, such as large-scale fraud, money laundering, and corruption, noting their detrimental impact on the economic fabric of society. Such offenses are viewed seriously, and courts may be less inclined to grant bail, especially if the accused holds a position of influence. In this case, the court pointed to the involvement of a money trail running into crores, stemming from the registration of fake firms using stolen identities, which it deemed to affect society at large.
Several Supreme Court judgments were cited to reinforce the approach towards bail in economic offenses. In Y.S. Jagan Mohan Reddy v. Central Bureau of Investigation, the Apex Court held that economic offenses constitute a class apart and require a different approach to bail. These offenses, often involving deep-rooted conspiracies and huge losses of public funds, are considered grave as they threaten the country’s financial health. The court in that case outlined factors to consider, including the nature of accusations and evidence, severity of punishment, character of the accused, circumstances peculiar to the accused, possibility of securing the accused’s presence, apprehension of witness tampering, and larger interests of the public/State.
The principles from Y.S. Jagan Mohan Reddy were reiterated in Nimmagadda Prasad v. Central Bureau of Investigation, where the Supreme Court again listed similar factors for consideration in bail applications. The court in Nimmagadda Prasad also clarified that for granting bail, the court only needs to be satisfied that there are “reasonable grounds for believing” a genuine case exists and that the prosecution has prima facie evidence, without requiring proof of guilt beyond reasonable doubt at this stage.
Further, the court cited Directorate of Enforcement v. M. Gopal Reddy and another, where the Supreme Court held that in economic offenses with a significant societal impact, courts should be slow in exercising their discretion under Section 438 of Cr.P.C. (anticipatory bail).
Regarding the argument that female accused are entitled to bail under Section 437 Cr.P.C., the court opined that this benefit is typically intended for women who lack agency and not for those who are powerful, connected to powerful individuals, and involved in offenses affecting the public at large.
The court also drew a parallel between the present case and Tahir Hussain v. The Assistant Director Enforcement Directorate, where the accused was involved in cheating, falsification, and forgery of documents to fraudulently remove money from company accounts, creating fake invoices to cover the money trail. The court found a similar situation here, with the crime initiating from the registration of fake GST firms using forged documents.
Conduct of Accused and Delay Tactics
A crucial factor influencing the court’s decision was the conduct of the accused during the trial proceedings. The court noted from a report by the concerned District Judge/Chief Judicial Magistrate that the accused had reportedly avoided appearing in court and were employing tactics to delay the framing of charges, including pursuing discharge applications (one of which had already been rejected). The court viewed this as deliberate interference with the judicial process, providing a strong reason to deny bail.
The rejection of the discharge application for one of the accused was seen by the court as an indication that the charges were prima facie proven based on the material collected during the investigation and presented in the chargesheet. The court stated that in economic offenses involving a money trail of crores resulting from the registration of fake firms, where an offense under the IPC is made out, such accused cannot be treated with leniency.
Precedents on Bail Discretion
The court referenced several other significant judgments on the exercise of judicial discretion in granting or refusing bail. In Gurcharan Singh v. State (Delhi Administration), the Apex Court held that there cannot be an inflexible formula for granting bail, and the facts and circumstances of each case must govern the exercise of discretion. Paramount considerations include the likelihood of the accused fleeing and tampering with evidence to ensure a fair trial.
Prahlad Singh Bhati v. NCT, Delhi and another reiterated the principles that bail jurisdiction must be exercised judiciously, considering the nature of accusations, evidence, severity of punishment, character of the accused, likelihood of securing presence, apprehension of witness tampering, and the larger interests of the public or State.
Kalyan Chandra Sarkar v. Rajesh Ranjan emphasized that courts granting bail must exercise discretion judicially and provide reasons, especially in serious offenses, based on a prima facie satisfaction of the charge, the nature of accusation and evidence, and the risk of tampering.
State of U.P. Through CBI v. Amarmani Tripathi outlined eight specific points for consideration in a bail application, including prima facie belief of the accused’s involvement, nature and gravity of the charge, severity of punishment, risk of absconding or fleeing, character and standing of the accused, likelihood of repeating the offense, reasonable apprehension of witness tampering, and the danger of the course of justice being thwarted.
Finally, the court cited P. Chidambaram v. Directorate of Enforcement, which held that while the principle of bail being the rule and refusal the exception remains, the gravity of the offense, gathered from the facts and circumstances of each case, is a key consideration. Economic offenses are categorized as “grave,” requiring sensitivity to the allegations. However, the court also clarified that even in grave economic offenses, denying bail in every case is not a rule, and the decision must be made on a case-by-case basis, ensuring the accused’s presence for trial.
The court also mentioned that the Apex Court had recently outlined considerations for granting or refusing bail in Satendra Kumar Antil v. Central Bureau of Investigation and another.
Conclusion
Having considered the arguments, the nature of the accusation, the gravity of the offense, the money trail involved, the alleged forgery using identity documents, the conduct of the applicants in delaying the trial, the rejection of a discharge application, and the various judicial precedents, the Allahabad High Court concluded that it was not a fit case for granting bail. The bail applications were consequently rejected.
FULL TEXT OF THE JUDGMENT/ORDER OF ALLAHABAD HIGH COURT
