Apex Court Orders High Court to Expedite Bail Decision for Company Director Accused in Subsidy Diversion Case
In a landmark judgment delivered on January 21, 2026, the Supreme Court of India criticized the practice of lower courts imposing conditions of upfront deposits for granting bail. The judgment was passed in the case of Rakesh Jain v. State, where the appellant, a director of M/s Pragat Akshay Urja Limited, was implicated in the diversion of subsidy funds amounting to Rs. 4.10 crore. The appellant, Rakesh Jain, had been granted interim bail by the Delhi High Court on the condition of depositing the alleged diverted amount. However, the High Court later canceled the interim bail due to non-compliance with the deposit condition.
The Supreme Court bench, comprising Justices Manoj Misra and Manmohan, granted leave to the appellant and directed the High Court to decide the regular bail application on its merits without deferring it due to unmet deposit conditions. The apex court stayed the High Court's order denying interim bail extension and emphasized that bail applications should be adjudicated based on their merits rather than contingent on financial conditions.
The Supreme Court's decision underscored that such financial conditions could derail the criminal justice system, turning it into a tool for extortion and coercing settlements. The court noted that the culpability of the appellant, being a company director, should be established in trial proceedings, and not presumed under Section 409 of the Indian Penal Code.
The judgment draws a clear distinction between the present case and previous rulings, notably referring to the decision in Gajanan Dattatray Gore v. State of Maharashtra, which condemned the imposition of deposit conditions for bail. In contrast, the respondent's reliance on Kundan Singh v. Superintendent of CGST and Central Excise was dismissed as it dealt with the broader principle of questioning agreed-upon conditions.
The Supreme Court's directive ensures that bail applications are processed expeditiously and justly, preventing undue delays caused by financial stipulations. The court mandated the High Court to address the appellant's bail plea within three weeks, maintaining the interim bail conditions until a decision is reached.
Bottom Line:
Bail conditions - Courts should not impose conditions requiring upfront deposits or undertakings for such deposits for granting bail, as it may derail the criminal justice system and encourage misuse. Bail applications should be decided on their merits.
Statutory provision(s): Criminal Procedure Code, 1973, Section 409 of the Indian Penal Code, 1860
