Facts of the Case

The applicant, Ranjita Pegu, proprietor of M/s Ram Electronics & Equipment, sought anticipatory bail under Section 438 of the Code of Criminal Procedure, 1973, in connection with Tezpur P.S. Case No. 2446/2021, registered under Sections 406, 420 and 506 of the Indian Penal Code, 1860.

The prosecution alleged that the applicant had purchased 35 E-Rickshaws from the informant for approximately ₹29.39 lakh under an agreement that payment would be made in instalments after sale of the vehicles. The applicant had already paid ₹14.30 lakh, while the balance remained unpaid.

According to the applicant, the remaining payment could not be made due to severe financial hardship arising from the COVID-19 pandemic and poor market conditions. Some vehicles were still lying unsold in the showroom, while others had been sold to dealers on credit.

Earlier, the High Court had granted interim anticipatory bail subject to payment of the outstanding amount. Although the applicant cooperated with the investigation and appeared before the Investigating Officer, she could not comply with the payment condition.

The issue before the Court was whether anticipatory bail should be denied solely because the outstanding amount had not been recovered.

 

Issues Involved

  1. Whether anticipatory bail can be refused merely because the accused failed to repay the alleged outstanding amount.
  2. Whether custodial interrogation was necessary for investigation in a commercial transaction involving alleged cheating and criminal breach of trust.
  3. Whether non-compliance with earlier payment directions justified cancellation of interim anticipatory bail.

 

Petitioner's Arguments

  • The applicant submitted that she was a genuine businesswoman holding valid trade licence, GST registration and Importer-Exporter Code.
  • She had already paid ₹14.30 lakh through banking channels, demonstrating her bona fide intention.
  • The remaining amount could not be paid due to genuine financial losses caused by the COVID-19 pandemic.
  • She had fully cooperated with the investigation, appeared before the Investigating Officer and her statement under Section 161 CrPC had already been recorded.
  • The offences alleged were compoundable in nature and negotiations for settlement were continuing.
  • Custodial interrogation was unnecessary since all relevant facts had already been disclosed.
  • Reliance was placed upon the Supreme Court decision in Dilip Singh vs State of Madhya Pradesh & Another, wherein it was held that criminal courts granting bail or anticipatory bail should not act as recovery agents for realizing disputed dues.

 

Respondent's Arguments

  • The informant argued that the applicant had dishonest intention from the very beginning while purchasing the E-Rickshaws.
  • Despite repeated opportunities granted by the High Court, she failed to comply with directions requiring payment of the balance amount.
  • Her conduct reflected an intention to cheat the informant.
  • The State also submitted that although the applicant had cooperated during investigation, she had failed to honour her commitment regarding repayment.

 

Court Order / Findings

The Gauhati High Court observed that:

  • The applicant had already joined the investigation and cooperated with the Investigating Officer.
  • Her statement under Section 161 CrPC had been recorded.
  • Although she failed to comply with earlier directions regarding payment, such non-payment alone could not justify denial of anticipatory bail.
  • The Court emphasized that custodial interrogation was not necessary merely for recovery of money.
  • Keeping the applicant in custody would neither facilitate repayment nor serve any meaningful investigative purpose.
  • The Court relied upon the settled principle that criminal courts cannot function as recovery agents while exercising jurisdiction under Section 438 CrPC.

Accordingly, the Court made the interim anticipatory bail absolute, subject to the earlier terms and conditions, while directing the applicant to continue cooperating with the investigation and make the balance payment in accordance with previous orders.

 

Important Clarification

  • Mere non-payment of an alleged outstanding amount does not automatically justify denial or cancellation of anticipatory bail.
  • Recovery of money cannot be the sole ground for custodial interrogation when the accused has cooperated with the investigation.
  • Courts exercising jurisdiction under Section 438 CrPC should not convert bail proceedings into recovery proceedings.
  • Financial disputes having criminal allegations must still satisfy the necessity of custodial interrogation before anticipatory bail is refused.
  • Cooperation with investigation remains a significant consideration while deciding anticipatory bail applications.

 

Sections Involved

Code of Criminal Procedure, 1973

  • Section 438 – Anticipatory Bail
  • Section 161 – Examination of Witnesses by Police

Indian Penal Code, 1860

  • Section 406 – Criminal Breach of Trust
  • Section 420 – Cheating and Dishonestly Inducing Delivery of Property
  • Section 506 – Criminal Intimidation

 

Link to download the order -
https://mytaxexpert.co.in/uploads/1782968985_115compressed.pdf

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