Facts of the Case

  • Origin of Case: The case originated from FIR No. 645, dated 20.11.2018, registered at Police Station City Fatehabad, District Fatehabad.
  • The Allegations: The FIR was registered at the instance of the Excise and Taxation Officer. The primary accusation against the accused persons involved the creation and operation of bogus, shell, and fake firms. These entities were allegedly set up exclusively to claim false Input Tax Credit (ITC) benefits under the Goods and Services Tax (GST) regime without any actual physical business or supply of goods taking place.
  • Role of the Petitioner: The petitioner, Rajesh Jain, was implicated based on the subsequent disclosure statement of a co-accused, Suresh Kumar @ Jon. The allegation stated that the petitioner was known to certain bank officials and had assisted the co-accused in procuring a cattle loan, though no such loan was ultimately availed.

Issues Involved

  • Whether the petitioner was entitled to the grant of regular bail under Section 439 of the CrPC given the serious allegations of economic fraud involving fake firms and fraudulent ITC claims.
  • Whether the principle of parity applies to the petitioner since the core co-accused individuals (who set up the shell firms) had already been admitted to regular bail by the High Court.
  • Whether the continuous judicial custody of the petitioner was warranted when the investigation was completed, no prior criminal history existed, and the offences were triable by a Court of Session/Magistrate where the trial conclusion would consume significant time.

Petitioner’s Arguments

  • Rule of Parity: The learned counsel for the petitioner strongly relied on the order dated 22.09.2021 passed in CRM-M Nos. 16521 & 16572 of 2021. Under this order, the main co-accused persons, Hawa Singh and Suresh Kumar @ Jon—who were directly alleged to have set up the shell firms—had already been granted regular bail by the same High Court.
  • Weak Basis of Implication: It was argued that the petitioner's name did not appear in the first disclosure statement made by the co-accused Suresh Kumar @ Jon. His name was only introduced in a second, subsequent disclosure statement with an allegation of assisting with a bank cattle loan that was never even availed.
  • Trial Delay and Custody: The counsel emphasized that the petitioner had been in judicial custody for 28 days, the investigation against him stood completed, and he had clean antecedents with no involvement in any other criminal cases. Furthermore, since the offences are triable by the Court of a Magistrate, the conclusion of the trial would inherently take a long time.

Respondent’s (State's) Arguments

  • Gravity of Economic Offence: The learned State counsel opposed the bail plea by highlighting the findings from the complainant’s (Excise and Taxation Officer) affidavit, which showed a systemic framework of shell firms created to systematically defraud the exchequer through fraudulent tax credits without real business operations.
  • Factual Submissions: While opposing the regular bail on account of the severity of the economic fraud, the State counsel placed the official custody certificate on record and candidly conceded the factual matrix: confirming the petitioner had been in custody for 28 days, the investigation was complete, and he possessed no other criminal history.

Court Order / Findings

  • Application of Mind: The Single-Bench Court presided over by Hon'ble Mr. Justice Arvind Singh Sangwan evaluated the arguments without offering any definitive remarks on the ultimate merits of the case.
  • Grant of Bail: Taking into consideration that the investigation was fully complete, the petitioner had no other criminal cases registered against him, his co-accused had already been enlarged on bail, and the trial was bound to take a long time to conclude, the High Court allowed the petition.
  • Directions: The High Court ordered the petitioner to be released on regular bail subject to his furnishing bail/surety bonds to the satisfaction of the concerned trial Court, Illaqa Magistrate, or Duty Magistrate.

Important Clarification

  • Secondary Disclosure Evidentiary Weight: The ruling subtly underscores that secondary disclosure statements of co-accused regarding non-consummated auxiliary actions (like an un-availed loan) hold weaker ground for denying personal liberty when the primary masterminds of the economic fraud have already been admitted to bail.
  • Pre-Trial Detention Limits: The court reiterated that in cases triable by a Magistrate, prolonged pre-trial detention cannot be utilized as a punitive measure when the investigation is concluded and the accused poses no flight risk or criminal recidivism threat.

Section Involved

  • Section 439 of the Code of Criminal Procedure, 1973 (CrPC): Special powers of the High Court or Court of Session regarding bail.
  • Indian Penal Code, 1860 (IPC) Sections:
    • Section 420: Cheating and dishonestly inducing delivery of property.
    • Section 406: Punishment for criminal breach of trust.
    • Section 467: Forgery of valuable security, will, etc.
    • Section 468: Forgery for purpose of cheating.
    • Section 471: Using as genuine a forged document.
    • Section 120-B: Punishment of criminal conspiracy.

Link to download the order -https://mytaxexpert.co.in/uploads/1783314861_920compressed.pdf

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