Facts of the Case

An FIR No. 142/2021 was registered at the Economic Offences Wing (EOW), Mandir Marg, Delhi, under Sections 419/420/467/468/471/120B of the Indian Penal Code, 1860, on a complaint that a GST registration in the name of M/s Madhu Enterprises had been fraudulently obtained using the complainant's PAN, and that transactions worth Rs.14.80 crore were shown through this firm between July and November 2019. Investigation traced the registered address to a landlord with no connection to the firm, and the mobile number used for GST registration to one Surjeet Singh Gusain, stated to be a security guard employed by the applicants' family. GST department records further showed that M/s Madhu Enterprises had shown sale of goods worth approximately Rs.2.27 crore to three entities — Delight Poly Plast, Shashi Plast Pvt. Ltd. and Delight Plastics — in which applicants Shashi Kant Gupta and his son Akshay Gupta were partners/directors. Apprehending arrest, both applicants sought anticipatory bail before the Delhi High Court.

Issues Involved

  1. Whether, given the documentary trail linking the applicants' controlled firms to the fraudulently registered GST entity, custodial interrogation of the applicants was necessary despite their claim of having cooperated with the investigation.
  2. Whether the applicants' shifting stands across successive bail applications and objections to the status report undermined their claim of non-involvement.
  3. Whether the Supreme Court's ruling in Pankaj Bansal v. Union of India (on non-cooperation under the PMLA) assisted the applicants on these facts.

Petitioner's Arguments

  • There were no direct or indirect allegations against the applicants in the FIR; they had always joined the investigation in compliance with notices under Section 160 CrPC and produced the documents in their possession.
  • In their objections to the status report, the applicants asserted they never dealt with M/s Madhu Enterprises, and that the relevant records were with the GST Department, Jamshedpur, which had raided the applicants' office premises.
  • Relying on Pankaj Bansal (2023 INSC 866), it was argued that mere non-cooperation or replies categorised as "evasive" cannot by itself justify treating a person as uncooperative or warrant custodial interrogation.

Respondent's Arguments

  • GST department records showed M/s Madhu Enterprises' transactions worth Rs.2.27 crore with three firms in which the applicants were directors/partners, and nine bank accounts opened at Bandhan Bank in the names of the applicants' employees/associates.
  • Surjeet Singh Gusain, in whose name M/s Madhu Enterprises was fraudulently registered, was stated to be the applicants' security guard; a Bandhan Bank relationship manager corroborated the applicants' role in facilitating the accounts.
  • Despite interim protection, the applicants failed to furnish payment details or contact persons for the Rs.2.27 crore in transactions, repeatedly stating they "did not remember," and a connected FIR No. 647/2020 under the IPC and Section 132 of the CGST Act, 2017 had also been registered against them at Sonipat, Haryana.

Court Order/Findings

  • The Court found the applicants' stands across successive bail applications and objections to the status report to be contradictory and evasive on the core question of their dealings with M/s Madhu Enterprises.
  • It distinguished Pankaj Bansal as inapplicable, holding that the answers given during investigation were, on their face, "totally evasive" rather than a genuine exercise of the right against self-incrimination.
  • The Court held that custodial interrogation of the applicants was necessary to unearth the entire chain of transactions linked with M/s Madhu Enterprises at the behest of the applicants and entities in their control.
  • Both applications were dismissed and disposed of, and the interim protection earlier granted to the applicants was withdrawn.

Important Clarification

  • A change of stance across successive anticipatory bail filings on the same core factual question can itself defeat the claim of cooperation that anticipatory bail protection is meant to reward.
  • The principle in Pankaj Bansal — that non-cooperation with a summons alone cannot justify arrest — does not extend to cases where the replies given during investigation are found to be evasive on their face rather than a bona fide exercise of the right against self-incrimination.

Sections Involved

  • Section 438, Code of Criminal Procedure, 1973 — governs anticipatory bail, the relief sought in both applications.
  • Sections 419/420/467/468/471/120B, Indian Penal Code, 1860 — offences of cheating, forgery and criminal conspiracy underlying the FIR.
  • Section 132, Central Goods and Services Tax Act, 2017 — invoked in the connected FIR (No. 647/2020) registered against the applicants at Sonipat concerning fraudulent GST registration and input tax credit.

Decision – In Favour of

Clearly in favour of the Department/State. Both anticipatory bail applications were dismissed, the interim protection earlier granted to the applicants was withdrawn, and the Court held that custodial interrogation of the applicants was necessary.

Related Case Laws

Case Details

  • Court: High Court of Delhi at New Delhi
  • Case No.: BAIL APPLN. 3366/2022 & BAIL APPLN. 926/2023
  • Coram: Justice Amit Sharma
  • Decision Date: 20 October 2023
  • Disposal Nature: Dismissed and disposed of

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