Economic Offences: Jail Not Bail?

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Economic offences have been given a peculiar position in bail jurisprudence under criminal laws in India. Some examples of such crimes are corporate fraud, tax evasion, money laundering, currencies forgery, and cybercrime. Economic offenders involved in such scams are usually in positions of responsibility and executive posts in enormous companies. They are often the mastermind and malefactor in organizing and planning the crime. However, once the crime is committed and the investigation has been initiated, several people are roped into the criminal system. Some of these people might have been unaware that such a crime was taking place under their supervision. Therefore, it is essential that procedural safeguards are in place and a uniform process or criteria is adopted when considering bail of the detained i.e. the culprit or the guilt-free, as may be determined by trial.

In this article, the author sheds light on certain ambivalent observations by courts on the grant of bail in economic offences and the need for a pragmatic approach in granting bail.

The Settled position of Law

It has been laid down in a plethora of judgments that economic offences are treated differently than other categories of offences. This is due to the gravity of the offence which is an extremely relevant factor while considering bail. In criminal law, the gravity of the criminal activity and its magnitude is directly proportional to the punishment the offender has to face. In 2019, the judgement of P. Chidambaram v. Directorate of Enforcement, introduced the concept of the Triple test or the Tripod test.

The triple test states that the alleged offender seeking bail should not

  1. be likely to abscond or be at flight risk
  2. tamper with the witnesses or
  3. destroy evidence.[1]

If these requirements are satisfied, then bail should be granted. Justice A.S. Bopanna was of the view that “even if the allegation is one of grave economic offence, it is not a rule that the bail should be denied in every case, since there is no bar created in the relevant enactment passed by the Legislature, nor does the bail jurisprudence provide for so.”

In spite of this change in position of law, courts have still been hesitant in applying the triple test, while granting or denying bail. One of the main reasons being the consequences of the offence.

These offences have a crippling effect on the economy as they deplete the economic status of the country not only nationally but also globally. Nationally, it reduces the Gross Domestic Product (GDP) of the Nation which forces the country to take loans from Financial Institutions.

The offenders fraudulently extract huge amount of borrowings from banks which is not repaid to the banks, and this directly affects the status of the banks. The banks later on find themselves in a financial crisis where it is impossible to get the money back from the offenders. Globally, this offence affects the monetary status of the country which later on disturbs the import and export business of the Nation, as there will be no revenue for the government and this makes the nation economically poor.

Incongruency between the Object of Bail and Gravity of Offence

A bail plea is critical for the alleged offender, as his freedom is at stake. If bail is granted, he can work towards proving his innocence at trial and access appropriate legal services to build his case. The primary objective of bail is to secure the attendance of the person at trial but at the same time granting him his liberty to be free. An accused person who enjoys freedom is in a much better position to look after his case and to properly defend himself than if he were in custody.

Personal Liberty is indispensable to the nature of bail. Most of the economic offenders are kept in custody for a long period of time pending investigation and trial. The general rule is that bail is the rule and jail is the exception. But this principle has now taken a backseat, considering the rise in economic offences and the magnitude of it that affects millions and it also hampers the liberty of the offender. However, as a presumably innocent person, he is entitled to freedom and every opportunity to look after his own case. Therefore, he must have his freedom to enable him to establish the innocence[2]. Nonetheless, is it still justified to grant bail in such swindles where crores have been laundered?

Hypothesis behind Grant of Bail

When considering bail in economic crimes, the gravity of an economic offence is directly proportional to the impact and loss caused in society. Money laundering is a serious threat to the national economy and national interest[3]. In Sanjay Chandra v. Central Bureau of Investigation, the ‘2G scam’ entailed the fraudulent allocation of 2G bandwidth spectrum to private entities in the telecom sector causing the exchequer an estimated loss of Rs. 30,000 crores. In this case, the Supreme Court observed that it has to take notice of the huge financial loss. The scope of consideration relating to bail includes the term of sentence being seven years, if convicted and in that regard, it has been held that in determining the grant or otherwise of bail, the seriousness of the charge and severity of the punishment.[4] The Sanjay Chandra case has distinctively elaborated the relevant aspects to be considered while granting bail. The two vital factors being the gravity of offence and the severity of punishment prescribed in law.  

The question the author puts to the reader is “Should the magnitude of the offence affect the liberty of the alleged offender at the stage of considering bail?” In the case of Sanjay Chandra, it was observed that it should be a factor when considering bail. However, in order to have a fair trial, the impact of the offence and the loss caused by the commission of the act cannot be a primary or guiding factor in the grant of bail. It can certainly be a factor to enhance the punishment of the offender once the trial has taken place and the offender has been convicted, but it cannot be a facet while granting bail as it can cloud the judgment of the Judge.

Investigation at the stage of granting bail is pivotal. The majority view taken by judges is that there is always a chance of the alleged offender tampering with the investigation and destroying evidence. However, once the investigation is completed and the charge-sheet has been filed, the offender should be enlarged on bail unless there is a serious contention of the offender violating the triple test, as laid down in Chidambaram[5]. The trial may take a prolonged period and most offenders are detained for an indefinite period before trial commences. This itself is an infringement of their personal liberty. Therefore, the gravity of the offence and seriousness of the charge should not deter courts in enlarging the offender on bail.

A Bombay High Court judgment in Khemlo Sakharam Sawant v. State, beheld a hard-headed approach when granting bail. The Court was of the view that an economic offence cannot be equated with a serious offence like murder. The Court should not be swayed away by the perception of morality but should confine its decision to the requirements of law.[6] Applying this position, it can be interpreted that public morality should not be a factor in these offences. Strict adherence should be made to the test laid down in the grant of bail in such offences. As pointed out by Justice Krishna Iyer in the State of Rajasthan v. Balchand, that “the basic rule may perhaps be tersely put as bail, not jail, except where there are circumstances suggestive of fleeing from justice or thwarting the course of justice.” [7]

Conclusion

Courts have to consider bail matters in economic offences with great caution. Grant of bail cannot be assessed by the repercussions or trail of the offence, which was the view taken earlier.  The judge has to ensure that when bail is granted, there is parity between a fair investigation and a fair trial. The right to freedom and personal liberty has to be synchronized with the duty of courts to deliver justice. Bail in these offences cannot be granted from the eyes of righteousness. If it is perceived from this aspect, then the liberty of the alleged offender can often be compromised. This can be avoided by the application of the triple test and strictly confining grant of bail to the parameters as laid down in the test. Hopefully, by adhering to this, we may be able to achieve justice expeditiously without hampering the personal liberty of the accused.


[1] P. Chidambaram v. Directorate of Enforcement [2019 SCC Online SC 1549]

[2] Giri Raj v. State Of Haryana, CRM-M No.19535 of 2018 

[3] Gautam Kundu v. Manoj Kumar [(2015) 16 SCC 1]

[4] Sanjay Chandra v. CBI [(2012) 1 SCC 40]

[5] P. Chidambaram v. Directorate of Enforcement [2019 SCC Online SC 1549]

[6] Khemlo Sakharam Sawant v. State [2001 SCC Online Bombay 395]

[7] The State of Rajasthan v. Balchand [AIR 1977 SC 2447]

Written By

Vanshika Shroff

Law Student, Pravin Gandhi College of Law

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