CENTRUM FINANCIAL SERVICES LIMITEDversusSTATE OF NCT OF DELHI AND ANR.

                         [2022] 8 S.C.R. 19                               19


          CENTRUM FINANCIAL SERVICES LIMITED                              A
                                  v.
              STATE OF NCT OF DELHI AND ANR.
                  (Criminal Appeal No. 94 of 2022)
                         JANUARY 28, 2022                                 B
          [M. R. SHAH AND SANJIV KHANNA, JJ.]
      Bail –Non-consideration of relevant factors– Penal Code,
1860 – ss.409, 420, 467, 468, 471 and 120B –Commercial
transaction – Respondent no.2-accused granted bail by High Court–
Correctness of – On appeal, held:While releasing Respondent no.2          C
on bail, the High Court has not at all considered the relevant factors
including the nature and gravity of accusation;serious allegations
of siphoning off the huge amount, the modus operandi and the
manner in which the offences were committed through shell
companies and creating false/forged documents and/or misusing             D
documents of the employees and showing them as Directors of the
fake and shell companies –High Court has also not taken into
consideration the status report filed by the I.O. detailing how
systematically the accused have committed the offence and
misappropriated the huge sum through shell companies – High Court
did not exercise the jurisdiction judiciously and granted the bail        E
mechanically by observing that the case arises out of a commercial
transaction – Impugned order set aside – Respondent no.2 to
surrender.
      Bail – Cancellation of – Duty of appellate court – Plea of
accused that after being released on bail there are no allegations        F
of misusing the liberty and thus the bail may not be cancelled –
Held: There is no absolute proposition of law that once the bail is
granted by the High Court, in absence of any allegation of misuse
of liberty and/or breach of any of the conditions of the bail, the
bail cannot be set aside when grant of bail is itself subject matter of
                                                                          G
challenge in appeal/revision – Rejection of bail in a non-bailable
case at an initial stage and cancellation of bail so granted has to
be dealt with and considered on different basis and that very cogent
and overwhelming circumstances are necessary for an order
directing the cancellation of the bail already granted – Thus, on
very cogent and overwhelming circumstances the bail can be                H
                                19
20           SUPREME COURT REPORTS                     [2022] 8 S.C.R.


A    cancelled –Where a Court while considering an application for bail
     fails to consider the relevant factors, an Appellate Court may
     justifiably set aside the order granting bail – Appellate Court is
     thus required to consider whether the order granting bail suffers
     from a non-application of mind or a prima facie view from the
     evidence available on record.
B
          Bail – Grant of – Relevant factors to be considered –
     Discussed.
          Prabhakar Tewari vs. State of U.P. (2020) 11 SCC 648;
          Gurcharan Singh vs. State (Delhi Administration) (1978)
C         1 SCC 118 : [1978] 2 SCR 358; Prasanta Kumar Sarkar
          vs. Ashis Chatterjee and Anr. (2010) 14 SCC 496 :
          [2010] 12 SCR 1165; Neeru Yadav vs. State of UP &
          Anr. (2016) 15 SCC 422 : [2015] 10 SCR 802; Anil
          Kumar vs. State (NCT of Delhi) (2018) 12 SCC 129 :
          [2017] 11 SCR 195; Prahlad Singh Bhati vs. NCT of
D
          Delhi & Ors. (2001) 4 SCC 280 : [2001] 2 SCR 684;
          Mahipal vs. Rajesh Kumar alias Polia and Another
          (2020) 2 SCC 118 : [2019] 14 SCR 529 – relied on.
          Dolat Ram vs. State of Haryana (1995) 1 SCC 349 :
          [1994] 6 Suppl. SCR 69; X vs. State of Telangana (2018)
E
          16 SCC 511 : [2018] 4 SCR 466 – referred to.
                           Case Law Reference
     [1994] 6 Suppl. SCR 69          referred to           Para 4.2
     [2018] 4 SCR 466                referred to           Para 4.2
F
     (2020) 11 SCC 648               relied on             Para 4.2
     [1978] 2 SCR 358                relied on             Para 4.2
     [2010] 12 SCR 1165              relied on             Para 10

G    [2015] 10 SCR 802               relied on             Para 10.1
     [2017] 11 SCR 195               relied on             Para 10.2
     [2001] 2 SCR 684                relied on             Para 10.2
     [2019] 14 SCR 529               relied on             Para 12.1
H
CENTRUM FINANCIAL SERVICES LIMITED v. STATE OF NCT                          21
               OF DELHI AND ANR.

       CRIMINAL APPELLATE JURISDICTION: Criminal Appeal No.                 A
94 of 2022.
      From the Judgment and Order dated 14.09.2020 of the High Court
of Delhi at New Delhi in Bail Application No.2442 of 2020.
       Siddharth Dave, Ashutosh Kumar, Ms. Namita Choudhary, Ms.
Srishti Khurana, Ms. Kritika Khurana, Advs. for the Appellant.              B

      Mukul Rohatgi, Vikas Pahwa, Sr. Advs., Chirag M. Shroff, Roshan
Santhalia, Vikas Sethi, Ms. Puja Jakhar, Advs. for the Respondents.
      The Judgment of the Court was delivered by
      M. R. SHAH, J.                                                        C
       1. Feeling aggrieved and dissatisfied with the impugned judgment
and order dated 14.09.2020 passed by the High Court of Delhi at New
Delhi in Bail Application No.2442 of 2020 by which the High Court has
allowed the said application preferred by the Respondent No.2 herein
and has directed that he be released on bail in connection with FIR         D
No.128 of 2019 PS Economic Offences Wing in New Delhi for the
offences under Sections 409, 420, 467, 468, 471 and 120B IPC, the
original complainant has preferred the present appeal.
       2. That the appellant herein a non-banking financial company
(NBFC) lodged an FIR/complaint with the Economic Offences Branch,           E
New Delhi against the company M/s Sri Aranath Logistics Limited
(formerly known as M/s LMJ Logistics Limited), Respondent No.2 herein
Jayant Kumar Jain – Managing Director and others for the offences
under Sections 409, 420, 467, 468, 471 and 120B IPC. It was alleged
against the accused – Respondent No.2 herein that he is the Managing
                                                                            F
Director of M/s Aranath Logistics Limited engaged in the business of
multi-commodity trading of agricultural and non-commodities agricultural.
That by way of written agreement accused availed loan credit facilities
to the tune of Rs.25 crores for a term of 180 days from the complainant
company. It was alleged that the said amount of Rs.25 crores was
disbursed in the year 2017. It was alleged that the said amount of Rs.25    G
crores was required to be used by the company for its own purpose. It
was further alleged that for the purpose of repayment of loan, no stock
statement was submitted and mortgage was also not created as agreed
between the parties. It was further alleged that instead of using the
amount for the purpose mentioned in the agreement the same was
                                                                            H
22             SUPREME COURT REPORTS                            [2022] 8 S.C.R.


A    transferred to several fake/shell companies. It was further alleged that
     at the time of availing the loan the accused misrepresented to the
     complainant about the financial health of the company of the accused. It
     was further alleged that the amount of around Rs.8 crores stated to
     have been diverted into such shell companies which were created by
     the accused in the name of his employees and bank account was opened
B
     for transaction of those companies by using forged and fabricated
     documents of identities of those employees and the said amount was
     further siphoned off to other companies which were connected to the
     accused. It was further alleged that Directors of those shell entities
     have stated that they have not opened the bank account in the said name
C    or said firm and their KYC form was misused by the accused. It was
     further alleged that a sum of Rs.15 crores was transferred to another
     company – LMJ International Ltd. and the said amount was used for
     the purpose of setting off against the previous liability of the said company
     with the Corporation Bank, Calcutta. That after the preliminary
     investigation on the complaint of the appellant herein – original
D
     complainant, the Economic Offences Wing having found a prima facie
     case against Respondent No.2 and others, FIR being FIR No.128 was
     registered. The Respondent No.2 came to be arrested on 03.07.2020.
     The Respondent No.2 filed an application before the learned Metropolitan
     Magistrate seeking bail under Section 437 Cr.P.C. One another bail
E    application for regular bail being Bail Application No.903 of 2020 was
     moved on behalf of the Respondent No.2 – Accused before the Court
     of Sessions Judge, Patiala House Courts, New Delhi. The said bail
     application was opposed by the I.O. A status report was filed pointing
     out how the amount of 25 crores was siphoned off and transferred to
     other shell companies and how the said amount was used by the
F
     Respondent No.2 for other companies. Vide order dated 04.08.2020 by
     a detailed speaking order, the learned Sessions Judge dismissed the bail
     application. That thereafter, respondent no.2 – accused filed the present
     bail application before the High Court. The detailed status report was
     filed on behalf of the I.O. It was also submitted that the charge-sheet
G    has been filed against Respondent No.2 and other co-accused. The
     detailed status report was filed pointing out how a sum of Rs.25 crores
     to be used by M/s LMJ Logistic Limited was transferred to shell and
     other companies such as M/s LMJ Logistic Limited and how a systematic
     fraud was committed. Despite the above, by the impugned judgment
     and order, the High Court has directed to release Respondent No.2 on
H
CENTRUM FINANCIAL SERVICES LIMITED v. STATE OF NCT                            23
        OF DELHI AND ANR. [M. R. SHAH, J.]

bail merely on the ground that the case arises out of a commercial            A
transaction and is based on documents already seized.
      3. Feeling aggrieved and dissatisfied with the impugned judgment
and order passed by the High Court directing to release Respondent
No.2 – accused on bail, the original complainant has preferred the present
appeal.                                                                       B
       3.1 At the outset, it is required to be noted that after this Court
directed to issue notice to the respondents vide order dated 17.12.2020
and thereafter the matter was adjourned from time to time, on 08.01.2022
the petitioner (appellant) moved an application being Criminal
Miscellaneous Application No.4818 of 2022 seeking permission to               C
withdraw the present Special Leave Petition submitting that during the
pendency of the present Special Leave Petition, a settlement agreement
has been entered into between the petitioner (appellant) and Respondent
No.2 on 08.01.2022 and therefore, the Petitioner (appellant) is no longer
interested in pursuing the present Special Leave Petition in view of the
settlement. The said application was heard by this Court on 10.01.2022.       D
This Court shown its disinclination to permit the petitioner (appellant) to
withdraw the Special Leave Petition by observing that the petitioner
(appellant) cannot be permitted to withdraw the Special Leave Petition
in view of the serious allegations against Respondent No.2 and others.
That thereafter the learned counsel appearing on behalf of the petitioner     E
(appellant) withdrew the said application. That thereafter the present
Special Leave Petition was adjourned to 17.01.2022, at the request of
the learned counsel for the respective parties to consider the present
Special Leave Petition on merits.
       4. Shri Mukul Rohatgi, learned Senior Advocate appearing on            F
behalf of Respondent No.2 has made the following submissions in support
of his prayer and requested not to cancel the bail granted by the High
Court.
        4.1 It is vehemently submitted by Shri Rohatgi, learned Senior
Advocate appearing on behalf of Respondent No.2 that in the facts and         G
circumstances of the case and considering the fact that the dispute is of
a civil nature arising out of commercial transactions and the investigation
is concluded and the case rests on documentary evidence already
collected by the Investigating Officer during the investigation which have
been seized and that the impugned order passed by the High Court
releasing Respondent No.2 on bail is as far as back on 14.09.2020 and         H
24             SUPREME COURT REPORTS                           [2022] 8 S.C.R.


A    thereafter there are no allegations that Respondent No.2 has misused
     the liberty in between and that during the investigation Respondent No.2
     has cooperated and neither the complainant nor the State are opposing
     the bail application seriously, this Court may not cancel the bail.
           4.2 It is further submitted by Shri Rohatgi, learned Senior Advocate
B    for Respondent No.2 that in the present case out of Rs.25 crores, Rs.15
     crores were transferred to the sister concern LNJ International Limited
     and the sister concern paid off its loan which cannot be said to be an
     offence.
            4.3 Shri Rohatgi, learned Senior Advocate on behalf of Respondent
     No.2 – accused has heavily relied upon the decisions of this Court in the
C
     case of Dolat Ram vs. State of Haryana, (1995) 1 SCC 349; X vs.
     State of Telangana, (2018) 16 SCC 511; Prabhakar Tewari vs.
     State of U.P., (2020) 11 SCC 648 as well as the decision of this Court
     in the case of Gurcharan Singh vs. State (Delhi Administration)
     (1978) 1 SCC 118 in support of his submissions that once the bail has
D    been granted by the High Court and/or the Court below the same may
     not be cancelled unless it is found that the accused has violated any of
     the terms and conditions of the bail order and/or has misused any liberty
     shown to him while releasing him on bail and/or there are any other
     peculiar circumstances.
E          4.4. Making the above submissions it is prayed to dismiss the
     present appeal.
            5. Present appeal is opposed by learned Counsel on behalf of
     Respondent – State. A status report on behalf of the State has been filed
     in which it is stated that the State had filed a status report on 09.09.2020
     before the High Court and before the High Court, the State vehemently
F
     opposed the bail of Respondent No.2. However, at that stage, further
     investigation was underway and a supplementary charge-sheet was yet
     to be filed. The same has now been filed. The State shall abide by the
     directions/order passed by this Hon’ble Court.
            6. In the status report it has been pointed out how systematic
G    fraud has been committed by Respondent No.2 and others siphoning off
     huge amount of Rs.25 crores through other Shell Companies who are
     found to be fake and non-existent. A supplementary charge-sheet is also
     filed on further investigation. A detailed status report has been filed
     pointing out how shell entities were used as conduit entities to transfer
H    money to the main company of the accused i.e., LMJ Logistics Limited.
CENTRUM FINANCIAL SERVICES LIMITED v. STATE OF NCT                            25
        OF DELHI AND ANR. [M. R. SHAH, J.]

      7. We have heard learned counsel appearing on behalf of the             A
respective parties at length.
       8. Having gone through the impugned judgment and order passed
by the High Court directing to release the Respondent No.2 on bail it
appears that the High Court has directed to release the Respondent
No.2 on bail mainly on the ground that the case arises out of a commercial    B
transaction and is based on documents already seized. Para 16 contains
the only reasoning while releasing Respondent No.2 on bail, which reads
as under:
      “16. Coming to the facts of the present case, it is an admitted fact
      that the co-accused namely Navin Kumar Jain and Hulash Chand            C
      Jain were the other Directors and shareholders of SALL as well
      as LMJIL. They also signed/undertook personal guarantee to the
      complainant company in their capacity as Directors of the SALL
      against the “Working Capital Demand Loan”. Navin Jain had also
      signed the Tripartite Off-take Agreement in the capacity of
      Director of LMJIL. Both of them were not even arrested and the          D
      chargesheet against them was filed without arrest. During two
      years of enquiry/investigation, the petitioner joined investigation
      on multiple occasions. After his arrest, the EOW sought only one
      day PC remand. Neither in the Status Report nor during the course
      of arguments, any apprehension was shown that the petitioner is         E
      a “flight risk”. The case arises out of a commercial transaction
      and is based on documents that already stand seized. The petitioner
      has already approached the NCLT where a moratorium on the
      assets/properties has been declared and an IRP has been
      appointed. The complainant has already approached NCLT.”
                                                                              F
       9. From the aforesaid it can be seen that while releasing the
Respondent No.2 on bail the High Court has not at all adverted to and/or
considered the nature of accusation and the material found/collected
during the course of investigation and the serious allegations of siphoning
off the huge amount through various shell companies. The High Court
has not at all dealt with and/or considered any of the allegations and/or     G
material collected during the course of the investigation which were
specifically pointed out and mentioned in the status report filed by the
I.O. From the status report and even the charge-sheet/supplementary
charge-sheet papers it has been found during the course of the
investigation that a sum of Rs.25 crores was disbursed by the complainant     H
26            SUPREME COURT REPORTS                          [2022] 8 S.C.R.


A    to Respondent No.2 and its company M/s LMJ Logistics Limited. The
     said amount was disbursed for its own use. During the course of the
     investigation, it has been found that the said amount was debited to the
     various companies/entities as under:


B




C




D




E




            9.1 During the course of the investigation, it has been found that
F    Rs.15 crores was transferred to another company/LMJ International
     Limited through some of the fake companies and the said another
     company – M/s LMJ International Limited used that amount to clear its
     dues of Corporation Bank, Kolkata. During the investigation it has been
     found that a sum of Rs.2,49,25,720/- was transferred to one Sairam
     Agrocorp Pvt. Ltd. and it was further transferred to LMJ International
G    Limited on the same day. Similarly, the amount of Rs.2,51,30,176/- was
     transferred in the account of Vasudev Agro Foods Pvt. Ltd. out of which
     Rs.1.82 crores approximately was transferred into account of Aldera
     Traders Pvt. Limited and it was further transferred to LMJ International
     Limited on the same day. During the course of the investigation, it has
H    been found that an amount of Rs.99,98,874/- and Rs.98,74,563/- were
CENTRUM FINANCIAL SERVICES LIMITED v. STATE OF NCT                             27
        OF DELHI AND ANR. [M. R. SHAH, J.]

transferred in the account of Sairam Agrocorp Pvt. Ltd. and consolidated       A
amount of Rs.1,98,72,914/- was further transferred to LMJ International
Limited on the same day. It has been further found that an amount of
Rs.99,96,387/- was transferred to Vasudev Agro Foods Pvt. Limited
and it was further transferred to LMJ International Limited on the same
day. Thus, it has been found that the credit facility to the tune of Rs.25
                                                                               B
crores availed by M/s LMJ Logistics Limited were not used for any
business purposes i.e., sale purchase of agri or non-agri products but it
has been rotated through shell entities and immediately transferred to
other company M/s LMJ International Limited to square off the liabilities
through the shell companies. During the course of the investigation/further
investigation it has been revealed that Sairam Agrocorp Pvt. Ltd. and          C
Vasudev Agro Foods Pvt. Ltd. are fake and shell companies and they do
not exist at the registered address. During the course of the investigation,
it has been found that some of the employees were made directors
without their knowledge and their KYC and other documents were
misused without their knowledge. As per the charge-sheet/supplementary         D
charge-sheet it appears that the investigation revealed that the accounts
in question were created to inflate the turnover of the company so that
they could avail the credit facility from various banks. It further reveals
that the shell companies were created to misappropriate/siphoned off
the money entrusted to them as a loan to the tune of Rs.25 crores. It has
been revealed that there was no genuine transaction of sale and purchase       E
but it was simply routing and re-routing of the amount received from the
complainant to different entities which were in actual being operated by
Respondent No.2. All these aforesaid allegations and the material
collected during the course of the investigation which are being part of
the charge-sheet and supplementary charge-sheet are not taken note of          F
by the High Court and the High Court has just simply ignored the same
and has released Respondent No.2 on bail by simply observing that case
arises out of a commercial transaction and the dispute is of a civil nature.
Therefore, the High Court has not at all taken into consideration the
relevant considerations while grant of bail. Even the High Court has not
                                                                               G
at all taken note of the reasoning given by the learned Sessions Court
while rejecting the bail application of Respondent No.2.
       9.2 In the light of the above facts, it is required to be considered
whether the High Court is at all justified in releasing Respondent No.2
on bail.
                                                                               H
28            SUPREME COURT REPORTS                             [2022] 8 S.C.R.


A           10. At this stage few decisions of this Court on the relevant
     considerations to be considered by the High Court while grant of bail are
     required to be referred to. In the case of Prasanta Kumar Sarkar vs.
     Ashis Chatterjee and Anr., (2010) 14 SCC 496, while cancelling
     the bail and quashing and setting aside the order passed by the High
     Court granting the bail to the accused it is observed in para 9 to 12 as
B
     under:
               “9. We are of the opinion that the impugned order is clearly
           unsustainable. It is trite that this Court does not, normally, interfere
           with an order passed by the High Court granting or rejecting bail
           to the accused. However, it is equally incumbent upon the High
C          Court to exercise its discretion judiciously, cautiously and strictly
           in compliance with the basic principles laid down in a plethora of
           decisions of this Court on the point. It is well settled that, among
           other circumstances, the factors to be borne in mind while
           considering an application for bail are:
D                (i) whether there is any prima facie or reasonable ground
              to believe that the accused had committed the offence;
                  (ii) nature and gravity of the accusation;
                  (iii) severity of the punishment in the event of conviction;
E                (iv) danger of the accused absconding or fleeing, if released
              on bail;
                 (v) character, behaviour, means, position and standing of
              the accused;
                  (vi) likelihood of the offence being repeated;
F
                  (vii) reasonable apprehension of the witnesses being
              influenced; and
                  (viii) danger, of course, of justice being thwarted by grant
              of bail.
G             [See State of U.P. v. Amarmani Tripathi [(2005) 8 SCC 21]
           (SCC p. 31, para 18), Prahlad Singh Bhati v. NCT of Delhi [(2001)
           4 SCC 280], and Ram Govind Upadhyay v. Sudarshan Singh
           [(2002) 3 SCC 598].
              10. It is manifest that if the High Court does not advert to
H          these relevant considerations and mechanically grants bail, the
CENTRUM FINANCIAL SERVICES LIMITED v. STATE OF NCT                          29
        OF DELHI AND ANR. [M. R. SHAH, J.]

    said order would suffer from the vice of non-application of mind,       A
    rendering it to be illegal. In Masroor [(2009) 14 SCC 286], a
    Division Bench of this Court, of which one of us (D.K. Jain, J.)
    was a member, observed as follows: (SCC p. 290, para 13)
             “13. … Though at the stage of granting bail an elaborate
          examination of evidence and detailed reasons touching the         B
          merit of the case, which may prejudice the accused, should
          be avoided, but there is a need to indicate in such order
          reasons for prima facie concluding why bail was being
          granted particularly where the accused is charged of having
          committed a serious offence.”
                                                                            C
        11. We are constrained to observe that in the instant case,
    while dealing with the application of the accused for grant of bail,
    the High Court completely lost sight of the basic principles
    enumerated above. The accused, in the present case, is alleged to
    have committed a heinous crime of killing an old helpless lady by
                                                                            D
    strangulation. He was seen coming out of the victim’s house by a
    neighbour around the time of the alleged occurrence, giving rise
    to a reasonable belief that he had committed the murder. We feel
    that under the given circumstances, it was not the stage at which
    bail under Section 439 of the Code should have been granted to
    the accused, more so, when even charges have not yet been               E
    framed.
       12. It is also pertinent to note that, as stated above, the
    Additional Chief Judicial Magistrate had rejected three bail
    applications of the accused but the High Court did not find it
    worthwhile to even make a reference to these orders. In this            F
    regard, it would be useful to refer to the following observations
    echoed in Kalyan Chandra Sarkar v. Rajesh Ranjan [(2004)
    7 SCC 528]: (SCC p. 536, para 12)
             “12. In regard to cases where earlier bail applications
          have been rejected there is a further onus on the court to        G
          consider the subsequent application for grant of bail by
          noticing the grounds on which earlier bail applications have
          been rejected and after such consideration if the court is of
          the opinion that bail has to be granted then the said court
          will have to give specific reasons why in spite of such earlier   H
30            SUPREME COURT REPORTS                            [2022] 8 S.C.R.


A                 rejection the subsequent application for bail should be
                  granted.”
          10.1 In the case of Neeru Yadav vs. State of UP & Anr., (2016)
     15 SCC 422, it is held by this Court in para 11 as under:
           “11. It is a well-settled principle of law that while dealing with an
B          application for grant of bail, it is the duty of the Court to take into
           consideration certain factors and they basically are: (i) the nature
           of accusation and the severity of punishment in cases of conviction
           and the nature of supporting evidence, (ii) reasonable apprehension
           of tampering with the witnesses for apprehension of threat to the
C          complainant, and (iii) prima facie satisfaction of the Court in
           support of the charge. (See Chaman Lal v. State of U.P., (2004)
           7 SCC 525)”
            10.2 In Anil Kumar vs. State (NCT of Delhi), (2018) 12 SCC
     129, it is observed and held by this Court that while granting bail, the
D    relevant considerations are, (i) nature of seriousness of the offence; (ii)
     character of the evidence and circumstances which are peculiar to the
     accused; and (iii) likelihood of the accused fleeing from justice; (iv) the
     impact that his release may make on the prosecution witnesses, its impact
     on the society; and (v) likelihood of his tampering.

E           10.3 In the case of Prahlad Singh Bhati vs. NCT of Delhi &
     Ors., (2001) 4 SCC 280, it is observed and held by this Court that the
     jurisdiction to grant bail has to be exercised on the basis of well settled
     principles having regard to the circumstances of each case and not in an
     arbitrary manner. It is observed and held as under:

F          “The jurisdiction to grant bail has to be exercised on the basis of
           well settled principles having regard to the circumstances of each
           case and not in an arbitrary manner. While granting the bail, the
           court has to keep in mind the nature of accusations, the nature of
           evidence in support thereof, the severity of the punishment which
           conviction will entail, the character, behaviour, means and standing
G          of the accused, circumstances which are peculiar to the accused,
           reasonable possibility of securing the presence of the accused at
           the trial, reasonable apprehension of the witnesses being tampered
           with, the larger interests of the public or State and similar other
           considerations. It has also to be kept in mind that for the purposes
           of granting the bail the Legislature has used the words ‘reasonable
H
CENTRUM FINANCIAL SERVICES LIMITED v. STATE OF NCT                               31
        OF DELHI AND ANR. [M. R. SHAH, J.]

       grounds for believing’ instead of “the evidence” which means the          A
       court dealing with the grant of bail can only satisfy it as to whether
       there is a genuine case against the accused and that the prosecution
       will be able to produce prima facie evidence in support of the
       charge.”
       11. Applying the law laid down by this Court in the aforesaid             B
decisions to the facts of the case on hand and the grounds on which the
High Court has released the Respondent No.2 on bail, we are constraint
to observe that in the instant case while dealing with the application of
the accused for grant of bail, the High Court has completely lost sight of
the basic principles enumerated above. The High Court has not at all
considered the modus operandi adopted by the accused in commission               C
of serious offence of siphoning and/or transferring the huge sum to another
company through shell companies. The High Court has also not taken
into consideration the status report filed by the I.O. in which in detail it
has been pointed out how systematically the accused have committed
the offence and misappropriated/siphoned off the huge sum through shell          D
companies. Thus, it appears that the High Court has not adverted to the
relevant considerations and has granted the bail mechanically by observing
that the case arises out of a commercial transaction.
        12. Now so far as the submission on behalf of the accused that as
the accused has been released on bail as far as back on 14.09.2020 and           E
that thereafter there are no allegations of misusing the liberty and therefore
the bail may not be cancelled and reliance placed upon the decisions
of this Court referred to hereinabove more particularly in the case of
X (Supra) are concerned at the outset it is required to be noted that this
is a case where it is found that the order passed by the High Court
releasing the accused – Respondent No.2 on bail has been passed                  F
mechanically and without adverting to the relevant facts and without
considering the nature of accusation and allegations and the nature of
the gravity of the accusation. Even in the decisions which are relied
upon by Shri Rohatgi, learned Senior Advocate appearing on behalf of
Respondent No.2, there is no absolute proposition of law laid down by            G
this Court in the aforesaid decisions that once the bail is granted by the
High Court, though the High Court could not have granted the bail, in
absence of any allegation of misuse of liberty and/or breach of any of
the conditions of the bail, the bail cannot be set aside when grant of bail
is itself subject matter of challenge in appeal/revision.
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32             SUPREME COURT REPORTS                            [2022] 8 S.C.R.


A           12.1 What is observed and held is that the rejection of bail in a
     non-bailable case at an initial stage and cancellation of bail so granted
     has to be dealt with and considered on different basis and that very
     cogent and overwhelming circumstances are necessary for an order
     directing the cancellation of the bail already granted. Therefore, on very
     cogent and overwhelming circumstances the bail can be cancelled. At
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     this stage the decision of this Court in the case of Mahipal vs. Rajesh
     Kumar alias Polia and Another, (2020) 2 SCC 118 is required to be
     referred to. In the said decision, it is observed and held by this Court that
     though this Court does not ordinarily interfere with the order of the High
     Court granting bail, however, where the discretion of the High Court to
C    grant bail has been exercised without due application of mind and in
     contravention of the directions of this Court, such an order of granting
     bail is liable to be set aside. Thereafter after drawing the distinction
     between the power of an appellate court in assessing the correctness of
     an order granting bail and an application for the cancellation of the bail,
D    in paragraph 16 it is observed and held as under:
           “16. The considerations that guide the power of an appellate court
           in assessing the correctness of an order granting bail stand on a
           different footing from an assessment of an application for the
           cancellation of bail. The correctness of an order granting bail is
E          tested on the anvil of whether there was an improper or arbitrary
           exercise of the discretion in the grant of bail. The test is whether
           the order granting bail is perverse, illegal or unjustified. On the
           other hand, an application for cancellation of bail is generally
           examined on the anvil of the existence of supervening
           circumstances or violations of the conditions of bail by a person to
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           whom bail has been granted.
           In Neeru Yadav v. State of U.P., (2014) 16 SCC 508], the accused
           was granted bail by the High Court [Mitthan Yadav v. State of
           U.P., 2014 SCC OnLine All 16031]. In an appeal against the order
G          [Mitthan Yadav v. State of U.P., 2014 SCC OnLine All 16031]
           of the High Court, a two-Judge Bench of this Court surveyed the
           precedent on the principles that guide the grant of bail. Dipak
           Misra, J. (as the learned Chief Justice then was) held: (Neeru
           Yadav case [Neeru Yadav v. State of U.P., (2014) 16 SCC 508],
           SCC p. 513, para 12)
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CENTRUM FINANCIAL SERVICES LIMITED v. STATE OF NCT                                33
        OF DELHI AND ANR. [M. R. SHAH, J.]

          “12. … It is well settled in law that cancellation of bail after it     A
          is granted because the accused has misconducted himself or
          of some supervening circumstances warranting such
          cancellation have occurred is in a different compartment
          altogether than an order granting bail which is unjustified, illegal
          and perverse. If in a case, the relevant factors which should
                                                                                  B
          have been taken into consideration while dealing with the
          application for bail have not been taken note of, or bail is
          founded on irrelevant considerations, indisputably the superior
          court can set aside the order of such a grant of bail. Such a
          case belongs to a different category and is in a separate realm.
          While dealing with a case of second nature, the Court does not          C
          dwell upon the violation of conditions by the accused or the
          supervening circumstances that have happened subsequently.
          It, on the contrary, delves into the justifiability and the soundness
          of the order passed by the Court.”
       12.2 Thus, as per the law laid down by this Court where a Court            D
while considering an application for bail fails to consider the relevant
factors, an Appellate Court may justifiably set aside the order granting
bail. Appellate Court is thus required to consider whether the order
granting bail suffers from a non-application of mind or a prima facie
view from the evidence available on record.
                                                                                  E
       13. From the aforesaid it emerges that while releasing Respondent
no.2 on bail, the High Court has not at all considered the relevant factors
including the nature and gravity of accusation; the modus operandi and
the manner in which the offences have been committed through shell
companies and creating the false/forged documents and/or misusing the
PAN Cards, Aadhar Cards and KYCs of the employees and showing                     F
them as Directors of the fake and shell companies. As observed
hereinabove, the High Court has not at all considered and taken into
consideration the status report and the evidence collected during the
course of the investigation. Therefore, the impugned judgment and order
passed by the High Court releasing Respondent No.2 on bail is                     G
unsustainable as the High Court while releasing Respondent No.2 on
bail has not exercised the jurisdiction judiciously and has not considered
the relevant factors which are required to be considered while grant of
bail.

                                                                                  H
34             SUPREME COURT REPORTS                         [2022] 8 S.C.R.


A           14. In view of the above and for the reasons stated above, the
     impugned judgment and order passed by the High Court releasing
     Respondent No.2 on bail deserves to be quashed and set aside and is
     accordingly quashed and set aside. Now on quashing and setting aside
     the impugned judgment and order passed by the High Court releasing
     Respondent No.2 on bail and consequently the bail being set aside, the
B
     Respondent no.2 – accused to surrender before the concerned Court/
     Jail Authority forthwith. Present Appeal is accordingly allowed.
            However, it is made clear that any observations by this Court in
     the present order shall not affect the trial and the observations made in
     the present order be treated to be confined to the impugned judgment
C    granting bail. It is further observed that after surrender it will be open
     for Respondent No.2 to move an appropriate application for bail before
     the High Court afresh after a period of three months, which shall be
     considered by the High Court in accordance with law and on its own
     merits and after taking into consideration the relevant material collected
D    during the course of the investigation which is part of the charge-sheet/
     further charge-sheet and taking into consideration the relevant factors
     to be considered while grant of bail.

     Divya Pandey                                                Appeal allowed.
     (Assisted by : Deepak Panwar, LCRA)
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