In a significant ruling on bail jurisprudence, the Supreme Court has held that the mere failure to deposit money or to comply with a condition cannot be a valid ground to keep a regular bail application pending or to cancel interim bail. The Bench categorically observed that Courts are duty-bound to decide bail applications on their merits, and not on the basis of deposit-related conditions.
The Supreme Court noted that,
“Here the applicant is one of the Directors of a Company. The allegations are in respect of diversion of funds by the Company. In an offence punishable under Section 409 IPC there is no presumption regarding culpability of a Director. The same would have to be established in a trial.”
The order was passed by a Division Bench comprising Justice Manoj Misra and Justice Manmohan while allowing the Criminal Appeal filed by Rakesh Jain.
According to the facts of the case, an FIR was registered in 2019 by the Economic Offences Wing (EOW) alleging diversion of subsidy funds amounting to around ₹4.10 crore by M/s Pragat Akshay Urja Limited. The appellant, Rakesh Jain, is one of the Directors of the company and was taken into custody on 12 December 2019.
Subsequently, the company deposited ₹2.17 crore, and on an assurance that the remaining amount would also be deposited, the Delhi High Court granted interim bail to the appellant on 22 April 2020. However, while the main bail application remained pending, the High Court refused to extend the interim bail on 21 July 2025 on the ground that the remaining amount had not been deposited.
Before the Supreme Court, the core issue that arose was whether, in such a situation, the bail application of the appellant could be deferred repeatedly without examining the merits of the case.
While dealing with this issue, the Court observed that,
“…….the appropriate course for the court was to decide the bail application on its own merits rather than to keep the matter pending by extending the interim bail and insisting on the upfront deposit.”
The Court thus held that since the investigation was complete and the charge-sheet had already been filed, merely because the assurance regarding deposit was not fulfilled, it was not justified to defer consideration of the bail application.
On behalf of the State, it was argued that since interim protection was granted subject to conditions, the appellant could not claim any grievance upon failure to comply with those conditions. However, the Supreme Court clarified that this principle operates in a different context and could not override the requirement of deciding a bail application on merits.
Further, in support of their argument, counsel for the State relied on the decision in Kundan Singh vs. Superintendent of CGST and Central Excise passed by the Supreme Court, in which it was held that,
“……where an interim protection has been obtained by agreeing to a condition, the person cannot question such condition.”
Finally, relying upon its earlier decision in Gajanan Dattatray Gore vs. State of Maharashtra and Anr., the Supreme Court reiterated that imposing conditions of upfront deposit for the grant or continuation of bail has the potential to derail the criminal justice process.
Disposing of the appeal, the Supreme Court directed the Delhi High Court to decide the appellant’s regular bail application expeditiously, preferably within three weeks from the date a certified copy of the order is placed before it.
Case: Rakesh Jain vs State
Date of Order: 21.01.2026
See Order: Rakesh Jain vs State
