Economic Offences: Jail, Not Bail?
By Vanshika Shroff
Economic offences have been given a special seat in criminal laws in the country. The gravity of an economic offence is directly proportional to the impact and loss caused to society. Some examples of such crimes are corporate fraud, tax evasion, money laundering, currencies forgery, and cybercrime. Economic offenders involved in such scams are often in key managerial positions in huge companies and have a fiduciary duty and responsibility to the company shareholders and the public at large.
The law of bail, like any other branch of law, has its own philosophy and occupies an important place in the administration of justice. The concept of bail emerges from the conflict between the police’s power to restrict the liberty of a man who is alleged to have committed a crime, and the presumption of innocence in favour of the alleged criminal.
However, in recent judicial decisions, we see a persistent deviation from safeguarding the personal liberty of the alleged offender. The judiciary has taken strict action against fraudsters under the Prevention of Money Laundering Act, 2002, Prevention of Corruption Act, 1988 and various other criminal laws. Most of the economic offenders are kept in custody for a long time pending investigation and trial.
In criminal law, bail is the rule and jail is an exception. But this principle has now taken a backseat, considering the rise in economic offences and their magnitude. This affects millions and hampers the liberty of the offender. In this article, the author looks at certain conflicting observations by courts on the grant of bail in economic offences and the need for a pragmatic approach in granting bail.
Settled Position Of Law
It has been laid down in several judgments that economic offences are treated differently than other categories of crime. 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. Economic offences arise out of deep-rooted conspiracies and have a crippling effect on the general public, thus different treatment,
In the 2019 judgement of P. Chidambaram v. Directorate of Enforcement, 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.”
Herein, the apex court introduced the concept of the Triple test or the Tripod test. The triple test states that the alleged offender seeking bail should not (a) be likely to abscond or be a flight risk (b) tamper with the witnesses or © destroy evidence. If these requirements are fulfilled then bail should be granted. Despite this change in position of law, courts have still been hesitant in applying this test while granting or denying bail; one of the primary reasons being the gravity of the offence.
Incongruence between the Object of Bail and Gravity of Offence
Bail is not to be seen as a punishment. The primary goal of bail is to ensure the person’s attendance at trial while also granting him the liberty to be free. A presumably innocent person must have his freedom to enable him to establish innocence (Giri Raj v. State Of Haryana).
The reason is that 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. Thus, an accused is therefore entitled to freedom and every opportunity to look after his case.
However, is it justified to grant bail in a situation where crores have been laundered?
Money laundering is a serious threat to the national economy. In Sanjay Chandra v. Central Bureau of Investigation (hereafter ‘Sanjay Chandra’), 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 as per the CBI. 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 the sentence being seven years if convicted, and in that regard, it has been held that in determining the grant of bail or otherwise, the seriousness of the charge and severity of the punishment should be taken into consideration. The Sanjay Chandra case has very well elaborated these relevant aspects i.e. gravity of offence and severity of punishment prescribed in law.
The question now is: should the magnitude of the offence affect the liberty of the alleged offender, who may not have committed the crime?
In the Sanjay Chandra case, it was observed that it should be a factor when considering bail. However, 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 unquestionably 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 would cloud the judgment of the Judges.
Investigation at the stage of granting bail is very crucial. The common 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 the Sanjay Chandra case.
A trial may take a long time 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 offence and seriousness of charge should not deter courts from enlarging the offender on bail.
A Bombay High Court judgment in Khemlo Sakharam Sawant v. State took a very hard-headed approach in granting bail. The Court observed 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.
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, “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.”
There is not any straight jacket formula to grant bail and it depends on the facts of each case (Mahipal v Rajesh Kumar). However, one can hope that the right to freedom and personal liberty is synchronised with the duty of courts to deliver justice. When it comes to bail in economic offences, it 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. The need of the hour is to assess if the offender satisfies the requirement of law or not. Hopefully, by adhering to this we may be able to achieve justice expeditiously without hampering the personal liberty of the accused.
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(This story has been written by Vanshika Shroff, Pravin Gandhi College of Law, Mumbai, 4th year, B.L.S. L.L.B.)