The Punjab & Haryana High Court has clarified that mere nomination as an accused under Section 120-B IPC without evidence of direct participation in forgery or financial manipulation cannot justify continued custody in a magisterial trial where investigation is complete and trial remains delayed. This ruling reinforces the principle that bail must be the norm, not the exception, particularly when custody exceeds five months without evidence of active criminal conduct.
Background & Facts
The Dispute
The case arises from a massive corporate fraud at Hitachi Astemo Gurugram Powertrain Systems Pvt. Ltd., where Rs. 12.767 crores were siphoned through a network of fake vendors and forged documents. Two employees, Rohit Naithani and Vineet Jha, allegedly manipulated the SAP system using fake invoices and forged approvals. The prosecution alleges that the petitioners, Harsh Singh and Chandra Vardhan Jain, received illicit payments routed through their bank accounts by the main accused, but were not employees of the company nor directly involved in creating or forging documents.
Procedural History
- 20.12.2024: FIR No. 305 registered under Sections 120-B, 408, 420, 467, 468, and 471 IPC at Udyog Vihar Police Station, Gurugram
- 2025: Investigation concluded; chargesheet filed
- 10.09.2025 & 18.10.2025: Petitioners arrested and remanded to judicial custody
- 09.03.2026: Petitions for regular bail filed before the Punjab & Haryana High Court
Relief Sought
The petitioners sought regular bail, arguing that they had no role in forging documents, had no criminal antecedents, and had already undergone over five months of custody in a magisterial trial where no evidence has been recorded and 29 witnesses remain unexamined.
The Legal Issue
The central question was whether Section 120-B IPC can sustain continued custody of an accused when there is no prima facie evidence linking them to the commission of the underlying offences such as forgery or criminal breach of trust, and when the trial is likely to be protracted.
Arguments Presented
For the Petitioner
Counsel argued that the petitioners were named only as conspirators under Section 120-B IPC, with no allegation of forging invoices, manipulating SAP entries, or initiating fraudulent transactions. The forensic report by Nangia Anderson LLP identified the main accused employees as the perpetrators of forgery. The petitioners’ role, if any, was limited to receiving funds - without proof of prior knowledge or active collusion. Reliance was placed on Arnesh Kumar v. State of Bihar to argue that arrest and continued custody cannot be automatic, especially in non-heinous, non-violent economic offences.
For the Respondent
The State and complainant did not dispute the factual posture but contended that receipt of illicit funds by the petitioners, in conjunction with the fraudulent scheme, established active participation in the conspiracy. They argued that the petitioners’ bank accounts were instrumental in laundering proceeds, and therefore, their involvement was integral to the conspiracy. However, they conceded that no direct evidence tied the petitioners to document fabrication and that the trial was magisterial with no evidence recorded.
The Court's Analysis
The Court declined to evaluate the merits of the prosecution’s case, emphasizing that bail decisions must be guided by procedural fairness and proportionality. It noted that Section 120-B IPC is a supplementary provision and cannot be the sole basis for denying liberty when the underlying offences require proof of direct culpability. The Court observed:
"The petitioners have been named as accused solely with the aid of Section 120-B IPC. There is no charge of petitioners having forged any specific document to facilitate transfer of money."
It further highlighted that the petitioners had no prior criminal record, had been in custody for over five months, and that the trial had not commenced despite the chargesheet being filed. The Court underscored that in magisterial trials, where the maximum punishment is three years, prolonged pre-trial detention without evidence of direct participation violates the presumption of innocence. The Court distinguished this case from those involving violent crimes or flight risk, noting that the petitioners had cooperated with investigation and had no history of absconding.
The Verdict
The petitioners won. The Court held that continued custody cannot be justified solely on the basis of being named under Section 120-B IPC without evidence of direct involvement in the substantive offences. The petitioners were granted regular bail upon furnishing bonds, with conditions against witness tampering.
What This Means For Similar Cases
Conspiracy Alone Is Not Sufficient for Denial of Bail
- Practitioners must challenge custody in white-collar cases where accused are named only under Section 120-B IPC without evidence of direct participation
- Courts must examine whether the underlying offence (e.g., forgery, criminal breach of trust) has prima facie linkage to the accused
- Delay in trial and duration of custody become critical factors in bail adjudication
Magisterial Trials Demand Proportionate Detention
- In cases triable by Magistrates (punishable by up to 3 years), custody beyond six months without trial commencement raises serious due process concerns
- Courts should not defer bail on speculative allegations of conspiracy
- The absence of evidence of document fabrication or system manipulation weakens the case for continued detention
Custody Duration Triggers Judicial Scrutiny
- Five months of custody without evidence recording is a red flag under Arnesh Kumar and Siddharam Satlingappa Mhetre v. State of Maharashtra
- Courts must balance public interest with individual liberty, especially in non-violent economic offences
- Bail should be granted unless there is concrete risk of evidence destruction or witness intimidation - neither of which was established here
