The Bombay High Court has delivered a significant ruling clarifying that criminal courts cannot impose bail conditions requiring accused persons to deposit amounts alleged to have been fraudulently obtained, nor can they direct the release of such funds to complainants during pendency of trial. The judgment reinforces the principle that criminal proceedings are not civil recovery mechanisms and upholds the presumption of innocence at all pre-trial stages.
Background & Facts
The Dispute
The dispute arose from allegations that Jigar Parmar (Accused No. 1) and his father Jayantilal Parmar (Accused No. 2), partners in JITEJ Life Spaces, induced Norris Crasto, a non-resident Indian residing in Qatar, to pay Rs. 1,30,00,000 in Kuwaiti Dinar between October 2019 and February 2020. Crasto was promised 13 commercial shops and 13 car parking spaces in a redevelopment project of Patel Building in Mumbai. Agreements were executed, and additional payments of Rs. 19.474 lakhs were made to Parmar, along with further sums to third parties for stamp duty and registration. However, no registered sale deeds were executed, and it was later discovered that the property was not owned by JITEJ Life Spaces, which had already lost its development agreement with the housing society.
Key Facts
- Crasto made payments between 03.10.2019 and 18.02.2020 totaling Rs. 1,30,00,000 in Kuwaiti Dinar
- Additional payment of Rs. 19,47,400 made to Jigar Parmar on 18.02.2020
- Further payments made to Raju Zaveri, Jitendra Prakash Gupta, and Charu Sharma for stamp duty and registration
- Agreements to sell were signed by Jigar Parmar as partner of JITEJ Life Spaces
- On 30.01.2024, accused assured refund of amounts but failed to comply
- Investigation revealed termination of redevelopment agreement by the housing society on or before 2021
- No registered sale deed was ever executed in favor of Crasto
- Accused had no legal title to the properties offered for sale
Procedural History
- 18.02.2020: Final payment made by complainant to accused
- 2024: Complainant filed private complaint before Magistrate
- 01.03.2025: Magistrate directed registration of FIR
- 05.03.2025: CR No. 0213/2025 registered at N.M. Joshi Marg Police Station for offences under Sections 318(4) and 61 of BNS, 2023 and Sections 3, 4, 13 of MOFA, 1963
- 01.12.2025: Magistrate granted bail to Accused Nos. 1 and 2, but imposed condition of bank guarantee of Rs. 75,00,000 each
- 23.05.2025: Accused No. 1 deposited Rs. 1,89,48,000 into IDBI Bank Account No. 0748104000030825
- 24.05.2025: Accused informed police of deposit to facilitate defreezing of 11 other frozen accounts
- 25.05.2025: Investigating Officer froze the IDBI account containing Rs. 1,89,48,000
- 03.10.2025: Magistrate ordered release of Rs. 1,89,48,000 to complainant upon furnishing indemnity bond
- 15.11.2025: Accused filed revision before Additional Sessions Judge, dismissed on grounds of interlocutory nature
- 28.12.2025: Writ Petition No. 5994/2025 filed before Bombay High Court challenging release order
- 03.01.2026: Writ Petition No. 6668/2025 filed challenging bail condition of Rs. 75 lakh bank guarantee
- 25.03.2026: Judgment reserved
- 08.06.2026: Judgment pronounced
The Parties' Positions
For the Petitioners (Accused)
- Argued that bail condition requiring Rs. 75 lakh bank guarantee is onerous, unreasonable, and tantamount to pre-trial satisfaction of claim
- Contended that the Rs. 1,89,48,000 in IDBI account was not proceeds of crime but legitimate business funds deposited to unfreeze other accounts
- Asserted that criminal courts cannot act as civil recovery agents
- Relied on Ramesh Kumar v. State of NCT of Delhi and Gajanan Dattatray Gore v. State of Maharashtra
For the Respondent (Complainant)
- Argued that overwhelming evidence proves fraud and that the deposited amount is clearly proceeds of cheating
- Claimed that complainant cannot be forced to wait till trial conclusion for recovery
- Submitted that indemnity bond protects accused’s interest
- Relied on prima facie case and public interest in preventing further fraud
Relief Sought
- Petitioners sought quashing of bail condition requiring Rs. 75 lakh bank guarantee
- Petitioners sought setting aside of order directing release of Rs. 1,89,48,000 to complainant
- Petitioners requested that the amount remain frozen until trial conclusion
- Complainant sought confirmation of release order and recovery of alleged fraud proceeds
The Legal Issue
The central questions were: (1) Whether a criminal court can impose a bail condition requiring the accused to furnish a bank guarantee equivalent to the alleged amount of fraud? and (2) Whether, during pendency of trial, a criminal court can direct the release of funds frozen under Section 102 CrPC to the complainant upon furnishing an indemnity bond?
Arguments Presented
For the Appellant/Petitioner
The petitioners relied on Ramesh Kumar v. State of NCT of Delhi and Gajanan Dattatray Gore v. State of Maharashtra to argue that bail conditions cannot be made contingent on payment or deposit of alleged proceeds of crime. They emphasized that such conditions violate the presumption of innocence and convert bail into a mechanism for civil recovery. They further contended that the Rs. 1,89,48,000 was not seized as proceeds of crime but voluntarily deposited to unfreeze other accounts, and thus lacked the required nexus under Section 102 CrPC. They cited State of Maharashtra v. Tapas D. Neogy and Shento Varghese v. Julfikar Husen to stress that seizure requires direct link between property and offence, which was absent here.
For the Respondent/State
The complainant argued that the evidence of fraud was overwhelming, supported by signed agreements, receipts, expert opinions on handwriting, and admissions by accused. They contended that the deposit was made to conceal assets and that releasing the amount with indemnity bond was a balanced approach to prevent injustice. They relied on the supervisory jurisdiction of the Magistrate and the need to protect victims from prolonged financial hardship. The State supported the Magistrate’s view that the condition was necessary to prevent recurrence of similar frauds.
The Court's Analysis
The Court began by affirming the settled legal position that bail is not a mechanism for securing civil claims. > "The conditions to be imposed while enlarging the accused on bail, must not be onerous or unreasonable or excessive... inclusion of a condition for payment of money by the applicant for bail tends to create an impression that bail could be secured by depositing money alleged to have been cheated. That is really not the purpose and intent of the provisions for grant of bail." (Ramesh Kumar v. State of NCT of Delhi). The Court held that directing a bank guarantee of Rs. 75 lakh as a condition for bail was ex facie unreasonable and violative of the presumption of innocence.
The Court then turned to the second issue: whether the Magistrate could order release of Rs. 1,89,48,000 to the complainant. It examined the nature of the deposit: the amount was not seized from the accused but voluntarily deposited by him to secure unfreezing of 11 other accounts. The Court emphasized that Section 102 CrPC empowers police to seize property only if it is alleged or suspected to be stolen or connected to the commission of the offence. > "The police officer is an investigator and not an adjudicator or a decision maker... the word ‘suspicion’ is a weaker and a broader expression than ‘reasonable belief’ or ‘satisfaction’." (Nevada Properties Pvt. Ltd. v. State of Maharashtra).
The Court found no direct nexus between the Rs. 1,89,48,000 and the alleged offence of cheating. The funds were generated from legitimate business operations, and their presence in the account was coincidental to the deposit made to unfreeze other accounts. The Court rejected the notion that a prima facie case justifies pre-trial transfer of funds, noting that criminal courts are not recovery agents. > "Criminal proceedings are not for realization of the disputed dues and the Criminal Court is not expected to act as a recovery agent to release the dues of the complainant, particularly without trial."
The Court further distinguished cases involving misappropriation of public money, where courts may consider voluntary deposit as a factor, from private fraud cases like this one. It held that releasing the amount to the complainant would amount to pre-judging guilt and undermining the trial process.
The Verdict
The petitioners succeeded on both grounds. The Court quashed the bail condition requiring Rs. 75,00,000 bank guarantee from each of Accused Nos. 1 and 2. The order directing release of Rs. 1,89,48,000 to the complainant was set aside. Instead, the Court modified the order to direct that the amount of Rs. 1,89,48,000 be invested in an interest-bearing fixed deposit account. The principal amount and accumulated interest shall remain in that account until the conclusion of the trial, at which point the Magistrate shall pass a final order on its disposition. No costs were awarded.
What This Means For Similar Cases
Bail Cannot Be Bought With Alleged Fraud Proceeds
- Practitioners must oppose any bail condition requiring deposit of alleged proceeds of crime, regardless of the strength of prima facie case
- Courts must not equate financial capacity with guilt or willingness to compensate
- Any such condition is per se unreasonable under Gajanan Dattatray Gore and Ramesh Kumar
Frozen Funds Require Direct Nexus to Offence
- Police cannot freeze accounts merely because accused is under investigation
- Section 102 CrPC requires objective suspicion linking the specific property to the offence
- Voluntary deposits made to unfreeze other accounts do not constitute seized proceeds
- Recovery of funds must await trial conclusion unless statutory provisions like PMLA apply
Criminal Courts Are Not Civil Recovery Forums
- Complainants must pursue civil remedies for recovery of alleged fraud amounts
- Indemnity bonds do not cure the fundamental illegality of pre-trial transfer
- Courts must resist pressure to deliver ‘quick justice’ at the cost of due process
- This judgment reinforces that criminal law serves public order, not private restitution
