The Punjab & Haryana High Court has affirmed that mere directorial association with a fraudulent financial entity does not automatically justify arrest, where the accused has cooperated with investigation and no custodial interrogation is necessary to secure evidence. This ruling reinforces the principle that anticipatory bail must be granted where the accused’s conduct demonstrates willingness to assist the probe.
Background & Facts
The Dispute
The petitioner, Nirmal Kumar, aged 66, is named as an accused in FIR No. 200 dated 02.05.2022, registered at Model Town Police Station, Rewari, under Sections 406, 420 IPC and Section 3 of the Haryana Protection of Interest of Depositors in Financial Establishments Act, 2013 (HPIDFE). The case arises from an alleged multi-crore investment scam operated by M/s Karambhoomi Real Estate Limited, which collected funds from over 1,500 investors under a fraudulent return-on-investment scheme.
Key Facts
- The petitioner was a director of M/s Karambhoomi Real Estate Limited, holding a 35% shareholding.
- He resigned from his directorship on 28.03.2014, nearly eight years before the FIR was registered.
- The main accused, Manoj Sengar and Devender Pal Singh, were the primary promoters and key functionaries of the company.
- The company allegedly collected Rs. 2,85,73,585 from investors, promising high returns, but failed to repay any amount upon maturity.
- Proceeds were allegedly used to purchase properties in the names of the accused and their associates, as evidenced by documents submitted to the Registrar of Companies, Kanpur.
- The petitioner was not alleged to have been involved in day-to-day operations after his resignation.
- The petitioner voluntarily joined the investigation and has been cooperating since being summoned.
Procedural History
- 02.05.2022: FIR registered against multiple accused including Nirmal Kumar.
- 30.12.2023: Court order in Devender Pal Singh v. State of Haryana (CRM-M-4412/2023) directed his nominal arrest and interrogation; he was granted interim bail.
- 23.10.2025 & 26.10.2025: Co-accused Rajni Singh was interrogated while on interim anticipatory bail.
- 12.11.2025: Petitioner filed anticipatory bail petition under Section 482 BNSS, 2023. Court granted ad-interim bail with conditions: cooperation with investigation, surrender of passport or affidavit of non-possession, and no travel abroad without permission.
- 10.02.2026: Hearing adjourned to allow State to file status report.
- 20.03.2026: Status report filed by Deputy Superintendent of Police, Rewari, confirming petitioner’s cooperation and absence of custodial necessity.
Relief Sought
The petitioner sought confirmation and finalization of the ad-interim anticipatory bail order dated 12.11.2025, and protection from arrest pending investigation and trial.
The Legal Issue
The central question was whether a former director, who resigned years before the alleged fraud and has voluntarily cooperated with the investigation, can be denied anticipatory bail solely on the basis of his past association with a fraudulent company, absent evidence of active participation in the criminal conspiracy.
Arguments Presented
For the Petitioner
Learned counsel relied on the Court’s own order in Devender Pal Singh v. State of Haryana (Annexure P68), where a similarly situated co-accused - also a former director who resigned in 2014 - was granted anticipatory bail. Counsel emphasized that the petitioner had fully cooperated with the investigation since being summoned, had no history of absconding, and that the evidence against him (bank records, company documents, investor statements) could be examined without custodial detention. He argued that Section 482 BNSS permits anticipatory bail where arrest is not essential for investigation.
For the Respondent
The State, through the affidavit of Deputy Superintendent of Police, acknowledged the petitioner’s cooperation but contended that his 35% shareholding and directorial role at the time of the company’s formation made him complicit in the scheme. The State argued that the petitioner was privy to the fraudulent structure and stood to benefit from the proceeds, as shown in the Registrar of Companies’ records. It submitted that while cooperation was noted, it was insufficient to outweigh the gravity of the offence and the need for deterrence.
The Court's Analysis
The Court examined the nature of the petitioner’s involvement, distinguishing between active participation and passive association. It noted that the petitioner had resigned in 2014, long before the bulk of the fraudulent transactions occurred, and that the primary accused - Manoj Sengar and Devender Pal Singh - were the operational architects of the scheme.
"The petitioner happens to be the named accused in the FIR. As per the record, collected during the course of investigation, the petitioner happens to be director in the company and had played a pivotal role in the commission of the crime..."
The Court observed that while the status report alleged the petitioner’s complicity, it did not provide any specific evidence of his active role post-resignation or of his involvement in soliciting investments, managing funds, or directing operations after 2014. The Court emphasized that the investigation relied on documentary evidence - bank records, company filings, and statements of complainants - which could be accessed without detaining the petitioner.
The Court further noted that the co-accused Devender Pal Singh, who had not cooperated fully and had failed to disclose the complicity of others, was still on interim bail. In contrast, the petitioner had consistently appeared before the Investigating Agency. The Court held that denying bail on the basis of directorial status alone, without evidence of active criminal intent or obstruction, would violate the proportionality principle under Arnesh Kumar v. State of Bihar.
The Court also reiterated that anticipatory bail is not a reward for innocence but a procedural safeguard against arbitrary arrest, particularly where custodial interrogation serves no investigative purpose.
The Verdict
The petition was allowed. The ad-interim anticipatory bail order dated 12.11.2025 was made absolute. The petitioner is protected from arrest in connection with FIR No. 200/2022, subject to compliance with conditions: continued cooperation with investigation, surrender of passport or submission of affidavit of non-possession within two weeks, and prior court permission for foreign travel. Failure to comply with the passport condition within two weeks from 20.03.2026 shall render the order inoperative, permitting arrest.
What This Means For Similar Cases
Directorial Status Alone Is Not Sufficient for Arrest
- Practitioners must argue that mere past directorship, without evidence of active participation in the alleged fraud post-resignation, cannot justify denial of anticipatory bail.
- The burden shifts to the prosecution to demonstrate specific, contemporaneous involvement - not general association.
- Courts must distinguish between structural liability and criminal culpability under financial fraud statutes.
Cooperation with Investigation Is a Decisive Factor
- Voluntary appearance before investigating agencies, timely compliance with summons, and absence of prior evasion are strong grounds for bail.
- Even in high-value fraud cases involving hundreds of victims, non-custodial investigation is permissible if documentary evidence is primary.
- Courts should not treat financial fraud as inherently custodial; the nature of evidence and accused’s conduct must dictate the necessity of arrest.
Parity Among Co-Accused Must Be Considered
- Where co-accused with similar roles and conduct have been granted bail, denial to another without rational distinction violates Article 14.
- Courts must examine whether differential treatment is based on objective criteria or arbitrary classification.
- The Devender Pal Singh precedent is now binding on similar factual matrices within the jurisdiction.
