The Punjab & Haryana High Court has delivered a stern rebuke against the misuse of judicial leniency by accused persons who exploit settlement promises to secure bail, only to later default on their commitments. In a clear reaffirmation of the sanctity of judicial orders, the Court held that bail cannot be granted or continued on the basis of undertakings to pay compensation, especially when such promises are made in bad faith and subsequently breached.
Background & Facts
The Dispute
The petitioner, Amit Kumar @ Amit Kumar Gupta, is accused in FIR No. 202/2024 registered at Police Station Kharar, District SAS Nagar, under Sections 406 and 420 of the Indian Penal Code. The complainant, Anjali Gautam, alleged that she and her husband were induced to enter into two agreements to sell for residential flats at GLD Homes, Kharar, based on the petitioner’s representations as a real estate developer. They paid a total of ₹46.5 lakh in cash and bank transfers. Despite repeated requests, the petitioner failed to execute sale deeds and later it was discovered that the flats had been sold to third parties.
Procedural History
- 22.07.2024: FIR registered under Sections 406/420 IPC.
- 28.10.2024: The petitioner was granted interim regular bail by a Coordinate Bench of this Court on the condition that he pay ₹26.5 lakh to the complainant by 31.01.2025.
- 05.03.2026: Petitioner filed this petition seeking regular bail, claiming the FIR was baseless and that the dispute was civil in nature.
- 05.03.2026: The Court, upon review, found the petitioner had not complied with the bail condition and had failed to deposit the agreed amount.
Relief Sought
The petitioner sought regular bail, arguing that the allegations did not disclose criminal intent, that the transaction was mediated by a third-party property dealer, and that the FIR was registered without prior notice under Section 41-A CrPC. He further contended that the evidence was documentary and custody served no purpose.
The Legal Issue
The central question was whether a court may continue to grant or extend bail to an accused who has deliberately violated a condition precedent to bail - specifically, a court-mandated undertaking to pay compensation - as part of a purported settlement, and whether such conduct constitutes an abuse of process warranting denial of bail.
Arguments Presented
For the Petitioner
The petitioner’s counsel argued that the dispute arose from a civil contract of sale, not criminal fraud. They contended that the agreements contained signature discrepancies and that the complainant had direct dealings with a property dealer, Atul Arora, who received the payments. It was submitted that the investigating agency failed to verify property ownership or confirm whether the flats were genuinely sold to third parties. The petitioner also claimed he had never been served a notice under Section 41-A CrPC and that the FIR was registered without due diligence.
For the Respondent
The State and complainant’s counsel countered that the petitioner had repeatedly delayed execution of sale deeds despite receiving substantial sums, and that the flats were indeed sold to others. They highlighted that the petitioner had earlier been granted interim bail on the express condition of depositing ₹26.5 lakh, which he had willfully failed to pay. They further pointed to 11 other FIRs under IPC and 10 cases under the NI Act involving similar allegations, indicating a pattern of predatory conduct. The State argued that the petitioner’s non-compliance demonstrated bad faith and undermined the integrity of judicial orders.
The Court's Analysis
The Court conducted a rigorous examination of the petitioner’s conduct in light of the Supreme Court’s recent ruling in Gajanan Dattatray Gore v. State of Maharashtra and Another, 2025 INSC 913. The Court emphasized that bail under Section 439 CrPC is a discretionary remedy, not a right, and must be predicated on the merits of the case - not on extraneous assurances.
"By inviting the Court to act upon such a compromise, the petitioner effectively transmutes a horizontal contractual obligation into a vertical undertaking toward the Bench. Consequently, any subsequent default does not merely give rise to a civil cause of action for breach of contract, but rather constitutes a direct affront to the dignity of the Court and a violation of the solemn assurance upon which the petitioner’s liberty was contingent."
The Court noted that the earlier bail order dated 28.10.2024 was not granted on merits but as a concession based on a settlement. The petitioner’s failure to comply with the payment condition was not a mere breach of contract but a deliberate manipulation of judicial process. The Court further cited Rakesh Mittal v. Ajay Pal Gupta, 2026 INSC 161, to underscore that offences involving cheating of hard-earned savings from gullible buyers are grave, even if not violent, and must be treated with seriousness in bail considerations.
The Court also took judicial notice of a troubling trend where accused persons use the prospect of settlement as a tactical tool to secure liberty, only to renege once released. This conduct, the Court held, reduces the administration of justice to a transactional mechanism and erodes public confidence in the judiciary.
The Verdict
The petition was dismissed. The Court held that the petitioner’s conduct - particularly his willful non-compliance with a court-mandated bail condition - constituted an abuse of process and a contemptuous disregard for judicial authority. The petitioner’s liberty could no longer be protected, and he was directed to remain in custody pending trial.
What This Means For Similar Cases
Judicial Undertakings Are Not Negotiable
- Practitioners must advise clients that any undertaking to pay compensation as a condition for bail is a solemn judicial obligation, not a private settlement.
- Failure to comply will result in immediate cancellation of bail, regardless of the merits of the underlying case.
- Courts will no longer entertain bail applications based on promises of restitution, per Gajanan Dattatray Gore.
Pattern of Conduct Elevates Bail Denial
- A history of similar FIRs under IPC or NI Act will be treated as evidence of modus operandi, not mere coincidence.
- In property fraud cases, repeated allegations of non-execution of deeds and diversion of funds will weigh heavily against bail.
- Courts may now consider prior FIRs as part of the ‘gravity of offence’ assessment under Section 439 CrPC, even if charges are not yet framed.
Settlements Cannot Override Judicial Scrutiny
- Parties cannot use settlement as a shield to avoid criminal liability; courts retain independent power to assess whether a prima facie case exists.
- Any bail order premised on compromise must be accompanied by strict compliance monitoring.
- Lawyers must not file affidavits of undertaking unless the client is fully prepared to comply - otherwise, professional ethics may be called into question.
