Supreme Court Quashes ₹ 3 Crore Deposit Condition For Bail In Investor Fraud Case, Orders Not To Encumber Properties

The Supreme Court has set aside a Madras High Court's order requiring a bail applicant to deposit ₹ 3 crore as a precondition for bail. The Court, however, directed the accused not to create any third party rights or any encumbrances on the properties which were owned by her husband.

The Bench of Justice BR Gavai and Justice KV Viswanathan ruled that such conditions to deposit effectively deny justice and directed alternative measures to protect the interests of investors.

During the hearing, Senior Advocate Manan Kumar Mishra appeared for the petitioner, and AAG V Krishnamurthy appeared for the respondent. 

The case arose after Poornima, the appellant, challenged the High Court's rejection of her plea to modify the condition imposed in its March 21, 2024 order. The High Court had granted her bail on the condition that she deposit ₹ 3 crore within eight weeks.

The counsel for the petitioner argued that Poornima’s husband, who was implicated in the financial fraud, had committed suicide due to his inability to repay depositors. Despite efforts to sell property and raise funds, she could not meet the condition.

The Court observed, “The Court should not impose such conditions which in effect amount to a denial of justice.”

To safeguard the interests of investors, the Court barred Poornima from creating third-party rights or encumbrances on her late husband's properties. It further noted that the Tamil Nadu Protection of Interests of Depositors (in Financial Establishments) Act, 1997, allows the State to attach and auction properties of financial defaulters to recover investor dues.

Allowing the appeal, the Court quashed the Rs. 3 crore deposit condition and directed that the bail be granted without such terms. Pending applications were also disposed of.

"The appeals are allowed. The application filed by the appellant before the High Court of Judicature at Madras for modification of the order dated 21.03.2024 is allowed. The condition of depositing of Rs. 3 crore as a pre-condition for grant of bail is quashed and set aside," the Court ordered. 

Cause Title: Poornima v. State 

Appearance:-

Petitioner: Senior Advocates Manan Kumar Mishra, S Prabakaran, Advocates Ma Gouthaman, M Naveen, Usha Prabakaran, Maheswaran Prabakaran, Anjul Dwivedi, Ram Sankar, Harini Ramsankar

Respondent: AAG V Krishnamurthy, AoR D. Kumaran, Advocates Deepa S, Sheikh F Kalia, Azka Sheikh Kalia, Veshal Tyagi, Chinmay Anand Panigrahi, P. Soma Sundaram, M. P. Parthiban, Y. Arunagiri

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