Can Bail Be Denied for Non-Payment? Supreme Court Answers
- rit arora
- 3 days ago
- 2 min read
The Supreme Court of India, in Rakesh Jain v. State, Criminal Appeal No. 378 of 2026 (@ SLP (Crl) No. 11336 of 2025), has reiterated an important principle of criminal jurisprudence: bail cannot be made contingent upon monetary deposits or undertakings, nor can courts indefinitely defer a bail application on that basis
Background of the Case
The case arose out of FIR No. 200/2019, registered by the Economic Offences Wing (EOW), Delhi, alleging diversion of a government subsidy amounting to approximately ₹4.10 crore by M/s Pragat Akshay Urja Limited. The appellant, Rakesh Jain, was one of the Directors of the company and was booked under Sections 409 and 120B IPC.
He was arrested on 12 December 2019 and remained in custody for nearly five months. During the investigation, the company deposited ₹2.17 crore, and based on an undertaking that the remaining amount would also be deposited, the Delhi High Court granted interim bail on 22 April 2020.
However, instead of deciding the regular bail application on merits, the High Court repeatedly extended interim bail. Eventually, by order dated 21 July 2025, the High Court refused further extension of interim bail solely on the ground that the appellant failed to deposit the remaining amount.
Supreme Court’s Intervention
The Supreme Court stayed the High Court’s order and allowed the appellant to continue on interim bail, observing that:
Investigation was complete
Charge-sheet had already been filed
Co-accused had already been granted bail
The offences were triable by a Magistrate
The appellant had already undergone substantial incarceration
The Court expressed concern over the High Court’s approach of deferring the bail application indefinitely without examining its merits.
Reliance on Gajanan Dattatray Gore Judgment
A significant aspect of the judgment is the Court’s reliance on its earlier decision in Gajanan Dattatray Gore v. State of Maharashtra (2025 SCC OnLine SC 1571), where it categorically held that:
Courts should not impose conditions of deposit or undertakings for payment as a prerequisite for granting bail.
The Supreme Court clarified that such practices:
Encourage misuse of criminal proceedings
Enable coercive recoveries through bail conditions
Undermine the fairness of the criminal justice system
Director’s Liability Not Presumed
The Court made an important observation regarding Section 409 IPC, holding that:
There is no automatic presumption of culpability against a Director
Individual liability must be established during trial
Merely being a Director of a company accused of fund diversion does not justify prolonged incarceration
This reinforces settled law that criminal liability is personal and not vicarious, unless specifically provided by statute.
Deposit Undertakings vs Bail on Merits
While the State relied on Kundan Singh v. Superintendent of CGST (2025 SCC OnLine SC 2568) to argue that a person who agrees to a condition cannot later challenge it, the Supreme Court distinguished the two rulings.
The Court held that:
Even if an interim bail was granted based on an undertaking,
Failure to comply with such undertaking cannot be a ground to avoid deciding regular bail on merits
Final Directions
The Supreme Court disposed of the appeal with the following directions:
The Delhi High Court must decide the regular bail application on merits
The decision should be taken preferably within three weeks
Interim protection granted earlier shall continue in the meantime
