Bail in serious tax-evasion cases cannot be cancelled without concrete proof of misuse of liberty or obstruction of justice.

In prosecutions for serious income-tax evasion, issuance of bailable warrants does not by itself justify cancellation of bail or automatic re-arrest under inherent criminal jurisdiction. The Court stressed that economic offences must be treated with gravity, but cancellation of bail requires concrete material such as misuse of liberty, interference with witnesses, or obstruction of justice. On the facts, no such material was shown, and the accused had remained on bail without demonstrated abuse of process. The applications to cancel bail and to invoke inherent powers for re-arrest were therefore rejected.

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Issues: Whether bail granted in prosecutions for alleged large-scale income-tax evasion could be cancelled merely because bailable warrants had been issued and whether inherent jurisdiction under section 482 of the Code of Criminal Procedure, 1973 should be exercised to re-arrest the accused.

Analysis: The allegations arose from prosecution under section 276C of the Income-tax Act, 1961, supported only by summary action under section 132(5) of the Act and pending final assessment. The Court held that issuance of bailable warrants is only one factor and cannot by itself govern the exercise of discretion under section 439 of the Code of Criminal Procedure, 1973. At the same time, the Court emphasised that serious economic offences and high-value tax evasion must be treated with gravity and that the Sessions Judge's reasoning was cryptic and inadequate on principle. However, cancellation of bail requires a proper foundation such as misuse of liberty, interference with witnesses, or other material showing that release on bail has obstructed the course of justice. No such material was shown, and the accused had remained on bail for a substantial period without demonstrated abuse of liberty.

Conclusion: The Court declined to cancel the bail or invoke section 482 of the Code of Criminal Procedure, 1973 for re-arrest, and the applications were rejected.

Final Conclusion: The order affirmed that in serious tax-evasion prosecutions bail should be granted sparingly and on sound reasons, but in the absence of material showing misuse of bail the existing bail could not be disturbed.

Ratio Decidendi: In prosecutions for serious economic offences, issuance of bailable warrants does not by itself justify grant or cancellation of bail, and inherent powers to interfere with bail should be exercised only when there is concrete material showing misuse of liberty or obstruction of justice.

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