Bail granted in hawala case involving 42 crore customs duty evasion through undervalued walnut imports

The City Civil and Sessions Court, Mumbai granted bail to an applicant charged with hawala transactions and customs duty evasion exceeding 42 crores through undervalued walnut imports. Despite acknowledging serious economic offence allegations, the court noted the applicant had been in custody for 17 days, allowing sufficient interrogation time. The DRI had seized relevant goods and documents, with bank accounts provisionally attached. The court determined physical custody was unnecessary for ongoing investigation, as undervaluation determination would be time-consuming and no criminal antecedents existed. Bail was granted with stringent conditions to address evidence tampering and flight risk concerns.

---

---

Issues Presented and Considered

The core legal questions considered by the Court in this matter include:

• Whether the applicant accused is entitled to bail under Section 480 of the BNSS, 2023, in the context of allegations of evasion of basic customs duty exceeding Rs. 42 crores.
• The nature and seriousness of the offence under Section 135 of the Customs Act, 1962, involving alleged manipulation of invoices and undervaluation of imported goods.
• The impact of granting bail on the ongoing investigation by the Directorate of Revenue Intelligence (DRI), including the risk of tampering with evidence or influencing witnesses.
• The sufficiency of the investigation conducted so far, including seizure of goods, documents, and electronic records, and the necessity of custodial detention of the accused during the investigation.
• The appropriateness of imposing conditions on bail to safeguard the investigation and ensure the accused's presence during trial and investigation.

Issue-Wise Detailed Analysis

1. Entitlement to Bail under Section 480 of BNSS, 2023 in a Serious Economic Offence

The legal framework governing bail applications in this case is Section 480 of BNSS, 2023, which provides the procedural basis for bail in economic offences. The offence under Section 135 of the Customs Act, 1962, relates to evasion of customs duty, a non-bailable offence but triable by the Sessions Court. The Court acknowledged the gravity of the allegations: evasion of basic customs duty amounting to over Rs. 42 crores through undervaluation of 3630 metric tonnes of inshell walnuts imported via the accused's firms.

The Court recognized the serious economic implications of the offence and the prima facie evidence suggesting manipulation of invoices. However, it also noted that the accused had been in judicial custody since 19.06.2025, and the DRI had conducted extensive interrogation during this period. The Court balanced the seriousness of the offence against the accused's right to liberty, noting the absence of criminal antecedents and the fact that the offence did not attract the death penalty or life imprisonment.

Precedents governing bail in economic offences emphasize that bail is not to be denied merely because the offence is serious, especially when the investigation has progressed and custodial interrogation is complete. The Court applied this principle, concluding that continued detention was not necessary at this stage.

2. Impact of Bail on Ongoing Investigation and Risk of Tampering or Flight

The DRI opposed bail on grounds that the accused's release could hamper the investigation, especially since other importers allegedly using the same modus operandi were still at large. The concern was that bail might enable tampering with evidence or influencing witnesses, thereby obstructing justice.

The Court considered these arguments carefully. It noted that the DRI had seized substantial evidence, including 7475 kgs of goods from the accused's stock and all relevant documents and electronic records. The Court reasoned that the physical presence of the accused was not indispensable for further investigation, particularly since the accused's bank accounts were provisionally attached, limiting his capacity to interfere with financial trails.

To mitigate risks, the Court imposed stringent bail conditions, including prohibition on tampering with evidence or influencing witnesses, mandatory cooperation with investigation, surrender of passport for six months, and restrictions on foreign travel. The accused was also required to furnish residential and contact details and those of relatives to ensure availability for investigation and trial. These conditions reflect the Court's approach of balancing liberty with safeguarding the investigation.

3. Nature of Evidence and Stage of Investigation

The Court observed that the dispute primarily concerned the valuation of imported goods, a complex and time-consuming process requiring detailed examination. The DRI had seized the goods and documents, and the investigation was ongoing but sufficiently advanced to conclude that custodial interrogation had been completed.

The Court recognized that the valuation issue would take time to resolve and that the accused's presence in custody was not essential for overseas inquiries or stakeholder interrogations. This reasoning aligns with principles that bail should not be denied indefinitely when the accused's continued detention does not materially advance the investigation.

4. Treatment of Competing Arguments

The Court carefully weighed the prosecution's concerns about the seriousness of the offence and potential interference with investigation against the accused's right to bail and the progress of the investigation. It acknowledged the economic impact of the offence but found that the accused had cooperated and that sufficient safeguards could be imposed to prevent tampering or flight.

The Court rejected the contention that bail would necessarily hamper the investigation, emphasizing that the accused's bank accounts were attached and that the accused's physical presence was not indispensable. It also noted the absence of prior criminal record, which mitigated flight risk.

Significant Holdings

The Court held that:

"Considering the stage of investigation, I think no purpose would be served by keeping the applicant/accused behind bar till submission of charge-sheet/complaint."

"So far as apprehension regarding tampering the evidence or fleeing from justice is concerned stringent conditions can be imposed against the accused."

These statements encapsulate the core principle that bail should not be denied merely because the offence is serious or the investigation ongoing, provided that appropriate conditions can safeguard the investigation and ensure the accused's presence.

The Court's final determination was to allow bail subject to conditions including:

• Execution of a personal bond of Rs. 2,00,000 with sureties or cash bail in lieu for two months.
• Prohibition on influencing witnesses or tampering with evidence.
• Mandatory cooperation with investigation and attendance when summoned.
• Surrender of passport for six months and court permission for any foreign travel.
• Submission of residential and contact details and those of nearest relatives, with obligation to inform of any changes.

This order reflects a balanced approach safeguarding both the interests of justice and the rights of the accused.

---