Question on converting arrest warrants to bailable under s.70(2) CrPC, s.72(2) BNSS sent to Larger Bench

HC dealt with a petition by an accused in an alleged large-scale tax evasion case challenging rejection of an application under s.70(2) Cr.P.C. seeking conversion of arrest warrants into bailable warrants. Observing that there are conflicting views of different coordinate Benches on whether arrest warrants in economic or heinous offences can be converted into bailable warrants as a matter of right under s.70(2) Cr.P.C. and s.72(2) BNSS, HC did not decide the issue on merits. Instead, it referred the legal question to a Special/Larger Bench and directed placing the matter before the Chief Justice for constitution of such Bench.

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1. ISSUES PRESENTED AND CONSIDERED

(1) Whether arrest warrants issued against an accused in an economic offence case under the CGST Act and Customs Act, after cognizance, can be converted into bailable warrants under Section 70(2) Cr.P.C. as a matter of right.

(2) Whether, in view of conflicting views of co-ordinate Benches on conversion of non-bailable warrants into bailable warrants in economic offence matters, the proper course is to refer the issue to a Larger Bench in keeping with the principles of judicial discipline and precedent.

(3) How the gravity and distinct nature of "economic offences" and "white-collar crimes" impact judicial discretion in matters of bail and issuance of non-bailable warrants.

2. ISSUE-WISE DETAILED ANALYSIS

Issue (1): Conversion of arrest warrants into bailable warrants under Section 70(2) Cr.P.C. in economic offences

Interpretation and reasoning

(a) The Court recorded that a complaint under Section 132 of the CGST Act read with Section 132 of the Customs Act alleged wrongful claim of Input Tax Credit of Rs. 10,65,23,833/-; cognizance was taken and the accused was summoned through arrest warrants.

(b) The petition before the Court sought conversion of the arrest warrants into bailable warrants under Section 70(2) Cr.P.C.; the Court characterised this as, in substance, a prayer "for anticipatory bail in the form of warrants."

(c) The Court rejected the contention that, merely because the offence under Section 132 of the CGST Act is punishable with up to five years' imprisonment and triable by a Magistrate, the issuance of arrest warrants or denial of bail must tilt in favour of the accused. It held there is no "straight jacket formula" based solely on the maximum punishment or the forum of trial; each case must be decided on its own facts, keeping in view the nature of accusations, evidence, severity of punishment, character of the accused, possibility of securing presence, risk of tampering with evidence, and larger public interest, as reiterated from Nimmagadda Prasad v. CBI.

(d) The Court noted that serious allegations of tax evasion "in crores of rupees" through fake/non-existent firms and fake ITC invoices amount to grave economic offences affecting the public exchequer and national economy, and such offences must be treated on a different footing in bail matters.

(e) The Court considered and contrasted two co-ordinate Bench decisions: in one line (Girdhar Gopal Bajaria; Shyam Sunder Singhvi), issuance and maintenance of non-bailable warrants in economic offence cases was upheld, with emphasis on the gravity of such offences and the need for a strict approach; in another (P.C. Purohit), non-bailable warrants issued post-cognizance in a similar economic offence context were converted into bailable warrants, largely relying on the accused's willingness to appear, absence of material on tampering with evidence, and the power under Section 72(2) BNSS.

Conclusions

(f) The Court did not finally decide whether, on the facts of the present case, the arrest warrants should be converted into bailable warrants. Instead, noting the directly conflicting co-ordinate Bench views on the same legal question, it held that the issue cannot be conclusively resolved by a Single Bench and must be referred to a Larger Bench.

(g) The specific question referred is: "Whether the arrest warrants issued against the accused committing economic offence or heinous offences like murder/rape/dowry death/dacoity etc. can be converted into bailable warrants as a matter of right of the accused by invoking the powers contained under Sections 70(2) Cr.P.C. and 72(2) BNSS as a matter of right?"

Issue (2): Effect of conflicting co-ordinate Bench decisions and necessity of reference to a Larger Bench

Legal framework

(a) The Court relied on the principles laid down by the Supreme Court in Sundaradas Kanyalal Bhathija, Ayyaswami Gounder, S. Kasi, Central Board of Dawoodi Bohra Community, and Union of India v. S.K. Kapoor regarding judicial discipline among co-ordinate Benches:

- A Bench of co-equal strength is bound by an earlier decision of a co-equal Bench; if it disagrees, it must refer the matter to a Larger Bench and cannot take a contrary view.

- Law laid down by a Bench of larger strength is binding on Benches of lesser or co-equal strength.

- A subsequent co-ordinate Bench decision rendered in ignorance of an earlier binding co-ordinate Bench decision is per incuriam.

Interpretation and reasoning

(b) The Court observed that two co-ordinate Single Benches of the same High Court had taken diametrically opposite views on the same legal issue: one upholding non-bailable warrants in economic offence matters (Girdhar Gopal Bajaria; Shyam Sunder Singhvi) and another converting such warrants into bailable warrants (P.C. Purohit).

(c) It noted that the earlier view in Girdhar Gopal Bajaria, emphasizing the distinct and grave nature of economic offences and upholding non-bailable warrants, was not brought to the notice of the Bench deciding P.C. Purohit, rendering the latter decision contrary to the discipline required among co-ordinate Benches as discussed in S.K. Kapoor.

(d) In such a situation, where there is no "exact and settled decision" of the Court but conflicting opinions of co-ordinate Benches of equal strength on the same issue, judicial decorum and propriety require reference to a Larger Bench rather than choosing between conflicting views at the same level.

Conclusions

(e) The Court held it was not appropriate for it, as a Single Bench, to resolve the conflict by preferring one co-ordinate Bench view over another.

(f) It therefore referred the formulated question of law to a Special/Larger Bench and directed that the matter be placed before the Chief Justice on the administrative side for constitution of such Bench.

Issue (3): Characterisation and treatment of economic offences and white-collar crimes in bail and warrant jurisprudence

Legal framework

(a) The Court drew extensively on Supreme Court precedents (Y.S. Jagan Mohan Reddy, Nimmagadda Prasad, Rohit Tandon, State of Gujarat v. Mohanlal Jitamalji Porwal, and the principles restated in Inder Mohan Goswami as applied by earlier co-ordinate Benches) to outline the special treatment of economic offences:

- Economic offences, involving deep-rooted conspiracies and huge loss of public funds, constitute a distinct class and must be viewed as grave offences affecting the economy of the country.

- Such offences are committed with cool calculation and deliberate design, with an eye on personal profit irrespective of public harm.

- White-collar crimes are to be treated more seriously than ordinary crimes, despite being non-violent, because they corrode the fabric of democracy and the financial health of the nation.

- In bail matters, courts must consider the nature of accusations, nature of evidence, severity of punishment, character of accused, likelihood of securing presence, risk of tampering with evidence, and larger public interest.

Interpretation and reasoning

(b) The Court emphasised that creation of fake/non-existent firms and passing of fake ITC through bogus invoices, resulting in tax evasion in crores of rupees, clearly falls within "grave economic offences" impacting the public exchequer and national economy.

(c) It underscored that a common citizen dutifully pays CGST/SGST while such offenders obstruct national development by siphoning off funds through fraudulent means; hence a "different approach" is justified in bail and warrant decisions for such offences.

(d) The Court reconciled the principles from Inder Mohan Goswami on cautious issuance of non-bailable warrants with the jurisprudence on economic offences, holding that while personal liberty is paramount and NBWs should not be issued mechanically, economic offences form an exception where the gravity, potential for evasion of process, and capacity to manipulate evidence demand stricter scrutiny.

Conclusions

(e) The Court affirmed that economic offences and white-collar crimes "stand on a different footing" and "constitute a class apart," requiring a stricter and more cautious approach in grant of bail and in conversion or issuance of non-bailable warrants.

(f) This classification and the associated strict approach form an essential backdrop to the question referred to the Larger Bench on whether conversion of arrest warrants into bailable warrants can ever be claimed as a matter of right in such cases.

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