New Delhi: In a significant judgment reinforcing the distinction between criminal justice and debt recovery, the Supreme Court has held that a court cannot defer the hearing of a regular bail application solely on the ground that the accused has failed to comply with an undertaking to deposit a disputed amount.

The Bench, comprising Justice Manoj Misra and Justice Manmohan, set aside an order of the Delhi High Court which had kept a bail plea pending and eventually cancelled interim bail because the accused, a company director, failed to deposit the remaining portion of an alleged diverted subsidy.

The case involved Rakesh Jain, a director of M/s Pragat Akshay Urja Limited, who was accused under Section 409 of the IPC (Criminal breach of trust by public servant/agent) for allegedly diverting a government subsidy of ₹4.10 crore.

After his arrest in 2019, the company deposited over ₹2.17 crore (more than 50% of the alleged amount). Jain was granted interim bail in April 2020 based on his counsel's statement that the remaining amount would also be deposited. However, when the remaining amount wasn't paid, the High Court kept deferring the hearing on his regular bail plea and eventually cancelled his interim bail for non-compliance.

The Supreme Court criticized this approach. It observed that while a person who voluntarily accepts a condition cannot later challenge it (Kundan Singh principle), the Court itself should not insist on upfront deposits as a precondition for hearing a bail plea on its merits.

The Bench relied on the principle laid down in Gajanan Dattatray Gore (2025), noting:

"The decision... deprecates the practice of courts insisting on upfront deposits... for consideration of their prayer on merits as that encourages implication with an oblique purpose and has the potential to derail the criminal justice delivery system."

The Court termed such practices as turning the justice system into a tool for "unscrupulous complainants to extort a settlement."

The Court also highlighted that under Section 409 IPC, there is no automatic presumption of a Director's culpability for the company's actions; it must be proven at trial. Since a substantial amount (>50%) had already been deposited, keeping the accused in jail or refusing to hear his bail plea just to recover the rest was unjustified.

This judgment strikes a blow against the growing "pay-to-get-bail" culture in Indian courts, where liberty is often bartered for financial settlements. By directing the High Court to decide the bail within three weeks on merits, the Supreme Court has reaffirmed that bail is a question of personal liberty, not a lever for financial recovery.