Parvinder Singh Khurana vs. Directorate of Enforcement [July 23, 2024]
Citation: 2024 INSC 546; Supreme Court of India; Criminal Appeal Nos. 3059–3062 of 2024
Background and Facts
This case arose from a money laundering investigation linked to the alleged bank fraud by Jay Polychem India Ltd. The Central Bureau of Investigation (CBI) registered an FIR on December 1, 2020, against the company and others for serious offences under the IPC and the Prevention of Corruption Act. The Enforcement Directorate (ED) subsequently registered an ECIR under the Prevention of Money Laundering Act, 2002 (PMLA), naming eleven accused, but not Parvinder Singh Khurana. Despite cooperating with the investigation, Khurana was arrested on January 20, 2023, after being called for questioning multiple times. He was first shown as an accused only in a supplementary complaint filed by the ED on March 17, 2023.
Khurana’s first bail application was rejected by the Special Court on March 10, 2023. He then filed two applications: one for default bail and another for regular bail. On June 17, 2023, the Special Court denied default bail but granted regular bail, finding that Khurana satisfied the twin conditions for bail under Section 45(1)(ii) of the PMLA. The ED moved the High Court seeking cancellation of bail. On June 23, 2023, the High Court stayed the bail order ex parte—without hearing Khurana’s counsel or recording reasons—and continued the stay for nearly a year as the matter was repeatedly adjourned.
Key Legal Issues
Whether a High Court or Sessions Court can stay the operation of a bail order pending the disposal of a cancellation application under Section 439(2) of the CrPC.
The constitutional implications of ex parte interim stays on bail orders, particularly regarding the right to personal liberty under Article 21.
Supreme Court’s Analysis and Findings
The Supreme Court held that the power to stay a bail order pending a cancellation application is available to the High Court or Sessions Court, but it must be exercised with extreme caution and only in rare and exceptional cases. The Court emphasized that such interim orders should not be passed mechanically or routinely, as they directly impact the fundamental right to liberty.
The Court found the High Court’s ex parte stay order to be unsustainable, as it was passed without hearing the accused or recording reasons, and continued for an unreasonably long period. The Supreme Court stated that the failure to promptly hear the accused on the continuation of the stay, and the absence of any allegation of misuse of bail by Khurana, violated the principles of natural justice and Article 21.
The Supreme Court clarified that the grounds for cancellation of bail are distinct from the grounds for grant of bail. Cancellation can be based on post-bail conduct or if the bail order is found to be perverse or illegal. However, a stay on a bail order should not be granted unless there are compelling reasons, such as risk to the investigation, threat to witnesses, or likelihood of absconding.
On the facts, the Court noted that the Special Court’s detailed bail order (over 50 pages) had considered all relevant materials, and the ED’s application for cancellation contained no allegations of misuse of bail. The Supreme Court set aside the High Court’s stay, allowing Khurana to be released on bail as per the original order.
Conclusion and Significance
The Supreme Court quashed the High Court’s ex parte stay on the bail order, reaffirming that interim stays on bail should be granted only in the rarest cases and after hearing the accused.
The judgment reinforces the primacy of personal liberty and due process, holding that courts must be sensitive to the impact of interim orders on the right to liberty under Article 21.
The decision provides clear guidance on the proper exercise of judicial discretion in bail matters, ensuring that routine or prolonged stays on bail orders do not undermine fundamental rights.
In summary: The Supreme Court ruled that interim stays on bail orders are permissible only in rare and exceptional cases, must be reasoned and after hearing the accused, and set aside the High Court’s prolonged ex parte stay, restoring Khurana’s bail.
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