White-Collar Bails: Judicial Exceptions to the Rigour of Section 212(6) Companies Act, 2013

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The principle of “bail as the rule and jail as an exception” under criminal law in India is enforced through the operation of  Section 439 of the Code of Criminal Procedure (“Cr.P.C.”) which provides that a person accused of an offense and in custody as per the provisions of Chapter VI, Chapter XVI or Chapter XVII of the Indian Penal Code shall be released on bail pending trial, with the exception for offenses punishable with life for which an opportunity needs to be given to the public prosecutor to defence, prior to the grant of bail. The Companies Act, 2013(“Companies Act”), however, supplements these provisions with Section 212 which prescribes for more stringent conditions for grant of bail in case of cognizable offenses under the Companies Act.

For arrests made under the Companies Act by the Serious Frauds Investigating Office (“SFIO”), Section 212(6) of the Companies Act prescribes that no person shall be released on bail for cognizable offenses under the Act unless the Public Prosecutor has been given an opportunity to oppose the application for such release. This is a special condition for grant of bail which was reserved only for offenses punishable with life in the Cr.P.C. This puts arrests under Section 212(8) of the Companies Act by the SFIO, at a higher footing for the conditions required to be considered by the trial court in releasing an accused on bail. Hence, judicial decisions for the exception to Section 212 have been hard to come by; propelling the need to place heavy reliance on past decisions of the grant of bail in cases of economic offenses. 

Investigation Completed 

While there have been multiple judgments discussing the issue, the law laid down for grant of bail for allegations of serious economic offenses by the Hon’ble Supreme Court of India in Sanjay Chandra vs. Central Bureau of Investigation (2012) 1 SCC 40 stands as the most prominent and clear law on the subject. In this case, the court while hearing bail pleas in the 2G scam case acknowledged that while offenses alleged against the accused may be economic offenses of high magnitude, the entitlement of the accused to bail cannot be denied, especially at a point where the investigation is completed and the charge sheet had been submitted. This judgment helped set the pace of how most trial courts and high courts in India dealt with the subject of grant of bail in cases of economic offenses. This judgment was followed by the Hon’ble Punjab and Haryana High Court for granting bail for offences under the Companies Act in D.K. Sethi V/s Central Bureau of Investigation CRM-M 46946 of 2017 decided on 24-09-2018.

Further, in the case of Manoranjana Singh vs. Central Bureau of Investigation (2017) 5 SCC 218, the Hon’ble Supreme Court while assessing the conditions of bail in the Sarada scam reiterated that though the seriousness of an economic offense has to be one of the relevant considerations for determination of bail, it cannot be the only factor for grant or denial of bail. The court expounded that the detention of an undertrial for an indefinite period would violate the right to life under Article 21 and hence at the stage where the investigation was complete, the accused can be released on bail. 

Investigation not complete 

Investigation for serious economic offenses that are punishable under Section 212(6) of the Companies Act generally takes a longer length of time due to the complexity and magnitude of allegations. In most cases of arrest under Section 212(8) of the Companies Act, the sheer length of the investigation and extension of the investigation beyond a period of 90 days, entitles the accused to an indefeasible right to bail under Section 167(2) of the Cr.P.C., which provides that if investigating authorities do not submit a charge sheet within 90 days of arrest, the accused must be released on bail pending completion of the investigation.  


While the case law on Section 212(6) of the Companies Act is hard to come by, exceptions to stringent measures on bail in economic offenses by the Hon’ble Supreme Court of India in multiple cases provide a valid line of reasoning and precedential value for grant of bail. The courts have, on multiple occasions also hesitated from granting bail under Section 212(6) like in the case of Nittin Johari vs Serious Fraud Investigation BAIL APPLN. 1971/2019 decided on 27-01-2020 in which the Hon’ble Delhi High Court rejected the bail application of the accused under Section 212(6) of the Companies Act for want of special conditions of bail to be fulfilled. 

The concept of bail and its historical lineage has always intended to place impediments on bail only in cases of heinous crimes that jeopardize human life or dignity and not otherwise. The evolution of company laws in India and the impediments on bail placed for its violation has created a grey area and placed a larger question before the court as to whether economic offenses can be equated to offenses that directly harm human life or dignity; which is still to be answered.

This Article is written by: Mr. Siddhant Nanda, Advocate, Bar Council of India.

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