Facts

The case arises from a money laundering prosecution linked to alleged bank fraud involving Jay Polychem India Ltd. The appellant, Parvinder Singh Khurana, though not initially named in the CBI FIR (2020) or the Enforcement Directorate’s (ED) first complaint, was later arrested on 20 January 2023 and shown as an accused in ED’s supplementary complaint (March 17, 2023).

1.          His first bail plea was rejected (March 10, 2023).

2.          On June 17, 2023, the Special Court granted him regular bail, finding that he satisfied the twin conditions under Section 45 of PMLA.

3.          Before release, ED moved the Delhi High Court under Section 439(2) CrPC for cancellation of bail.

4.          On June 23, 2023, a vacation judge of the High Court stayed the bail order without hearing the accused or recording reasons.

5.          The stay continued for nearly a year due to repeated adjournments, with even judges recusing after reserving orders.

6.          The appellant remained in custody till 7th June 2024, when on the day of hearing Supreme Court stayed the High Court’s interim stay and restored the bail order.

Issue

Whether a High Court or Sessions Court has the power to grant an interim stay of a bail order pending cancellation proceedings under Section 439(2) CrPC, and if so, under what circumstances?

Law Discussed

1.          Section 439(2), CrPC / Section 483(3) BNSS: Empower High Court/Sessions Court to cancel bail.

2.          Article 21, Constitution of India: Protection of personal liberty.

Key Holdings:

The Supreme Court strongly disapproved the practice of casually staying bail orders:

1.          Power to Stay Exists, But Narrow: Courts do have inherent power to stay a bail order, but only in exceptional cases with a very strong prima facie case for cancellation.

2.          Ex-Parte Stay Rare: Ex-parte interim stay of a bail order should almost never be granted. If granted, the accused must be heard immediately thereafter.

3.          Need for Reasons: Courts must record brief reasons justifying any stay—it cannot be a cryptic “stay granted” order.

4.          Liberty Should Not Be Illusory: Bail restores personal liberty under Article 21. Mechanical or prolonged interim stay effectively deprive the accused of this right and cannot be countenanced.

5.            On Facts: The High Court’s stay (23 June 2023) was ex parte, without reason, and continued for one year without deciding cancellation. This violated the appellant’s rights under Article 21 of the Constitution.

Key Takeaway

The Supreme Court emphasized that “liberty once granted through bail cannot be lightly taken away”. Interim stay of bail orders should be exceptional, reasoned, and time-bound—not routine or casual.

This judgment is a significant pushback against prolonged incarceration of undertrials despite valid bail orders, reinforcing the principle that personal liberty is paramount.