The power to grant an ex-parte interim stay of an order granting bail has to be exercised in very rare and exceptional cases: Supreme Court

In a significant judgment delivered on July 23, 2024, the Indian Supreme Court addressed the power of High Courts and Sessions Courts to grant interim stays on bail orders while applications for bail cancellation are pending. The case, Parvinder Singh Khurana v. Directorate of Enforcement, centered around the appellant, Parvinder Singh Khurana, who was arrested on January 20, 2023, in connection with a money laundering case under the Prevention of Money Laundering Act (PMLA).

Comprehensive account of the events described in the provided court document:

The Central Bureau of Investigation (CBI) initiated a case on December 1, 2020, against two companies and two individuals for offenses including cheating, forgery, and corruption, related to a loan account of Jay Polychem India Ltd.

Subsequently, on February 23, 2021, the Enforcement Directorate (ED) registered a case under the Prevention of Money Laundering Act (PMLA) stemming from the CBI's investigation. Though not initially named as an accused, the appellant, Parvinder Singh Khurana, was questioned multiple times by the ED between October 31, 2020, and January 20, 2023, before being arrested on the latter date. The appellant's first bail application was rejected on March 10, 2023. The ED then filed a supplementary complaint on March 17, 2023, formally naming the appellant as an accused. The appellant filed two new bail applications on April 29, 2023, one seeking default bail and the other regular bail. While the Special Court denied the default bail, it granted regular bail on June 17, 2023, finding that the appellant met the criteria for bail under PMLA. The ED, however, filed an application on June 21, 2023, to the Delhi High Court seeking cancellation of the bail. On June 23, 2023, a Vacation Judge of the High Court ordered a stay on the bail order, effectively preventing the appellant's release, and scheduled a further hearing. The hearing scheduled for June 26, 2023, did not take place. The case was subsequently adjourned multiple times while the interim stay on the bail remained in effect. Compounding the delays, the judge who initially reserved judgment after hearing arguments on the bail cancellation recused himself, as did two subsequent judges. On May 3, 2024, after nearly a year of being caught in legal proceedings, the appellant applied to have the stay on his bail vacated. However, on May 22, 2024, the High Court merely granted him the liberty to apply for interim bail while further adjourning the matter.

The above events prompted the appellant to appeal to the Supreme Court, which on June 7, 2024, stayed the High Court’s stay order, finally enabling the appellant's release on bail. The Supreme Court would later release its full judgment on July 23, 2024. and held that interim stay, granted without providing reasons or hearing the appellant's counsel, remained in effect for nearly a year despite multiple recusals and adjournments.

Criticizing the Delhi High Court's handling of the case, the Supreme Court highlighted the multiple recusals, adjournments, and the year-long duration of the interim stay, all while the accused remained incarcerated despite being granted bail. The Court deemed this an "ex-parte order staying the order of bail...passed without considering merits," which continued "to operate for one year without the appellant getting a hearing on the issue of continuation of the interim order."

The Supreme Court, in its judgment, underscored the importance of an accused's right to liberty under Article 21 of the Indian Constitution, asserting that this right cannot be arbitrarily curtailed and has held that The effect of the grant of bail under the provisions of Sections 437 and 439 of the CrPC (Sections 480 and 483 of the BNSS) is that the liberty of the undertrial accused is restored pending the trial, subject to  the accused complying with the conditions of bail.   When the High Court or Sessions Court stays such an order, it amounts to taking away the liberty granted under the order of bail. When an application for cancellation of bail is filed, the High Court or Sessions Court should be very slow in granting drastic interim relief of stay of the order granting bail.

The Court emphasized that interim stays on bail orders should only be granted in exceptional circumstances where a strong prima facie case for bail cancellation exists and observed that the exparte stay of the bail order should not be granted.  The said power can be exercised only in rare and very exceptional cases where the situation demands the passing of such drastic order. Where such a drastic exparte order of stay is passed, it is the duty of the Court to immediately hear the accused on the prayer for continuation of the interim relief. When the Court exercises the power of granting exparte ad interim stay of an order granting bail, the Court is duty bound to record reasons why it came to the conclusion that it was a very rare and exceptional case where a drastic order of exparte interim stay was warranted. thus, stating that ex-parte stay orders, issued without hearing the accused, should be exceptionally rare, requiring the court to immediately schedule a hearing to consider the accused's arguments.

The Supreme Court ultimately set aside the Delhi High Court's stay order, paving the way for the appellant's release on bail. This landmark judgment establishes clear guidelines for lower courts concerning interim stays on bail, reinforcing the principle that the right to liberty is paramount and any infringement upon it must be justified by exceptional circumstances and due process.

Coram: Hon'ble Justice Abhay S. Oka & Justice Augustine George Masih. Between: Parvinder Singh Khurana Vs Directorate of Enforcement. DOJ:23-07-2024