Bail Plea in One Court, Writ Against Arrest in Another: Supreme Court Calls Non-Disclosure an Abuse of Process

Case at a Glance

The Supreme Court has held that an accused in a Rs. 43 crore GST fake-invoice case abused the process of law by pursuing bail before the Sessions Court and the High Court and a writ challenging his arrest, without disclosing these parallel proceedings, and by getting his bail petition listed during the winter vacation. It set aside the Karnataka High Court's order disposing of the bail petition and sent it back for fresh decision, while letting him remain on interim bail.

The Directorate General of Service Tax Intelligence filed a complaint before the Special Court for Economic Offences, Bengaluru, alleging that the respondent, proprietor of M/s MK Traders, issued invoices without supplying goods and availed fraudulent input tax credit, with an alleged loss of Rs. 43,08,22,936, under Section 132 of the CGST Act. He was arrested on 16 September 2025 and his bail applications were rejected by the trial court and the Sessions Court.

He filed a bail petition in the Karnataka High Court on 9 December 2025, listed on 12 December with two weeks for objections, and a similar application in the Sessions Court on 10 December, which was rejected. On 22 December he filed a writ petition challenging his arrest; ad-interim release was refused that day. The same day a memo got the bail petition listed on 26 December, during the winter vacation, when a Single Judge granted bail.

The Key Question Before the Court

Is it permissible for an accused to challenge his arrest and seek bail in parallel forums without disclosing all of them to each court?

Uberrima Fides in Bail Litigation

After viewing the video recording and transcript of the vacation hearing, the Court found that the department's counsel had argued on merits but had sought an adjournment as the Standing Counsel was engaged, so the department was not wholly unrepresented. The real problem was the respondent's conduct: he lacked uberrima fides and did not disclose to the High Court the refusals by the Sessions Court and the writ court.

While recognising the right to seek bail or challenge an arrest, the Court said pursuing both in parallel without disclosure “clearly amounts to abuse of the process of law”. The vacation listing, despite the earlier direction giving two weeks for objections, “was clearly an attempt to steal a march by even misleading the Court.” It also advised that where a ‘two weeks’ period falls in a vacation, registries should ordinarily compute it excluding the vacation.

What the Court Actually Held

• The part of the impugned order disposing of the criminal petition was set aside and the petition revived.
• The respondent shall continue on interim bail on the earlier terms until further orders.
• The department may file a counter affidavit within two weeks, with one week for a rejoinder.
• The Single Judge is to decide the bail petition on merits, preferably by the end of the year.

Why This Judgment Matters

• It warns against forum shopping between bail and writ remedies.
• It stresses full disclosure of all parallel proceedings in bail petitions.
• It guides High Court registries on computing time periods that fall in vacations.

What Should Advocates Take Away From the Judgment?

For Defence Counsel

• Disclose every pending and decided bail or arrest challenge in each petition.
• Avoid seeking vacation listing in a way that cuts short the other side's time to respond.

For Prosecuting Agencies

• Place the record of parallel proceedings before the court when opposing bail.
• Ensure representation at vacation hearings.

Key Takeaways

Frequently Asked Questions

No. The Court did not set aside the bail at this stage; he remains on interim bail while the High Court decides afresh.

The CGST Act, 2017, for alleged fake invoices and fraudulent input tax credit.

According to the text, no; it relied on principles of uberrima fides and suppressio veri, suggestio falsi.

Conclusion