[Cites 17, Cited by 0]

Gujarat High Court

Madhavpura Mercantile Co-Operative ... vs State Of Gujarat on 8 May, 2026

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                           R/CR.MA/14234/2019                              CAV ORDER DATED: 08/05/2026

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                                                                       Reserved On   : 22/01/2026
                                                                       Pronounced On : 08/05/2026

                                     IN THE HIGH COURT OF GUJARAT AT AHMEDABAD

                        R/CRIMINAL MISC.APPLICATION (FOR CANCELLATION OF BAIL) NO.
                                               14234 of 2019

                                                         With
                                      R/CRIMINAL MISC.APPLICATION NO. 21308 of 2018

                      FOR APPROVAL AND SIGNATURE:


                      HONOURABLE MR.JUSTICE UTKARSH THAKORBHAI DESAI
                      ==========================================================

Approved for Reporting Yes No

========================================================== MADHAVPURA MERCANTILE CO-OPERATIVE BANK LTD (IN LIQUIDATION) THRO ITS OFFICIAL LIQUIDATOR Versus STATE OF GUJARAT & ORS.

========================================================== Appearance:

MR DIPAN DESAI(2481) for the Applicant(s) No. 1 MR GG TRIVEDI(3565) for the Respondent(s) No. 3 NOTICE NOT RECD BACK for the Respondent(s) No. 2 MR. ROHAN RAWAL, APP for the Respondent(s) No. 1 ==========================================================

CORAM:HONOURABLE MR.JUSTICE UTKARSH THAKORBHAI DESAI

CAV ORDER

1. The original complainant Madhavpura Mercantile Co-

operative Bank Ltd (In Liquidation) through its official

liquidator has preferred the application no. 14234 of 2019

against the respondent no. 3-accused Ramesh Samarthmal

Sheth, for cancellation of bail, which was granted to him by

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way of order passed in CRMA no. 787 of 2018 dated

17.02.2018, by the Additional Sessions Judge of Court No.

10, City Civil and Sessions Court at Ahmedabad City.

1.1 The applicant-State has preferred a separate

application vide CRMA No. 21308 of 2018 against the said

accused who is mentioned as respondent in the said

application, praying for the same relief i.e. cancellation of

bail, challenging the same order passed by the Additional

Sessions Judge of Court No. 10, City Civil and Sessions Court

at Ahmedabad City.

2. Heard learned advocate Mr. Dipan Desai for the

applicant-bank, Mr. Rohan Rawal learned APP for the

respondent no.1/applicant-State and learned Senior

advocate Mr. I.H. Syed with learned advocate Mr. G.G. Trivedi

for the respondent no. 3/ respondent-accused, in both the

applications.

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3. At the outset, M case no. 8 of 2005 was filed by the

complainant- bank against the respondent accused no. 3 and

other co-accused which had culminated in filing of the

charge sheet on 20.12.2005. As per the case of the

prosecution, the respondent no. 3/ respondent-accused

Ramesh Samarthmal Sheth and co-accused Abdul Gaffar

Abdul Karim Khan were the partners of partnership firm

named GK builders which had sought loan from the

applicant-bank, whereas, the accused nos. 6 and 7 had stood

as guarantors against the said borrowing by the respondent

no.3-accused and co-accused Abdul Gaffar. Thereafter, the

respondent no.3-accused had defaulted in repaying the loan

amount of Rs. 14,18,11,919/-. It is the case of the

prosecution that, the respondent no. 3/respondent-accused

had acted in connivance with the bank officials, who were

also arraigned as co-accused in the said offence.

4. It is extremely discomforting to note that, though the

charge-sheet came to be filed in the year 2005, the

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respondent no. 3/respondent-accused came to be arrested

only in the year 2018, and thereafter, came to be released on

regular bail vide order passed in CRMA no. 787 of 2018 on

17.02.2018, by the learned Additional Sessions Judge of City

Civil and Sessions Court no. 10 of Ahmedabad City.

4.1 It is pertinent to observe that, the learned Additional

Sessions Judge, while enlarging the respondent no.3accused

on bail, vide order passed in CRMA no. 787 of 2018, had

observed that, the applicant had repaid an amount of Rs. 2

crores and 75 lakhs to the applicant-bank, and the dues of

the applicant-bank were well secured by way of charge on 2

residential flats situated in Mumbai, valued at approximately

Rs. 50 crores. The learned Judge had also noted that, the

applicant had remained present for the settlement and that,

he was old and aged and that, he was present for the

settlement before the appropriate authority. The learned

Judge had also observed that, the charges leveled against

the respondent no. 3-accused were related to the non-

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payment of loan amount and disposal of the mortgage

property. According to the Learned Judge, without entering

into the merits of the case, since other co-accused were

bailed out by the said court and by the Hon'ble High Court,

on the ground of parity, the respondent no. 3/respondent-

accused was required to be released on bail. Learned Judge

had further observed that, when the respondent no. 3-

accused was present before the proper forum for getting

anticipatory bail, which was rejected, it cannot be said that

he had absconded.

4.2 On perusing the report submitted by the ACP, Fraud

Cell, CID Crime-Gandhinagar in the present applications, it

has been specifically stated that, the applicant and the other

co-accused in connivance with the bank officials, who too

have been joined as co-accused, had hatched a conspiracy

and had successfully applied for hypothecation term loan to

the tune of Rs. 10 crores.

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4.3 It has been further submitted that, the applicant along

with the other co-accused in connivance with the bank

officials had repeatedly, illegally sought the overdraft facility

without submitting any security towards the same. It is also

submitted that, the surety Guni Devi, who is mentioned as

accused no. 7, though had passed away, a false undertaking

in her name was submitted before the applicant bank. It is

submitted that, the shops which were pledged to the

applicant-bank were sold off by the respondent no.

/respondent-accused and other co-accused, and no charge or

legal burden was created over the two flats, which were

allegedly mortgaged for procuring the loan of Rs. 10 crores.

4.4 It further transpires that, the respondent no.

3/respondent-accused had submitted certain cheques for

payments towards repayment of his loan, however, some of

those cheques were dishonoured. Out of the outstanding

amounts of loans, the respondent no. 3/respondent-accused

has not even deposited 5% of the said amount. Though the

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respondent no. 3/respondent-accused's anticipatory bail

came to be rejected by the High Court vide order passed in

CRMA No. 14732 of 2015 on 19.10.2015, the respondent no.

3/respondent-accused came to be arrested only on

24.01.2018, and thereafter, promptly was granted regular

bail by the learned competent court on 17.02.2018.

4.5 Considering all these aspects, it clearly appears that,

the Learned Additional Sessions Judge while enlarging the

respondent no. 3/respondent-accused on bail, had neither

considered nor had discussed all such aspects.

4.6 The Co-ordinate Bench vide order passed on 17.09.2025

had called for the report from the concerned trial court as

regards progress of the trial against the said respondent no.

3/respondent-accused, pursuant to which, a report dated

06.10.2025 was received from the concerned learned

Additional Sessions Judge, Court No. 14 of City Civil and

Sessions Court at Ahmedabad City, wherein it was

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mentioned that, the A.C.B Case no. 25 of 2018 was pending

for hearing of arguments of the learned APP, as against the

discharge application filed by the respondent no.

3/respondent-accused on 16.10.2025. The learned Additional

Sessions Judge had also annexed the copy of the Rojkam of

the said special ACB Case No. 25 of 2018, from wherein, it is

reflected that, the CID crime Gandhinagar Zone Police

Station had submitted the charge sheet before the special

court on 03.11.2018, however, till the date of the report, the

charge is yet to be framed. It can also be gathered from the

Rojkam which has been forwarded that, neither the

prosecution nor the accused persons are interested in

proceeding with the trial, which is indeed a sorry state of

affairs. Almost, seven and a half years have passed since, the

chargesheet was laid before the competent court, and till

date, the trial is in limbo.

5. It would be apposite to refer to the judgment of the

Hon'ble Apex Court in the case of Abhimanue Etc. Etc

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Versus State of Kerala with Criminal Appeal Nos. 4200-

4201 of 2025 [Arising Out of SLP (Criminal) Nos. 7641-7642

of 2025] Vishnu Etc Versus State of Kerala and Another,

the Hon'ble Apex Court in para no. 17 has observed thus:

17. Law is well settled that cancellation of bail is distinct from revocation of an order granting bail. Bail may be cancelled when the accused violates any of the conditions imposed. On the other hand, an order granting bail can be revoked if such an order is found to be perverse or illegal. In P v. State of Madhya Pradesh , a three-judge Bench of this Court, after analyzing various previous decisions, discussed the distinction between the two. Relevant paragraphs of the decision are reproduced below:

21. Echoing the above principle, in Ranjit Singh v.

State of M.P. [Ranjit Singh v. State of M.P., (2013) 16 SCC 797 : (2014) 6 SCC (Cri) 405], it has been held thus:

"19. ... There is also a distinction between the concept of setting aside an unjustified, illegal or perverse order and cancellation of an order of bail on the ground that the accused has misconducted himself

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or certain supervening circumstances warrant such cancellation. If the order granting bail is a perverse one or passed on irrelevant materials, it can be annulled by the superior court."

22. In Abdul Basit v. Mohd. Abdul Kadir Chaudhary [Abdul Basit v. Mohd. Abdul Kadir Chaudhary, (2014) 10 SCC 754 : (2015) 1 SCC (Cri) 257], this Court has opined that: (SCC p. 763, para 19) "19. Therefore, the concept of setting aside an unjustified, illegal or perverse order is different from the concept of cancellation of a bail on the ground of accused's misconduct or new adverse facts having surfaced after the grant of bail which require such cancellation and a perusal of the aforesaid decisions would present before us that an order granting bail can only be set aside on grounds of being illegal or contrary to law by the court superior to the court which granted the bail and not by the same court." ***

24. As can be discerned from the above decisions, for cancelling bail once granted, the court must consider whether any supervening circumstances have arisen or the conduct of the accused post grant of bail demonstrates that it is no longer conducive to a fair trial to permit him to retain his freedom by enjoying

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the concession of bail during trial [Dolat Ram v. State of Haryana, (1995) 1 SCC 349 : 1995 SCC (Cri) 237]. To put it differently, in ordinary circumstances, this Court would be loathe to interfere with an order passed by the court below granting bail but if such an order is found to be illegal or perverse or premised on material that is irrelevant, then such an order is susceptible to scrutiny and interference by the appellate court.

6. The Hon'ble Apex Court in the judgment of State of Karnataka vs. Sri Darshan Etc. reported in 2025 (9) SCR 194 has discussed at length the law relating to cancellation of bail. The observations of the Hon'ble Apex Court in paragraph nos. 16, 17, 18 are reproduced as under:-

16. It is equally well established that the considerations for grant of bail and for its cancellation are not identical. While the grant of bail involves a preventive evaluation of the likelihood of misuse of liberty, the cancellation of bail entails a review of the prior decision - either on account of supervening circumstances or because the original order was legally flawed. As laid down in State (Delhi Administration) v. Sanjay Gandhi, "Rejection of bail when bail is applied for, is one thing; cancellation of

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bail already granted is quite another". This principle reflects a recognition of the sanctity of liberty once granted, and the requirement of compelling justification for its withdrawal.

17. However, it is equally well recognized that bail granted without due application of mind to relevant factors - such as the gravity of the offence, the strength of the evidence, or the conduct and antecedents of the accused - may be cancelled. Even in the absence of subsequent misconduct, a bail order that is perverse, unjustified, or legally untenable is vulnerable to interference. In Dolat Ram v State of Haryana (supra), this Court held that "where a bail order is (1978) 2 SCC 411 passed in disregard of material facts or in an arbitrary manner, it can be set aside".

18. Let us now examine the jurisprudence on when bail may be annulled or cancelled. Two distinct categories have emerged in this regard:

(A) Annulment of Bail due to legal infirmity in the order; and (B) Cancellation of Bail, i.e., revocation of bail due to post-grant misconduct or supervening circumstances.

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(A) Annulment of bail orders

18.1. This refers to the appellate or revisional power to set aside a bail order that is perverse, unjustified, or passed in violation of settled legal principles. It is concerned with defects existing at the time the bail was granted, without reference to subsequent conduct.

18.2. In Prahlad Singh Bhati v. NCT of Delhi, this court laid down guiding principles:

"(a) While granting bail the court has to keep in mind not only the nature of the accusations, but the severity of the punishment, if the accusation entails conviction and the nature of evidence in support of the accusations.

(b) Reasonable apprehensions of the witnesses being tampered with or the apprehension of there being a threat for the complainant should also weigh with the court in the matter of grant of bail.

(c) While it is not expected to have the entire evidence establishing the guilt of the accused beyond reasonable doubt but there ought always to be a

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prima facie satisfaction of the court in support of the charge.

(d) Frivolity in prosecution should always be considered and it is only the element of genuineness that shall have to be considered in the matter of grant of bail, and in the event of there being some doubt as to the genuineness of the prosecution, in the normal course of events, the accused is entitled to an order of bail."

18.3. In Puran v. Rambilas and another, it was held that a bail order can be set aside even in the absence of post-bail misconduct if it is found to be unjustified, illegal, or perverse.

18.4. Similarly, in Dr. Narendra K. Amin v. State of Gujarat and another13, a three-Judge Bench held that consideration of irrelevant materials renders the bail order vulnerable and liable to be set aside.

18.5. In Prasanta Kumar Sarkar v. Ashis Chatterjee, this Court held that where the High Court grants bail mechanically and without application of mind to material factors such as the gravity of the offence or antecedents of the accused, such an order

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must be set aside.

18.6. In Prakash Kadam and others v. Ramprasad Viswanath Gupta and another15, this Court distinguished between cancellation of bail by the same court and annulment by an appellate / revisional court. It observed:

"18. In considering whether to cancel the bail the court has also to consider the gravity and nature of the offence, prima facie case against the accused, the position and standing of the accused, etc. If there are very serious allegations against the accused his bail may be cancelled even if he has not misused the bail granted to him. Moreover, the above principle applies when the same court which granted bail is approached for cancelling the bail. It will not apply when the order granting bail is appealed against before an appellate/Revisional Court.

19..... There are several other factors also which may be seen while deciding to cancel the bail."

18.7. In Neeru Yadav v. State of UP, this court annulled a bail order where the High Court had ignored the criminal antecedents of the accused and relied mechanically on parity. It held that

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consideration of irrelevant factors and omission of relevant considerations renders the order perverse. As the court noted:

"15. .... It is clear as a cloudless sky that the High Court has totally ignored the criminal antecedents of the accused. What has weighed with the High Court is the doctrine of parity. A history-sheeter involved in the nature of crimes which we have reproduced hereinabove, are not minor offences so that he is not to be retained in custody, but the crimes are of heinous nature and such crimes, by no stretch of imagination, can be regarded as jejune. Such cases do create a thunder and lightning having the effect potentiality of torrential rain in an analytical mind. The law expects the judiciary to be alert while admitting these kind of accused persons to be at large and, therefore, the emphasis is on exercise of discretion judiciously and not in a whimsical manner."

It further clarified:

"18. Before parting with the case, we may repeat with profit that it is not an appeal for cancellation of bail as the cancellation is not sought because of supervening circumstances.

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The annulment of the order passed by the High Court is sought as many relevant factors have not been taken into consideration which (2014) 16 SCC 508 includes the criminal antecedents of the accused and that makes the order a deviant one. Therefore, the inevitable result is the lancination of the impugned order."

18.8. In Anil Kumar Yadav v. State (NCT of Delhi), this Court reiterated that while no exhaustive list can be laid down, courts must always consider the totality of circumstances, including the seriousness of the offence, prima facie evidence, and potential for interference with the trial.

18.9. In State of Kerala v. Mahesh, it was observed that even under Article 136, where interference with bail orders is rare, this Court will exercise its powers if the bail order is found to be lacking application of mind or based on irrelevant considerations.

(B) Cancellation of bail

18.10. As per Halsbury's Laws of England, the grant of bail does not set the accused at liberty in the absolute

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sense but merely shifts custody from the State to the sureties. Consequently, cancellation of bail entails an assessment of whether the accused has abused the liberty so conferred.

18.11. In Dolat Ram v. State of Haryana (supra), this Court delineated broad, though not exhaustive, grounds justifying cancellation of bail, including:

• Interference or attempt to interfere with the due course of justice;

• Evasion of justice;

• Abuse of the concession of bail;

• Likelihood of the accused fleeing from justice.

18.12. In Abdul Basit v. Abdul Kadir Choudhary, this Court elaborated the circumstances in which bail granted under Section 439(2) Cr.P.C. may be cancelled, including where the accused:

• engages in similar criminal activity post-bail;

• interferes with or obstructs the investigation;

• tampers with evidence or influences witnesses;

• intimidates or threatens witnesses;

• attempts to abscond or evade judicial process;

• becomes unavailable or goes underground;

• violates the conditions imposed or evades the

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control of sureties.

18.13. In Mahipal v. Rajesh Kumar (supra), Justice D.Y. Chandrachud explained:

"An appellate court is empowered to set aside a bail order if it is found to be based on a misapplication of legal principles or where relevant considerations have been ignored. On the other hand, cancellation of bail typically arises from post-bail conduct or supervening circumstances."

18.14. Finally, in Deepak Yadav v. State of U.P. and another, this Court reaffirmed that bail already granted should not be cancelled in a routine or mechanical manner. Only cogent and overwhelming circumstances, which threaten the fairness of the trial or the interest of justice, would warrant such interference.

18.15. Thus, it is clear that while cancellation of bail is a serious matter involving deprivation of personal liberty, the law does permit annulment of a bail order that is unjustified, legally untenable, or passed

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without due regard to material considerations. The distinction between annulment of bail orders due to perversity and cancellation for post-bail misconduct must be clearly understood and applied, ensuring a careful, calibrated, and constitutionally sound approach to the administration of criminal justice."

7. In the light of the observations of the Hon'ble Apex

Court, the applications on hand pertaining to cancellation of

bail of the accused come within the purview of "annulment

of bail orders". The respondent no. 3/respondent-accused

might not have committed any breach of the bail condition,

however, the order granting him bail itself appears to be

erroneous, illegal and perverse. Public money to the tune of

Rs. 11 crores together with interest that must have accrued

upon the principal amount have not been repaid to the

applicant bank by the respondent no. 3/respondent-accused

till date, inspite of his so called or hollow commitments.

8. The Hon'ble Apex Court in the judgment of Rakesh

Mittal Vs Ajay Pal Gupta alias Sonu Choudhury and

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another reported in 2026 SCC online SC 211 has observed

thus:-

15. .... Even in cases of cancellation of bail, the power to do so is not just limited to occurrence of supervening circumstances as the Court has the inherent power and discretion to cancel the bail of an accused even in the absence of supervening circumstances ...

....

19. Though the observations made in some of the above cases were in the context of heinous offences, which is not the case presently, we may note that the value of life and liberty of members of society is not limited only to their 'person' but would also extend to the quality of their life, including their economic well-

being. In offences of a pecuniary nature, where innocent people are cheated of their hard-earned monies by conmen, who make it their life's pursuit to exploit and feast upon the gullibility of others, the aforestated factors must necessarily be weighed while dealing with the alleged offenders' pleas for grant of bail.

....

22. In such circumstances, the High Court ought not to have blindly extended the parity principle to him

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without considering the particular and distinctive features of his individual case.....

9. Thus considering the role of the respondent no.

3/respondent-accused in the entire offence, in the opinion of

this court, the learned Additional Sessions Judge ought not

to have granted bail to him. It is abundantly clear from the

charge sheet papers that, the respondent no. 3/respondent-

accused had intended to cheat and defraud the applicant-

bank right from the beginning, when he had applied for loan

on behalf of his company.

10. Further, the intention or bonafides of the respondent

no. 3/respondent-accused can be gauged from the fact that,

till date only Rs. 2 crores and 75 lakhs have been repaid to

the bank. In the absence of any security/pledge/mortgage of

properties against the loan availed, the applicant bank would

never be in a position to recover the outstanding loan

amounts from the respondent no. 3/respondent-accused and

the other co-accused. It is true that, the applicant bank's

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officials were also hand in gloves with the respondent no.

3/respondent-accused, however, the onus of repaying the

loan amount is entirely upon the shoulders of the

respondent no. 3/respondent-accused and other co-accused.

11. Though the anticipatory bail of the respondent no.

3/respondent-accused came to be rejected by the High

Court, it would not be out of context to note the

observations of the court in paragraph nos. 6 and 7.1 for the

purpose of considering how the entire fraud was committed

by the respondent no. 3/respondent-accused and the other

co-accused. The same read as under:-

6. Ms. Avani S. Mehta, learned advocate appearing on behalf of the complainant bank by taking me through the affidavit in reply and attached documents has submit that the applicant himself was one of the partner in G.K. Builder and had signed the sanction letter of the bank as token of acceptance in the capacity of a partner. Further more the applicant has also executed undertaking to stand as guarantor for repayment of loan liability of M/s G.K. Builder (the

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borrower) in his capacity as partner of M/s S.P. Builder. She submits that he was involved in the business transaction and administration of the partnership firm. Further he has offered Flat No.41 in the name of Gunidevi P.Sheth as a security and signed on behalf of his grandmother Gunidevi P.Sheth on stamp paper for Rs.100 dated 24.02.2000, though she had already expired in 1981. The said applicant had been signed on behalf of deceased Gunidevi with ulterior motive and malafide intention. She submitted that on perusal of the signature on the sanction letter as well as the letter written to the bank in the year 2001, as also various undertakings given to the bank would show that he was actively involved in the business administration of M/s G.K. Builder, the borrower. Though an undertaking on behalf of one M/s. S.P. Builder wherein the applicant is a one of the partner has given assurance that such shop shall not be sold , assign, transfer, alienate, however, the said shops have already been sold and accordingly, the association of Secretary of Hira Panna CHS Limited has issued letter which is produced on record. The total loss to Bank in the scam has revealed to the tune of Rs.1650/ crores which had been illegally sanctioned and the bank has gone into liquidation. She would

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submit that though the suit has been decreed, the amount of penal interest has been awarded at the rate of 17.5% which today comes to above Rs.111 crores (Rupees One Hundred Eleven Crores only) which much less than the value of those flats. She would further submit that the application for anticipatory bail filed by the applicant be rejected.

7.....

7.1 A letter on stamp paper of Rs.100 dated 24.02.2000 signed on behalf of the said Gunidevi P. Sheth written by Gunidevi P.Seth addressed to the complainant bank wherein an undertaking was given that flat No.41 situated at Walkeshwar Purab Cooperative Housing Society Limited, 42, B.G.Kher Marg, Mumbai shall not sale, assign, transfer or alienate. The said undertaking has been filed by the present applicant. At the end such undertaking, the name of Gunidevi P.Seth is typed but signature reveals on the left side, creates doubt about the intention of the applicant. Since the bank officers are involved in such huge scam to the tune of Rs.1650 crores. The applicant cannot be said that it is a civil dispute. Prima facie,I am of the opinion that from the inception of the transaction i.e. from availing the loan as well as submitting such frivolous undertakings,the intention

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of the applicant was to avail the amount and thereafter, not to pay the same. The Bank might not recover the decreetal amount on the so called argument given on behalf of the advocate advanced today. It is also admitted that the amount of Rs.10 crores has now become Rs.111 crores as per decree passed by the competent Court. The suit must have been filed get back the monetary loss within the prescribed period of limitation, it would not establish that there are only civil disputes between the bank and the present applicant."

11.1 It is true that, anticipatory bail and regular bail stand on

different footings, the parameters while allowing/rejecting

the same being altogether different. However, in the case on

hand, neither the gravity of the offence nor the complicity of

the respondent no. 3/respondent-accused in the crime, could

have been overshadowed or eclipsed during the hearing of

the regular bail application and subsequent grant of the

same. With all due respect, the Learned Sessions Judge

considering trivial and irrelevant aspects and by mechanically

applying the law of parity, had allowed the regular bail

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application of the respondent no. 3/respondent-accused. The

Learned Judge had overlooked the evidence against the

respondent no. 3/respondent-accused and thereby, had

fallen into the error of granting bail to the respondent no.