Misuse of Interim Bail and Necessity of Custodial Inquiry in Cheating Cases Involving Religious Inducement

Introduction

The case of Manu Wahdwa @ Mohit v. The State, Govt. of NCT of Delhi (Delhi High Court, April 22, 2025) arises from an FIR lodged by Ms. Gurpreet Kaur Rai (the de facto complainant) alleging that the petitioner, Manu Wahdwa, and his associates cheated her and her children of over Rs. 5.63 crore in the name of religious blessings and lucrative investment schemes. The accused had enjoyed interim protection from arrest on the basis of a mediated settlement, undertook to repay portions of the amount, but failed to honor those commitments. When investigation notices were served, he allegedly absconded. The petitioner sought anticipatory bail; the High Court refused, emphasizing the need for custodial interrogation to trace the diverted funds and noting the misuse of judicial indulgence.

Summary of the Judgment

Justice Girish Kathpalia dismissed the anticipatory bail application. Key points of the order include:

The petitioner had received repeated interim bail indulgence on the promise of repaying the monies but paid nothing after December 2024.
The allegations under Section 420 IPC involved a systematic fraud in the guise of religious sanction and guaranteed investment returns.
The accused failed to disclose the investment destination of the cheated money and, upon notice, absconded to an undisclosed location.
The court held custodial interrogation necessary to uncover the money trail and investigate undisclosed transactions.
Recognizing victims’ plight, the court refused to extend further bail protection where orders were flouted and the accused attempted to frustrate the investigation.

Analysis

1. Precedents Cited

Although the judgment does not quote specific case names, it relies on well-settled principles from the Supreme Court on anticipatory bail and the purpose of custodial interrogation:

Gurbaksh Singh Sibbia v. State of Punjab – anticipatory bail must be sparingly granted and cannot be a blanket protection when investigation is active.
Nikam v. State of Maharashtra – courts should consider the likelihood of the accused fleeing or tampering with evidence when deciding bail.
Vivek Sharma v. The State of Chhattisgarh – recognition that custodial interrogation may be required to trace complex financial frauds and money trails.
Settled law that “bail is not a tool for securing recovery of money,” yet the court may withhold bail if the accused misuses interim orders and obstructs investigation.

2. Legal Reasoning

The court’s reasoning followed a structured approach:

Assessment of Conduct: The petitioner repeatedly breached the terms of interim bail and mediated settlement by failing to repay agreed amounts.
Persistence of FIR Allegations: The offence under Section 420 IPC was clearly established on the face of the FIR, involving inducement through religious authority and false investment promises.
Need for Custody: Investigation required detailed interrogation to identify where and how the large sums were invested—information not disclosed by the accused.
Prevention of Flight: The accused’s absconding behavior and undisclosed whereabouts militated against release.
Victims’ Interests: The court balanced the hardship faced by numerous complainants who had been cheated out of life savings.

3. Impact

This judgment reinforces critical safeguards in white-collar and fraud cases:

It signals that interim bail or negotiated mediations cannot be misused as shields against criminal accountability.
Courts will look beyond mere compliance with procedural conditions and examine the substantive conduct of the accused.
It upholds custodial interrogation as a vital tool in unravelling sophisticated financial frauds, especially where the money trail is murky.
It underscores judicial sensitivity to exploitation of religious faith for fraudulent schemes, and the need to protect vulnerable devotees.
Future litigants will find that fleeing from investigation or failing to disclose crucial transaction details weighs heavily against bail.

Complex Concepts Simplified

Anticipatory Bail: Pre-arrest bail granted under Section 438 CrPC to someone fearing arrest for a non-bailable offence. Here, the petitioner sought protection before formal arrest.
Section 420 IPC: Penalizes cheating and dishonestly inducing delivery of property. Conviction can attract up to seven years' imprisonment.
Mediation Settlement: A court-facilitated agreement between parties to resolve disputes. Non-compliance does not bar criminal proceedings if offences are substantial.
Custodial Interrogation: Questioning of an accused in police custody, essential in complex frauds to follow leads, examine documents, and prevent evidence tampering.
De Facto Complainant: The person who lodges the complaint—here, Ms. Gurpreet Kaur Rai, directly affected by the alleged fraud.

Conclusion

The judgment in Manu Wahdwa @ Mohit v. The State clarifies that:

Interim indulgences and settlement terms do not override the need for full criminal accountability in serious cheating cases.
Courts will refuse anticipatory bail where an accused misuses prior bail orders, absconds, or obfuscates the financial trail.
Custodial interrogation remains indispensable in unravelling multi-crore frauds, particularly those exploiting religious trust.

This decision thus fortifies the judiciary’s resolve to prevent abuse of the legal process and to secure the interests of victims in large-scale financial frauds.