High Court Gives Bail in Rs 8500 Crores ITC Scam Over Failure to Furnish Grounds of Arrest

The applicant, Ashraf Bhai Ibrahim Bhai Kalavdiya, who was accused of being involved in a Rs 8,500 crore fake ITC scam, has been granted bail by the Bombay High Court. The court stated that his arrest did not follow the required legal steps, and also violated fundamental rights under Article 22(1) of the Constitution.

Ashraf was arrested on March 12, 2024, by the Directorate General of GST Intelligence (DGGI), Pune Zonal Unit, as he was accused of running fake entities and fraudulently claiming and passing on ITC without supplying goods or services. He had been in judicial custody since his arrest. His earlier bail request was dismissed by the Sessions Court in October 2024.

The court noted that the arrest was not valid because it did not comply with Article 22(1) of the Constitution. This Article requires that the person being arrested must be clearly told on what grounds they are being taken into custody. The court said that just reading out or giving a brief summary of the reasons is not enough, the grounds of arrest should be explained properly.

The court referred to earlier judgemenst passed by Supreme Court in the cases of Vihaan Kumar v. State of Haryana, Prabir Purkayastha v. State (NCT of Delhi), and Pankaj Bansal v. Union of India, which ruled that if the proper procedure is not followed during an arrest, especially if the reasons are not given in writing, the arrest is considered unlawful.

The department claimed that informing him orally, along with providing the Arrest Memo and Authorisation to Arrest, was enough for compliance.

However, as per the court, these documents did not explain the grounds of arrest and were not addressed directly to Kalavdiya. Therefore, the court stated that this was not enough to meet the constitutional and legal standards.

The DGGI mentioned that there is one more similar case in Gujarat, in which Kalavdiya is involved. However, the court stated that just because the accused is having another case pending does not mean his bail would be denied. It referred to the Supreme Court’s judgement in Prabhakar Tewari v. State of U.P., which supports this view.

The court has given bail to Kalavdiya on a personal bond of Rs 1 lakh along with two sureties. The court also imposed several conditions, such as surrendering his passport, staying within Maharashtra, and regularly attending trial proceedings.