Bombay High Court: In a case concerning the imposition of onerous bail conditions linked to permission for foreign travel, a Single Judge Bench of N. J. Jamadar, J., allowed the petitions filed by an accused in prosecutions under the Securities and Exchange Board of India (‘SEBI’) Act, 1992 (‘SEBI Act’), challenging the order of the Special Judge. The Court held that the requirement to deposit Rs 27.06 crore as a prerequisite for travel abroad failed the tests of reasonability, proportionality and nexus with the object of ensuring presence at trial. The Court accordingly quashed the impugned condition and substituted it with a lighter requirement of Rs 5 lakh in each case as security, while leaving all other conditions imposed by the Special Judge unaltered.
Background:
The petitioner was facing prosecution in Special Cases initiated by SEBI for offences punishable under Sections 24(1) and 27 of the SEBI Act. SEBI claimed that its investigation revealed large scale manipulation of the securities market, with violations of Regulations 4(a) and (d) of the SEBI (Prohibition of Fraudulent and Unfair Trade Practices) Regulations, 1995. Complaints were filed against the petitioner and co-accused, and by an order dated 6 April 2016, the petitioner was released on bail subject to conditions, including that he was not to leave the country without prior permission of the Special Judge.
In October 2025, the petitioner sought permission to travel abroad to Thailand for a family vacation and to United Arab Emirates (‘UAE’) for a family wedding. SEBI resisted the application, contending that the petitioner abused the liberty of bail and again indulged in manipulation of the securities market, including front running. SEBI earlier issued an ex-parte interim order-cum-show cause notice dated 2 January 2025 directing disgorgement of Rs.65.77 crore and restraining the petitioner from entering into securities transactions.
By the impugned order dated 04-11-2025, the Special Judge granted permission to travel abroad but imposed the condition of deposit of Rs.27.06 crore, which was not yet deposited in accordance with SEBI’s interim order. The Judge noted that other noticees deposited Rs.38.70 crore and since the petitioner did not challenge the interim order, it was considered appropriate to require deposit of the balance amount.
The petitioner argued that the onerous condition effectively negated the permission to travel abroad, stressing that he was not a flight risk and complied with bail conditions on earlier occasions. He submitted that the interim order did not attain finality, no proceedings were initiated to enforce it, and that the liability was directed principally against another noticee, with him being roped in only as jointly and severally liable.
SEBI, however, maintained that the condition was in consonance with Section 437(3) of the Criminal Procedure Code, 1973, that the petitioner indulged in manipulative trades while on bail, and that economic offences constituted a class apart. SEBI stoutly refuted the claim that the petitioner was not directed to deposit the amount, asserting that the order of 02-01-2025 clearly established his prime role.
Analysis and Decision:
The Court noted at the outset that the Special Judge did not find the petitioner to be a flight risk. The travel details indicated that the petitioner had travelled abroad on multiple occasions and returned, thereby complying with bail conditions. Thus, the legality and propriety of the condition to deposit Rs 27.06 crore alone required examination.
The Court emphasised that the right to travel abroad is a facet of the right to life and personal liberty and cannot be subjected to unreasonable or arbitrary restrictions. While conditions may be imposed when granting permission to travel, the Court observed that such conditions must not be so onerous that they defeat the right itself. The Court highlighted that conditions must have a reasonable nexus with the object of ensuring the presence of the accused at trial and maintaining the integrity and fairness of the trial.
The Court observed that the Special Judge relied upon an ex-parte interim order dated 02-01-2025 in directing the deposit of Rs 27.06 crore. The Court noted that under the SEBI Act, SEBI is empowered to impound proceeds and issue directions, but the interim order was prima facie in nature and treated as a show cause notice. The Court emphasised that no final order under Section 11 or Section 15-HA of the SEBI Act had been passed, nor had any complaint under Section 24(2) of the SEBI Act or recovery proceeding under Section 28-A of the SEBI Act been initiated.
The Court further observed that the direction to deposit the said amount was not imposed to secure the petitioner’s presence at trial but rather appeared to be a measure to enforce the interim order. The Court held that while the petitioner must suffer the consequences of failing to comply with SEBI’s order under the statutory scheme, such liability could not be converted into a bail condition for travel abroad in prosecutions initiated long ago.
Consequently, the Court held that the condition imposed by the Special Judge did not satisfy the tests of reasonability, proportionality, and nexus with the object of bail. The requirement to deposit Rs 27.06 crore was therefore quashed, and in its place, the Court directed the petitioner to deposit Rs 5 lakh in each case as security, which would be liable to forfeiture in the event of failure to return on the specified date.
The Court further ordered that any amounts already deposited in compliance with the earlier condition be adjusted against this reduced requirement, while clarifying that all other conditions imposed by the Special Judge shall remain unaltered.
[Ketan v. Parekh v. SEBI, Writ Petition No. 5854 of 2025, decided on 17-11-2025]
Advocates who appeared in this case:
For the Petitioner: Amit Desai, Sr. Advocate with Nilesh Tribhuvann, Burzin Bharucha, Jhanavi Shah, Kaushal Popat i/by White and Brief Advocates and Solicitors
For the Respondent: Mohan Rao Sulabha Rane, Sakshi B, Sangramsingh Parab, Chetan Kapadia, Sr. Advocate i/by Anubha Rastogi and Pooja Gera