Failure to fulfill settlement conditions and violating statutory financial norms warrants cancellation of conditional bail.

The Petitioner, Satinder Singh Bhasin, was the Director of Bhasin Infotech and Infrastructure Private Limited (BIIPL), the developer of the 'Grand Venice' project.

Facing multiple FIRs across Delhi and Uttar Pradesh alleging non-delivery of units and siphoning of funds, the Petitioner was granted interim bail by the Supreme Court on 06.11.2019.

The bail was subject to specific conditions: (i) depositing Rs. 50 Crores in the Registry; (ii) making every possible attempt to settle the claims of allottees within 6–8 months; and (iii) not committing similar offences.

Subsequently, insolvency proceedings under the IBC were initiated against BIIPL and its sister concern GVCTPL.

Allottees filed applications seeking cancellation of bail, alleging that the Petitioner failed to complete the project, failed to settle claims, and siphoned off Rs. 74 Crores to related entities during the insolvency moratorium.

1. Whether the Petitioner violated the condition of bail by depositing the mandated Rs. 50 Crores using corporate funds rather than personal funds in contravention of statutory requirements.

2. Whether the Petitioner failed to make a bonafide attempt to settle the claims of allottees as per Condition (viii) of the bail order.

3. Whether the project was in a habitable condition fit for handing over possession to allottees.

4. Whether the Petitioner committed similar offences by siphoning funds during the subsistence of the IBC moratorium, thereby violating Condition (i).

The Court applied the principles governing the cancellation of bail as established in Ashok Dhankad v. State (NCT of Delhi), which allows cancellation based on the accused's conduct subsequent to the grant of bail, including the violation of imposed conditions.

It relied on Section 185 of the Companies Act, 2013, which prohibits companies from advancing loans to directors without a special resolution.

Further, the Court applied Section 14 of the Insolvency and Bankruptcy Code (IBC), 2016, regarding the legal effect of a moratorium on the transfer or disposal of assets.

The Court found that the Petitioner violated the deposit condition by "borrowing" the Rs. 50 Crores from BIIPL without a special resolution, effectively using homebuyers' money to secure his personal liberty.

On the issue of settlement, the Court reviewed reports from UPSIDA, a Court-appointed Observer, and an independent Committee, all of which confirmed that the project was incomplete, lacked essential services (lifts, fire safety), and was unfit for habitation.

The Court observed that many "settlements" were merely notional and that the Petitioner had engaged in double-allotments and document fabrication, evidenced by an "assignment deed" dated 2015 that mentions "GST," a tax regime not enacted until 2017.

Regarding the siphoning of funds, the Court noted that Rs. 74 Crores were transferred from GVCTPL to entities controlled by the Petitioner’s relatives during the IBC moratorium, which prima facie established a lack of bonafide conduct and a violation of the condition not to commit similar offences.

Consequently, the Court cancelled the Petitioner's bail and directed him to surrender within one week.

Under Condition (ix) of the original bail order, the Court ordered the forfeiture of the entire Rs. 50 Crore deposit plus accrued interest; Rs. 5 Crores was directed to be transmitted to NALSA, and the remainder to the IRP for IBC proceedings.

The Petitioner was barred from applying for regular bail for twelve months and must first comply with all orders in the insolvency proceedings.