Arvind Tiwary v. The State of Bihar
Background
The appellant was a rice miller who had contracted with the Bihar State Food & Civil Supplies Corporation to mill paddy under the public distribution system, undertaking to furnish a bank guarantee (or pledge property) covering the value of paddy issued to him; the Corporation alleged he received thousands of quintals of paddy but failed to return the corresponding rice, amounting to an alleged defalcation of about Rs. 79.62 lakh, and an FIR under Sections 409/420 IPC was registered. This case was heard together with dozens of similar appeals by other millers, after a 2017 Supreme Court order had earlier modified bail/anticipatory-bail terms for all such accused across the state (requiring bank guarantees to be furnished and kept alive, on pain of automatic cancellation), and the Corporation later issued fresh demands treating "bank guarantee" as covering the entire "defalcated sum" rather than just the value of paddy actually taken.
Decision Breakdown
The Court held that the 2017 order's reference to "bank guarantee" meant only the guarantee the miller was already obliged to furnish and maintain under his original milling agreement, not an inflated amount pegged to the alleged defalcated sum as the Corporation and trial court had assumed. Where millers had genuinely complied with their original agreement obligations (including by pledging unencumbered property in lieu of a bank guarantee, where the agreement allowed this), cancellation of their bail/anticipatory bail and the resulting non-bailable warrants were set aside and recalled. However, where millers had genuinely failed to furnish or keep alive the bank guarantee actually required under their own agreements, the cancellation of bail and warrants of arrest were upheld, and such millers were to be taken into custody immediately; the Corporation was also permitted to encash guarantees or auction pledged property to recover the amounts, following due process. All connected appeals, including the appellant's, were disposed of on these terms.
Lesson Learnt
When a court order imposes a bail condition tied to a contractual obligation (such as a bank guarantee), the condition must be read strictly by its own terms: a government agency cannot unilaterally expand it to cover a larger disputed sum, but genuine non-compliance with the real underlying obligation will still result in bail being cancelled.