Dipakkumar Dharamsinhbhai Kakadiya And Ors vs. Directorate Of Revenue Intelligence And Anr
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The applicants, Dipakkumar Dharamsinhbhai Kakadiya, Kakadiya Brjieshkumar Vinodbhai, and Kakadia Savitaben Dharamshi, sought anticipatory bail apprehending arrest in connection with an investigation by the Directorate of Revenue Intelligence (DRI) concerning alleged misdeclaration and undervaluation of imported walnuts. The DRI accuses them of using fabricated invoices to evade customs duties, with evasion estimated at approximately Rs. 44 Crores. The investigation involves transactions routed through Nhava-Sheva Port and conducted in the names of various firms. Applicant No. 1 manages these firms, Applicant No. 2 is his nephew, and Applicant No. 3 is his mother. A co-accused, Sneh Deepakbhai Kakadiya (son of Applicant No. 1), was arrested and subsequently released on bail. Search and seizure operations were concluded in February 2025.
Held
The Court held that the applicants' approach to the High Court for anticipatory bail was permissible due to the complex jurisdictional issues, as the High Court possesses concurrent territorial jurisdiction over the relevant districts. The Court found that the objections raised by the DRI regarding maintainability were not sustainable in the peculiar facts of the case. Regarding the second issue, the Court acknowledged that while the mere filing of a compounding application is not an absolute ground for bail, in this specific case, the applicants had demonstrated a genuine willingness to comply with the compounding provisions. The Court considered the stage of the investigation, the conclusion of search and seizure operations, the documentary nature of the evidence, the absence of prior criminal records, and the applicants' willingness to jointly deposit Rs. 5 Crores. The Court reasoned that the object of compounding is to facilitate voluntary compliance and avoid protracted litigation. Therefore, the Court deemed it fit to grant anticipatory bail, subject to specific conditions including reporting to the investigating agency, cooperating with the investigation, depositing Rs. 5 Crores, and not tampering with evidence or influencing witnesses. The ratio decidendi is that in cases involving compoundable offences under the Customs Act, where there is a demonstrable willingness to compound and cooperate, and the investigation has reached a stage where coercive steps might be disproportionate, anticipatory bail can be granted with appropriate conditions.
Key Issues
1. Whether the High Court has the territorial jurisdiction to entertain the anticipatory bail application, given the alleged offence was committed in Nhava-Sheva (District Raigad) and Mundra Port (Gujarat), while remand proceedings for a co-accused were conducted in Mumbai. - Applicants argued that due to complex jurisdictional facts and the High Court's concurrent territorial jurisdiction over both Mumbai and Raigad, approaching the High Court directly was permissible, citing Dr (Mrs) Roshan Sam Boyce. They contended that objections on maintainability were meritless. - Respondents (DRI) raised preliminary objections on maintainability, implying the application should have been filed before the competent Sessions Court. 2. Whether the pendency of a compounding application under Section 137(3) of the Customs Act, 1962, warrants the grant of anticipatory bail, considering the documentary nature of evidence and the applicants' willingness to cooperate and deposit funds. - Applicants argued that their willingness to pursue compounding, coupled with the stage of investigation, absence of prior record, and documentary evidence, merits consideration for anticipatory bail. They highlighted their submission of a compounding application and affidavits of compliance. - Respondents opposed the application on merits and relied on an ex-parte order rejecting the compounding application as premature. They also cited cases like Pankaj Karsanbhai Thacker and Union of India Vs. Padam Narain Aggarwal to argue against granting bail.
Sections Cited
Section 132, Section 135, Section 137(3)
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Chitra Sonawane. 901-ABA-1808-2025.docx IN THE HIGH COURT OF JUDICATURE AT BOMBAY CRIMINAL APPELLATE JURI ICTION Anticipatory Bail Application No.1808 of 2025
Dipakkumar Dharamsinhbhai Kakadiya Age: 49 years, Add: 801, Shubh Lakshmi Residency, Ved Gurukul Road, Surat, Gujarat-395004. 2. Kakadiya Brjieshkumar Vinodbhai Age : 29 years Add: 802, Shubh Lakshmi Residency, Ved Gurukul Road, Surat, Gujarat-395004. 3. Kakadia Savitaben Dharamshi Age : 72 years, Add: 801, Shubh Lakshmi Residency, Ved Gurukul Road, Surat, Gujarat-395004 … Applicants versus
Directorate of Revenue Intelligence Mumbai Zonal Unit, 13, Sir Vithaldas Thackery Marg, New Marine Lines, Mumbai-400020. 2. State of Maharashtra High Court, Mumbai. ... Respondents. ---- Dr Sujay Kantawala a/w Mr Sujit Sahoo, Mr Prateek Singh, Ms Ira Misra, Mr Mahadeo Londhe and Ms Aishwarya Kantawala for the applicants. Mr Jitendra B Mishra a/w Mr Umesh Gupta, Mr Rupesh Dubey, Ms Sangeeta Yadav for respondent No.1. __________________________________________________ 31 July 2025 CHITRA SANJAY SONAWANE SANJAY SONAWANE Date: 2025.07.31 21:33:10 +0530
Chitra Sonawane. 901-ABA-1808-2025.docx Mr SV Walve, APP, a/w Mr Shahaji Shinde, ‘B’ Panel Counsel for the respondent No.2/ State. ---- Coram: R.N. Laddha, J. Date: 31 July 2025. P.C.: The applicants apprehend arrest and coercive action in connection with allegations involving both compoundable and non-baliable offences punishable under Sections 132 and 135 of the Customs Act, 1962. These apprehensions arise in the course of an ongoing investigation being conducted under File No.DRI/MZU/F/INT-32/Enq 17/2025/RA No.485 of 2025, by and/or at the instance of the respondent/ Directorate of Revenue Intelligence (DRI).
The investigation pertains to alleged acts of mi eclaration in the importation of goods, primarily walnuts, which are classified as freely importable items. These imports were mainly routed through the Nhava-Sheva Port. The DRI accuses the applicants of deliberately undervaluing the imported goods by submitting manipulated and fabricated invoices to evade customs duties. The transactions in question were carried out in the names of several entities: M/s Deepak Trading Company, M/s Angel Enterprises, M/s Deepak Kirana Stores, and M/s BV FEB. __________________________________________________ 31 July 2025
Chitra Sonawane. 901-ABA-1808-2025.docx
Search and seizure operations were conducted in February 2025 in relation to the said allegations. It is submitted that applicant No.1 is the individual managing the affairs of the firms as mentioned above. Applicant No.2 is the nephew of applicant No.1, and applicant No.3 is the mother of applicant No.1. 4. Kakadiya Sneh Deepakbhai, son of applicant No.1, was arrested in connection with the present matter vide Remand Application No.485 of 2025. He has since been released on bail. The Remand Applications filed in the case alleged evasion of customs duty to approximately Rs.44 Crores, and copies of the said applications have been annexed to the present application for reference.
The Directorate of Revenue Intelligence (DRI) have filed the detailed replies opposing the anticipatory bail application. The DRI has raised preliminary objections on the issue of maintainability and is contesting the application on merits. In support of its opposition, the DRI has also placed reliance on an ex-parte order dated 3 July 2025 issued by the compounding authority, wherein the compounding application filed by the applicants was rejected as being premature. __________________________________________________ 31 July 2025
Chitra Sonawane. 901-ABA-1808-2025.docx
The primary allegation in the case pertains to large-scale undervaluation in the import of ‘Inshell Walnuts’. It is alleged that the modus operandi involved the submission of manipulated and fabricated invoices issued by Dubai-based entities to Indian Customs authorities, to suppress the true transaction value and thereby evade customs duties. It is further alleged that Sneh Deepakbhai Kakadiya, in his capacity as an authorised representative of the Dubai-based entity, had personally signed the aforementioned manipulated invoices. Additionally, actual invoices issued by a Chile-based supplier were recovered from Sneh Deepakbhai Kakadiya’s email account, clearly indicating a significant discrepancy and deliberate under-invoicing. The estimated customs duty evaded in this manner is said to exceed Rs 44 Crores.
According to the respondent, similar practices are being adopted by multiple importers. The DRI also contends that applicant No.1 had previously sought and was granted time to appear in response to various summonses issued during the course of the investigation. However, rather than complying with those summonses, the applicants have now chosen to approach this Court for anticipatory bail. It is further stated that the co-accused, Sneh Deepakbhai Kakadiya’s statements were recorded under CCTV surveillance, and the alleged __________________________________________________ 31 July 2025
Chitra Sonawane. 901-ABA-1808-2025.docx retraction of such statements is argued to be an afterthought.
The respondent has also raised concerns regarding non- well as the decision of the Hon’ble Supreme Court in Union of though no specific allegation of mis-declaration has been made in Mumbai. The customs declarations in question were primarily made at Nhava-Sheva, located in District Raigad, with some declarations made at Mundra Port in Gujarat. Under such circumstances, the applicants cannot be expected to jeoparadise their liberty by engaging in protracted arguments over territorial juri iction, specifically, whether the matter falls under the juri iction of the Sessions Court at Mumbai (where __________________________________________________ 31 July 2025
Chitra Sonawane. 901-ABA-1808-2025.docx remand proceedings of co-accused are being conducted) or the Sessions Court at Panvel District-Raigad, where the alleged Ltd & Ors., as reflected in the order dated 16 January 2006 in Maharashtra, 1981 SCC OnLine Bom 112 & other similar rulings is distinguishable in the context of the present case.
Furthermore, the applicants have filed a joint compounding application dated 1 July 2025 under Section __________________________________________________ 31 July 2025
Chitra Sonawane. 901-ABA-1808-2025.docx 137(3)of the Customs Act, 1962, as a one-time statutory remedy prior to the initiation of prosecution, with the intention of avoiding multiplicity of proceedings, evading the rigours of prolonged litigation, and safeguarding their liberty. Through this application, the applicants have expressed their willingness to cooperate fully with the compounding authority and to pay the compounding fee as may be determined, along with any customs duty, interest, and penalty found due in accordance with law. An affidavit to this effect, dated 1 July 2025, has also been filed before the learned ACMM, Esplanade, Mumbai, in Remand Application No.485 of 2025. 12. Following the filing of the Compounding Application dated 1 July 2025, the Compounding Authority, by way of an ex-parte order dated 3 July 2025, rejected the application as 901-ABA-1808-2025.docx Hameed & Anr., 2019 SCC OnLine Bom 5363, the Court modified the Sessions Court direction in an anticipatory bail matter, limiting the advocate’s presence to a visible but not audible distance during the interrogation.
The search and seizure operations in this matter have __________________________________________________ 31 July 2025
Chitra Sonawane. 901-ABA-1808-2025.docx (Anti Evasion) Central GST and Central Excise & Anr., 2020 SCC OnLine Bom 10998, where cancellation of bail was upheld based on the facts of that particular case. In that case, the applicant therein had not filed any compounding __________________________________________________ 31 July 2025
Chitra Sonawane. 901-ABA-1808-2025.docx application. But in the present case, the applicants have already submitted an application for compounding the offence and it is pending before the competent authority. The statutory framework for compounding under Section 137(3) of the Customs Act, 1962, is designed to facilitate the settlement of offences without compromising on the recovery of lawful revenue. It allows for the filing of a compounding application at any stage, either before or after institution of prosecution, provided that the goods involved are freely importable and the case does not fall within the exceptions enumerated in the proviso to Section 137(3). It is not in dispute that an application for compounding, once filed, can only be allowed upon the applicant depositing the amounts determined as due, including customs duty, interest, and penalty, along with the compounding fees as may be determined by the Authority. In the present case, the applicants have already submitted affidavits undertaking compliance with these requirements.
The object of the compounding mechanism is to ensure enforcement of the Act while providing a route for voluntary compliance and avoidance of protracted litigation or incarceration. In the past, the Courts extended interim protection to the applicants therein during the pending investigation under the Customs Act and the Central Excise __________________________________________________ 31 July 2025
Chitra Sonawane. 901-ABA-1808-2025.docx Act. Illustratively:Manoj Arun Gore Vs. Union of India & Ors., Cri.WP No.1649 of 2005 dated 30 June 2005; Sadruddin Basar Khan Vs Union of India & Ors, Cri WP No.1648 of 2005 dated 30 June 2005; Mahesh Mehta Vs Union of India & Goyal Vs. Union of India & Ors., WP (Cri) No.93 of 2009 dated 30 October 2009, the Hon’ble Supreme Court restrained the authorities from taking coercive steps against the petitioner, in light of a compounding application being under contemplation during the course of investigation.
In the totality of the circumstances, and in the facts of the present case, the applicants’ willingness to comply with compounding provisions, the stage of the investigation, absence of prior criminal record, the documentary nature of the evidence, the willingness on the part of the applicants to jointly deposit a total amount of Rs.5 Crores with the respondent, and the completion of search and seizure operations collectively merits consideration. Accordingly, this Court deems it fit to allow this application subject to the following conditions : __________________________________________________ 31 July 2025
Chitra Sonawane. 901-ABA-1808-2025.docx (i) In the event of the applicants’ arrest in connection with File No.DRI/MZU/F/INT- 32/Enq 17/2025/RA No.485 of 2025, by and/or at the instance of respondent/ DRI, they shall be released on bail, upon executing a PR Bond of Rs.25,000/- each and furnishing one or more sureties in the like amount. (ii) The applicants shall report to the office of the investigating agency as required and cooperate with the investigation. Any statements recorded shall be in the presence of their advocate, who may remain at a visible but not audible distance. The proceedings shall be videographed. (iii) The applicants shall, jointly, deposit a total amount of Rs.5 Crores with the respondent within one week from the date of this order. (iv) The applicants shall not, either directly or through any other person, tamper with the evidence or attempt to influence any witnesses. __________________________________________________ 31 July 2025
Chitra Sonawane. 901-ABA-1808-2025.docx
The application stands disposed of accordingly.
[ R.N. Laddha, J.] __________________________________________________ 31 July 2025
Reproduced from the public record of the Bombay High Court. Verify against the court's own copy before relying on it. Income tax judgments are on bharattax.net.