A Delhi court said he should get bail. The Supreme Court said no — here's why

The High Court freed a terror-accused businessman because some evidence was 'inadmissible'. The Supreme Court just overturned that — and changed how bail works in UAPA cases. On a September afternoon in 2018, the businessman walked out of a Delhi jail — the air outside tasting different from the stale corridor he had known for over a year. Seven months later, the Supreme Court told him to go back inside — and in the process, told every judge in the country how to handle bail when the charge is terror funding.

When the NIA came knocking

In the summer of 2017, the accused was a prominent Kashmiri businessman. Then the National Investigation Agency (NIA) arrived. Their case: he was the money man. They alleged he had channeled funds from Pakistan's ISI, from Hafiz Saeed (the Lashkar-e-Taiba founder), from the Pakistan High Commission, and from sources in Dubai — all flowing to Hurriyat separatist leaders in Jammu and Kashmir. The purpose, the NIA said, was to fuel terrorist and secessionist activities.

He was arrested in August 2017. The charges were heavy: criminal conspiracy, waging war against the nation, and a string of offences under the Unlawful Activities (Prevention) Act, 1967 (UAPA — a law that deals with terrorism and activities threatening India's unity). In court records, he became A-10 — the tenth accused in a sprawling conspiracy case. The NIA officer's case diary, thick with handwritten notes and seized bank records, sat on the desk as the investigation unfolded.

The trial court says no

The accused applied for bail in June 2018 before the Special Court (NIA) in Delhi. The NIA's case rested on witness statements — some recorded by the police under Section 161 of the CrPC (statements made to police during investigation), others recorded by a magistrate under Section 164 of the CrPC (formal statements that can be used as evidence). Some of these witnesses were protected — their identities kept in sealed covers because they feared for their lives. In the courtroom, the sealed envelopes sat unopened on the judge's desk, their contents known only to the investigating agency and the magistrate who recorded them.

The Special Court judge looked at the material and said no. Under Section 43D(5) of the UAPA (a special provision that makes bail harder to get in terror cases), the court found "reasonable grounds" to believe the accusations against him were "prima facie true" (true on the face of it, based on the material available). Bail was rejected. The judge's order was crisp — the file was closed, and the accused remained in custody.

The High Court opens the door

The accused appealed to the Delhi High Court. And here, the case took a sharp turn. The High Court examined the evidence piece by piece — and found it wanting. It threw out the Section 164 statements of the protected witnesses, saying they were kept in sealed cover and not properly supplied to the accused. It discounted the Section 161 police statements as "inadmissible" evidence. Without those statements, the High Court reasoned, the remaining material was too thin to hold a man in jail. In September 2018, it granted him bail. The courtroom fell silent as the order was read — the accused's family in the gallery exhaled, while the NIA counsel's face tightened.

The NIA rushed to the Supreme Court.

"A flat no"

The Supreme Court bench, led by Justice A.M. Khanwilkar, heard the appeal in April 2019. The question was deceptively simple: Could a High Court, at the bail stage, pick apart the evidence, decide what was admissible and what wasn't, and then grant bail because the remaining pile looked weak?

The answer was a flat no.

The court pointed to Section 43D(5) of the UAPA. That provision says that when a person is accused of a UAPA offence, bail "shall not be granted" if the court, on seeing the police report and other material, finds reasonable grounds to believe the accusation is prima facie true. The key word, the court said, is "material" — not "admissible evidence" or "proven facts." At the bail stage, the judge must look at the entire pile gathered by the investigating agency: the case diary, the police report under Section 173 of the CrPC (the final report filed after investigation), and all the statements and documents that come with it.

The High Court had done the opposite. It had excluded the Section 164 statements because they were in sealed cover. It had excluded the Section 161 statements because they were "inadmissible." The Supreme Court said this was a fundamental error. Questions of admissibility — whether a piece of evidence can legally be used at trial — are matters for the trial judge, not for a bail hearing. At the bail stage, the court must take the documents as they are. If a statement exists in the investigation record, the judge can look at it and decide whether it makes the accusation look true on its face.

The mini-trial that was never supposed to happen

The Supreme Court used strong language. The High Court, it said, had conducted a "mini-trial" — a full dress rehearsal of the case that belongs at the trial stage, not at bail. The court held that "the question of admissibility of documents or evidence is a matter for trial and cannot be a basis for discarding material at the bail stage." The bail stage is about broad probabilities. The judge asks: Does the material, taken as a whole, suggest the accused was involved? That is a lighter standard than what is needed to frame charges or convict. But it is not zero. The court must record a finding — and that finding must be based on the "totality of material," not on a cherry-picked subset.

The court also noted that the UAPA has an overriding effect. Section 48 of the Act says that its provisions prevail over anything inconsistent in other laws, including the CrPC. Section 44 of the UAPA allows witness protection — including keeping identities in sealed covers. Section 43D(5) imposes bail restrictions that override the normal CrPC rules. So the High Court could not say: "The sealed cover statements were not supplied under Section 207 of the CrPC (which requires copies of documents to be given to the accused), therefore I will ignore them." The UAPA's special provisions meant those statements could still be considered at the bail stage.

When the court looked at the whole pile

The Supreme Court then did what the High Court should have done. It looked at the totality of the material — including the statements the High Court had excluded — and asked: Are there reasonable grounds to believe the accusations are prima facie true? The answer was yes. The court found that "reasonable grounds existed to believe accusations were prima facie true." The material showed the accused's alleged role as a financial conduit. The accusations were not baseless. The Special Court had been right to reject bail.

The Supreme Court set aside the High Court's order. The accused's bail was cancelled. He was sent back to custody.

THE PLAY: At bail stage under Section 43D(5) UAPA, the court must consider the entire investigation material — including sealed cover witness statements and Section 161/164 CrPC statements — without testing their admissibility as evidence.

The businessman went back to jail. The law went back to basics: bail is not a trial, and a judge cannot play mini-trial with a terror accused's liberty.

THE TEST: The "totality of material" standard means the bail court must weigh the entire investigation record — case diary, police report, witness statements — as one whole, not dissect individual pieces for admissibility.

WHAT THIS MEANS: For every future UAPA bail hearing, the judge's job is simpler and harder at once: simpler because they do not need to decide evidence rules at this stage; harder because they must resist the temptation to conduct a mini-trial. The sealed cover stays sealed for the accused's lawyer, but the judge can read it and use its contents to decide bail.

The case — National Investigation Agency v. Zahoor Ahmad Shah Watali — remains a landmark for how Indian courts approach bail under special laws. The Supreme Court's April 2019 order, running through the procedural journey from the FIR registered in May 2017 to the final appeal, established a clear ratio: at the bail stage, the court must consider the totality of material gathered by the investigating agency including the case diary, Section 173 report, and all accompanying documents and statements, and not analyse individual pieces of evidence or discard them on grounds of admissibility.

The judgment drew on precedents including Hitendra Vishnu Thakur v. State of Maharashtra, Ranjitsing Brahmajeetsing Sharma v. State of Maharashtra, and Manohar Lal Sharma v. Union of India — each reinforcing that bail under special statutes requires a different lens than ordinary criminal law. The Supreme Court's ruling did not just affect one businessman; it recalibrated the balance between liberty and national security in every UAPA case that follows.