Kathmandu, October 27
The Supreme Court has established a precedent clarifying when it can review detention orders issued by lower courts and order the release of detainees, even when their arrests and extensions of remand have been authorised by a court.
The ruling states that the court will generally not interfere with detention authorised through regular legal procedures. However, it may issue a habeas corpus order if detention is unlawful, the authorities act with improper motives, or the court authorising detention lacks jurisdiction.
The interpretation came in response to a habeas corpus petition filed on behalf of Shashidhar Sharma, who was arrested on allegations of banking offences involving the misuse of a loan.
The ruling also clarifies the limits of habeas corpus proceedings, stating that they cannot ordinarily be used to reassess evidence or determine the merits of a criminal case pending before a lower court.
A habeas corpus petition is a legal remedy through which a person or their representative asks a court to examine whether detention is lawful and, if it is not, order the person’s release. Such petitions receive priority because they concern personal liberty and fundamental rights.
Traditionally, courts have generally been reluctant to entertain habeas corpus petitions against detention authorised by lower courts. In recent years, however, the Supreme Court has increasingly examined whether such detention complies with legal procedures and jurisdictional requirements.
Dispute over alleged misuse of a Rs 480 million loan
Shashidhar Sharma, a resident of Tilottama in Rupandehi, obtained a loan of Rs 480 million from Prabhu Bank in January 2025 to build the Asian Village Resort.
The Nepal Rastra Bank’s Supervision Department subsequently prepared a report alleging that the loan had been misused. Based on the report, the Central Investigation Bureau (CIB) of Nepal Police arrested Sharma on July 14.
Sharma’s family argued that his arrest was unlawful because the bank had not filed a complaint. His daughter-in-law, Muna Chhetri, subsequently filed a habeas corpus petition at the Supreme Court, seeking his release.
The CIB alleged that the loan proceeds had not been used to purchase land for the resort but had instead been transferred to the bank accounts of people connected to the borrower through family relationships. Investigators treated the alleged transfers as a possible banking offence involving the misuse of loan funds.
The petition prompted the Supreme Court to examine when habeas corpus proceedings can be used to challenge detention authorised by a lower court and whether compliance with legal procedures is sufficient to make detention lawful.
Courts must exercise independent judicial judgment
The Supreme Court emphasised that arrests and extensions of remand must not become mechanical exercises. Judicial authorities must independently assess whether continued detention is necessary and justified.
It said courts should not automatically approve investigators’ requests to extend remand merely to prolong custody.
The full text of the judgment states that anyone detaining a person must demonstrate the legal basis for that detention before a court. If no such basis can be established, the detainee must be released immediately.
The ruling distinguishes habeas corpus proceedings from an appeal against a lower court’s decision. Habeas corpus is intended to examine the legality of detention, not to determine the facts and evidence of the underlying criminal case.
“Evaluating the facts and evidence of a case pending before a subordinate court and issuing a habeas corpus order that effectively determines the outcome would be contrary to the principles, system and concept we have adopted,” the court said.
Five tests for reviewing detention
A joint bench of Justices Tek Prasad Dhungana and Meghraj Pokharel identified five considerations for determining whether a habeas corpus order should be issued.
The court said it must examine:
- Legal basis for detention: Whether a law authorises detention and whether the alleged conduct constitutes an offence under the law.
- Jurisdiction: Whether the arresting authority and the court authorising detention have the necessary legal jurisdiction.
- Procedural compliance: Whether the arrest warrant, presentation before the judicial authority and other required procedures have been followed.
- Application of judicial mind: Whether the detention order reflects independent judicial consideration or was issued mechanically, with prejudice or in bad faith.
- Continuing legality: Whether a valid legal basis for detention still exists when the petition is heard.
The court said detention must satisfy all five tests. If it does, the Supreme Court cannot use habeas corpus proceedings to examine the truth of the allegations or order release on the merits of the underlying case.
However, if detention fails even one of these tests, the detainee may be released regardless of which authority issued the order.
Remand extensions must be independently reviewed
The Supreme Court also stressed that each extension of remand requires an independent judicial assessment of the necessity and justification for continued detention.
If the review has not taken place or has been conducted only as a formality, the court may intervene through habeas corpus proceedings.
However, it cautioned that its review must remain within the legal scope of the remedy and should not extend to detention authorised by a competent court through a lawful investigation process unless the required grounds for intervention are established.
Supreme Court refuses to order Sharma’s release
Applying these principles, the Supreme Court declined to issue a habeas corpus order for Sharma’s release, finding that his detention could not be deemed unlawful in the circumstances presented.
The court noted that a complaint concerning alleged loan misuse had been made and that the arrest and subsequent remand extensions had been authorised through judicial procedures.
It also clarified that its observations were limited to assessing the legality of detention and would not affect the ongoing investigation, prosecution, decisions on custody or the final outcome of the case.
The court further observed that, in assessing detention in financial crime cases, the analysis should not be limited to whether the accused might destroy evidence. Such offences can involve elaborate planning and affect public funds and the wider economy, it said, adding that their seriousness should be considered when decisions about custody are made.
The full text of the judgment, prepared on July 30, was made public by the Supreme Court only recently.
