June 23, 2024
Home » Important Case laws of Section 409 of Indian Penal Code (IPC)
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This article has been written by Tadepalli Aditya Kamal (pursuing 3rd year BBA LLB at KLE Law College, Bengaluru)


IPC Section 409 – Criminal Breach of trust by public servant, or by banker, merchant, or agent.

As provided under the Code, Section 409 IPC reads as, “Whoever being in any manner entrusted with property, or with any dominion over property in his capacity of a public servant or in the way of his business as a banker, merchant, factor, broker, attorney or agent, commits criminal breach of trust in respect of that property, shall be punished with imprisonment for life, or with imprisonment of either description for a term which may extend to ten years, and shall also be liable to fine.”

Section 409 of the Indian Penal Code applies when the offense is committed by someone in certain professional roles, such as a public banker, banker, merchant, factor (someone who acts on behalf of another in business matters), attorney, or agent. These individuals are expected to perform their duties honestly, and any deviation from this standard results in serious consequences. To establish a person’s guilt under this section, the following elements need to be proven.

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  1. The accused was in a specific profession, such as a public servant, merchant, broker, attorney, or agent.
  2. The accused was entrusted with someone else’s property.
  3. The accused engaged in a criminal breach of trust regarding the entrusted property.

Case Laws

Sardar Singh Vs. State of Haryana

Facts of the Case : In the case of Sardar Singh vs. State of Haryana, the appellant held the position of a patwari in Revenue Circle Raisina, Gurgaon. When he assumed his duties, a memo detailed the books and documents he received. Subsequently, he was suspended following a departmental inquiry and was instructed to hand over his post, which he failed to do. As a result, the Revenue Assistant, Gurgaon, ordered the lock of his room to be broken open. His successor took charge of the post, and two lists were prepared, one indicating the books and documents found in the room and another listing those that were missing. The prosecution alleged that the appellant committed a criminal breach of trust concerning three documents, including a daily transaction diary, a copying fee register, and a receipt book, along with an amount of Rs. 26.50 that he had received for issuing certified copies in his capacity as Patwari.

The Judicial Magistrate First Class acquitted the appellant, stating that there was no proof of the appellant being entrusted with the said amount, and he had no responsibility for the roznamcha waqlati and copying fee register. However, regarding the receipt book, the Magistrate found that the appellant had been entrusted with it in his capacity as Patwari, and it was not found in his room. The Magistrate convicted the appellant under Section 409 of the Indian Penal Code, sentencing him to imprisonment until the rising of the Court and a fine of Rs. 100. The appellant subsequently appealed to the Sessions Judge, who upheld the Magistrate’s decision. The appellant then filed a revision petition with the Punjab & Haryana High Court, which also dismissed the petition. Dissatisfied with the High Court’s decision, the appellant appealed to the Honorable Supreme Court.

Issues : Whether the appellant is liable for criminal breach of trust regarding the receipt book under Section 409?

Judgement : The Supreme Court, in its judgment, noted that although the appellant did not return the receipt book to his successor and it was not found in his room, there was a lack of evidence to establish the misappropriation of the receipt book. Consequently, the appellant had been wrongly convicted under Section 409 of the Indian Penal Code. The Supreme Court allowed the appeal and overturned the conviction order. As a result, the sentence imposed on the appellant was quashed, and he was acquitted of the offense under Section 409. The Supreme Court emphasized that the mere failure or omission to return entrusted property is insufficient to establish the commission of an offense under Section 409.

L. Chandraiah Vs. State of Andhra Pradesh

Facts of the Case : In this case, there were six accused individuals identified as A1, A2, A3, A4, A5, and A6. A1 served as a Sub-Postmaster at a Sub-Post Office between April 1986 and May 8, 1987, while A2 succeeded A1, working from May 8, 1987, to November 16, 1987. A3 was a Postal Assistant in the same Sub-Post Office, and A4 was a postman in the same office. A5, an employee of the Postal Department, had resigned in 1987, and A6 was a student living as a tenant with A3. The case revolved around recurring deposit accounts opened by a company’s workers in the Sub-Post Office. The company deducted sums from the workers’ wages and directly remitted them to the Post Office in a single check. The Postal Authorities made the necessary entries in each account. To withdraw money from the recurring deposit accounts, the company affixed its seal on the withdrawal voucher and sent it to the Postmaster, where the worker would sign for withdrawal in the presence of the Postmaster.

The prosecution alleged that the accused individuals conspired to fraudulently withdraw Rs 91,280 from these accounts using fabricated vouchers with forged signatures, while the workers claimed they had never made these withdrawals. In the Trial Court, A1, A2, and A3 were convicted under various sections of the Indian Penal Code (IPC) and the Prevention of Corruption Act. However, A4, A5, and A6 were acquitted. A1 was sentenced to one year of rigorous imprisonment under Section 409 IPC, while A2 received a two-year sentence under the same section. Dissatisfied with the verdict, A1 and A2 filed appeals with the High Court of Judicature, Andhra Pradesh at Hyderabad, which upheld their convictions. Both accused individuals then appealed their cases to the Supreme Court.

  • Issues : 1.  Whether the conviction of the appellants (A1 and A2) was correct in the eyes of the law
  • Issues : 2.  Whether the appellants knew that the vouchers were forged by A3?

Judgement  : The Supreme Court noted that A1 and A2 were unaware that A3 had dishonestly and fraudulently fabricated the vouchers. There was no evidence to establish that A1 and A2 had any knowledge of the fraudulent activity, and as a result, they lacked criminal intent. Therefore, the convictions of A1 and A2 could not be upheld. The Supreme Court acquitted them. Additionally, the Supreme Court emphasized that the offense under the relevant section necessitates the presence of criminal intent or mens rea. 

N. Bhargavan Pillai Vs. State of Kerala

Facts of the case : The accused in this case held the position of an Assistant Taluk Supply Officer and was temporarily working as a Junior Manager in the Kerala State Civil Supplies Corporation. Initially deputed for a five-year term until June 30, 1986, the Corporation requested an extension of his term. Later, the Managing Director of the Corporation sent a letter to the Director of Civil Supplies, requesting an extension until November 30, 1986.

However, despite a relieving order effective from November 29, 1986, the accused did not attend his office after November 27, 1986, and failed to hand over his responsibilities. He applied for leave and neglected to hand over the keys to the Punalur godown or verify its stock. He eventually reported to the godown on December 13, 1986, and brought the keys. In the presence of the Assistant Manager, he committed in writing to hand over his charge on December 13, 15, and 16, 1986. Stock verification revealed a substantial shortage, specifically 102 quintals of rice and other missing items. The accused later undertook to remit the value of the shortage. Subsequently, the accused was suspended and later retired from service on February 28, 1992. He faced a case, was tried in the Trial Court, and found guilty under Section 5(2) of the Prevention of Corruption Act and Section 409 of the Indian Penal Code (IPC). He was sentenced to one year for the Section 409 offense.

The accused appealed to the Kerala High Court, but the conviction was confirmed. He then appealed to the Supreme Court, arguing that the conviction lacked proper sanction under Section 19 of the Prevention of Corruption Act and Section 197 of the Code of Criminal Procedure, 1973 (CrPC). The defense counsel also contended that the prosecution failed to establish misappropriation and mens rea (criminal intent). In response, the prosecution argued that the legal process was followed correctly. They stated that misappropriation does not fall within the scope of an employee’s official duties, hence the need for Section 197 CrPC sanction was unnecessary. In a corruption case involving the misappropriation of a significant stock intended for the public, it was against the public interest not to prosecute the accused.

Issues : 1. Whether the conviction of the appellant (accused) was proper?

Issues  : 2. Whether there was a need for sanction to prosecute him?

Judgement : The Supreme Court affirmed that both the Trial Court and the Kerala High Court were correct in concluding that the prosecution successfully demonstrated the entrustment of the specified items (as mentioned in the table). Consequently, the convictions under the Prevention of Corruption Act and Section 409 of the Indian Penal Code were deemed appropriate. The Supreme Court also clarified that obtaining sanction under Section 197 of the Code of Criminal Procedure (CrPC) is not a mandatory prerequisite for prosecuting an individual under Section 409 of the IPC. Furthermore, the Supreme Court emphasized that it is the prosecution’s responsibility to establish that the property in question was entrusted to the accused. Once this entrustment is established, it falls upon the accused to explain how they handled that property.

Sushil Kumar Singhal Vs. Regional Manager, Punjab National Bank

Facts : In this case, the accused was employed as a peon in a bank and was entrusted with Rs 5,000 in cash to deposit as payment for the Telephone Bill at the Post Office. However, he failed to deposit the money, leading to the bank filing a First Information Report (FIR) against him under Section 409 of the Indian Penal Code (IPC). The Trial Court convicted him under this section and subsequently, the bank terminated his employment. In response, the accused raised an industrial dispute under the Industrial Dispute Act of 1947, which was referred to the Central Government Industrial Tribunal-cum-Labour Court-II (referred to as the “Tribunal”). Meanwhile, he also appealed his conviction before the Appellate Court, which upheld the conviction but granted him the benefit of probation under the Probation of Offenders Act of 1958, resulting in his release on probation.

Subsequently, the Tribunal issued an award rejecting the accused’s claim and affirming the justification for his dismissal from service, in accordance with the law. Dissatisfied with this outcome, the accused filed a writ petition with the Punjab & Haryana High Court to challenge the award, which was ultimately dismissed. The accused, who is the appellant, then filed an appeal with the Supreme Court. The appellant’s counsel argued that the High Court’s judgment and the Tribunal’s award should be set aside based on the provisions of the 1958 Act.

On the other hand, the bank’s counsel contended that the benefit provided under the 1958 Act pertains only to the punishment (sentence) and does not erase the fact of conviction. Consequently, the bank was within its rights to terminate the accused’s employment, as he had been convicted of an offense involving moral turpitude. Therefore, the appeal should be dismissed.

Issues : 1. Whether the act of the appellant involved moral turpitude?

             2. Whether the benefit granted to the appellant under the Act of 1958 entitles him to reinstatement in service?

Judgement : Citing precedents and examining the evidence presented, the Supreme Court determined that the appellant had indeed committed an offense involving moral turpitude. The Court further ruled that a conviction for such an offense acts as a disqualification, making it untenable for the employee to retain their employment. Consequently, the Court rejected the appeal.

Sunil Dahiya Vs. State (NCT of Delhi)

Facts : In this case, Sunil Dahiya served as the Managing Director of the Vigneshwara Group of Companies (VGC), with his brother holding the position of Finance Head and his father as the Chairman. Sunil Dahiya was engaged in two construction projects for IT parks in Gurgaon and Manesar, involving the incorporation of several companies, including Vigneshwara Developers Pvt. Ltd., Vigneshwara Developwell Pvt. Ltd., and M/s Aquarious Buildcon Pvt. Ltd., among others. These companies collectively formed VGC. Sunil Dahiya obtained approvals from the Haryana State Industrial & Infrastructure Development Corporation (HSIIDC) and the Directorate of Town & Country Planning for these projects. Subsequently, he invited applications from the public to invest in these projects through media advertisements.

Investors, including Punjab National Bank (PNB), invested in these projects, and agreements were executed between the investors and Sunil Dahiya on behalf of the mentioned companies. Sunil Dahiya assured investors that the construction would be completed within 60 months, offering guaranteed returns ranging from 9% to 12% per month. However, investors filed complaints, alleging that the projects were not completed, assured returns were not paid, and the accused had misappropriated over Rs 600 Crores. They also claimed that the accused had purchased properties owned by the investors but failed to provide the promised compensation properties. The accused was accused of forging agreements, making false claims in advertisements, and having a history of cheating investors.

Based on these allegations, FIRs were filed under various sections, including Sections 409, 420, 423, 467, 471, and 120B of the Indian Penal Code (IPC). Charge sheets revealed over 1,500 investors, and it was established that Sunil Dahiya acted not only as an agent but also as a trustee of the company’s assets, along with his family members. The Trial Court convicted Sunil Dahiya and his family, sentencing them to life imprisonment. Subsequently, he filed multiple bail applications, all of which were rejected. The defense argued that the accused had no dishonest intentions and cited the progress in one project while explaining the delays in the other due to a lack of approvals. The prosecution contended that construction activity had been minimal, with misappropriation of funds for personal luxuries.

Issues : 1. Wthether the order of conviction against the applicant (accused) under Section 409 IPC was proper?

              2. Whether the Additional Sessions Judge was right in rejecting the bail applications?

Judgement : The Delhi High Court found that Sunil Dahiya and his family members had a shared objective and collaborated with common intentions. They were accused of engaging in economic offenses involving substantial amounts of misappropriated public funds and fraud. Consequently, these offenses were of a serious nature, justifying the conviction. The High Court determined that granting regular bail in cases of criminal breach of trust by agents and similar crimes would be detrimental to the criminal justice system. Such exceptions might include situations where these offenses affect a large number of individuals and result in substantial losses of public funds. The Court also stressed that economic offenses are severe because they pose a significant threat to the country’s financial well-being. Furthermore, the Delhi High Court recognized the correctness of the Additional Sessions Judge’s decisions in rejecting the applicant’s three bail applications. Consequently, all three bail applications were denied.

Lalita Saini Vs. State

Facts of the Case : In this case, the accused (identified as Respondent No. 2) and other co-accused were members of the governing body/managing committee of the Vedanta Welfare Society. They allegedly deceived the victims, including Lalita Saini and their family, by falsely claiming that the Society was expanding its membership and acquiring more land. The new members were required to deposit a substantial amount, roughly Rs. 11 lakhs, for a three-bedroom flat. The victims paid a total of approximately Rs. 33.95 lakhs, but the accused failed to provide them with share certificates, membership, or refunds. As a result, the victims filed an FIR against the accused under various sections of the Indian Penal Code. Upon investigation, it was revealed that the Society had no registered property, no authority to collect public funds, and no legal status to support its actions. Additionally, 47 more victims had lodged complaints against the accused. Respondent No. 2 applied for “default bail” under Section 167(2) of the Code of Criminal Procedure (CrPC) when the prosecution did not file a charge sheet within 60 days from the initial remand. The Chief Metropolitan Magistrate rejected this bail application.

Respondent No. 2 subsequently filed a revision petition with the Sessions Court to challenge the CMM’s decision, and the District and Sessions Judge (North-West), Rohini, granted him statutory bail, stating that the prescribed period for filing a charge sheet was 60 days according to Section 167(2)(a)(ii) of the CrPC. Lalita Saini, one of the victims, filed a petition with the Delhi High Court under Section 482 of the CrPC, along with Section 439(2) of the CrPC, to contest the District and Sessions Judge’s order. The petitioner argued that the period stipulated for filing the charge sheet was actually 90 days. The petitioner’s counsel emphasized that around Rs. 12 lakhs had been deposited through legitimate banking channels. On the other hand, the counsel for Respondent No. 2 argued that the stipulated period for filing the charge sheet was indeed 60 days.

Issues : 1. Whether the stipulated period for filing the charge sheet for an offence punishable under Section 409 IPC is 60 days or 90 days.

              2. Whether the order passed by the District and Sessions Judge was proper?

Judgement : The Delhi High Court clarified the timelines for filing a charge sheet under the Code of Criminal Procedure (CrPC). It stated that when an offense is punishable with a minimum sentence of less than 10 years and a maximum sentence that does not include death or life imprisonment, the stipulated period for filing a charge sheet is 60 days under Section 167(2)(a)(ii) of the CrPC. In such cases, if the charge sheet is not filed within 60 days, the accused becomes eligible for default bail. Conversely, when an offense is punishable with a minimum sentence of imprisonment for 10 years or more, and the maximum sentence includes death or life imprisonment, the stipulated period for filing a charge sheet is 90 days under Section 167(2)(a)(i) of the CrPC. In such situations, if the charge sheet is not filed within 90 days, the accused qualifies for default bail.

In this particular case, the offense under Section 409 of the Indian Penal Code (IPC) is punishable with either life imprisonment or imprisonment for up to 10 years, in addition to a fine. Given the seriousness of this offense, the court held that the prosecution must file the charge sheet within 90 days. Accordingly, respondent No. 2 was not eligible for default bail under Section 167 of the CrPC because the charge sheet had been filed within the stipulated 90-day period. As a result, the court granted the petition filed by Lalita Saini and nullified the District and Sessions Judge’s prior order.

N. Raghavender Vs. State of Andhra Pradesh, CBI

Facts of the Case : In this case, N. Raghavender (Accused No. 1; A1) served as the Branch Manager in the Sri Rama Grameena Bank’s Nizamabad Branch from May 1990 to September 1995. A. Sandhya Rani (Accused No. 2; A2) worked as a Clerk-cum-Cashier in the same bank from 1991 to 1996, responsible for daily transactions in current and savings accounts, including preparing credit and debit vouchers. C. Vinay Kumar (Accused No.3; A3) was the treasurer of Nishita Educational Academy and A1’s brother-in-law. A3 opened Current Account No. 282 in the bank as an authorized signatory of the academy with an initial deposit of Rs. 5,00,000. The prosecution alleged that A1 and A2, abusing their positions, conspired with A3 to allow withdrawals of up to Rs. 10,00,000 from the academy’s account, despite having sufficient funds. A1 was accused of issuing loose-leaf cheques on three occasions, with Rs. 2,50,000, Rs. 4,00,000, and Rs. 3,50,000 being withdrawn without entries in the ledger book, and a signature mismatch on one of the cheques. A1 was also accused of prematurely closing two fixed deposit receipts (FDRs) totaling Rs. 14,00,000.

The Chairman of the bank filed a complaint with the Central Bureau of Investigation (CBI), resulting in the registration of a case against A1, A2, and A3 under various sections of the IPC and the Prevention of Corruption Act. At the trial court, the prosecution presented 11 witnesses and documentary evidence. The court found A1 guilty of several offenses but acquitted A2 and A3. A1 appealed his conviction and sentence before the High Court of Andhra Pradesh, which upheld the trial court’s findings. Dissatisfied with the High Court’s judgment, A1 appealed to the Supreme Court.

The Senior Counsel for A1 argued that there was no mens rea (guilty intent) in the case, as A1 did not personally benefit from the transactions and the bank did not incur losses. The defense also contended that A1 should not be held liable under the specified sections of the IPC or the Prevention of Corruption Act, citing the use of loose cheques and omission of ledger entries. On the other hand, the Additional Solicitor General (ASG) representing the CBI contended that to establish mens rea or criminality under the mentioned sections, it was necessary to prove that A1 either benefited or caused a loss to the bank. A1 needed to bear full responsibility for failing to discharge his duties and demonstrate that he conducted all transactions legitimately, adhering to the required conditions.

Issues : 1. Whether the conviction and sentence against the appellant were proper?

              2. Whether the criminal appeal filed by the appellant before the Court (i.e., Supreme Court) was sustainable?

Judgement : The Supreme Court noted that both the Trial Court and the Andhra Pradesh High Court had not sufficiently examined the essential elements of Sections 409, 420, and 477A of the Indian Penal Code (IPC). They failed to reference specific evidence that could establish the requirements for these sections.

Additionally, the Supreme Court pointed out that no monetary loss had been inflicted upon the Bank, B. Satyajit Reddy, or any bank customers. The evidence presented in the case did not indicate any conspiracy among the accused individuals. Despite the accused’s misconduct in their professional duties, their actions did not demonstrate their culpability under Sections 409, 420, and 477A of the IPC or the provisions of the Prevention of Corruption Act. Regarding Section 409 of the IPC, the Supreme Court clarified that for a conviction to be valid, certain conditions must be met:

1. The accused must be public servants, bankers, merchants, or agents.

2. Entrustment of public properties is a mandatory requirement.

3. There must be dishonest misappropriation or misuse of the entrusted property in the manner specified under Section 405 of the IPC.

Furthermore, the Court emphasized that customers act as lenders to banks, and banks act as borrowers. Banks do not hold customer deposits in trust; these funds become part of the bank’s overall funds. Banks are obligated to repay this money to customers upon request. Until customers make such requests, banks may utilize these funds to generate profits. However, a clear and substantial evidence of misappropriation of funds is essential before prosecuting an offender, as it would be unsafe to proceed without such evidence. Consequently, the Supreme Court concluded that the conviction and sentence against the appellant were inappropriate. As a result, the appeal was allowed by the Court.

Brij Nandan And Another Vs. State of Punjab

Facts of the Case : In this case, five accused individuals, namely Rakesh Kumar Malhotra (Arakshn Supervisor), Parvesh Walia (Ticket Supervisor), Brij Nandan, Anwar Ansari, and Jarnail Singh, were implicated in corruption within the Railway Department. They conspired against Ram Singh Meena, who had previously filed a complaint against them. To retaliate, they instigated Sohan Lal, a teacher at DAV School, Khanna, and other Railway Department employees to file a complaint against Ram Singh Meena. This complaint led to Ram Singh Meena’s transfer from District Sirhind to District Ropar. After the transfer, Brij Nandan, Rakesh Kumar Malhotra, and Anwar Ansari inspected Ram Singh Meena’s records but found nothing amiss. Nevertheless, these accused persons persistently lodged various complaints against Ram Singh Meena. Then, on August 4, 2018, the accused took away relevant records pertaining to Ram Singh Meena’s service from Smt. Chanchal Bala and tampered with the records in various ways. They did this with the intent of implicating Ram Singh Meena in a case, ultimately leading to the filing of a charge sheet against him.

Ram Singh Meena filed a complaint against the accused individuals, accusing them of various offenses. Subsequently, an FIR was registered against all five accused persons under Sections 409 and 120B of the Indian Penal Code.

The investigating agency conducted a comprehensive inquiry, and the Officer in charge of the Police Station GRP, Sirhind, District Fatehgarh Sahib, submitted a report under Section 173 of the Code of Criminal Procedure (CrPC) against Brij Nandan, Anwar Ansari, and Jarnail Singh. In the Chief Judicial Magistrate’s Court in Fatehgarh Sahib, Brij Nandan and Anwar Ansari were charged under Sections 409 and 120B of the IPC, while Jarnail Singh was discharged from the case. Both Brij Nandan and Anwar Ansari filed separate Criminal Revision Petitions before the Additional Sessions Judge in Fatehgarh Sahib. Additionally, Ram Singh Meena and the State filed a Criminal Revision Petition to challenge the Chief Judicial Magistrate’s order discharging Jarnail Singh.

The Additional Sessions Judge in Fatehgarh Sahib dismissed the petitions of the two accused persons and took up Ram Singh Meena’s petition. The Judge remanded Jarnail Singh’s case for reconsideration. Subsequently, Brij Nandan and Anwar Ansari (the petitioners) submitted a Criminal Miscellaneous Petition before the Punjab & Haryana High Court, seeking the quashing of the orders issued by the Chief Judicial Magistrate and the Additional Sessions Judge. The counsel for the petitioners argued that since the Railway Department had declined to grant sanction (under Section 197 of the CrPC) for prosecuting the accused, the Trial Court should not have framed charges against them. Furthermore, since the Railway Department had not filed any complaint regarding the removal or tampering of documents, they requested the High Court to quash the FIR and subsequent legal proceedings.

Issues : 1. Whether the said FIR and the subsequent proceedings against the petitioners (Brij Nandan and Anwar Ansari) were proper?

             2. Whether the petitioners were liable under Sections 409/ 120B IPC?

             3. Whether the Criminal Miscellaneous Petition filed by the petitioners was sustainale?

Judgement : The Punjab and Haryana High Court noted that the petitioners had taken the documents in question (such as forwarding notes and ID proof) and may have committed an offense under Section 409 of the Indian Penal Code (IPC) due to the alleged misappropriation of these documents. The High Court also determined that there were no legal issues with the following:

1. Registering the First Information Report (FIR).

2. Framing the specified charges.

3. The Additional Sessions Judge’s decision to reject the Criminal Revision Petitions.

As a result, the High Court dismissed the Criminal Miscellaneous Petition as it was found to be unsustainable. The High Court clarified that an offense under Section 409 of the IPC pertains to actions beyond one’s official duty, and prior sanction is not required to prosecute an individual under this Section. 

Yogesh Jagia Vs. Jindl Biochem Pvt. Ltd.

Facts of the Case : In this case, there was a private real estate development company called Jindl Biochem Pvt. Ltd. (referred to as the “private company”), with four promoters – Rajinder Kumar Jindal, Attar Singh, Kartar Singh, and A.P. Singh. They had jointly promoted V4 Infrastructure Pvt. Ltd. (referred to as “V4”) in 2005. Before incorporating V4, they contributed funds and acquired a commercial land plot from the Delhi Development Authority, which V4 developed as per a development agreement in 2005. Disputes arose among the promoters in 2008, leading to the exit of some and the sale of equity shares to the remaining promoters. To settle these disputes, part of a commercial property in Dwarka was agreed to be sold by V4 to the private company, involving two space buyer agreements. An escrow account was established to facilitate the transfer. However, disputes emerged regarding the possession of documents in the escrow account, leading to allegations of wrongful acts.

The private company alleged that Yogesh Jagia (Accused No.1), Sanjay Pal (Accused No.2), and Attar Singh (Accused No.3) conspired to alter the space buyer agreements and that A1 committed a criminal breach of trust.

The private company filed a police complaint in 2011 against A1, A2, and A3. The allegations included failure to execute a sale deed despite receiving the sale consideration and A1’s release of documents from the escrow account to A2 and A3, constituting a criminal breach of trust under Section 409 of the Indian Penal Code (IPC). A1 filed a petition under Section 482 of the Criminal Procedure Code (CrPC) before the Delhi High Court to quash the summoning order issued by the Trial Court. A1’s Senior Counsel argued that there was no prima facie case of Section 409 IPC and that various complaints filed by the respondents contained contradictory statements. It was also contended that the disputes were civil in nature, and the Trial Court’s order lacked a proper basis.

The respondents’ Senior Counsel, representing Jindl Biochem Pvt. Ltd. and Rajinder Kumar Jindal, countered that there were sufficient grounds for summoning A1 under Section 409 IPC, supported by evidence and materials. A1, A2, and A3 were alleged to have conspired in transferring documents to V4 without ensuring compliance. The petitioner was accused of altering the space buyer agreements and withholding specific documents, leading to a loss for the respondents. In essence, the case revolves around allegations of fraud and conspiracy between the accused and the respondents concerning property transactions, with A1’s petition seeking to quash the summoning order.

Issues : 1. Whether the said summoning order maintainable?

             2. Whether the petitioner was liable under Section 409 IPC?

             3. Whether the petition filed by the petitioner was maintainable?

Judgement : The Karnataka High Court determined that the petitioner had sufficient funds in the company’s accounts and intended to pay them, finding no evidence of willful default by the company. However, the Income Tax Department authorities had attached the company’s properties, a situation beyond the company’s control. In light of these circumstances, the petitioner lacked the necessary mens rea and was not liable under Section 409 of the Indian Penal Code. The Court emphasized the requirement of willful default by the company for the vice president’s liability under Section 409 IPC. Consequently, the Court granted the petition filed under Section 482 of the Criminal Procedure Code and dismissed the ongoing proceedings before the IV Additional Chief Metropolitan Magistrate in Bengaluru.

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